Lecture 14 Flashcards
Quantity Discount Analysis
A technique to examine the incremental costs between quantities in the supplier’s quote.
With this tool, the buyer can verify that the quantity discounts are reasonable.
Unit price may be less, but the supplier may not be aware of inconsistencies.
Process Mapping
A tool that reduces processes to their components or activities.
In other words, it maps out the activities flow in process.
Helps identify and then eliminate non-value-added activities (waste) or delays in the process.
Two basic types of Process
Sequential
Concurrent
Sequential
Set of steps comprising the activity that occur on after the other.
Concurrent
Steps performed concurrently during the main flow of work
The Eight Wasts
Overproduction Waiting Unnecessary transportation Inappropriate process Unnecessary inventory Unnecessary or excess motion Defects Underutilization of employees
Indirect Spend
All purchased goods and services that do not end up in prodects or services delivered to customers.
Equals 50% of a company’s purchases
Transportation and Logistics make up a large portion
Transportation Modes
Motor Carrier
Rail Carrier
Water Carrier
Pipeline
Motor Carrier Advantages
High Flexibility
Good Speed
Good Reliabiltiy
Motor Carrier Disadvantages
High Cost
Limited to domestic or regional
Cannot be used for large volumes
Rail Carrier Advantages
Lower Cost
Wide range of items
Piggy back service
Rail Carrier Disadvantages
Limited to rail access
Longer lead times
Water Carrier Advantages
Good for bulk and heavy items
Low cost
Water Carrier Disadvantages
Limited flexibility
Seasonal availability
Very long lead-times
Pipeline Advantages
High-volume
Low cost after installation
Pipeline Disadvantages
High up-front costs
Limited to certain items
Types of Motor Carriers
Common Carriers
Contract Carriers
Private Carriers
Exempt Carriers
