Supply Chain Flashcards
Characteristics of Responsive (Decentralized) Supply Chain
Speed focused, innovative products. high demand uncertainty, high profit margins, higher distribution complexity
Characteristics of Efficient (Centralized) Supply Chain
Cost focused, functional products. more predictable demand, low demand uncertainty, low profit margins, lower distribution complexity
Outsourcing
obtaining resource or process external to company. EX: getting raw material/component from someone else, or having someone else do some process for you
Reasons to Outsource?
reduce costs, reduce lead times, allow more innovation, focus on core capabilities, share risk with another company
Offshoring
obtaining resource/process external to the company across the ocean
Reasons to Offshore?
closer to offshore customers, faster response to offshore customers, lower costs, better technical ability
Disadvantages to Offshoring?
may lose ability to do offshore task, exchange rate volatility, give up control over quality/cost, difficult to determine overall product cost
Offshoring cost drivers
exchange rate exposure, falling communication costs, lower risk in joint ventures, labor costs
Push System
workers maximize output, always stay busy. defective work may be produced. line bottlenecks and unfinished products occur. difficult response to special orders or changes in
Pull System
operators work only when there is signal to produce. no bottlenecks, unfinished product. faster reaction to defects
Lean Operations
eliminate waste
Internal Strategies to match supply with demand
hire/fire, reduce/extend employee hours, change production rates, sub-contract
External Strategies to match supply with demand
increase price, advertise/promotions, bundling offers, pre-orders
Optimal Service Level
Critical Fractile
What happens to the critical fractile if the salvage value for the item increases?
critical fractile increases
