Supply chain management Flashcards
What is included in a supply chain?
A supply chain encompasses all activities associated with flow and transformation of gods and services from the raw materials stage to the end user, as well as the associated flows of information.
What is the purpose of supply chain management?
Supply chain management aims to integrate and manage the flow of goods, services and information through the supply chain.
What are some changes to the business environment which have influences supply chain management?
- The empowered consumer
- Power shift in the supply chain
- Deregulation
- Globalisation
- Technology
- Quality Management.
Explain the bullwhip effect.
The bullwhip effect describes the tendency for variations in customer demand to be amplified as they move upstream to the suppliers furtherest away from the customer.
What affect does the bullwhip effect have?
It increases the costs associated with inventory, transportation, shipping snd receiving; customer service and the profitability of suppliers are also damaged.
What opportunities are available for improvement by using supply chain management?
Accurate ‘pull’ data - The sharing of point-of-sale information collected by retailers and distributors can provide downstream suppliers with more accurate demand forecasts to inform their production scheduling.
Lot size reduction - Focused management effort can enable order volumes to be reduced; for example, by providing discounts according to the annual order volume rather than according to individual shipment volumes. Various techniques can be used to reduce the cost of ordering, such as electronic ordering.
Single-stage control of replenishment - A single member of the supply chain is given responsibility for monitoring and managing inventory for all supply chain members. This removes the chances of the ‘bullwhip’ phenomenon created by distorted information and multiple demand forecasts.
Vendor-managed inventory - This involves the use of a local supplier (usually a distributor) to maintain inventory for the manufacturer or retailer. Where the local supplier provides this service for multiple buyers, there can be savings on the costs of distribution.
Collaborative planning, forecasting and replenishment (CPFR) - With CPFR, members of the supply chain share planning, demand, forecasting and inventory information. CPFR begins by collaboration to agree on a joint marketing plan that is used as the basis for marketing and purchasing decisions by individual participants.
Blanket orders - Also called unfilled or incomplete orders, blanket orders are a contract to purchase certain items that are shipped only when specifically requested. This approach combines the benefit of a long-term purchase commitment with flexibility in the receipt of the purchased items to fit the purchaser’s schedules.
Standardisation - This is where purchasers increase the standardisation of their component parts drawing on the assistance of suppliers to help reduce the need for variety.
Postponement - Postponement withholds any modification or customisation to a generic product for as long as possible. This can involve redesigning a product to enable a uniform standard product to be made that can be customised to individual markets through ‘plug in’ features. To pursue this approach, manufacturers need an effective and efficient supply chain to distribute their standard product to many different markets.
Cross-docking - Goods arriving at a warehouse from a supplier are unloaded from the supplier’s truck and immediately loaded on one or more outbound trucks. In the process, the load may be recombined to suit the customer’s needs. This approach saves storage costs but relies on efficient and reliable warehousing services.
Drop shipping and special packaging - Drop shipping means that the supplier will ship directly to the end consumer rather than to the seller, saving time and reshipment costs. The use of special packaging, labels and optimal placement of labels, and bar codes of packaged items are other ways that suppliers can generate cost savings for distributors.
What are the five performance objectives for Supply Chain Management?
Quality - Errors at any stage in the supply chain can multiply in their effect on end-customer service.
Speed - How fast a customer’s order can be satisfied is one dimension of speed to be considered, but more important is the speed with which products can move through the supply chain.
Dependability - Dependability in terms of on-time, in full order completion together with fast throughout times is the mark of a highly performing supply chain.
Flexibility - The ability to cope with changes and disturbances is important.
Cost - There are potentially high transaction cost is establishing a supply chain.
What is the Supply Chain Operations Reference model (SCOR)?
It is a broad, highly structured and systematic, framework for supply chain management. It is the best known tool used to support strategic sourcing.
What are five measures for performance attributes?
Supply chain reliability - Perfect Order fulfilment - (Total perfect orders) / (Total number of orders)
Supply chain responsiveness - Average order fulfilment cycle time - (Sum of actual cycle times for all orders delivered) / (Total number of orders delivered)
Supply chain agility - Upside supply chain flexibility - Time required to achieve an unplanned 20% increase in delivered quantities
Supply chain costs - Supply chain management costs - Cost to plan + cost to source + cost to deliver + cost to return
Supply chain asset management - Cash-to-cash cycle time - (Inventory days of supply + days of receivables outstanding - days of payables outstanding)
What is upstream and what is downstream?
Upstream is the suppliers and downstream is the retail store.
