Final Blueprint Flashcards
Materials and supplies that a firm carries either to sell or to provide inputs or supplies to the production process
Inventory
Quantities of goods in stock is known as
Inventory
What are 6 characteristics of service operations
Customer Participation
Simultaneity
Perishability
Intangibility
Heterogeneity
Nontransferable
What are the two forms of inventory
Accounting and Operational Inventories
Purchased items received, but not yet transformed
Raw Materials
Raw materials that have entered the transformation process and are in process or waiting
Work-in-progress
Products of the transformation process that are ready to be sold
Finished Goods
Why is inventory management important throughout the entire supply chain?
Inventory management generates valuable data that can be used for forecasting, demand planning, and supply chain optimization.
The planning and controlling of inventories to meet the competitive priorities of the organization.
Inventory Management
What are some of the pressures for small inventories
Inventory holding cost
Cost of capital
Storage and handling costs
Taxes
Insurance
Shrinkage
Pilferage
Obsolescence
Deterioration
What are some reasons for carrying inventory
1) Protect against lead time demand
2) Maintain independence of operations
3) Balance supply and demand
4) Buffer uncertainty (Safety Stock)
5) Economic purchase orders i.e buying in bulk to take advantage of reduced cost/unit
What are the 5 different types of inventory we have discussed
Cycle Stock
Safety Stock
Anticipation inventory
Pipeline inventory
Maintenance, Repair and Operating Items (MRO)
Inventory ready for immediate use, typically, produced in batches is known as
Cycle Stock
Extra inventory carried for uncertainties in supply and demand. This is also known as buffer stock
Safety Stock
Inventory carried in anticipation of events. This helps to smooth out the flow of products in supply chain
Also can be known as seasonal or hedge inventory
Anticipation Inventory
Inventory in transit
Exists because points of supply and demand are not the same is also known as transportation inventory
Pipeline Inventory
Inventory not directly related to product creation is known as
Maintenance, Repair and Operating Items (MRO)
What are the 3 inventory costs
Holding
Ordering
Shortage
Costs that vary with the amount of inventory held typically described as a % of inventory value
Also called carrying cost
Holding Cost
Cost involved in placing an order also referred to as “setup cost”
Ordering Cost
This cost occurs when we run out of stock
Shortage Cost
How do we determine how much to order using the Fixed-Order Quantity system?
Determined using the EOQ Formula
When do we determine to order using the Fixed-Order Quantity system?
When the Inventory Position (IP) reduces to the Reorder Point (ROP), an order is placed for the amount determined by the EOQ formula
How do we determine how much to order using the Fixed-time period system?
The order quantity is determined by subtracting the current inventory position (IP) from the Target Level (R)
Q=IP-R
How do we determine when to order when using a fixed time period system?
Orders are placed at fixed time intervals (T) when the Inventory Position (IP) is checked. “T” is pre-determined, i.e. every 2 weeks, every 30 days
An order of fixed quantity, Q, is placed when inventory drops to a reorder point, ROP. What system do we use to calculate the ROP?
Fixed-Order Quantity System “Q” System
Inventory is checked in fixed time periods, T, and the quantity ordered varies.What system is used to calcuate this answer?
Fixed-Time Period System “P” System
An order is only placed when inventory drops to a specified level, known as?
Reorder Point (ROP)
T/F-The amount requested in each order placed will always be the same quantity when used the fixed-order quantity system
True
T/F- the amount requested in each order placed will vary and is based refilling back up to the target inventory level “R” when using the fixed time period system
True
Demand for a finished product is known as
Independent Demand
Demand for components parts or subassemblies is known as
Dependent Demand
Relationships between independent and dependent demand is shown in a
Bill of Materials (BOM)
T/F- Dependent demand order quantities can be computed via an Materials Requirements Planning system (MRP)
True
An inventory control system used to compute order quantities for dependent demand inventory items is known as
Materials Requirements Planning
A list that shows all of the raw materials and subassemblies that go into a product. It also shows the quantities and relationships of items needed to make a final product
Bill of Materials (BOM)
Inventory management tool that classifies inventory based on its degree of importance. It gives priority to important inventory items
ABC Classification
T/F- Based on Pareto’s Law (80/20) – 20% of the inventory items (part numbers) account for 80% of the total inventory value
True
Idk just know
High Priority Items – Class A (“vital few”), Moderate Priority – Class B, and Low Priority – Class C (“trivial many”)
What formula provides the ideal quantity to be purchased that minimizes Total Cost.
EOQ Formula
What does EOQ stand for
Economic Order Quantity
***** is minimized when the ordering cost equals the holding cost. It is at this intersection that the optimal value of “Q” or EOQ is revealed.
Total Cost
storage capacity and costs should be considered when ordering large quantities this is known as
Capacity Constraints
Total cost changes little on either side of the EOQ
—managers can adjust to accommodate needs. What is the term that describes this
EOQ Adjustments
The most common metrics used to measure inventory are (4)
Units
Dollars
Weeks of Supply
Inventory Turnover
Vendor is responsible for managing the inventory located at a customer’s facility what is this known as
Vendor Managed Inventory (VMI)
A management tool used to address, improve, and communicate supply chain management decisions within a company, with their suppliers, and with their customers.
A model that describes the business processes required to satisfy a customer’s demands.
Is Known as?
SCOR
What does SCOR stand for?
Supply Chain Operational Reference
T/F- SCOR is a process framework
True
What type of frameworks deliver the known concepts of business process reengineering
- benchmarking
- best practices and
- organizational design in a cross-functional framework
Process Frameworks
Why use SCOR?
- Helps explain the processes along the entire supply chain
- Provides a basis for how to improve processes along the entire supply chain
- It is has been described as the “most promising model for supply chain strategic decision making”
T/F- SCOR has been described as the “most promising model for supply chain strategic decision making”
True
Who developed the SCOR model?
Developed by the Supply Chain Council along with 70 of the world’s leading manufacturing companies
Who uses the SCOR model?
Manufacturing and Service Firms
T/F- Intel was one of the first major US corporations to adopt SCOR (~1999)
True
Benefits recorded using the SCOR model included for this type of business is
faster cycle times
less inventories
improved supply chain visibility
timely access to important customer information
Is this a manufacturing example or service
Manufacturing
T/F- A service example of using the SCOR model is A New York hospital used the SCOR model to define, measure, and improve SC
True
Benefits recorded using the SCOR model included for this type of business is
less inventories
increased capacity
increase in demand
reduced labor cost
reduced prep times for key procedures
Is this a manufacturing example or service
Service
T/F- The SCOR process framework combines 4 techniques into one integrated approach
True
What part of the SCOR process framework captures the “as-is” business activity and design the future “to be” state
Business Process Re-engineering
What part of the SCOR process framework quantifies relative performance of similar supply chains and establish internal targets
Performance Benachmarking
What part of the SCOR process framework identifies practices and software solutions that result in significantly better performance
Best Practices Analysis
What part of the SCOR process framework technique assesses skills and performance needs and align staff and staffing needs to internal targets
Organizational Design
What is the process reference framework for business process re-engineering
Processes
What is the process reference framework for performance benchmarking?
Performance (metrics)
What is the process reference framework that identifies practices and software solutions that result in significantly better performance
Practices
What is the process framework that assesses skills and performance needs and align staff and staffing needs to internal targets
People (skills)
SCOR defines this word as The processes that plan and execute the acquisition of materials, transformation of materials in sellable products, delivery and return of products and services in support of customer orders
SCOR definition of Supply Chain
End-to-End Supply Chain
Supplier’s Supplier - Components PLAN
Supplier- Subassemblies PLAN
My organization- manufactures PLAN
Customer-Retailer PLAN
Customer’s Customer- Consumer
What are the SCOR Processes
Plan
Source
Make
Deliver
Return
Enable
Which SCOR process objective is determining capacity, materials, staffing and resource needed to achieve supply chain targets and the identification of corrective actions to address shortages in supply or demand.
Plan
Which SCOR process objective is the ordering, receipt, inspection and transfer of raw materials,
subassemblies, products, packaging and/or services
-Used for receiving from suppliers and/or from internal nodes
Source
Which SCOR process objective is The conversion of adding value to products through mixing, separating, forming, machining, and chemical processes, repair, refurbishment, and/or decomposition
Make
What is an example of the SCOR process plan?
Forecasting, S&OP, MRP? Likely “Plan” in SCOR
What is an example of the SCOR process Source
Receiving processes? Probably “Source” in SCOR
What is an example of the SCOR process “Make”
Item number change? Probably “Make” in SCOR
Which SCOR process objective is the (customer-facing) process of managing orders, scheduling deliveries, picking, packing and shipping and invoicing customers for products and services delivered
Deliver
Which SCOR process objective is returning materials or products to address defects in product, ordering, or manufacturing, or to perform upkeep activities (addresses both physical and logical returns).
Return
What is an example of the SCOR process Deliver
Order taking or Shipping? Probably Deliver in SCOR
What is an example of the SCOR process Return
Reverse material flow? Probably “Return” in SCOR
How does SCOR help companies that have implemented the model?
- Translates business strategy to supply chain strategy (Formulate strat)
- Measure supply chain performance
- Understand relative performance compared to competitors – How are we doing compared to our supply chain strategy
- Identify and monitor processes that most likely cause the performance gaps – What improvement targets should we pursue?
A characteristic to describe a strategy. Performance attributes serve as classification for metrics and formulate strategic direction
Performance Attribute
A metric to measure the overall performance or state-of-affairs. SCOR level-1 metrics are considered KPIs
Key Performance Indicator
A standard of measurement is known as
Metric
An observation that reduces the amount of uncertainty about the value of a quantity is known as
Measurement
JUST KNOW
SCOR METRICS- Level 1 are first selected and then diagnostic metrics follow Level 2 and Level 3
What monitors and diagnoses overall supply chain health
SCOR Metrics
A visual display of the most important information needed to achieve one or more objectives, consolidated and arranged in a single view
Scorecard
A scorecard providing metrics related to four organizational strategies: financial, customer satisfaction, internal process excellence/efficiency, and employee learning and growth
Balanced Scorecard
A scorecard providing metrics related to the five SCOR supply chain strategies (attributes): reliability, responsiveness, Agility, cost and assets
SCORcard
Comparing an organization’s performance, products, practices, and/or services with those of other organizations that operate in the same or comparable industry
Benchmarking
What are 3 SCORcard metric requirements
Measurable and quantifiable
Linkage to responsibility
Ensure metric is well-defined
What SCORcard metric requirement should Avoid ‘feel good’ metrics like supplier satisfaction or customer satisfaction, unless they are an aggregation of well-defined detail metrics. Framework-based metrics simplify the selection process
Measurable and quantifiable
What SCORcard metric requirement should Avoid metrics that have no impact on performance reviews (supplier or employee), ensure the metric is linked to the (right) process owner at the right level
Linkage to responsibility
Multiple interpretations of a metric may lead to ‘workarounds’ and negation of the effort. SCOR metric this is known as
Ensure metric
