GSCM 200 Flashcards
The diff. btwn supply chain, operations, and supply chain and operations
supply chain - links the operations of diff. firms together
operations - transformation processes within a firm
SC&O - managing not only your operations but upstream suppliers and downstream customers
- Process design, mgmt., control and improvement
process design - consists of CONFIGURING inputs and resources in a way that provides value, enhances quality and is productive (how you are setting up the process)
- Process design, mgmt., control and improvement
process mgmt.
–the act of EXECUTING AND CONTROLLING the productive functions of a firm (manage process as its being executed)
- Process design, mgmt., control and improvement
Process control
–act of MONITORING a process for its efficacy, a process that includes dimenstions such as cost, timeliness, or quality (watching execution of the process and monitoring, checking the problems)
- Process design, mgmt., control and improvement
Process improvement
- -proactive effort to ENHANCE process performance
- -often managers employ process improvement in response to customer needs or competitive pressures (take the results and enhance the process)
supply chain globalization strategies
–licensing, strategic alliance, gloablization
licensing - sale of same product with diff. trademark in other countries
strategic alliance - partner with another company, both use your unique core competencies to sell in another country. Also could be called a “joint venture”
globalization - build infastructure nad presence indepentently of other companies
outsourcing, insourcing, nearsourging, offshoring, nearshoring
outsourcing - moving PRODUCTION to other companies
insourcing - moving PRODUCTION in to the company
nearsourcing - moving PRODUCTION closer geographically to where products are sold
offshoring - moving PRODUCTION to another country
nearshoring - moving production closer to the same ountry as consumption
sustainability
the proactive mgmt. of resources in an effort to be env. friendly
primary flows of supply chaing (don’t need to knw direct/indirect flow stuff)
supliers –> manufacturers –> wholesalers –> coonsumers
product flows
–moves primarily downstream (prodcut is created and then sold downstream)
monetary flows
–moves primarily upsream - money from consumer end flows up towards suppliers
information flows
–moves up and downstream - suppliers and customers share data with each other
reverse logistics
–managing returned products (flows upstream)
service supply chain complexity
product is the customers, customers add variability
LEARN THE INTEGRATIVE MODEL FOR SC&O MGMT.
Supply mgmt. in left circl
operationgs mgmt. as CORE processes
custoemr relationships mgmt. as right circle (Downsream)
quality, mgmt. analytics and logistics along the bottom
then the 4 I’s on let side
the 4 I’s
integrating
–collaborating and cooperating with all the stakeholders in SC&O processes (teamwork)
innovating
–change on a larger scale (than improvement) that has a dramatic effect on business results (large scale improvement that affects SC and business results)
impacting
–successfully managing core processes that affect the customer (affects customer retention…lead paint example??)
improving
–process, not a single event - it is the result of effective process mgmt. and design (incremental and continuous improvement)
Alignment
consistency among strategic, supply chain, and operational decisions
Porter’s generic startegies
cost, differentiation, focus
cost strategy
–focus on reducing production costs (Walmart)
differentiation strategy
–emphasis on devloping PRODUCTS that are significantly better than competitors (Apple)
focus strategy
–emphasis on SELECT CUSTOMERS OR MKTS. (Home Depot)
Fischer’s supply chain alignment model
efficient vs. responsive supply chains
vs. functional and interactive products
- -better way of putting this is just that FUNCTIONAL products need EFFICIENT supply chains while INTERACTIVE products need RESPONSIVE supply chains
- -functional efficient product = kitchen appliances and interactivve responsive products = tailored clothing, Nike
Agility and adaptability
similar ideas, diff. timing
AGILITY
–the ability of a supply chain to respond quickly to SHORT TERM hanges in demand or supply
ADAPTABILITY
- -LONG TERM capability to adjus a supply chain’s design (theh supply network, manufacturing capabilities and distribution network) to meet major structural shifts in the mkt.
- –make changes as production matures
- -identification of capabilities needed to transition
Order winners and qualifiers - how a firm generates business
ORDER WINNERS (points of difference) --attributes that differentiate a company's products
ORDER QUALIFIERS (point of parity) - necessary attribuets that allow a firm to enter into and compete in a market --a firm's strategy must account for these necessities
Lifetime value
the potential LT worth that each customer provides to a company instead of the immediate profit that the customer may contribute
–Pareto’s law suggests that 20% of customers acount for 80% of revenues
Hoshin Kanri planning
Policy deployment
–implicit in Hoshin is the use of the basic 7 tools of quality and quality function deployment
projects
catchball
the strategic back and forth dialogue btwn successive levels of managers and their teams
capabilities
the network of people, knowledge, IS, tools, and business process that create value for customers
- -capabilities support strategies bc they provide the comp. with the tools to carry out strategic plans
- -when a firm develops strategy, it develops an understanding of both its customers and iss capabiltiies
core competency
abilities that companies compete on that are difficult for competitors to replicate
—honing only those capabilities that tie most closely to their customer values and that provide them with a unique competitive advantage
changes in strategy
internet has provided managers with more info. and ability to improve strategy along with global expansion
- -interconnected globally - managers source their construction and supplies from remot sources around world
- -the ability to manufacture products/materials or supplies cheaply anywhere in the world and ship them inexpensively to worldwide mkts. creates a “world wide web of production”
three main reasons firms use supply chain strategy
- leverage relatinoships to reduce costs
- create relationships to appropriate value from a partner with complementary core competencies
- establish long-term, intense relatinoships to create synergestic value
reverse logistics
logistics used to move products up the suppoy chain - often used in managing resycling or sales returns
types of relationships: transactional, complementary synergistic
transactional
–relationship in which buyer has many supplier choices, does not need to share internal comp. info. during exchange - is purchasing a routine item - does not req. tech. innovation from supplier and does not expect shortages in supply (toilet paper)
complementary --a relationship that occurs when companies understand that their core competencies need another firm's competencies in order to maintain world-class service (combining core competencies)
synergistic
–relatinoship btwn 2 companeis who are committed to working together in a way that the result is greater than the sum of the indiv. parts
- . aligning strategic levels
- -there are three strategic levels in a company
- strategies
- -means that define how the company will win customers, achieve LT goals, fit in comp. env. develop relationships
- -FUNCTIONAL STRATEGIES (or operational subplans) - are 1-2 yr .goals that help firm “win battle but not war” - events like improving product quality by cont. improvement, reducing costss, and improving supplier relationships - functional tactics
- -tactics are ST stems used in implementing strategies
- -lOOK AT CHART FOR EXAMPLES!!! - operations
- -the daily activities that a firm must [erform to achieve success
- -generally make sure schedules are met, enough employees are present to meet customers’ needs and enough shipping is available to deliver goodsservices
- -comps. cannot succeed without effective operations
- aligning incentives
a local optimum occurs when a firm rewards each unctional area for achieving goals
–good strategy aligns incentives of both sales team and SC7O team to create greater profits for firm
must address alignment issues in SC&O strategies
–IS - what kinds of enterprise systems are needed to satisft needs of entire supply chain - what are data relations?
–logistics - when will you ship? does schedule meet expectations? how to optimize online shipping practices?
==suppliers - who are preferred? what is process of supplier selection? source globally?
—inventory mgmt. - where to ooptimally store? how much? how long? perishable goods?
- focusing on process
- -shouldn’t focus on indiv. functiosn but whole process for improvement
- -an often-usedmodel that helps managers consider HOLISTIC effects of their decisions is SCOR model (SC oeprational reference model)
three main emphasis in SCOR model
- process modeling
- performance measurements
- best practices
SCOR encourages managers to consider 5 parts with suppliers, customer and themselves
- -then suggests that comp. should benchmark its processes against other firms that are very good at similar processes and find where they differ
- -helps to improve forecasting, inventory planning, electronic supplier comm., mgmt.
SCOR MODEL PROCESSESS
- plan
- -balances aggregate S and D to develop a course of action that best meets sourcing, production and delivery requirements - source
- -includes activites related to procuring goods/services to meet planned and actual demand - make
- -transforming products into ifinished state - deliver
- -order mgmt., transportation mgm., distribution mgmt. - return
- -returns and extends post delivery customer support
metrics and measurements
final obstacle SC managers face is creating effective metrics
- -good metrics are 2 things
1. drive correct, strategic behavior,
2. actionable and predictive - -effective metric must provide info. they can act on
- -usually use cost and schedule as their metrics
LOOK AT THAT BIG METRIC CHART
systems thinker
Systems thinking makes strategy execution more effective because it allows managers to act in ways that help the entire company.
- –In addition, the SC&O manager works closely with suppliers not only to meet cost targets but also to help suppliers improve their production quality.
- –The modern SC&O manager worries less about her functional expertise and wories more about leading the entire supply chain.
chaging strategic environment
biggest worry is the rapidly changing env. Only those firms that are able to accommodate this change will be able to succeed
Globalization:
- –to be effective, SC&O managers must be prepared to understand the cultures, economics, and infrastructure of many different countries
- —Many companies have learned painful lessons as they try to penetrate promising new international markets.
sustainability
freq. defined as the ability to operate today in a way that does not threaten the future
- –commitment to sustainable business practices means strategy must take into account not only the profitability of the firm but also the future effects of the strategies
- —Companies have to address many environmental issues, regulatory req., firms realize more and more that environmental friendliness is part of being a good corporate citizen. Therefore, tasks such as environmental protection, waste management, product integrity, worker health, government relations, and community relations compose the environmentally related strategic issues that must be addressed
sustainability mgmt.
Sustainability management:
—-making sure that processes and their outcomes have long lasting benefits for the environment and future
life-cycle costing
- –uses value analysis to identify the total wcosts of products from a worldwide perspective.
- —A SCORECARD is a tool used to monitor the performance of suppliers around the world
reverse logistics
- —the ability of a company to move product upstream while managing waste streams in an effort to reduce the cost of the waste stream or make the waste stream profitable
- –Customer Preference
- –A final point about sustainability that SC&O managers must consider is customer preference
innovation
SC&O managers must also be able to support and help create innovative new products and services
—-Tomorrow’s SC&O managers must therefore be very good at functional tactics and they must be culturally astute, sustainability minded, and innovative
Calc. economics of purchasing problem (pg. 149-150)
current profit margin = 6^ net income = 180000 salse = 3M COGS = 2820000 materials = 2M
option 1 - hire a salesman (inc. sales 15%)
–new sales 3M * 1.15 - 3450000
–new COGS = 2820000 * 1.15 = 3243000
new NI = 207000
new net income = 180000 * 1.15 = 207000
–profit margin = 207000/ 345000 = 6% (Same as original)
OR cust meraterials cost by 4$ --new materials 2M * .04 new COGS 2820000 - 80000 = 2740000 new net incom = 260000 profit margin = 8.7%
impacts of quality on profitability
improving quality of sourced materials allows a firm t o change more for products, which inc. rev. for same level of sales
–inc. profitability due to lower defect rates dropping and less waste on faulty parts
portfolio approach to strategic sourcing
–how to identify portfolio types’–recommend strategies
portfolio approach to strategic sourcing (4 types_
HIGH profit impact and LOW supply risk
–leverage items (MAX commercial advantage) - sugars
LOW profit impact and low supply risk
–routing items - simplify aquisition - sign/stand materials
HIGH profit impact and high SR
–crisical items
LOW profit impact and high supply risk
–bottleneck items
4 toosl of strateic cost mgmt.
1. spend analysis
what did we spend our money on and who did we spend it with?
–takes into account ALL spending
direct spending
–any material/service that is part of final product
indirect spending - all spending that supports operations of firm
capital spending - all spending for buildigns and large equipment
- price analysis
(lev. and routine) - process of comparing supliers price against each other or an external benchmark
make sure you are comparing items with same specifications, quality, lead imes, warranties, etc.
ex. choose btwn 2 suppliers.- assume 7.5% cost of capital
A. $60/unit - pmt. in 30 days
B. $60.32/unit, pmt. in 90 days
days diff. = 90-30 = 60
daily cost of capital = .075/365 = .00020548
A. .00020548 * 60 * $60 = .74
B $60 * .74 = $60.74
still 60.32
supplier B is cheaper
- cost analysis
analyzing each indiv. cost element that makes up the final price
–usually this is necessary when a price anlaysis canot be done due to a low # of suppliers
total cost of ownership
(all 4 quadrants) - combo of ALL costs involved in product, not just purchase price
acquisition costs - identification, selection, purchase
ownership costs - quality, maintenance
post-ownership costs - customer use, disposal, env.
key learning from Simulation 1 and 2
the great shoot out
- -manufacturing process with chips and dice
- -variation is enemy ti production efficiency - variation kills processes
- -ways to reduce variance - p acing the line, add capacity (2 assembly lines), maintain a min. # of “work in progress” items
tanks and doves - managing relationships
–unless suppleir plays tanks, you need to either defend yourself or avoid eing taking advantage
