Supply Chain Debrief Flashcards
EBeer game- 4 roles
Manufacturer (makes goods)
Distributor (served wholesalers)
Wholesaler (Served retailers)
Retailer (served customers)
what flowed up from retaielrs
purchase order Paperwork
this was the quantity that was requested
what flowed downstream from manufacturers
this was the products flow
What was a pattern in the orders that were made for every group
There was a time lag, but BOTH inventory and orders increased first with the retaielrs then slowly got higher at the next level after a period of time
What was actual demand in the EBeer Game
4 for the first 4 weeks and then 8 consistently
what are 2 reasons for fluctuations in ordering quantities
1) customer demand changes
2)bull whip effect
3) lack of communicaiton
What happened in the game
the retailers ordered a shit ton, then the wholesalers did more, then the distributors did more, then the manufactureres did even more!!
gues son top of guess on top of gueess
What is the bullwhip effect
information (orders) going back thorugh the supply chain become distorted and then AMPLIFIED
How did the bullwhip effect be showcased in the simulation
Lack of communicaiton/cooperation between levels, people had to guess customer demand
lead to wrong ordering decisions
What does the bullwhip effect result in
causes members of the supply chain to overreact to changes in demand at the retail level
small demand changes at consumer level result in LARGE ONES at supplier level
How does long lead times affect ordering
when long lead time, PEOPLE PANIC!! they order more but this does not increase lead time
how did long lead time have affects in the simulation
people panicked when the order did not arrive instantlty and the backlog kept growing!! panicked and order even more
What are the 5 business implicaitons/EXPENSES of the supply chain structure
1) stockouts CAN occur
2) excess inventory can occur
3) overtimem costs
4) layoffs/rehiring costs
5) expediting
How can stockouts occur cuz of supply chain structure
because the orders are coming in and there is not enough inventory
why do over time costs occur in a supply chain
50% -100% increase in labour costs can occur when trying to match the fluctuating demands of people
Why are there layoffs/rehiring costs in supply chain
beacuse demand can be fluctuating (or at least cuz of bullwhip effect)
Why can expediting costs become a factor in the supply chain structure
because there are long lead times, the companies might start rushing transportation costs to meet demand
What is the negative part of the supply chain structure
because of the general lack of communication, there are lots of costs that can occur, so this will result in a higher end price for the consumer
HOW do we measure the bullwhip effect
measure the amplification of variance!!!
Formula for bullwhip effect, numerical meaning
Variation in Orders/Variation in Demand
If the bullwhip effect is greater than 1! Then more var in orders than demand, which means that effect is happeining
what did stanley do?
mitigated the panic buying of retailers during covid 19 by making employees build tools and shit during covid
this way they earned a lot of money cuz when the demand started ocming in they had inventory
WAS A RISK: because if the demand didnt come in the ocmpany would have lots of inventory and associated costs wouldl be high
-ALSO ethical? making parents be away from kids during a pandemic?
How can the supply chain be improved
Better communication and cooperation
-track actual consumer demand (ERP)
-encouage cooperation
-forecasting
How do we track actual cosnumer demand
Use IT!
-> Point of sale systems, ERP, internect
-> stop converting fairly constant consumer demand into lumpy demand by lot sizes, DONT STRESS SUPPLY CHAIN!!!!!!!!
How can we encourage cooperation/communication between parties in the supply chain?
1) incentivize sharing information
-> offer lower unit cossts to buying businesses for getting the actual data of customers
-> they need this incentive because organizing data and shii means more admin costs
2) VMI
->have ppl from the vendor go in to check inventory!
-> lower admin costs for the retailer
-> vendor sees actual cunsomer demand
PROS OF VMI
1) lower admin costs for retailer
2) products rrackerd properly
3) consumer demand tracked accurately
4) products showcased better
5) can track competitiors demand too
How can forecasting encouage supply chain communication?
Use CPFR (collaborative planning foreacsting and replenishment)
-> share forecasts, production and distribution schedules
-> share decision making
Who did FIRS EVER VMI
ruth handler. matterls co founder, who was upset that data was 6 weeks old by the time she saw it
Example of CPFR
COllaborative planning fprecasting and replenishment
-Canadian Tire gives supplier 26 week Planned order stream for each stock-keeping unit
- this is regenerated weekly, so suppliers can see far in advance when demand will “POP”
-supplier lead times are cut down from 45 to 15 days
-now they do collaborative cpfr with 100 of their largest suppliers
How can we shorten lead times? 3 WAYS
1) admin (ordering) lead time
-> use IT to cut lead times of ordering
2) physical manufacutureing lead time
-> just-in-time production systems(you have smaller batches- completed faster)
3) transportatin lead time
->have suppliers close by GEOGRAPHICALLY
How is physical manufacturing lead time improved by just in time production systems?
JIT: inventory management that requires working closely with suppliers so that raw materials arrive as production is scheduled to begin, but no SOONER.
-> LOW SETUP TIME
-> VERY SMALL BATCHES= FASTER PRODUCTION COMPLETION
-> KEEP INVENTORY LOW
-> lots of opp costs of tied up inventory
Why is there so much offshoring? is this good?
because it is cheaper! but it is not good because this leads to very high lead tiems
Why is onshoring good?
-transportation costs are very high a lot of the time
-lead times create silos in supply chain
-reducing currency exposure
-reduces trasportation concern
-ikea onshored, so did ford
What is next shoring
having producting next to demand!!!
-> reduces logisitc cost
-> reduced lead time
->better for envrionment
->better receptive to consumer demand/local needs
->better percepiton: more jobs
What is reshoring doing to jobs!
increasing jobs in home country! more manufacturing jobs in usa!!
there are awards for reshoring jobs!
yep ! national metalworking reshoirng
What can you do if you are a SME (Small/mid entr) and cannot change supply chain structure
ADAPT TO SUPPLY CHAIN!!!!
1) Aspirin rule: if you take 2 aspiring rn dont take one more right away, just chill
-> BE AWARE OF THE LEAD TIME
2) Systems thinking: ANALYZE how your actions will affect the supply chian, before you do anything
What is the 3 ways tosolve supply chain problems? SUMMARY
1) change the supply chain structure (communicaie and cooperate, shorter lead times)
2) if you cannot change the supply chain structure THEN ADAPT
(adapt= recognize the delays)
3) Choose capable suppleirs
how can you choose capable suppliers!!!!!
DONT FOCUS ON THE COST OF SUPPLIERS!!!
1) choose reliable ones that have fast production and fast delivery
2) are they willing and able to collaborate (share infofrmation)
3) DONT SKIMP ON THE SUPPLIERS
Does promotions/sales and discounts create fluctuations in the supply chian?
YES!!!! this makes people have varied factory orders!!!
If you are not to have promotions/sales/discounts, what is the ideal appraoch for SCM
everyday low prices, so demand is constant
logic: if product prices are constant, demand will be constant too, if prices drop, then demand increases lots, this creates waves in the supply chain!
is VMI and incentizing retailers to share info expensivE?
yes! but it is more expensive to have an unstable supply chaiin
what is friendshoring
sourcing from nations that have ismilar political values as us! this way we can make sure that things will be stbale because our political values algin
think about those promos like 2.00 but limit of 3 items,
what is good for mktg
what is food for scma
mktg: good sales!!
scma: the limit makes sure supply chiain isnt imapcted too bad
