P1.D.4 Supply Chain Management Flashcards
What is Supply Chain Management?
P1.D.4 Supply Chain Management
Aims to maximize product’s value to customer to gain and sustain competitive advantage.
- Aligning resources and suppliers to the demand
- Managing risk associated with production cycle
- Adding value throughout process
- Provide metrics to measure success of process
Supply chain management involves managing all of the internal and external activities relating to the flow of products to end users. Supply chain management aims to maximize the product’s value to customers to gain or maintain a competitive advantage. Supply chain management includes product research and development, purchasing, production, warehousing, distribution, and other activities or departments that affect the flow of products.
What is Materials Requirement Planning (MRP) System?
P1.D.4 Supply Chain Management
Computer based system that tells what is needed for the manufacturing cycle.
- What is needed?
- How much is needed?
- When is it needed?
Material Requirement Planning (MRP) Systems
Benefits & Limitations
(P1.D.4 Supply Chain Management)
Benefits
- Less coordination required across depts.
- Minimal excess inventory.
- Accurate and timely delivery of goods to customers.
- Optimized use of manufacturing resources.
- Decreased capital costs due to decreased inventory levels and production optimization
Limitations
1. Adjusting issues during production.
What is Just-In-Time (JIT) System?
P1.D.4 Supply Chain Management
- Manufacturing process that relies on demand of products.
2. Referred to as the demand-pull system.
Just-In-Time (JIT) System
Benefits & Limitations
(P1.D.4 Supply Chain Management)
Benefits
- Eliminates excess production and excess investment in working capital
- Reduces setup times and machine downtimes
- Low cost of carrying and handling inventories
- Maintains stronger supplier relationships.
- Reduces risk of defects and inventory write-downs.
Limitations
- High risk of stock out costs
- Increased reliance on suppliers
- Implementation/transition costs
Outsourcing Benefits & Limitations
P1.D.4 Supply Chain Management
Benefits
- Cost efficiency
- Improved performance, quality and timeliness of product/service.
- Avoidance of risk of technological obsolescence.
Limitations
- May be expensive
- Loss of inhouse expertise
- Compromise of confidentiality
- Less control on quality
What is Enterprises Resource Planning (ERP)?
P1.D.4 Supply Chain Management
- Integration of call systems of a company.
- Maps all business operational processes into a single system.
- Transaction based.
Enterprise Resource Planning (ERP) Benefits
P1.D.4 Supply Chain Management
- Enhanced employee productivity
- Better collaboration among depts.
- Cost benefits of using a single platform rather than a multi-platform.
What is Lean Manufacturing?
P1.D.4 Supply Chain Management
- Method of reducing or eliminating waste in a manufacturing process.
- Treats inventory as a liability.
Lean Manufacturing Benefits
P1.D.4 Supply Chain Management
- Avoid machine downtime
- Reduced inventory costs
- Simplification of manufacture of complex goods
- Increase ROI
- Reduced space for operations
- Enhanced customer satisfaction
- Efficient distribution
- Improved supplier relationships
What is Theory of Constraints?
P1.D.4 Supply Chain Management
A method of optimizing a process when faced with limiting factors and bottlenecks.
What are the five steps of the Theory of Constraints Analysis?
(P1.D.4 Supply Chain Management)
- Identify the constraint
- Exploit the constraint
- Subordinate and synchronize the constraint
- Elevate and expand constraint: add capacity to constraint.
- Repeat process
What is Throughput Costing?
P1.D.4 Supply Chain Management
- Considers direct materials as the only product costs.
- Measures how effectively the system moves the investment value through the system.
Throughput contribution = Sales revenue - Direct material cost
Capacity Concepts
P1.D.4 Supply Chain Management
- Capacity Management: management of entity’s costs of unused (excess) capacity
- Theoretical Capacity: Level of production allowing no time off
- Practical Capacity: Measure of capacity that is the maximum level at which an entity can operate efficiently (realistic & achievable)
