Supply Chain Management #1

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Author:
belanger
ID:
256314
Filename:
Supply Chain Management #1
Updated:
2014-02-14 13:26:09
Tags:
SCM
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Description:
Supply Chain Management
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  1. Vertically Integrated Firm
    business boundaries include one-time suppliers and customers
  2. Strategic partnerships
    alliances with suppliers, transportation, distributors, and customers
  3. Reverse logistics activites
    return products, obtain warranty repairs, throw product away/recycle
  4. Focal Firm
    Middle company with first-tier suppliers and customers on either side
  5. Supply Chain Management
    • Product-related activities
    • improve operating efficiencies, quality, and customer service
    • sustainable competitive advantage
    • all collaborating organizations.
  6. First-tier suppliers/customer
    firms most important direct boundaries
  7. Bullwhip Effect
    Small changes ripple through and create larger changes in supply chian

    safety stock, forecasting, and production problem
  8. Business Process Reengineering (BPR)
    radical rethinking and redesigning of business processes to reduce waste and increase performance
  9. Supply Management
    • most crucial issue
    • Supplier eval
    • Supplier certification
    • Strategic pertnerships
    • Purchasing
    • Supplier relationships
    • Strategic Sourcing

    Purchasing:Upstream
  10. Supplier evaluation
    determining the current capabilites
  11. Integrations
    Coordinating all aspects

    • Performance measurement
    • Risk magmt
  12. Distribution
    Logistics

    • Transportation mgmt. & models
    • CRM
    • Warehousing
  13. Vendor Managed Inventory (VIM)
    • Suppliers manage buyer inventories
    • Reduces carrying and stockout costs
  14. VIM from buyers perspective
    • Supplier track inventories
    • Determines delivery schedules & order quantities
    • Buyer can take ownership at stocking location
  15. Foundations of SCM
    • Supply Mgmt
    • Operations
    • Distribution
    • Integration
  16. Operations
    Production: adding value

    • Forecasting
    • Inventory mgmt
    • Resource planning
    • Process mgmt
  17. Supplier certification
    buers to assume the supplier will meet certain product quality and service requirements covered by the certification
  18. Demand management
    • minimizes costs for forecasting being different from actual demand
    • match demand to available capacity
  19. Supply Chain Consists of
    • Raw materials manufacturers
    • Compoenent/intermediate manufacturers
    • Final Product manufacturers
    • Wholesalers/distributors
    • Retailers
  20. Down Stream
    Product, Service, Credit Flow
  21. Upstream
    Orders, cash, recycling, and returns flow
  22. Six Sigma quality
    total quality management strategy
  23. External Drivers of Change
    • Globalization & Increase competition
    • Increasing customer expectations
    • Product proliferation
    • Shorter product life cycles
    • New Tech
    • environmental Issues
  24. Importance of SCM
    Cost Savings and better coordination of resources
  25. Bullwhip Causes
    • Price Fluctuations
    • Periodic ordering of wholesalers/manufacturers
    • Rationing/shortage gaming
  26. Bullwhip solutions
    • Base production on wholesaler demand, not consumer demand:
    • Actual Demand available to suppliers
    • Vendor-managed inventory
    • Reduce SC
    • Reduce order to deliver time
  27. Expanding Supply Chain
    • Breadth-other manufacturers
    • Depth- 2nd/3rd tier suppliers/customers
  28. Benchmarking
    Improve over competitors' performance
  29. Greening SC
    75% consumers influenced by CSR
  30. Reduced SC Cost
    • Six Sigma
    • Reduce:
    • purchasing costs
    • waste
    • excess inventory
    • non-value added activies
  31. Merchant Buyers
    wholesalers and retailers who resell
  32. Industrial Buyers
    by raw to make service/product
  33. MRO
    Maintenace Repair Operating
  34. Purchasing
    Aquiring materials, services & equipment
  35. Contracting
    acquisition of services
  36. Supply mgmt encompasses
    all acquisition activites
  37. Goals of purchasing
    • 1. uninterrupted flows or raw materials at lowest total cost (Total Cost Analysis)
    • 2. Improve quality
    • 3. Optimize customer satisfaction
  38. Material Requisition/Purchase Requisition
    • Triggers Order
    • State: product quantity and delivery date
  39. Request for Quotation (RFQ)
    • Getting Proposal
    • Buyer identifies suppliers & issues a RFQ for routine items or RFP for demanding products
  40. Purchase Order (PO)
    • Contract Formed
    • buyer's offer accepted by supplier
  41. Backward vertical integration
    acquiring sources of supply
  42. Forward Vertical Integration
    Acquiring customer's operations
  43. Reasons for Buying/Outsourcing
    • Cost advantage
    • Insufficient capacity
    • Lack of expertise
    • Quality

    • Strategic benefit of BEST IN CLASS supplier
    • Greater flexibility in new tech
    • Reduce cycle times
    • Risk transferred
    • Less capital required
    • Technology
  44. Reasons for Making
    • Protect Patent
    • No competent supplier
    • Quality control
    • Existing capacity
    • Control lea-time, tansport, and warehouse cost
    • Lower cost
  45. Total Cost to Make/Buy
    Fixed Cost + Variable Cost
  46. Breakeven Point
    • Cost to Make = Cost to Buy
    • > make
    • < buy
  47. Supply Mgmt Trends
    New relationships with suppliers

    • Outsourcing
    • Focus on Operations
    • Single sourcing
    • Long-term Buyer-Supplier relations
    • Partnerships vs adversarial trading
  48. Supply Base
    • List of org you purchase from
    • Many are consolidating
  49. Preferred suppliers provide
    • earlier involvement: info on trends, materials, processes or designs
    • Info on markets
    • Capacity for unexpected demand
    • Cost efficiency- economies of scale
  50. Single-Source: Reasons to Favor
    Risky but Trendy
    • Good relationship
    • Less quality variability
    • Lower cost
    • Transporation economies
    • Proprietary product/process
    • Volume too small to split
  51. Multiple Sources: Reasons to Favor
    • Need capacity
    • Spread interruption risk
    • Create competition
    • Information
    • Special kinds of business
  52. Supplier Selection Criteria
    • Technologies
    • Willingness to share tech & Info
    • Quality
    • Cost
    • Reliability
    • Order system & cycle time
    • Capacity
    • Communication capability
    • Location
    • Service
  53. Total Cost of Ownership
    • (often overlooked)
    • Unit cost
    • Tooling
    • Transportation
    • Ordering
    • Carrying
    • Quality
  54. Unit cost
    annual demand * price
  55. Tooling cost
    set amount
  56. Transportation cost
    (order cost * annual demand * weight * TL) /pound per mile
  57. Ordering cost
    order cost * (annual demand/order quantity)
  58. Carrying Cost
    (Order quantity/2) * price * carry %
  59. Quality Cost
    Unit cost * quality%
  60. Weighted-Criteria Eval System
    • 1. Key dimensions
    • 2. performance data
    • 3. assign weights
    • 4. evaluate performance
    • 5. score
    • 6. classify vendors
    • 7. Audit regularly
  61. Supplier Scorecard
    Rating * Weight = final value

    Weights must sum to 1
  62. Keys to successful partnerships
    • Trust
    • Shared vision & objectives
    • Relationships
    • Mutual benefits & needs
    • Commitment & to mgmt support
    • Change mgmt
    • Info sharing
    • Capabilites
  63. Performance Metrics
    • 1. understandable
    • 2. easy to measure
    • 3. focused on real value-added results
  64. VIM from Suppliers perspective
    • Avoids ill-advised customer orders
    • Supplier decides inventory setup & shipment
    • Opportunity for supplier to educate customers about other products
  65. Centralized Purchasing
    • located at corporate office
    • makes all purchasing decisions

    always hybrid
  66. Decentralized purchasing
    • local departments
    • make own purchasing decisions

    always hybrid
  67. Centralization Advantages
    • Concentrated volume
    • Leveraging purchase volume
    • Avoid duplication
    • Specialization
    • Lower transportation costs
    • No competition within units
    • Common supply base
  68. Decentralization Advantages
    • Closer knowledge of requirements
    • Local sourcing
    • Less bureaucracy
  69. Decentralized-centralized
    • 3m
    • decentralized corporate
    • centralized business unit
  70. Centralized-decentralized
    • Volume discounts
    • central large national contracts
    • decentral items specific to business unit
  71. Reasons for Global Sourcing
    can improve quality, cost and delivery performance
  72. Challenges for Global Sourcing
    • additional skill & knowledge with:
    • international suppliers
    • logistics
    • communication
    • political environment
  73. Independent Demand
    Finished Goods
  74. Dependent Demand
    • Raw materials
    • Component parts
    • Sub-assemblies
  75. Qualitative Forecasting
    • Opinion
    • Used when data is limited, unavailable, or not currently relevant
  76. Quantitative Forecasting
    • Mathematical
    • Using old data to predict new data
  77. Average Demand
    Period of time
  78. Demand Trend
    whether it is increasing or decreasing
  79. Cyclical variations of Demand
    • longer than a year
    • wave-like
    • due to business cycle
  80. Seasonal element of demand
    • peaks and valleys
    • consistent interval
  81. Random variation of demand
    • unexpected/unpredictable events
    • Natural disasters
  82. Qualitative Methods
    • Consumer Survey- focus groups
    • Sales Force Composite- survey sales force
    • Dlphi Method
    • Historical Analogy
    • Jury of Executive Opinion
  83. Delphi Method
    • 1. Experts
    • 2. Questionnaire
    • 3. Sum results & redistribute with new questions
    • 4. Sum again, refining forescases & conditions, new questions
    • 5. Repeat 4 if needed thatn distribute final results to all participants
  84. Quantitative Forecasting Methods
    • Time Series:
    • Moving average
    • Exponential smoothing
    • Trend projection
    • Casual models:
    • Linear Regression
  85. Naïve Forecast
    Next period = past period
  86. Simple Moving Average
    average of past periods
  87. Forecast Error
    • how far above or below actual demand
    • Defined in real terms
  88. Running Sum of Forecast Errors (RSFE)
    Indicates bias- tendency to be consistently higher or lower than actual demand

    *Sum of errors
  89. Mean Absolute Deviation (MAD)
    • average absolute error
    • 0 is best
    • larger less desirable
  90. Weighted Moving Average
    • Unequal weighting on prior time periods
    • Weights must add to one
    • t= last
  91. Mean Absolute Percentage Error (MAPE)
    • true average of forecast error
    • Ideal 0
    • Average of abs(e/a)
  92. Mean Squared Error (MSE)
    average e^2
  93. Tracking Signal (TS)
    • Forecast in acceptable limits
    • +- 4
    • is forecast average keeping pace
    • Use when other figures are both really large
  94. Collaborative Planning, Forecasting, and Replenishment (CPFR)
    • Coordinate demand forecasting, production and purchase planning, and inventory replenishment
    • Used to integrate multi-tier SC
    • Objective: exchange internal info to give reliable, longer term future view
    • Uses cyclic & interative approach
  95. CPFR Model
    • 1. Collaboration Arrangement
    • 2. Joint Business Plan
    • 3. Sales Forecasting
    • 4. Order Planning/Forecasting
    • 5. Order Generation
    • 6. Order Fulfillment
    • 7. Exception Management
    • 8. Performance Assessment
  96. CPFR Benefits
    • Strengthens partner relationships
    • Analysis of sales & order forecasts
    • Improve forecast accuracy
    • Integrates planning, forecasting and logistics
    • Efficient category management & customer purchasing patterns

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