Lesson 3 Flashcards
What is the purpose of contingency planning in supply chains?
To create and test backup plans that maintain a strong supply chain and prepare for disruptions.
What are the two phases of the Scenario Planning Theory process?
Creating scenarios and using those scenarios for strategic planning.
What are common causes of nervousness in supply chains?
Demand variability, supply disruptions, lead time variability, the bullwhip effect, lack of information sharing, and external events.
What is demand variability and its impact on supply chains?
What strategies can help reduce demand variability?
It measures fluctuations between expected and actual demand, leading to challenges like overstocking, stockouts, and reputational loss.
Improve demand forecasting, manage safety stock, maintain production flexibility, and enhance inventory management.
How do you calculate demand variability
We use coefficient of variability (CoV):
CoV= StandardDeviationofDemand/
AverageDemand
What types of supply disruptions can affect the flow of goods?
What are the challenges caused by supply disruptions?
Transportation delays, production issues, supplier problems, natural disasters, and geopolitical events.
Inventory fluctuations, increased costs, and delays in product delivery.
What is the bullwhip effect?
What strategies can mitigate the bullwhip effect?
A phenomenon where small fluctuations in retail demand lead to larger fluctuations up the supply chain, impacting wholesalers and manufacturers.
Collaborative planning, smoothing orders, and improving information sharing.
How to calculate bullwhip effect (BWE)?
BWE=
VarianceofDemand/VarianceofOrders
BWE = 1 means no amplification
BWE > 1 indicates demand amplification
BWE < 1 means smoothing or dampening
How can external events disrupt supply chains?
What strategies help manage risks from external events?
Natural disasters, geopolitical events, economic fluctuations, and strikes can lead to supply disruptions and increased costs.
Risk management, collaboration, visibility, and continuous monitoring.
What is ripple effect?
It describes how disruptions in one part of the supply chain can cascade downstream, affecting performance like stock levels and costs.
What is the formula for lead time?
LeadTime=(Pre-ProcessingTime)+(ProcessingTime)+(Post-ProcessingTime)
What is supplier diversification?
It’s a strategy where a company works with multiple suppliers to reduce the risk of supply chain disruptions.
