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Supply Chain Management > Week 1: Introduction to SCM and the course > Flashcards

Week 1: Introduction to SCM and the course Flashcards

1
Q

What is supply chain management?

A

management of the flow of goods and services including all process that transform raw materials into final products.

It means getting the right product (right quality and quantity) at the right time, to the right place, at the right cost

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2
Q

Name the two kinds of products?

A
  1. Functional products (staples)
  2. Innovative products (fashion, B&J, Nespresso, Apple)
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3
Q

Name three characteristics of functional products

A
  • Stable, predictable demand
  • Long life cycle
  • Competition thus low profit margins
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4
Q

Name three characteristics of innovative products?

A
  • Unpredictable demand
  • High profit margins
  • Short life cycle (few months), great variety
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5
Q

Name the two functions of a supply chain?

A
  1. Physical: focus of efficient supply chain
  2. Market mediation function: Focus of responsive supply chain. Products produced and offered meet customer demand effectively.
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6
Q

What are Fisher’s two supply chain strategies?

A
  1. Efficient
  2. Responsive

Mismatch causes problems

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7
Q

Name five operations strategies to compete in the market?

A
  1. Speed to market
  2. Responsiveness through configure to order
  3. Efficiency through outsourcing manufacturing and logistics
  4. Cost efficiency
  5. Efficient and reliable order fulfillment
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8
Q

Give an example company that uses a speed to market operations strategy and their customer value propopsition?

A
  1. Zara
  2. High fashion content at a reasonable price
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9
Q

Give an example firm that uses a responsiveness through configure to order operations strategy and their CVP

A
  1. Dell Direct
  2. Customer experience
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10
Q

Give an example company of a firm that uses an efficiency through outsourcing manufacturing and logistics strategy and their CVP?

A
  1. Apple
  2. Product innovation
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11
Q

Give an example of a firm that uses a cost effiency operations strategy and their cvp

A
  1. Walmart
  2. Everyday low pricing
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12
Q

Give an example of a firm that uses an efficient and reliable order fulfillment operations strategy and give their CVP

A
  1. Amazon
  2. Product selection and availability
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13
Q

Name three key observations in supply chains?

A
  1. Interaction between supply chain and development chain
  2. Coordination across companies / Global optimization
  3. Uncertainty and risk factors
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14
Q

What is a development chain?

A

Set of activities and processes associated with new product introduction

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15
Q

What activities are included in the development chain?

A
  1. Product design and research
  2. Associated capabilities and knowledge
  3. Sourcing decisions
  4. Production plans
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16
Q

Why is it essential to share information and cooperate across the supply chain?

A

Coordination/ cooperations and integration are essential to prevent a bullwhip effect. Optimizing information sharing with suppliers will reduce inventory costs / shortage costs

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17
Q

Name four trends that cause uncertainty and risk factors in supply chains?

A
  1. Demand is problem number one; forecasting alone is not a solution
  2. Recent trends
  3. Natural disasters
  4. Politics
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18
Q

Name three recent trends that have caused uncertainty and risk in supply chains?

A
  • Lean manufacturing
  • Outsourcing
  • Offshoring
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19
Q

Name the seven key issues in supply chains?

A
  1. Inventory control
  2. Network configuration
  3. Production sourcing
  4. Supply contracts
  5. Distribution strategies
  6. Product design
  7. Supply chain integration and partnering
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20
Q

Name three factors that make forecasting strategically important?

A
  1. Capacity
    - Capacity shortages can result in undependable delivery, loss of customers, loss of market share
  2. Workforce scheduling
    - Hiring, training, laying off workers
  3. Supply chain management
    - Good supplier relations and price advantages
21
Q

What are the three forecasting time horizons?

A
  1. Short-range forecast
  2. Medium-range forecast
  3. Long-range forecast
22
Q

What is the time rainge of the short-range forecast and what activities are included?

A
  • Up to 1 year, usually less than 3 months
  • Purchasing, scheduling, workforce levels, job assignments, production levels
23
Q

What is the time range of the medium-range forecast and what activities are included?

A
  • 3 months to 3 years
  • Sales and production planning, budgeting
24
Q

What is the time range of the long-range forecast and what activities are included?

A
  • 3+ years
  • New product & Capacity planning, facility location, research and development
25
Q

What are the seven steps in forecasting?

A
  1. Determine use of the forecast
  2. Select the items to be forecasted
  3. Determine time horizon of the forecast
  4. Select forecasting models
  5. Gather the data
  6. Make the forecast
  7. Validate and implement results
26
Q

What are the three golden rules of forecasting?

A
  1. Forecast is always wrong
  2. Longer the forecast horizon, the worse the forecast
  3. Aggregate forecasts are more accurate
27
Q

Name the two main forecasting approaches?

A
  1. Qualitative methods:
    - Used when situation is vague and little data exists
    - Involves intuition and experience
  2. Quantitative methods:
    - Used when situation is stable and historical data exist
    - Involves mathematical techniques
28
Q

Name the four main qualitative forecasting methods?

A
  1. Jury of execution
  2. Delphi method
  3. Sales force composition
  4. Consumer market survey
29
Q

What is a jury of execution forecasting method?

A

Pool of opinions of high-level experts, sometimes augmented by statistical models

30
Q

What is the delphi method forecasting method?

A

Panel of experts, queried iteratively

31
Q

What is a sales force composition forecasting method?

A

Estimates from individual salespersons are reviewed for reasonableness, then aggregated.

32
Q

Name the two main quantitative methods?

A
  1. Time series models (Naïve approach, moving averages, exponential smoothing, seasonal indices
  2. Associative model (linear regression)
33
Q

What are time series?

A

value of the same variable is recorded at regular intervals

34
Q

What are the four components of time series?

A
  1. Levels: an average around which observations vary
  2. Trend: predictable increase or decrease in the level over time
  3. Seasonality: pattern or predictable and recurring shifts in the level
  4. Random noises: unpredictable variations in the data
35
Q

What are the three quantitatitive methods of forecasting in case of no trend or seasonality

A
  1. Naïve approach
  2. Moving average
  3. Exponential smoothing
36
Q

What is the naïve approach in quantitative forecasting?

A

demand in next period is same as demand in most recent period. Sometimes cost effective and efficient. Can be a good starting point.

36
Q

What is the moving average method in quantitative forecasting?

A

series of arithmetic means. Used if little or no trend and is always running behind a bit.

37
Q

What are the potential problems of using the moving average method in forecasting?

A
  1. Do not forecast trends
  2. Require extensive historical data
  3. Increasing n smoothes the forecast, but makes it less sensitive to changes.
37
Q

What is meant with seasonal variations in forecasting?

A

consistent and repeated upward or downward movements of data values. Can be traced to recurrent events.

38
Q

What is exponential smoothing in quantitative forecasting?

A

trade-off that takes into account recent observations (flexibility) and more historical data (stability)

39
Q

What is seasonally adjusted / deseasonalized data?

A

seasonal effect has been removed. Deseasonalization is useful to identify other patterns and make better forecasts.

40
Q

What steps should be taken to deseasonalize data?

A
  1. Calculate the season average
  2. Calculate the seasonal index: average of this season’s demand over time period / average all seasons over time period
  3. Deseasonalize the data
  4. Apply forecasting method
  5. Seasonalize the data (by multiplying it with the seasonal index
41
Q

What is the forecast error and what does it mean?

A

actual demand – forecast value.

The smaller it is the more accurate the forecast.

42
Q

Name the two types of performance measures of forecasts?

A
  1. Measures of accuracy: Tell us about the average size of the error
  2. Measures of bias: tells us of the forecast tends to be consistently too high or consistently too low
43
Q

Name three measures of accuracy in forecasting and give one advantage for each?

A
  • Mean absolute deviation (MAD) ; Advg: easy to understand
  • Mean squared error (MSE) ; Advg: Often used to determine uncertainty and inv management due to variance and st dev association
  • Mean absolute percentage error (MAPE) ; Advg: Good to compare products with different levels.
44
Q

Name three measures of bias in forecasting?

A
  • Mean forecast error (MFE, not used in the course)
  • Running sum of forecast errors (RSFE)
  • Tracking Signal (TS)
    Forecast is biased when it is consistently too high or too low
45
Q

What is upstream and what is downstream in supply chains?

A

The supplier side is upstream

The customer side is downstream

46
Q

What are the two potential objectives of a supply chain?

A
  1. Minimizing cost (cost optimization)
  2. Maximizing service level (service level optimization)
47
Q

What is the relation between the information and product flows in supply chains?

A

They flow in opposite directions.

Goods flow from upstream to downstream
Information flows from downstream to upstream

Supply Chain Management (2 decks)

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