FINAL Flashcards
3 parts of social responsibility
Legal &Ethical behavior Sustainability
Commitment to the Community
Sustainability
– Acting within the law in all of the nations in which they conduct business. It might also include treating stakeholders well - employees, business partners, and customers.
Legal and Ethical Behavior
Earth-friendly business practices. Having business practices, products, and services that do not harm the environment in the present nor in the future.
Sustainability
Investing in the well-being of the communities in which the business operates as well as the greater world.
Commitment to the Community
Ways SC can be more sustainable
- Procurement – Purchasing better materials, fewer materials, safer materials
- Logistics – Transportation efficiencies, reduce fuel consumption
- Manufacturing and Operations, Facilities – Energy consumption, defect reduction, minimize emissions
- Reverse logistics – Recovery of packaging, damaged items, parts, etc. for reuse, refurbishing, re-sale, recycling
- Supply chain sustainability catalysts – Large powerful companies can become catalysts often have the power to motivate thousands of suppliers to become sustainable. This not only impacts the catalyst’s supply chain, it impacts every other company that buys material from that supplier.
- Rethink design – Poor design will always yield poor outcomes. Sometimes companies need to start from scratch and develop a new design. Example: Electric car engines instead of gasoline powered engines
- Sustainability Accounting – Companies cannot fix a problem until they can find the source. With the help of accounting supply chains can identify primary areas of costs related to unsustainable business practices.
- Develop Sustainability Metrics – Metrics help companies find problems, track improvement, and they can also motivate employees to change their behavior.
Purchasing better materials, fewer materials, safer materials
Procurement
Transportation efficiencies, reduce fuel consumption
Logistics
Energy consumption, defect reduction, minimize emissions
Manufacturing and Operations, Facilities
Recovery of packaging, damaged items, parts, etc. for reuse, refurbishing, re-sale, recycling
Reverse logistics
Large powerful companies can become catalysts often have the power to motivate thousands of suppliers to become sustainable. This not only impacts the catalyst’s supply chain, it impacts every other company that buys material from that supplier.
Supply chain sustainability catalysts
Poor design will always yield poor outcomes. Sometimes companies need to start from scratch and develop a new design. Example: Electric car engines instead of gasoline powered engines
Rethink design
Companies cannot fix a problem until they can find the source. With the help of accounting supply chains can identify primary areas of costs related to unsustainable business practices.
Sustainability Accounting
help companies find problems, track improvement, and they can also motivate employees to change their behavior.
Develop Sustainability Metrics
A geographic area sanctioned by the government where items are not under the control of customs authorities. As such, goods can be imported into a country, brought into an FTZ and then stored, displayed, and/or manipulated before being re-exported without ever being inspected or taxed by customs officials.
Free Trade Zone
FTZ
(In some countries these types of areas go under different names – free economic zone, free zone, export processing zone, special economic zone)
A voluntary program developed by US Customs and Border Protection for companies importing goods into the US. The program requires member organizations to report a significant level of detail related to supply chain partners and actions for each imported shipment. In exchange for providing this information to US Customs, member companies are allowed opportunities for speedier and more hassle-free customs clearance.
Customs-Trade Partnership Against Terrorism (C-TPAT)
A contractor (company or person) that helps a client’s goods clear customs in a foreign country. • Before goods reach the border: Preparation of documents, issues relating to import fees and taxes • During inspection: Answers the customs agents’ questions in an effort to facilitate customs clearance
Customs House Broker
A contractor (company or person) that helps companies organize the efficient and effective shipment of goods from one point in the supply chain to another. do not actually transport the goods, instead they negotiate and arrange for one or more logistics companies to prepare, secure, store, track, and move the cargo.
Freight Forwarder
A contractor that performs one or more logistics functions for their client in an effort to facilitate effective and efficient movement in the supply chain.
(procurement, assembly, etc.). Below is a short list of the types of services that might be performed by a 3PL:
• Arranging shipping itineraries, in some cases taking over all the client’s logistics responsibilities
• Aiding in the import and/or export process
• Warehousing, Distribution, Picking and Packing
• Containerization and Transportation • Packaging
• Documentation
• Product tracking, Logistics data and information management
• Logistics specific financial services
• Management of digital marketplaces for logistics services
Third party Logistucs
3PL
A type of offshoring where the manufacturing facility is relatively close to the consumer
Near sourcing
Also referring to :
Near source offshoring
Near source offshoring and outsourcing
A company that produces goods on behalf of another organization
Contract manufacturer
Apple designs numerous digital devices but they outsource manufacturing to companies like Foxconn and Pegatron. Foxconn and Pegatron would therefore be considered Apple’s ________
contract manufacturers
The outsourcing of office activities like accounting, human resources, customer service activities (like call centers and customer chat). Sometimes these types of outsourced activities are referred to as back office activities.
Business process outsourcing
IBM offers companies help in the areas of employee recruitment, supply chain services, customer care and management of financial data. If you owned a small company you might consider having IBM help manage these types activities rather than developing departments internally. IBM is an example of
Business Process Outsourcing
When a company moves manufacturing out of its “home” country to another country.
Offshoring
Ford Motors is an American company that has manufacturing plants in the United States, it also has plants around the world in many countries including China, Germany, Brazil, Russia, and South Africa. this is an example of?
Offshoring
A strategy where a company utilizes a contractor in another country to perform services and/or operations.
Offshoring and outsourcing
When a company contracts an outside firm to perform services, operations, or business processes that were previously performed in-house.
Outsourcing
is a supply chain phenomenon where fairly stable demand results in a proliferation in the amount of inventory that is carried as one travels upstream in the supply chain
Bullwhip effect
Distribution carries more inventory than retail. Manufacturing carries more inventory than distribution. Suppliers carry more inventory than manufacturers. And so on, and so on.
Example of??
Bullwhip effect
4 causes of the bullwhip Effect
Order Batching
Forward Buying
Rationing
Shortage Gaming
When companies place large and infrequent orders from their suppliers. Typically this is done to take advantage of quantity discounts and economies of scale in purchasing and delivery. The problem is that the infrequent orders leave large communication gaps (uncertainty) for suppliers and it may also require suppliers to carry large amounts of inventory so they can be prepared when those large orders are actually placed.
Order Batching
This is the result of suppliers offering sales. Buyers are motivated to buy in large quantities to take advantage of low prices. Buyers are not buying based on demand, but rather on price. Therefore, true demand is unknown by sellers (uncertainty). Sellers experience the uncertainty of demand due to their own short-term drops in price for their customers
Forward Buying
Sometimes, despite their best efforts, suppliers do not have enough inventory to satisfy the demand of all of their customers. If this is the case, suppliers may ration their inventory and send each of their customers only a fraction of the inventory that was ordered. For example, if a company receives orders for 1,000 total units from their customers, but only has 800 units of inventory available, that company might only send each of their customers 80% of their orders. These smaller than expected deliveries introduce doubt into the system and thus may trigger negative behaviors in the future.
Rationing
In rationing, customers only receive a fraction of their placed order. This leaves the customer short of their desired inventory level. If customers feel that this rationing may occur again, customers may try to “game” the system by placing an order larger than their expected demand. For example, if their demand is 80 units, they may place an order 100 units instead of the 80 units needed. The rationale is that when the supplier sends them only 80% of their placed order, they will get exactly the demand needed.
Shortage Gaming
A system that combines push and pull - pushing product elements that are considered standard and then allowing customers to pull product elements that can be customized. Those product elements that are standard will be produced in advanced, and then final production will be delayed until the consumer places an order that specifies the customized elements.
Postponement
postponement, relationship to push and pull
Postponement is to combine a push/pull system. It can be valuable because it allows some degree of customization and standardization (speed and customization).
The relationship to push is through the standardized portions of manufacturing.
The relationship to pull system is the customization options offered to customers.
example: painting an chair after received an order
strategy: pull
inventory: evil: minimize it
quality control: quality at the source
supplier relations: suppliers are partners
supply chain communication: open communication required
consumer market: customer dictates what supply chain must produce
business practices: best today won’t be best tom
Lean manufacturing
- A production philosophy that strives to meet consumer demand and desires but with minimal inventory levels and minimal supply chain waste.
- Ex. TPS(Toyota Production System/ Just- In Time)
Lean manufacturing
• High Performance Quality
• Consistent Quality
• Quality at the source – Empowering every employee to be a quality inspector and manager
• Continuous Improvement - Being lean means being devoted to the consumer.
• Poka-yoke – Mistake-proofing. Lean companies will find ways to completely eliminate certain types of errors.
• Close supplier ties – Good relationships, trust, and information sharing reduce uncertainty and thus will result in fewer unwanted supply chain surprises.
• Small lot sizes
• Standardized components and work method
• Dedication to the Workforce – Lean systems require finding errors, fixing errors, identifying opportunities for improvement, and relationship management with supply chain partners.”
• Using Automation when Appropriate
• Short Set-up/Change-over – Set-up time is the amount of time it takes to change a system from producing one product to producing a different item. Keeping short set-up times allows systems to run “leaner”.
o Consider the EOQ formula for manufacturing: EOQ = Sqrt [(2Demand Set-up Costs) / Holding cost]”
Keys to lean manufacturing
focus on productivity and value, an irresistible combination for any supply chain manager.
Lean system
A system in which consumer demand is known and expected. As a result a supply chain will preemptively buy materials, manufacture finished goods, and even deliver them to a store or a picking and packing facility where consumers can buy them at a later date.
Supply chains are quite similar. Some supply chains proactively begin manufacturing and delivering products to stores before customers even know they want them.
Push system
- High finished goods demand readily available for buyers
- Opportunities to take advantage of quantity discounts
- End-items are standardized with little opportunity for customization
- Vulnerable to obsolescence of inventory, high holding costs, and poor demand forecasts that may result in stockouts or massive overstocks.
Push System characteristics
System that is activated by consumer demand as a result a supply chain will not make and store finished goods inventory until someone wants something
Other supply chains wait for the customers to place their orders
Pull systems
- High raw materials inventory readily available to produce a specific consumer order
- End-items are very likely offer a range of customization options
- Vulnerable to sudden increases in demand, poor forecasts that may result in poorly planned production systems/facilities
Pull systems characteristics
Retailers that are fully committed to engaging customers via catalogs, phone calls, websites, email, internet chatrooms, social media sites or mobile apps, and of course also in stores.
Omni-Channel Retailing
VMI stands for ??
Vendor Managed Inventory
An arrangement where retailers allow vendors to monitor in-store inventories, initiate orders/shipments to the store when inventories are low and also bring the items into the store and onto the shelf
Vendor Managed inventory
Refers to the portion of the supply chain between the final inventory holding facility and the end consumer/ is not always necessarily home
Last mile
- Miles rom Amazon ceneter to you
- End consumer could be a office, mechanic, factory
- Variation in size, location and consumer expectations
When a customer joins the line, gets frustrated and leaves the line.
Reneging
When a potential customer sees the line, but never joins the line because they think it looks too long and/or too slow
Balking
Queuing systems - Goals and Trade-offs
- Goal: To serve people efficiently.
- Trade offs - Having too many staff and underutilizing them OR having too long a line, and angry customers. Both lose money
Goal of waiting line management
Balance the cost paid by the customers (time) with the cost paid by the company (money paid to maintain the system)
Distribution of goods from an upstream supplier to a downstream customer through a distribution center with minimal handling and storage times typically less than 24 hours.
Cross Docking
are typically used to store inventory for long periods of time (weeks, months, or even years). storage is the primary function. Items need to be kept safe and preserved for future use.
Warehouses
focus on efficiently getting items to retail and/or wholesale outlets. try to quickly get large shipments of a good off of a single truck and then get that good ready for distribution to dozens of downstream stores. The idea here is to have full trucks with large quantities of one (or a few goods) in-bound and then full trucks with small quantities of many different items outbound.
DC Services
Distribution Center Services
5 Modes of Transport
-road
-rail,
-ocean/water
air
and pipeline (used only for liquids)
___is not the fastest or the cheapest. It is neither the most expensive nor the slowest. is thus a reasonable combination of a number of important transportation attributes.
Road
Pros: Accessibility, Flexibility, Versatile, Reliable. 2nd Fastest mode, Much cheaper than air. Vital to Intermodalism.
Cons:Long Trips mean excessive regulations. Vulnerable to fuel prices, tolls, taxes, fees. One driver, one truck, insurance. LTL’s and LCL’s will make many stops.
Road Pros and Cons
Good for heavy and/or bulky shipments that do not need speedy delivery. Also good for items with low “value/weight” ratios. A good intermodal option for lengthy domestic shipments where speed is not vital.
Rail
Warehousing V Distribution Centers Differences
W: Provides storage
DC: facilitates movement
Pros: Ability to carry heavier cargo, better for distance, not as effected by fuel cost, more affordable than road costs, more capable in poor weather.
Cons: Susceptible to in-transit damage from vibration. Poor on time reliability. Avg. Speed about 30 mph. Access to infrastructure required (rails and loading stations)
Railway Pros and Cons
excellent for large and bulky international shipments that require low transportation costs, but do not require quick shipment.
Ocean/water
Pros: Low Cost, transports almost any form of cargo.
Cons: Much slower than air, port capabilities, Channel depth challenges.
Water Pros and Cons
An attractive option with items that have a high “value/weight” ratio. Especially useful when short lead times and low inventory levels are valued. In addition, useful when security and damage are significant concerns.
Air
Pros: Speed, fastest growing mode (becoming more affordable)
Cons: Extremely Expensive, incompatible containers.
--------------------------------------- High Value ($) to weight ratio (diamonds, wine, cigars, race horses) High Insurance Cost Items Overnight Preference or Emergencies Short Shelf Life (Flowers and food)
Infrastructure Examples
Air Pros and Cons
Used only for liquids or items that can be shipped in a slurry
Pipeline
o When cargo is moved from one vehicle or vessel to another vehicle or vessel without directly handling the cargo. Typically the cargo would be stored inside of a standardized container or a truck trailer. The standardized container can swiftly and securely be moved from a ship to a rail car, from a rail car to a truck chassis, etc.
Intermodel
A controlled atmosphere container
Reefer
TEU stands for?
Twenty-foot equivalent unit
o Stands for Twenty-foot Equivalent Unit. This is how containerized cargo is measured. One 20-foot container is equal to 1 TEU
LTL
Less than a truck load
– If a company has a reasonable amount of goods going to a single location, but not enough goods to fill an entire truck or container
TL
o Truckload Shippers
These types of shippers specialize in moving large amounts of goods, enough to fill an entire truck. If you are dealing with 20 or 40-foot containers instead of a truck, the term CL Shipper can also be used, where CL stands for container-load.
bubble wrap, Styrofoam popcorn, small inflatable airbags used in boxes, large inflatable bags used in shipping containers
-Used to fill the empty space inside boxes, tubes, etc.
Dunnage
Schematic drawings that illustrate product placement
Planogram
Typically these are large items that do not quite fit into either the bulk or break bulk categories. This might include vehicles, logs, and livestock. items are typically not moved in standardized containers.
Automobiles, logs, steel, cattle
Neo Bulk
Cargo that is packaged (box, bottle, can, etc.) and/or secured on a pallet. This type of cargo can then be placed inside of a standardized container or a truck trailer.
General or packaged cargo
Break Bulk
Cargo that is loose and free flowing. cargo is not in any type of bag, box, or packaging vessel. As such, cargo is typically loaded and unloaded by being pumped, scooped, shoveled, etc.
Free flowing cargo, stored loosely- grain
Bulk
base is the collection of companies from which an organization presently purchases products and/or services. implies that an organization has a group of companies with which they have developed a working relationship. This advanced relationship might imply that transactions occur regularly and perhaps more fluidly.
Established supplier base
Represent the chain of organizations that help bring a product into the hands of the end user. This might include packaging companies, delivery companies, warehouses, distribution centers, perhaps even suppliers.
Established channels of distribution
o The largest workstation is your slowest workstation. This limits the output of the assembly line. IT is the weakest link”
Bottle Neck
resource(s) with the smallest capacity
Bottleneck
What is Cycle Time?
What does it dictate?
How does it relate to capacity?
- Maximum time allowed for work on one unit at each station
- Time it takes for 1 unit to come off the assembly line
-Less cycle time = more capacity higher effective cycle time
If the time required for work elements at a station exceeds the line’s cycle time, the station will be a bottleneck, preventing the line from reaching its desired output rate.
“A manufacturing layout that combines elements of both line flow and flexible flow layouts. In this layout, products may pass through a layout in a linear fashion, but each workstation would have the ability to allow for some level of customization.
Items requiring low degrees of customization may be created in systems that very much resemble line flow systems except for one or two areas. On the other hand, items requiring higher degrees of customization may only utilize line flow elements in a few parts of their facility.”
Hybrid Strategy
A manufacturing strategy and layout that typically works well for producing end items (or services) that have relatively low demand levels and that may require a high level of customization. The work centers focus on a particular type of function like drilling, sanding, welding, painting, assembly, etc. While each work center performs a single function, a large degree of variation is possible at each workstation.”
Flex Flow
These line flow systems can typically be stopped at any time without compromising the inventory flowing through the system. In other words, stopping the line during the employees’ lunchtime will not cause the work-in-process items on the line to spoil. (Cars, trucks, digital devices would all likely utilize an assembly line system)
Assembly line
is a manufacturing strategy and layout that typically works well in producing end items (or services) that have relatively high demand and that require very little (if any) customization. The work centers are located in a linear path. Items begin on one end of the line and continue in a linear path to the last work center. Each work center performs the exact same work to every unit that passes through that work center.”
Line Flow Strategy
systems must run to completion once the process has been started.
Loaves of common sliced sandwich bread might be an example of a product that might utilize a continuous flow system. “
“Continuous flow
What are the key differences between:
- Line Flow Systems
- Flexible Flow
- Hybrid systems
Line: Makes same item
Flex Flow: Makes customize item
Hybrid: Mix between line and flex flow
What should be considered in choosing a supplier?
o Consumer needs
o Cost, Quality, Speed,
Flexibility
o Technological capability
o Location
o Information Technology
System
o Ability to innovate
o Capacity Potential
o 2nd and 3rd tier
suppliers
o Reliability
o ServiceWhat does it mean if
AHC > AOC?
Should you increase or decrease Q in each case?
Holding more than you are ordering. Decrease Q
you’re on the right side of EOQ
What does it mean if
AHC
Holding less than you are ordering. Increase Q
left side of EOQ
is the lot size (Q) that will minimize total annual inventory cost (TC); it is therefore seen as the optimal lot size.
-The order size to minimize cost & maximize outcome
EOQ
Economic Order Quantity.
EOQ’s relationship to Holding Costs and Ordering costs?
EOQ is the equilibrium between holding costs and ordering costs
Benefits of High Inventory Levels
o Higher levels of customer service - Having inventory will help a company address their immediate demand for product
o Quantity discounts may be possible - Lower per unit costs
o Fewer orders will need to be placed - Possibly lower ordering costs and transportation costs
o Greater security against unexpected demand variability”
Benefits of Low Inventory Levels
o Less storage space required – Costs of holding inventory may be lower
o Lower chance of inventory obsolescence and shrinkage
o Less inventory typically means less materials handling requirements
o Less money invested in inventory means more money available for other investment opportunities”
The act of a company taking on additional supply chain responsibilities that were formerly done by outside parties.
Vertical Integration
Taking over supply chain responsibilities formerly performed by downstream supply chain partners. ”
-taking over the roles of companies closer to the customer
Forward Integration
Taking over supply chain responsibilities formerly performed by upstream supply chain partners”
-taking over the role of your supplier
Backward Integration
Protects against uncertainty in demand, lead time, supply with no intention of using. (such as insurance)
safety stock
