Lec. 4 & 5: Describing and Analyzing the Supply Chain

Question 1

What are the three main classifications of activities in the Lean terminology?

Answer 1

• Non-value adding
• Necessary but non-value adding
• Value-adding

Question 2

What is a value stream?

Answer 2

All of the activities (value and non value adding) required to bring a service / product from customer request to fulfillment (and beyond to receipt of payment).

Question 3

What is lean?

Answer 3

A production strategy trying to remove everything that does not add value, and focus only on value adding processes.

Question 4

Why does Lean focus on productivity rather than on quality?

Answer 4

Because improved productivity leads to leaner operations, which help to expose further waste and quality problems.

Question 5

What are the 7 types of waste?

Answer 5

• Overproduction
• Waiting
• Transport
• Inappropriate processing
• Unnecessary inventory
• Unnecessary motion
• Defects

Question 6

Why is overproduction bad?

Answer 6

Leads to excessive work-in-progress and lead and storage times, meaning that defects may not be detected early, products may deteriorate, and artificial pressures on production may be generated.

Question 7

Explain just-in-time (JIT)

Answer 7

Pull parts through production based on customer demand instead of pushing parts through production based on projected demand.

Question 8

Explain Kaizen

Answer 8

Kaizen refers to the series of activities whereby instances of Muda are eliminated one by one at minimal cost. Employees work together proactively to achieve regular, incremental improvements in the manufacturing process.

Question 9

What is the main criteria for good KPIs?

Answer 9

Good KPIs are alligned with top-level strategic goals.

Question 10

What is Kanban?

Answer 10

A method of regulating the flow of goods both within the factory and with outside suppliers and customers, based on pull and customer need rather than push.

Question 11

What is Muda?

Answer 11

Waste, non-value adding activities

Question 12

What is Takt time?

Answer 12

A measure of how long it should take, to produce a product. Not how long it actually takes.
Effective working time per shift / customer requirement per shift (hours per required customer unit)

Question 13

What is PCE?

Answer 13

Process cycle efficiency. Value-added time / total lead time

Question 14

What is value stream mapping?

Answer 14

A tool applied to identify added value and remove waste. It allows you to see the entire sequence of activities coherently, rather than focusing on optimizing only single activities.

Question 15

What is the bullwhip effect?

Answer 15

Amplification of demand fluctuations when moving up the supply chain.

Question 16

What are the main reasons for the bullwhip effect?

Answer 16

• Demand forecast updating
• Order Batching
• Price fluctuations
• Rationing and shortage gaming

Question 17

How does Demand Forecast Updating cause the bullwhip effect?

Answer 17

When an order is placed, you use this is as a piece of information to update sales forecasts. If you receive a larger order, you forecast that sales generally are larger going forward.

Question 18

How does Order Batching cause the bullwhip effect?

Answer 18

Most companies do not make new orders each time sales has occured. They often make order weekly, biweekly or monthly.
For the supplier, this makes it hard to actually understand the demand.
The variability in these pikes is larger than the demand the company actually faces

Question 19

How does Price Fluctuations cause the bullwhip effect?

Answer 19

Price fluctuations affects the quantity of orders, making variation in orders larger than variations in consumption.

Question 20

How does Rationing and shortage gaming cause the bullwhip effect?

Answer 20

If supply is only 50% of total demand, all customers might receive 50% of what they order (rationing)
Knowing that the manufacturer will ration when the product is in short supply, customers exaggerate their real needs when ordering.

Question 21

What is the core method of avoiding the bullwhip effect?

Answer 21

Thinking of supply chain as a coherent whole. Sharing information and have a joint demant forecasting.

Question 22

What are the reasons for companies to do demand forecasting?

Answer 22

• Production scheduling
• Capacity planning
• Inventory control
• Material requirements