Module 1 Section A

Question 1

Demand Side Activities

Answer 1

-Provide key inputs to MPC in form of quantities required

Question 2

Forecasting

Answer 2

can be made directly for demand or can be provided

Question 3

Demand Management

Answer 3

-Used to prioritize demand when necessary
–estimates impact of marketing activities on demand”

Question 4

Distribution Requirements Planning (DRP)

Answer 4

–input to inventory and logistics planning at both S&OP planning (info aggregated at product family

Question 5

Supply–Side Activities (Capacity) – Resource Planning

Answer 5

–1st of several capacity management activities that grow more detailed/shorter in time horizon
–can add value to the strategic plan (e.g. validating need/timing of capacity requirements; recommending whether to expand capacity in advance of need all at once, incrementally, or lag behind)
–occurs at both the strategic and tactical levels

Question 6

Supply–Side Activities (Capacity) – Rough Cut Capacity Planning (RCCP)

Answer 6

–2nd level of capacity planning = output of master scheduling level
–a check to see if bottleneck work centers and other key resources (e.g. critical raw materials or staffing will have sufficient capacity)
–Output of master scheduling after being validated by RCCP is the master production schedule (MPS)

Question 7

Master Production Schedule (MPS)

Answer 7

–priority plan specifying due dates and quantities for end items”

Question 8

Capacity Requirements Planning (CRP)

Answer 8

–at the material requirements planning (MRP) level
–prelim MRP is sent to crp in form of planned and open orders
–highly detailed capacity check looks at all resource capacity, not just bottlenecks
–once capacity is validated, finalized MRP sent to execution stage”

Question 9

Execution

Answer 9

-“Processes: purchasing & production activity control (CAP)
–MRP results in purchasing whenever resources are not sufficient
Purchasing includes: sourcing, ordering, scheduling deliveries
-Inputs to PAC = parts of MRP product in-house

Question 10

Production Activity Control (CAP)

Answer 10

-used to regulate flow of work through production processes –> start with scheduling

-scheduling can be used to adjust when certain orders are released for production or final assembly

Question 11

Supply Chain Operations Reference Digital Standard (SCOR DS) Road Map - Level 1

Answer 11

-model always centered on your org.

-can focus on at least 2 levels out from yourself in each direction

-LEVEL 1 = Major processes (industry neutral*)

Plan, source, make, deliver, return, enable

*applicable to any industry

Question 12

Supply Chain Operations Reference Digital Standard (SCOR DS) Road Map - Level 2

Answer 12

-LEVEL 2 = Process categories (industry neutral)

Make-to-stock (MTS) -

Make-to-order (MTO)

Engineer-to-order (ETO)

Retail

Question 13

Supply Chain Operations Reference Digital Standard (SCOR DS) Road Map - Level 3

Answer 13

LEVEL 3 = Process elements (industry neutral)

-show how individual processes are configured to enable them to be executed

-focus is on inputs/outputs, requirements related to skills, performance, capabilities, best practices

Question 14

Supply Chain Operations Reference Digital Standard (SCOR DS) Road Map - Level 4

Answer 14

LEVEL 4 = improvement tools/activities (industry specific*)

*orgs. develop or select these processes and performance measures themselves

Question 15

Strategic Planning & Management

Answer 15

-systematic and disciplined, but flexible process of gathering and analyzing internal/external information, goal setting, aligning all parts of the org. to the org’s strategic goals.

-quality of strategies tied to quality of research conduct before strategy development

-need to understand risks, opportunities, resources available first

Question 16

Global Strategic Design Principles

Answer 16

-affecting org’s relationship to the physical environment and society, including local communities, workforce & sustainability

Question 17

Network Strategic Design Principles

Answer 17

-guiding collaborative interactions with upstream and downstream suppliers and customers

Question 18

Local Strategic Design Principles

Answer 18

-shape internal activities of orgs.

Question 19

Characteristics of Successful Strategies

Answer 19

1) fit their internal/external environments –> identify/respond quickly to changes in these environments

2) create significant/sustainable competitive advantage; not easily imitated by rivals

3) result in measurable performance improvements: increase in revenue, market share, share price, returns to investors, customer satisfaction/retention, capital available for reinvestment

4) strategy communicated to all members of org.

5) strategies at all levels are aligned

6) leaders disciplined in pursing chosen strategies

Question 20

Competitive Advantage

Answer 20

-Advantage an org has over its rivals in attracting customers and defending against competitors.

-Sources include characteristics that a competitor cannot duplicate without substantial cost and risk e.g. manufacturing technique, brand name or human skill set

Question 21

Defining Strategy

Answer 21

Strategy: plan for using an org’s resources to achieve sustainable, long-term success

Business strategy: defines success in a competitive context –> org is successful when it outperforms its competition

Key success factors: product attributes, organizational strengths and accomplishments with the greatest impact on future success in the marketplace that will create a sustainable competitive advantage

-strategy formation includes strategic and business planning

Question 22

Strategic Planning

Answer 22

-how to marshal and determine actions to support the mission, goals and objectives of an org

-meant to provide direction to the org’s investment of its resources over a longer time frame, more than the usual annual business planning cycle

Question 23

Business Planning

Answer 23

-provides bridge from strategic to tactical planning

-translates the strategic plan objectives, both financial and non-financial, and allocates organizational resources to support strategic activity in all of org’s part

-Business plan: used for strategic plan refinement is to be distinguished from business plans developed by entrepreneurs seeking capital investment

-statement of long-range strategy and revenue, cost, and profit objectives usually accompanied by budgets, projected balance sheet, and a cash flow; usually stated in terms of dollars and grouped by product family

-translated into synchronized tactical functional plans through production planning/sales & ops planning process

Question 24

Strategy Hierarchy (from general to specific)

Answer 24

1) Corporate strategy - plan to improve competitiveness of the org as a whole; addresses key questions about where the org will compete e.g. which industries, geographical regions

2) Business strategy - plan to improve competitiveness of individual line of business

3) Functional area strategy - plan to implement and support corporate (and business) strategy at functional level; usually include marketing, sales, finance, it, HR, and ops.

4) Operations strategy - plan how the function will perform its work in a manner consistent with the direction and priorities described at the corporate, business, and functional area levels; must address key decisions about capacity, supply network, process technology, org. improvement

Question 25

Mission

Answer 25

Mission: overall goal(s) for an org. set within the parameters of the business scope

Mission statement: company statement of purpose; grounded in the present and defines the reason an org. exists;

Question 26

Vision

Answer 26

Vision - shared perception of the orgs. future - what the org. will achieve and a supporting philosophy; must be supported by strategic objectives, strategies, and action plans to move it in the desired direction

Vision statement - org’s statement of its vision

Question 27

Corporate Culture

Answer 27

-set of important assumptions that members of the company share

-system of shared values about what is important and beliefs about how the company works

-common assumptions influence the ways the company operates

Question 28

Environmental Scanning

Answer 28

Process used to explore org’s potential strengths, weaknesses, opportunities and threats; tool is primarily external

EXAMPLES OF TOOLS:

-Strategic benchmarking: key tool for external environment scanning; compares the org against external or internal organizations or functions or against industry standards

Competitive Analysis: analysis of a competitor that includes its strategies, capabilities, prices and costs

Question 29

PESTEL Analysis

Answer 29

-used to describe focus of an analysis of an org’s external or macro environment

-Macro environment - environment external to a business including technological, economic, natural, and regulatory forces that marketing efforts cannot control

Org must focus on the environmental factors that are strategically relevant (i.e. will have a big impact on the org and its strategy)

Political - government’s willingness to become involved with an issue; stability of government and its institutions

Economic - gross domestic product, employment levels, family or disposable incomes, interest or currency exchange rates

Sociocultural - demographics (.e.g age, gender, birth rate, disease rate), values, preferences

Technological - identifying emerging and speculative technology can have significant impact on society and commerce e.g. 3D printing, genetic engineering

Environment - natural events/trends e.g. changes in weather, droughts, depletion of certain resources; also includes reactions to these events e.g. increases in insurance rates, changes in agricultural practices or energy production methods, increased popularity of energy saving equipment among consumers

Legal/Regulatory Factors - laws and regulations enacted as a result of political attitudes

Question 30

Five Forces Framework/Model of Competition

Answer 30

-methodology for analyzing competitive pressures in a market and assessing the strength/importance of each of those pressures

-to use framework one must 1) identify key figures and major sources of competitive pressure in each area, 2) evaluate intensity of pressures, determine how overall picture supports profitability

Question 31

Five Forces Framework/Model of Competition

Level of Competitive Rivalry

Answer 31

-area represents intensity with which rivals compete in this industry to gain market share and competitive advantage

-as rivalry intensifies likelihood of making sustainable profit decreases, since tactics can be costly

EXAMPLE OF COMPETITIVE ACTION:

1) price cutting

2) providing better customer service

3) attractive financing terms

4) customizable products

5) frequent redesign of product to add new features/options

6) marketing tactics (e.g. heavy advertising)

RIVALRY IS STRONGER WHEN:

1) Demand is growing slowly/declining

2) brand switching is not costly

3) competitors’ products are not very distinct from one another

4) excess supply or unused capacity (and fixed and/or storage costs are high)

5) more competitors of equivalent size and capability

6) rivals have diverse strategies including globalization

7) it is harder to leave industry due to barriers to exit that may be legal/contractual or emotional

Question 32

Five Forces Framework/Model of Competition

Potential New Entrants to Market

Answer 32

-entry of new competitor usually triggers costly competitive actions as existing competitors struggle to maintain their positions

Threat of entry greater when:

1)industry is growing and new entrant can recoup investments in entry process over time

2) regulation is lax

3) new tech emerges that can overcome advantages of incuments

4) products are not strongly distinguished from each other; less customer loyalty to specific brands

Question 33

Five Forces Framework/Model of Competition

Substitute Products

Answer 33

-thinking outside of box in terms of who you think competitors are e.g. every org that meets same customer need, such as sweeteners

-substitutes are only attractive if they are easily available, offer comparable/better quality and if there are few barriers to substitution (e.g. unattractive prices)

Question 34

Five Forces Framework/Model of Competition

Bargaining Power of Suppliers & Buyers/Customers

Answer 34

-suppliers with stronger bargaining power are in position to drive up producer’s costs –> higher consumer prices for finishes good –> possible decreased sales

-manufacturers could absorb suppliers’ increases –> not raise prices –> suffer smaller profit margin

Review Exhibit 1-20: conditions favoring suppliers and buyers/customer

Question 35

Industry Attractiveness

Answer 35

-assessed by # and relative strength of the 5 forces

-conditions in general favor org’s ability to be profitable when:

1) internal rivalry among competitors is weak to moderate,

2) leverage over suppliers and buyers is high,

3) barriers to new entrants are high,

4) threat from substitutions is low

Question 36

Resource & Capability Analysis

Identifying Resources

Answer 36

-identifies all of an organization’s resources and capabilities to determine if they offer sustainable competitive advantage

Resource: anything that adds value to a good or service in its creation, production, or delivery; can be tangible (physical, financial, technological, organizational) or intangible (e.g. human assets, intellectual capital, brands, reputation, relationships, culture, compensation system)

Question 37

Resource & Capability Analysis

Identifying Capabilities

Answer 37

-capabilities use resources to create value

-can be tangible (e.g. cryogenic machining , computer systems, personnel capable of data mining) or intangible (e.g. developing/launching a new product)

Question 38

Resource & Capability Analysis

VRIN Test

Answer 38

V: valuable resource of capability directly related to strategy being considered; is relevant and help create and advantage over competitors

R: rare - something an org possesses but competitors lack e.g. patent and org. learning related to designing electric cars

I = Inimitable - difficult for a competitor

N = Nonsubstitutable - cannot be countered by entirely diff. types of resources/capabilities

Question 39

SWOT Analysis

Answer 39

-used to assess an org’s ability to implement a strategy and defend itself against competition

-analysis of the strengths, weaknesses, opportunities, and threats of and to an org

S/W reflect internal conditions that favor or damage competitiveness

O/T reflect external conditions that impact the org

Question 40

SWOT Analysis

Strengths & Weaknesses

Answer 40

STRENGTHS

1) include an org’s core process and core competencies

2) core process = unique capabilities central to org’s competitive strategy

3) core competencies = bundles of skills/knowledge sets that enable a firm to provide greatest level of value to its customers in a way that is difficult for competitors to emulate and provides future growth; developed through collective learning, communication, and commitment to work across levels and functions in the org, with customers and suppliers

WEAKNESSES
1) competitive liabilities;

2) things org does poorly or not at all;

3) may be insufficient resources or missing/deficient capabilities;

4) uncorrected weaknesses increase an org’s vulnerability to external threats

Question 41

SWOT Analysis

Opportunities & Threats

Answer 41

OPPORTUNITIES

1) convey competitive advantage to org

2) could be newly discovered / unmet customer needs in market that could deliver new revenue with little competition, new tech that can lower costs and increase competitiveness, increases in market share because of exit of powerful competitor from market

3) must be aligned with org’s strengths

THREATS

1)will damage org’s current competitiveness or profitability

2) may be risks that can limits success of a planned strategic action

3) org becomes more vulnerable when it does not build its competencies, correct its weakness, commit to regular scanning of its internal/external environments

Question 42

Value Chain Analysis

Answer 42

VALUE CHAIN

1) functions within an org that add value to the good/services that org sells to customers and for which it receives payment

2) way of understanding where costs occur in org or supply chain and how one activity in chain can affect the costs of another

VALUE CHAIN ANALYSIS

1) examination of all links an org uses to produce/deliver its products/services, starting from origination point and continuing through delivery to final customer

-two types of activities:

1) primary - create value and will vary in diff. orgs. examples: purchasing, operations, logistics, sales/marketing

2) support - make the primary activities possible; examples - IT, HR, accounting

-internal costs > than competitors’ costs can put org at a competitive disadvantage unless able to create another advantage

Question 43

Trading Partners

Answer 43

-part of extended value chain system

-any org external to the firm that plays an integral role within the supply chain (SC) community and whose business fortune depends on the success of the SC community

e.g. suppliers and channel partners (distributors, dealers, retailers)

-some supply chain partner activities can create costs without contributing value e.g. damaged goods or complicated ordering systems; org can work with supplier to help mitigate issues

Question 44

Product Life Cycle Analysis

Answer 44

1) stages a new product goes through from beginning to end (intro –> growth –> maturity –> decline)

2) time from initial research and development to time at which sales and support of product to customers are withdrawn

3) period of time during which product can be produced and marketed profitably

Make to stock (MTS) for fast selling item is profitable only up to a point, if demand declines building inventory becomes unprofitable –> can switch to ATO or MTO

products with shorter life cycles must generate revenue early

Question 45

Product Life Cycle -

Introduction Phase

Answer 45

1) business invest large amount of resources to change customers’ limited awareness of product

2) high degree of risk –> sales are slow, incur loss rather than profit

3) focus on product positioning - gaining consumer attention for the new product and distinguishing it from any competitors; marketing effort to place product in a market to service particular niche or function

4) manufacturing environment = ETO (mainly or MTO to avoid producing until there is demand

Question 46

Product Life Cycle -
Growth Phase

Answer 46

1) successful products gain market share rapidly

2) puts pressure on manufacturing and distribution to scale upward or downward quickly if demand differs from what was projected

3) product designs tend to stabilize

4) brand identities emerge and basis for brand loyalty built

5) competitors may try to introduce product imitations or price cut (over time slows revenue growth increases)

6) concerns = quality, compliance with specs, ability to meet demand reliably –> damage sales

MTS work well

Question 47

Product Life Cycle -
Maturity Phase

Answer 47

1) marks peak sales

2) functional product = low profit margin and predictable demand (sales can be steady)

3) associated with intensifying competition –> # of available customers levels off; price cutting/promotion increase

4) org must lower costs of production to maintain profit or support lower prices

5) org can expand # of customers by targeting new customer needs or entering new market areas

6) extensions of existing products or plans for new products may be introduced to create differentiation in crowded market

MTS work well

Question 48

Product Life Cycle -
Decline Phase

Answer 48

1) products no longer in demand or demand falling at steady/increasing rate

2) profits still possible, but requires changing to less expensive production environment such as make to order

3) rollover strategy from existing to replacement can be:

solo product roll - inventories of existing product completed used up before new product introduced; avoids problem of selling off inventory of older product at discount that erods profit; risk = manufacturing process may have been problematic and volume is insufficient

dual product roll - plans for having both products available for period of time; decreases risk of not having product available to meet customer demand, but also risks confusing customers

4) production may begin to return to environment to facilitate shrinking demand e.g. ETO or MTO

5) products may be discontinued

6) if production costs can be lowered, can still make small profit margin

7) may sell to orgs that can produce products more profitably

MTS becomes unprofitable