Supply chain management Flashcards
what is a supply chain
a network of facilities that procure raw materials, transform them into intermediate goods and then final products, and deliver the products to customers through distribution system
what three areas does supply chain span out through and what management do they belong to?
- procurement (purchasing goods to transform them, supply chain management)
- internal transformation (making the products, operations management)
- distribution (logistics, supply chain management)
which section of supply chain management is inbound and which is outbound
purchasing is inbound, physical distribution is outbound
what are the 3 tiers of suppliers and who do you want relationships with
1 is my supplier, want close relationship with
2 is my supplier’s supplier, want a meh relationship with just to make sure everything tier 1 wants he gets
3 dont need any relationship with, 2nd tier’s supplier
what does going global do in terms of a company’s supplier/ facility locations
it reduces labour costs
why is the fashion industry reshoring and hurting the global supply chains by not being involved in them anymore
they are reshoring to reduce both lead times and shipping costs
what is vertical integration, what does it ask a company
the proportion of the supply chain that the company owns, for example owning your supplier, asks a company whether or not to make their supplies or to buy them
why would an organization not want to outsource
control
what products would not be smart to outsource
vital parts to your goods. for example tesla does not outsource their batteries
what did arcteryx do as a vertical integration example
has a faciility in vancouver where they are focusing on proprietary designs & new products, this accounts for 10% of their global manufacturing and essentially what they learn and perfected in that facility, they taught and ‘integrated’ into their facilities over seas
what is purchasing (procurement) and why is it important
it is the things we buy like services or materials that we choose not to produce ourselves, it is important because they are a huge cost and even the modest reductions in these costs can lead to huge benefits
how do companies select vendors to supply them
based on many criterias, each companies weigh what they believe is most important of a trait that their suppliers should have and choose depending on that. For example cirteria can include company as a whole, services, products, and sustainability.
what does improving supplier operations/ efficiency do and how have some companies helped their suppliers
it will improve the entire supply chain’s performance, some companies have offered free consulting to their vendors to help them be more profitable, produce higher quality products, be more efficient, etc.
three types of purchasing
- centralized purchasing
- stockless purchasing
- blanket purchase orders (POs)
what is centralized purchasing, give an example,positives and negatives
when the entire organization’s needs for a product are purchased in one order. Example is safeway and plastic bags, locations were individually ordering bags so the headquarters decided to combine all orders. Positives: purchasing power, negatives: reduced flexibility/ speed
what is stockless purchasing
supplier delivers material directly to the production area rather than to a stock room
what are the pros for retailer for blanket purchase orders and what are the pros for the manufacturer
pros for retailer
- unit cost savings
- lower holding costs
- lower order costs
- less supply uncertainty
the pros for the manufacturer
- known demand
what is vendor managed inventory
when the vendors/ suppliers manage their customer’s inventory and supplies and restock them when needed
what are the implementation challenges for VMI
customer: trusting vendor enough to let it happen, staff layoffs
vendor: more staffing, vehicles, remote technology, overall work required.
benefits that come from vmi
customer: less admin (ordering costs), less chance of stockouts
vendor: knowledge of demand patterns and potential for more sales since less stockouts
what do firms who are excelling at procurement supply chain management do that sets them apart
they work with fewer suppliers which reduces lead times, costs, late deliveries, overall problems
what three utilities are covered by physical distribution (logistics) and what do each of them mean
time utility (when): providing goods when wanted, not produced
place utility (where): providing goods where they are needed, not where they are produced
form utility (what): the physical change in goods and/ or packaging, basically what you are providing
how are companies pushing customers to be more environmentally aware
by showing how many trees they are saving by choosing vehicle transportation instead of aircrafts, some even made green boxes although these were not environmentally good since you would need to make green paint
what are the different types of logistic costs and why must we consider all of them?
transportation (air, rail, ship, truck), inventory (holding costs), packing (materials required like box, packing peanuts, etc.), damage (in transit, in storage). We must consider all costs because even though air transportation would be more expensive than rail, other costs such as inventory and damage and packing could be much more, making the rail options more expensive.
review slide 23
what is cross docking and what can it do, what does it require
removing the intermediate step of storage by distributing them immediately after they are received. This means as soon as they are recieved they are scanned and distributed to different sections such as a section for stores, for customer orders, for inventory, etc.reduces product handling, inventory, facility costs. requires tight scheduling and extensive infromation technology.
what is drop shipping
retailer doesn’t have what you want in stock so they have to order it from their supplier for you, then the supplier sends you the goods instead of having the goods need to be shipping two times. retailer gives shipping instructions to supplier and supplier ships.
what is postponement and what is it’s purpose
postponement is a logistics management strategy that intentionally delays supply chain activites, its purpose is to improve flexibility and reduces inventory costs
types of postponement
place utility
form utility
labelling postponement
packaging postponement
what is place utility postponement
avoiding to commit inventory to stores for as long as possible until demand is shown. if equal inventory is held at a store with high demand and at a low demand, it must be pulled back to warehouse then shipped to the high demand store or be shipped to the high demand store. this postponement gets rid of that extra time and cost
what is form utility postponement
assembling the product in a different order, meaning the parts that customers are customizing are held until the end to see the demand. for example if french people want your product you can postpone assembling the packages until the end to make sure you put in the french handbook in there instead of the english one. or if they want green casing instead of blue, you postpone.
labeling postponement
works when manufacturer produces a generic product and is sold under multiple labels,
packaging postponement
products completed but stores in bulk without packaging, reduces storage space, provides flexibility to meet demnd fluctuations of different package sizes, for example batteries
why is third party logistics/ outsourcing good
it allows each partner to concentrate on what they do best and assingn other aspects of their business process to another organization who will do a better job on that task
examples of 3pl services
transportation, warehousing, distribution, mass production, order fullfilment, packaging, testing, etc
which party logistics is continously growing
3pl
humanitarian supply chain, what does red cross do to meet the demands
processes and systems involved in mobilizing people, resources, skills and knwoedge to help vulnerable people affected by disasters. red cross has multiple warehouses worth of food and other resources for almost half a million people ready to be sent out whenever something occurs
differences between commercial and humanitarian supply chains,5 things
speed more critical than cost in humanitarian, higher inventory levels in humanitarian, more perishable items which get replaces, more stakeholders in humanitarian, higher visibility of performance
reverse supply chain,new vs used products are?
the series of activites required to retrieve a product from a customer and either dispose or resuse it, new products are returns, used products are recycling goods
what does xerox do with its old photocopeirs that were returned
disaasembles them and reuse/ remanufactures them
the 7 product design considerations
- design for manufacturability
- shipping and handling considerations
- eco design strategy
- modular design flexibility
- design to target cost
- compress the design process
- formalize for production
what do we do to achieve a good design for manufacturing
- use standard materials and parts of known quality
- design to process capability and set tolerances and specifications that wont strain the current systme
- minimize number of distinct components
shipping and handling (design)
handling is done during prpoduction/ assembly
packing and shipping depends on how the item is stored and the shape it is produced to make it more optimal to fit into the vehicles for transportation, reducing shipping costs and increasing space
eco-design strategy, who is an example
overall look at how the product is environmentally, for example low impact materials, lifetime, distribution, how its produced, etc. Arcteryx, they built repair centers at their retail locations and allow customers to send it back to the factory for repair, this boosted sales and trade in jumpin
modular design flexibility
creation of products from some combination of basic, pre existing subsystems. essentially a bunch of different sections that are already done then put together. in standard production the benefits are design, inventory and production effeciencies while in the customer specific production section the benefit is customization at a reasonable price
design to target cost
essentially the price/ costs we will have to pay. it is decided by taking into consideration the selling price, subtracting our desired margin, and then getting the target cost as our value
compressing design process
essentially the product development process will be a functional approach, having the marketing, engeneering, accounting, and operations team all in on the design process
fromalize for production
when the product’s design is complete, we then formalize it for production process. the finished product will have two components, Bill of Materials and Routing
BOM (bill of materials)
the components required to build the product, WHAT items are ordered and picked
Routing
the processing instructions for the product, HOW to make the product
the new supply chain technologies
- Radio Frequency IDentification (RFID)
- 3D Printing
- Blockchain
what is radio frequency identification and how does it help
a chip tag attached to items in stores that contains info and live tracking. it will improve inventory visibilit and accuracy (customer service) and also ability to stock a wider variety of products (low admin per item)
3D printing and how does it help
manufactures products, building 3D objects ‘layer upon layer’, reduces lead time, reduces transportation costs and carbon footprint
how does blockchain help and what is it
system of shared information that provides transactions of each product and item through the shipping process and to customer delivery. everyone has access to the info at the same time. can potentially benefit companies because of proof of sustainability tracing, lower administration costs, and food safety recalls
matrix for block chain based on value of trust and automation
when value of automation (VOA) is high and value of trust (VOT) is high, block chain has high value. when VOA is high but VOT is low, blockchain has some value but other tech may suffice, when both vot and voa are low, blockchain has limited value, when vot is high and voa is low, there is niche application
