Supply Chain Management Flashcards
Ashby’s Law of Requisite variety
“An organization needs to be as flexible as its environment”
Super-tanker company
A company that is extremely vertically integrated. E.g. Philips in the 50s and 60s.
Work-boat company
A company that is not very vertically integrated. Where non-core functions (including production and assembly) are outsourced. “The Modern Firm”
Unit-Management / Unbundling of the firm
The process of splitting up vertically integrated firms into smaller Business Units. From super-tankers to work-boats.
Collaborative Planning (Sales & Operations Planning)
Method where decision making is done across multiple organisation. Each link in the chain updates the others on a frequent basis. Then joint decisions are made on how to move forward
Collaborative KPIs
Joint use of KPIs so that one company doesn’t optimize for themselves, but for the network
Operations planning with Scenarios
TO BE DESCRIBED
Myopic Management
Management form in which manager tend to obtain short-term firm-based gains.
Business Dynamics
New perspective on management where the focus lies on long-term profit for the entire network.
Exponential Decay
Feature of the negative feedback loop. The more there is of something, the faster it can be reduced.
E.g. The more rabbits there are, the faster they will die.
First order material delay
Where the flow is a certain percentage of the stock. Most common form of delay
Higher order material delay
Where the flow is a certain percentage of the stock,
Information delay
The difference between the perceived value and the actual value.
E.g. the actual amount of corona infections versus how many positive tests there are.
Information delays have a noise suppressing quality
Anchor and Adjustment Theory
Humans are quick to make first impressions (anchor). If this first impression is wrong it takes a lot of time to adjust to the actual situation.
Five System Archetypes
- Exponential Growth
- Goal-seeking
- Oscillation
- S-shaped growth
- Overshoot & Collapse
Steady State Value
The equilibrium values for the stocks that a particular system is working towards
Rationality Filter
The filter you use to assess the validity of stories, ideas, and models you come across.
Economics and Mathematical models assume full rationality, but people are in fact nor rational.
Can’t be avoided.
Cognitive Filter
Limitations in the cognitive ability to interpret situations. Humans have difficulty with dynamic systems, accumulations, delays, feedback-loops, etc.
Can’t be avoided
Behavioral Limitations
Theory-loadedness of Observations by an individual.
Might be avoidable depending on the emotional state someone is in.
Theory-loadedness
Observations are said to be “theory-laden” when they are affected by the theoretical presuppositions held by the investigator.
Organizational limitations
The organization being unable to take the necessary steps, though the optimal decision is known
Strategic Limitations
Capability trap, experience trap, good vibes trap
Capability Trap
If a process throughput is not what it should be, you can work faster (work more) or smarter (improve process). Both take time, but only one adds to lowering process defects.
Working smarter is not very visible, might look like nothing is done.
Experience Trap
When older people rely on their experiences even though their old experiences are not very effective at modern situations. Called the Brooks Law
Service Ramp-up Trap
Thinking that you can ramp up rapidly, actually slows your ramp speed
Why has good decision making become more complex?
Increasing volatility in the environment
Increasing technological complexity
Increasing interconnectedness
Principal-Agent Theory
If an agent has two tasks, for which the performance of only can easily be measured, then the agent is likely to pay very little of no attention to the unmeasurable one.
Principal-Agent Theory
If an agent has two tasks, for which the performance of only can easily be measured, then the agent is likely to pay very little of no attention to the unmeasurable one.
Stock-flow failures
The phenomenon the individuals perform poorly with accumulative problems
Priming
The phenomenon that a stimuli will result in a stronger or faster response of the brain of that stimuli was observed before.
Availability Heuristic
The availability heuristic operates on the notion that if something can be recalled, it must be important, or at least more important than alternative solutions which are not as readily recalled.
Planning Fallacy
The tendency to under-estimate the time and resources required to complete a certain (set of) task(s)
Framing effect
The phenomenon of making a certain decision or forming a certain opinion based on information surrounding the topic that might not necessarily be representative
Overconfidence: the WYISIATI rule
Due to the illusion of understanding and What You See Is All There Is, people may become overconfident in their predictions, judgments, and intuitions.
Brooks Law
“A common mistake is in starting a project with one goal or one budget; and then when some of the variables change, as they always do in projects, managers decide to add staff but they fail to take into account time lags in hiring and training people, and projects end up late and over-budget.”
Policy Perspective
Choosing the right distance / level of abstraction when modeling system dynamics. Not as close as psychology and not as far as to being unaware of internal structure / social culture
Overt decision
Overt decisions are conscious decisions by people as part of management- and economic processes
Implicit decisions
Implicit decisions are the unavoidable result of the state of a system. These are often still very important decision.
