Supply Chain New Stuff Flashcards
5 goals of firms regarding their supply chain management
Ensure timely availability of resources Reduce total costs Enhance quality Access technology and innovation Foster sustainability
Steps of the strategic sourcing process
Analyze spend & markets Develop sourcing strategy Identify potential suppliers Assess & select suppliers Manage relationship
Spend analysis
process to understand what purchases are being made and at what price from which suppliers
4 types of sourcing strategies or relationships
Strategic
Leverage
Bottleneck
Noncritical
Strategic
build collaborative partnerships
High level or risk and high value of spend
Leverage
Standardize purchases and use competition to select suppliers
Low level of risk and high value of spend
Bottleneck
Use multiple sources and find substitute materials
High level and risk and low value of spend
Noncritical
Increase inefficiencies (VMI) Low level or risk and low value of spend
Sourcing strategy must consider (3 things)
Number of suppliers to use, capabilities and location of suppliers, and type of relationship and contract length
4 Types of relationships and their definitions
Adversarial- lots of distrust, limited communications and short-term transactions (buyers minimize dependency on suppliers)
Arms-length- more purchasing transactions, but less distrust and antagonism between the two parties
Relationships with mutual goals- major step towards collaboration, but lacks the commitment of a full partnership
Full partnership- close working relationships with trust, mutual respect and highly integrated operations
Competitive bidding
suppliers submit bids to win the buyers business (RFP and then buyer rates the potential suppliers)
Online reverse auctions
Allow suppliers to competitively bid for buyer’s business in real time (drive prices lower rather than higher)
Negotiation
supplier is qualified, but they negotiate terms of contract. This is the preferred method of supplier selection (requires early supplier involvement)
Strategic suppliers and strategies
market leaders, specific know-how, buyer or supplier can have more power
create mutual commitment and long-term relationship
Leverage suppliers and strategies
many competitors, commodity products, buyer dominated
Obtain best deal for short-term
Bottleneck suppliers and strategies
technology leaders, few or only one supplier alternative, supplier dominated
Secure short and long term supply and reduce risk
Noncritical suppliers and strategies
larger supply, many suppliers with dependent position, reduce number of suppliers
Reduce logistics complexity and improve operation efficiency
Reasons why B2B relationships fail
Lack of clear goal Cultural distance Lack of trust Lack of coordination between management Difference in operation procedure Relational risks Operational risks
How to partner effectively?
should be driven by overall corporate strategy
Types of partnerships
Arm’s length
Type 1- coordinated activities, planning and short term focus (one division)
Type 2- coordination, planning and integration of activities, long term focus but limited period (multiple divisions)
Type 3- sharing significant levels of operational integration, partners view each other as an extension of own firm, no end date
Joint ventures
Vertical integration
Benefits of partnering
Improve assets/cost efficiencies
Improve customer service
Enhanced marketing advantage
Profit and stability
Levels of strategic planning
Corporate- overall mission of the firm and the types of businesses the firm wants to be in
Business unit- part of the overall firm, but act as a semi-independent organization (use SWOT analysis)
Functional strategic planning- determines how the function will support the overall business unit strategy
Critical customer
customer receiving priority because it is critical to the firm’s current or future success
Value proposition
all of the intangible and tangible benefits that customers can expect to receive by using the products offered by the firm
Order-winners, qualifiers and losers
Order-winners- traits that cause customers to choose a product over a competitor
Order-qualifiers- trait that must be met at a certain level for the product to even be considered
Order-losers- traits that, if not satisfied, cause loss of current or future orders
4 characteristics of a good value proposition
Offers a combination of features that a customer is willing to pay for
Differentiates the firm from its competition
Satisfied the financial and strategic objectives
Reliably delivered given the capabilities of the firm and its supporting supply chain
Capabilities
operation activities that the firm can perform well
Core capabilities
skills, processes and systems that are unique to the firm and enable it to deliver products that are difficult to imitate for competitors
Fit
exists when operation capabilities support the value proposition and the outcomes desired by critical customers
Lean system
improve efficiency by eliminating waste (aka just-in-time manufacturing)
Benefits of a lean system
lower breakeven amount by increasing the contribution amount and reducing fixed costs
Lower variable production costs (labor, materials and energy)
Make smaller quantities and allow niche marketing
Objectives and principles of a lean system
only produce what customers want
only as quickly as customers want
with only feature that customers want
with perfect quality
with minimum lead times
with no waste of labor materials or equipment
using methods that reinforce development of workers
Steps to achieve lean system principles
Precisely specify value for each specific product
Identify the value stream for each product
Make value flow without interruptions
Let the customer pull value from the producer
Pursue perfection
Reasons for employees being critical in a lean system
Acceptance- lean requires acceptance from the top down
Source of flexibility- flexible to meet customer demand
Working in teams
Power in their hands- responsibility of improving product quality (frontline workers)
Beliefs of lean
Data solves problems
Waste is a symptom- result of a problem elsewhere
Goals are to be met- realistic, achievable goals
Standardization is fundamental to performance improvement
Process orientation- if you don’t like the outcomes, then change the process
Triple bottom line
measures and attempts to reduce potentially negative impacts of a firm’s process on people, planet and profits
Life Cycle Assessment
a tool that helps assess the full impact of waste in everything that goes into a product
5 stages of life cycle assessment
Extraction- getting inputs
Production- costs incurred to produce finished good
Packaging/transport- includes wasted material and energy for packaging
Usage- waste related costs in use including maintenance repair and operation
Disposal or recycling costs- costs incurred at the end of the product life cycle
5 Categories of waste
material choice energy usage solid residuals liquid residuals gaseous residuals
4 key stakeholders
customers
workers
suppliers
investors
Typical supply chain strategies
Continuous replenishment- close relationship, high predictability of demand
Lean- not close relationship, high predictability of demand
Fully Flexible- close relationship, low predictability of demand
Agile- not close relationship, low predictability of demand
Agility
a firm’s responsiveness to external stimuli
Reacting quickly requires
Spare capacity
Accurately forecasting capacity
Switch into high priority production when necessary
Being able to deliver in a short time requires
spare capacity
power over suppliers
close relationships with suppliers
good scenario planning
Solving Lead time gap
Source- same country suppliers and near shoring
Make- re-design and new technology
Deliver- closer to customer and faster transportation
Lead time gap
The gap between the source of discovering customer demand and the customer’s order cycle. We want to shrink the lead time gap as much as possible for agility
Drivers
compelling reasons to partner
Facilitators
supportive environmental factors that enhance partnership growth (corporate comparability, physical proximity
Possible facilitators in relationships
Corporate comparability Compatible management philosophy Strong perspective of mutuality Symmetry between the two parties Shared competitors Physical proximity Prior relationship experience
General outcomes of partnership
Global performance outcomes
Enhancement of profits
Leveling the flow of profits over time
Effective supply chain evaluation audit
flexible comprehensive objective mathematically straightforward reliable
Strategic competitiveness
when a firm successfully formulates and implements a value-creating strategy
Strategy
an integrated and coordinated set of commitments and actions designed to exploit core competencies and gain a competitive advantage
