Supply Chain Management Flashcards
what is a supply chain
a) procure raw materials
b) transform into intermediate goods and then final products
c) deliver products to customers through distribution syste
Steps in the supply chain
Suppliers
-> Purchasing (procurement) [INBOUND]
-> Internal Transformation
-> Physical distribution (logistics) [OUTBOUND]
->Customers
What is inbound in the supply chain
Procurmenet/ Purchasing of materials
What is outbound in the supply chain
Physical Distribution/ Logistics
What is OPMA in the supply chin
What is SCMA in the supply chain
1) internal transformation: Design, Production, Inventory, Quality
2) Inbound Procurement and Outbound Logistics
Do the suppliers only have one tier?
NO! Suppliers need to get goods, and they go back to 3 tiers generally
In the slide 7.5 visaul, what are the boxes?
what are the arrows?
operations management
supply chain management
Relationship between tier of suppliers
the further back you go is the further back in the supply chain
slide 7.5
What are the 4 steps of the sypply chain
1) inputs (getting the inputs from the suppliers)
2) transformation (making the goods)
3) Localization (where you put the labels on the products and make them for the country)
4)Outputs (individual deliveries)
What is happening in Ethiopia
Becoming a hub for fast fashion!!! Shein (chienese brand) producing its lcothes in the country
Countires that were once outsourcing spots like India and China are doing what?
outsourcing to the newest cheapor labour country-ETHIOPIA
Why are countries builidng goods in ethiopia?
because no taxes for the first 5 years for corporations, and tax breaks for those who import construction equipment on the country!
basically inviting FDI for infrastructure growth
-also poor human rights regulations
What is happening in France?
They really want to implement circular economy
- government is subsidizing people repaire clothes, giving rebated of 6-25 euros
-also subsdizing repairing appliances and tech
why are global supply chains falling out of fashion?
- desire to limit transport costs
- desire to refuce lead time of products
even though it is 20% cheaper to produce goods offshore, the long lead times are not it!
What is vertical integration
owning more than one portiion of the supply chain
Vertical integration considerations:
Pros and Cons of Outsourcing
Pros of outsourcing:
1) reduce inventory, turn fixed costs into vbl costs
2) improve effectiveness, firm focuses on what it does best
3) improve image by associating with superior providers
Cons of Outsourcing:
1) low control of strategic processes
2) potential of intellectual property
3) messy co-ordiantion
Logic of vertical integration
basically control the production of goods that are critical to your operations,
but outsource the non strategic products
PROTECT IP should be safeguarded so people dont copy
Arcteryx
Tesla example for vertical integration
-produce own lithim ion batteries (in the states and also in berlin, and also in china)
-has other production outsourced
Arcteryx example for vertical integration
-vancouver store
-has a huge production facility in vancouver close to hq (10% production made here, 90% outsourced)
-produces limited amount of goods and they have to be approved first
What is procurement?
purchasing of services or materials that a company does not develop internally!!!
is procurment costs/ purchasing costs big contributorS?
why does this matter
yes!!! they are substantial, so reducing them even a little bit can have lots of payoffs
What part of the supply chain pipeline is vendor selection a part of?
its part of the procurement stage
What is vendor selection based on?
many criteria for what makes a good supplier:
1) Company- size/capcaity, location, profit
2) service- deliveries on time, handling complaints
3) products- quality, price, packagining, warranty
4) sustainability- enviornmenttal, social
What is vendor development
Improving supplier operations, basically offerig consulting to the vendors to help them do better
1) accomplishing cost reductions
2) improving quality
3) fast and consistent delivery
What are the 3 types of purchasing
1) Centralized
- Make one big order as opposed to multiple small orders
2) Stockless
-purchase goods and have them delivered immediately to production not to stockroom
3) Blanket Purchase Orders (POs)
-order a crap t on, pay at a discounted price, slowly get the goods as you ask for them over time
Centralized pruchasing
pros
cons
if you value —–, dont go with centralized purcahsing
have a big order all at once, influence the price in the purchase negotiation
cons: less flexibility and speeed with such a big order
FLEXIBILITY AND SPEED
stockless purchasing
pros
cons
purchase goods and dont let them go to the stockroom!!! cutting out middle men and storage costs
cons: lots of co-ordination is needed between the parties! especially on nthe supplier end
Blanket POs
example
retail store committs to purchasing 1000 hockey sticks, gets the goods at a discount! Retail doesnt want all stick immefiately, they will send orders over time for goods to be delievered
Blanket POs
pros for retailer
pros for manufacturer
Retailer:
-unit cost savings
-lower holding costs (small deliveries)
-lower order costs (things already set up)
-less supply uncertainty
Manufacturer:
-known demand (guaranteed sales)
-easy to schedule workers so never any overtime needed
-if market changes you still get the money up
What is VMI
vendor managed inventory
when the vendor manages the customers inventory of the products they are supplying
benefits of vmi for customers and vendors
Customers: less admin costs (order costs), because the vendor knows when they are gonna order
-low chance of stockout, cuz vendor managing
Vendor: knoweldge of customer demand patterns, potentially more sales cuz less stock outs
What are the challenges VMI creates for customers and vendors
Customer: trusting vendor to do this, having to layoff staff that would do this
Vendor: staffing, vehicles, remote tech expenses
where do chip and soft drink vendors have vmi?
convenience stores
Is it good to do supplier consolidaiton?
YES!! it is better to work with fewer suppliers closer!!w
why should we do supplier consolidaiton?
Bnechmark firms (TYPE A CUSTOMERS), so they never get shroted, they never stockout, they get the good quality stuff
THEY GET TREATED BETTER THAN TYPICAL FIRMS
two types of firms under supplier consolidation
1) typical firms
2) benchmark firms (TYPE A)
What is Logistics/Physical distribution
the outbound process in supply chain where goods get distributed to customers
Logisitics, Time place and form utility meaning
Time utility: (When); goods get to customers when they are wanted, not when they are produced
[storage and warehousing]
Place utility: (Where); goods get to customers where they are needed, not where they are produced
[transportation]
Form utility: (what) physical/chemical changes in goods and/or packaging
[assembly/manufacturing\
how are companies encouraging green delivery
showing that if they dont do rush deliveres and do GGREEN deliveries, it will have less eco impact
52% of customers change minds
What are the costs that must be conssidered under logisitics costs
ALL IN COSTS
1) transportation type
2) inventory (holding costs)
3) packagining (materials needed)
4) damage (in transit, in sotrage, expiration)
can airfreight be faster and cheaper?
yes!because a higher up front cost of transportaiton, but lower cost of packagining and less damage since vacuum sealed goods
Air, Truck, Rail, Water
Cost
very high, high, medium, low
Air, Truck, Rail, Water
deliver speed
very fast, fast, avg, slow
Air, Truck, Rail, Water
locations served
lots
less than lots
lots
less
Air, Truck, Rail, Water
product variety
limited
high
high
very high
Air, Truck, Rail, Water
shipment frequency
high
high
low
very low
Air, Truck, Rail, Water
schedule dependability
high
high
medium
medium
what are intermodal shipment
same containers on boats trains and trucks!!!
-convenient (less handling
extensive network
optimal cost
increased security
What are 3 shipment strategies
1) consoldiating
2) cross-docking
3) drop shipping
Consolidating- shipment strategies
Having all suppliers deliver to all retail locations is ineffeicient; so have a distribution centre consolidate shipments to retail locations
Get the orders in bulk into warehouse Storage/breaks bulk and builds orders
then it goes to mixed orders
-> back to back converyer belts
Shipment strategies- cross-docking
remove the intermediate step of storage by distributing them immediately after they are received
1) reduces: product handling, inventory, facilitry costs
2) requires: tight scheduling, extensive IT
cross docking simple
Products are unloaded from a truck or railroad car, sorted, and directly reloaded onto outbound trucks or rail cars to continue their journey.
Shipment strategy- drop shipping
when a retailer has a supplier immediately drop the product off to a customer
-> this saves the retailer a lot of money on the time and reshipping costs
DIFFERENCE BETWEEN WHO IS BILLED (RETAILER), AND WHO IS SHIPPED TO (cUSTOMER)
What is a good logisitics maangement strategies?
Postponement! Intentionally delaying supply chain activities for the purpose of improving flexibility, and reducing inventory costs (shortage costs, holding costs)
What is the pro of postponement strategies
if they are executed well, can result in 30-40% lower inventory costs with shorter order fulfilment times, and improved customer satisfaction
How can we do postponement of place utility?
Positionining inventory down the supply chain for as long as possible!! keep things in the warehouse as long as you can before you send it to the retail stores!!
this way you can match demand, and do rapid delivery, because if one store has high demand and one has low demand, pulling back inventory to the warehouse is really complicated!!
how do you implement postponement of place utility
- geographically close warehouse to the retailers
-good IT system that has a good ERP
-good transportation system
How can you postpone form utility?
slide 7.26-27
Supply chain postponement times:
1) postpoining form utility
2) postpoining place utility
3) labeling postponenment
4) packagining postponement
labeling postponement
products are completed with the exception of labeling
a manufacturere can produce a generic product that is sold unter multiple labels
what is packagining postponement
products are completed but stored in bulk wihtout packaging
-reduces storage space (in warehouse or on a truck)
-provides flexibility for demand fluctuations of different package sizes
Third party logistics
this is the outsourcing of transportation, warehousing, distribution, order fulflment, and final assemble of modular products (mass customization)……….
basically 3pl: allows all partners to concentrate on what they do best and assign other aspects of their busienss process to another org who is expert in the aspect of th ebusiness
is 3pl a growing industry
yes
1pl, 2pl, 3pl, 4pl
1pl: conduct all logistic internally
2pl: use a carrier to transport freight
3pl: outsource some logistical activities: like transportation of freight, 3pl company will own trucks and warehousis
4pl: completely outsouricng a supply chain
example of 4pl providers, and what they own
dleoitte, accenture, and they own no physical logistical assets usually
whatis a functional product
what sort of supply chain is needed?
products with predictable demand (low product variety, low stockout rate, low contribution to margin, longgg life cycle)
they need a PHYSICALLY EFFICIENCT process supply chain (supply predictable demand efficiently at lowest cost, focus on cost >quality)
What is ahumanitarian supply chain
processes and systems involved in mobilizing people, resources, skills and knowledge to people during disaster
->When hurricane katrina hit usa, the FEMA did a poor job of getting humanitarian aid to these people
-> walmart gave water in big trucks to all of these people! So government thought maybe we should look to these business ideas for operations
!!!
govt understood better infrastructure and coordination needed
what is the most difficult link in the humanitarian supply chain?
DISTRIBUTION!!! coordinating how to get goods where they need to be is so hard
how can you ease distribution through a humanitarian supply chian
pre position resources to where they need to be for easy distribution
-> the red cross has multople warehouses in strategic locaitons
FortMcMurray convoys: the truckers who drove to help had good intentions but caused a lot of problems by clogging up the roads! Result: we need a strong co-ordinated humanitarian effort
panama warehouses: watch videos
-why panama: low chance of natural disastersm but leads to where a lot of them occur! This is a perfect spot to keep the humanitarian aid warehouses Lots of transportation infrastrucutre in this area, flights, rail adn ships, fastest way to get aid out is to ship it by air, the warehouses are located near the airports
-the panama canals run north to south
differences between humanitarian supply chain and commercial supply chain
- cost < speed, speed is the key
- high inventory levels are GOOD! ignore the holding cost
- perishable items expiring is okay this means that they were unused, they have to be replaced
- many stakeholders
- high visibility of performance
- a lot higher job satisfaction
Ikea: created stable structured shelters at the refugee camps, so they can provide some more security and some safety. There are no addiitonal tools required to build this secure structure, these homes can be locked safely and this creates a higher sense of safety and privacy; ikea partnered wtihi the UNHCR, united nations high commission for refugees
Ikea: created stable structured shelters at the refugee camps, so they can provide some more security and some safety. There are no addiitonal tools required to build this secure structure, these homes can be locked safely and this creates a higher sense of safety and privacy; ikea partnered wtihi the UNHCR, united nations high commission for refugees
what is important about humanitarian supply chain jobs
people need to be ready to move quickly to areas of crises!!
what are innovative product characteristics
what is the supply chain type needed
-products with innovative demand
(also small life cycle, high contribution to margin, lots of variety, and high stock outrate)
they need a market responsive supply chain (respond to unpredictable demand, minimize stock out rate, and markdowns) FOCUS ON SPEED FLEXIBILITY AND QUALITY
