supply chain Flashcards
what are outcomes of the global environment?
- rise in business velocity and clock speed
- growth through mergers and acquisitions
- shorter product life cycle
- move toward automation and e-business
Why are supply chains important?
- creating visibility and efficiency
- managing supply chain relations
- avoiding disruption
- mitigating risks
What are the 4 R’s of Supply Chain Management?
- responsiveness
- reliability
- resilience
- relationships
What is competitive advantage creation?
firm’s supply chain should deliver the product that customers want when they want it AND cost effectively
What are the aspects of competitive advantage creation?
- customer demand and wants
- product delivery, costs and design
- production (how, where, outsourcing)
- procurement and supplier selection
- input sourcing
What is a service leader?
high value advantage, low cost advantage
what is a commodity market?
low value advantage, low cost advantage
what is a cost and service leader?
high cost advantage, high value advantage
what is a cost leader?
high cost advantage. low value advantage
what is the logistics and competitive strategy?
deliver superior customer value at less cost
what are 3 aspects of differentiation?
- tailored services
- reliability
- responsiveness
what are 3 aspects of less cost?
- capability utilization
- asset turn
- synchronous supply
what are some key variables in supply chain networks?
- capacity
- procurement
- inventory
- production
- routing
- transportation modes
- number of commodities and markets
- international factors
- financial factors
what are some areas for supply chain improvements?
- holistic perspective on SCM that transcends organizational boundaries
- managing integration and coordination across boundaries
- addressing weaknesses
- supplier selection and procurement strategy
what are some conflicting goals in the supply chain?
lot size v inventory cost inventory v transportation cost lead time v transportation cost product variety (SKUs) v inventory cost cost v customer service agility v responsiveness
what are symptoms of supply chain problems?
stock-outs and high inventory long cycle times high product returns high costs poor service level lack of strategic procurement
Why is logistics and customer service a key component of any marketing strategy?
- the continual increase in customer expectations
2. trend towards commoditization
what are TOC life cycle costs
acquisition cost management cost maintenance cost operating cost inventory cost technical support cost training cost disposal cost
what are the 3 elements of total cost of ownership
pre-transaction costs
transaction costs
post-transaction cost
what are pre-transaction costs
need recognition
need description
sourcing
supplier selection
what are transaction costs
ordering monitoring
receipt and inspection
payment
documentation
what are post transaction costs
relationship cost with the supplier maintenance cost repair costs lost production cost customer goodwill costs decommissioning and disposal costs
What are pre-transaction components
identifying need investigating sources qualifying sources adding supplier to internal systems educating supplier in firms operations and vice versa
what are transaction components
price order placement/preparation delivery/transportation tariffs/duties billing/payment inspection return of parts follow up and correction
what are post-transaction components
line fallout defective finished goods rejected before sale field failures repair/replacement in field customer goodwill/reputation of firm cost of repair parts cost of maintenance and repairs
what are the strategic uses of total of ownership
performance measure
decision making
communication
what is the equation of customer value
quality x service / cost x time
What is marketing effectiveness?
consumer franchise x customer franchise x supply chain efficiency
what is the consumer franchise?
brand values, corporate image, availability
what is the customer franchise
customer service, partnership, quick response
what is the supply chain efficiency
flexibility, reduced asset base, low cost supplier
what is marketing effectiveness comprised of?
market share, customer retention, superior ROI
What is the four parts of market driven supply chain?`
- identify value segments
- define the value proposition
- identify the market winners
- develop the supply chain strategy
what is the perfect order achievement?
on time x in full x error free
What are metrics for supply chain performance?
order accuracy fill rate defect rate on time delivery lead time return rate accounts receivables cost effectiveness inventory turns supply chain responsiveness supply chain partnerships
what is pareto law
80% of profits come from 20% of customers and 80% of total costs will be generated by 20% of customers
what is the push orientation
movements of products and materials toward the final market are initiated or pushed by the manufacturer
what is the pull orientation
supply chain decisions are initiated or pulled by customers
what are categories of push-pull strategies
- make to stock – totally push
- assemble to order – partially built
- make to order – products only built upon receipt of orders
what is the importance of demand penetration point?
- key uncertainty management variable
- where it happens would:
- influence production strategy and product specifications
- determine volume and degree of completion of finished goods or WIP inventory
- influence production, operations, and delivery lead time
- feasibility or type of postponement - multiple de-coupling points for different SKUs exacerbate supply chain complexity and inventory risks
what is the production strategy for low inventory volume, high inventory turn?
integrated supply chain with JIT inventory
what is the production strategy for high inventory volume, low inventory turn
products with long lead time with suppliers
what is the production strategy for high inventory volume, high inventory turn
high spoilage, short shelf life, and perishable products such as fresh or frozen food industry
what do we known about demand forecasting techniques
forecasting is always wrong
the longer the forecast horizon., the worst is the forecast
aggregate forecasts are more accurate
what are the two types of postponement?
- form postponement –> keep the products as long as possible in a standard condition
- time postponement –> execute all activities in the supply chain as close as possible to the customer order
what are characteristics of functional products?
low product variety high forecast accuracy long product life cycle low risk or obsolescence low cost of lost sale
what are characteristics of innovative products?
high product variety low forecast accuracy short product life cycle high risk of obsolescence high cost of lost sale
what are physically efficient supply chain strategies?
high utilization high turnover low cost trumps short lead-time low cost suppliers product design strategy integral for max performance at minimum cost
what are market responsive supply chain strategies?
maintain buffer capacity
significant buffer stocks of components and finished goods
aggressively shorten lead time
speed and flexibility
product design strategy modular to enable postponed differentiation
What causes variability and uncertainty in the supply chain management environment?
product obsolescence changes in input prices macroeconomic changes entry of new rivals introduction of new products changes in consumer tastes international politics and pandemic disruptive technological change
what are three basic flows in SCM?
order - from customer to supplier
shipment - from supplier to customer
payment - from customer to supplier
complexity increases with the number of suppliers in the following areas:
order generation for suppliers
coordination between production and shipments of supplies
consolidation of shipments
transportation management
financial transaction ie invoicing and pyaments
documentation
reasons for bullwhip
demand forecasting updating - updating forecasts
order batching - members rounding up or down
price fluctuations - larger quantities discounts
rationing and gaming - buyers/sellers delivering over or under
how to cope with the bullwhip effect
reduce uncertainty - share supply chain info reduce variability reduce lead times alliance arrangements better forecasting
how to close the lead-time gap?
- demand visibility or reduced lead time
2. shorten the distance - real or informational
what drives responsiveness?
visibility - forecasting demand better
velocity - responding more rapidly to demand
what is vendor managed inventory (VMI)
supplier rather than the customer manages the flow of product into the customer’s operations
what are some characteristics of the global apparel industry
- brand marketers and brand manufacturers
-significant variations in customer preferences
-push strategy
-two major collections a year, most items sold at discounted prices
wide assortment of garments and accessories
long order delivery cycle time
buyer driven supply chains
trading companies are used as cross border intermediaries
fragmented, global production
what are supply chain challenges in apparel industry?
- long order cycle time and large number of SKUs
- fragmented production and difficulty in supplier integration
- transportation and logistics efficiency depends on volume
- difficulty in achieving accuracy in demand forecast
- lumpy sale activities and cash flows
- high risk/costs due to long cycle time and supply chain, limited coordination and forecast difficulty
what are the two levels of make-buy decision considerations?
strategic level - compatibility with firm’s core competencies, supplier dependance
tactical level - total cost of ownership, production capability, quality requirement
what are the reasons for buying?
desire to be seen as lean organization
unexpected sales which increases volume
quantities are too small
own cost structures are too high
what are the arguments for buying?
- allows for greater integration of plants
- potential suppliers are unreliable
- avoid shortages due to anticipated shortages in the future
- desire to maintain costs and intellectual properties
- unreliable supply chain
level of outsourcing?
transactional outsourcing
tactical outsourcing
strategic outsourcing
what is transactional outsourcing?
transactions, no long term contracts, no bonding
what is tactical outsourcing?
long term basis, negotiated contracts, integrated IT systems to facilitate information flow
what is strategic outsourcing?
long term relationships, successful outcomes, partners in SCM, establish transactional transparency
What is the SCOR model?
describes the business activities associated with all phases of satisfying a customer’s demand
what are the five processes of the SCOR model
plan source make deliver return
what is the process reference model?
integrates the concepts of business process reengineering, benchmarking and process measurement
What are the 5 management processes of SCOR
building block approach processes metrics best practice technology
What does SCOR span?
all supplier/customer interactions
all physical material transactions
all market interactions
return
What does SCOR not include:
sales administration processes
technology development processes
product and process design and development processes
some post-delivery technical support processes
What does SCOR assume but not explicitly address
training
quality
IT administration
What is the SCOR project roadmap?
level 1: analyze basis of competition
level 2: configure supply chain
level 3: align performance levels, practices and systems
level 4: implement supply chain processes and systems
What are the performance attributes of SCOR:
reliability responsiveness agility costs asset management efficiency
what are the three types of benchmarking
performance benchmarking - comparison of performance measures
process benchmarking - comparison of methods and practices
strategic benchmarking - comparison of the strategic choices
Who can you benchmark against?
- internal benchmarking - departments, units, within same org
- competitor benchmarking - against competitors
- functional benchmarking - non competitor orgs (ie customer, supplier) within same industry
- generic benchmarking - best processes around
how do you measure risk?
probability of occurrence x expected value of the outcome
what are the five categories of risk?
- supply risk
- demand risk
- process risk
- control risk
- environmental risk
what are the three different sources of supply chain risks
environmental (external)
network (external)
organizational (internal)
six steps in managing risk profile
- identify and prioritize earnings drivers
- identify critical infrastructure
- locate vulnerabilities
- model scenarios
- develop responses
- monitor the risk environment
what is the supply chain risk management process?
- understand the supply chain
- improve the supply chain
- identify critical paths
- manage critical paths
- improve network visibility
- establish supply chain continuity team
- work with suppliers and customers to improve supply chain risk management procedures
when to pool resources for risk mitgation?
high cost of risk mitigating
when to decentralize resources for risk mitigation?
low cost of risk mitigating
when to reduce costs for risk mitigation?
low level of risk
when to mitigate risk for risk mitigation?
high level or risk
how do you mitigate the risk for disruptions?
add inventory, have redundant suppliers
how do you mitigate the risk for delays?
add capacity, add inventory, increase responsiveness, increase flexibility, increase capability
how do you mitigate the risk for forecast risk?
increase responsiveness, aggregate or pool demand
how do you mitigate the risk for procurement risk?
add capacity, add inventory, have redundant suppliers, increase flexibility
how do you mitigate the risk for receivables risk?
have more customer accounts
how do you mitigate the risk for capacity risk?
add inventory, increase flexibility, aggregate demand, have less redundant suppliers, remove capacity
how do you mitigate the risk for inventory risk?
add capacity, have redundant suppliers, increase responsiveness, increase flexibility, aggregate or pool demand, increase capability, remove inventory
what are characteristics of critical paths?
long lead time
single source of supply with no short term alternative
dependence on specific infrastructure
high degree of concentration amongst suppliers and customers
bottlenecks or pinch points through which material or product must flow
high levels of identifiable risk
what is FMEA
failure mode and effect analysis - systematic approach to identifying where in a complex system attention should be focused to reduce risk of failure
What three questions does FMEA ask
what could go wrong
what effect would this failure have
what are the key causes of this failure
what criteria does FMEA use
what is the severity of the effect of failure
how likely is this failure to occur
how likely is the failure to be detected
multiply all 3
what factors encourage growth of time sensitive markets
shortening life cycles
customers drive for reduced inventories to minimize costs
volatile markets making reliance on forecasts dangerous
why cycle time reduction?
reduce costs
increase demand visibility
forecast accuracy
reduce inventory level
what are the lead time components of the order to delivery cycle?
commercial and planning lead time materials lead time assembly lead time distribution lead time installation/retail lead time
what is the cash to cash cycle
cumulative lead time from procurement to payment
what are the goals of logistics pipeline management?
lower costs
high quality
more flexibility
faster response times
how do you calculate efficiency of supply chain
= value added time/end to end pipeline time
