Supply Chain Management
Explain Supply Chain Operations Reference Model (SCOR)
"The Supply Chain Operations Reference-model (SCOR) is a process reference model that has been developed and endorsed by APICS Supply Chain Council as the cross-industry standard diagnostic tool for supply chain management
What are the characteristics of SCM as a management philosophy?
- A systems approach to viewing the supply chain as a whole, and to managing the total flow of goods inventory from the supplier to the ultimate customer. - A strategic orientation toward cooperative efforts to synchronize and converge intrafirm and interfirm operational and strategic capabilities into a unified whole. - A customer focus to create unique and individualized sources of customer value, leading to customer satisfaction (based on the synchronization of SC activities).
What are the six business era models?
- Analog - Web - E-Business - Digital Marketing - Digital business - Autonomous
Mention the 6 key technologies set to change the logistics industry by 2030
- Big data - Sensor technology - Augmented reality - 3D printing - Robots - Drones
What are 6 different types of inventory?
- Cycle stock: inventory that results from replenishment of inventory sold or used in production. - In-transit inventories: items that are en route between two locations. - Safety or buffer stock: held in excess of cycle stock because of uncertainty in demand or lead time. - Speculative stock: inventory held for reasons other than satisfying current demand, e.g. when purchasing more to receive discounts. - Seasonal stock: form of speculative stock that involves the accumulation of inventory before a seasonal period begins. - Dead stock: items for which no demand has been registered for some specified period of time, e.g. obsolete items
What are the five steps of process redesign?
- Develop business vision and process objectives. Prioritize objectives and set stretch targets - Identify processes to be redesigned. Identify critical or bottleneck processes - Understand and measure existing processes. Identify current problems and set baseline - Identify IT levers. Brainstorm new process approaches - Design and build a prototype of the process. Implement organizational and technical aspects
What are the different types of channel relationship?
- Direct supply chain - Extended supply chain - Ultimate supply chain
Describe the three risk categories
- Disruption: when the supply chain is radically and unexpectedly transformed through nonavailability of certain production, warehousing, distribution, or transportation options - Delay: can be viewed as a recurrent risk and can occur because of many reasons, such as variations in transportation or production lead times - Distortion: known as "forecast risk," occurs when one or more parameters within the supply chain system, such as order sizes, stray from their forecasted and expected values
Mention 5 reasons to hold inventory
- Economies of scale: ordering large quantities allows to take advantage of price reductions - Balancing supply and demand: seasonal supply/demand, e.g. garden furniture should be produced in winter, as well. - Specialization: cost savings in the operation of consolidation warehouses that allow to specialize manufacturing by location. - Protection from uncertainties: prevent a stock-out in the case of variability in demand or in the replenishment cycle. - Buffer: channel participants are separated geographically, making inventory necessary to achieve time and place utility
Explain the "exhaustive approach"
- Identify all processes within an organization (or supply chain!) and then prioritize them in order of redesign urgency. - Often associated with "information engineering" (i.e., use of data dictates processes to be redesigned). - Limited resources can make this approach very difficult.
Explain the "high impact approach"
- Identify only the most important processes or those most in conflict with the business vision and process objectives. - Most organizations have some sense of which areas are most crucial to their success - This approach might be sufficient in most cases
What are the assumptions behind the square root law?
- Individual distribution center serves an exclusive market area, demand varies randomly and safety stock levels are statistically determined - All distribution centers maintain the same level of safety (buffer) stock protection. This assumption is consistent with the practice of many companies that seek to standardize product availability across the market - Demands at each distribution center in the decentralized system are not correlated. This assumption is questionable when customers do not accept supplier-defined market territories, i.e., when they can get products more easily and cheaply from other distribution centers
What are the necessary steps to implement a SCM philosophy?
- Integrated behavior - Mutually sharing information - Mutually sharing risks and rewards - Cooperation - The same goal and the same focus on serving customers - Integration of Processes - Partners to build and maintain long-term relationships
What characterise process-oriented measurement?
- Measures are much more interrelated - Measure are much more customer focused - Measure give a more comprehensive view
Explain posteponement
- Postponement refers to the process by which the commitment of a product to its final form (manufacturing postponement or location logistics postponement) is delayed for as long as possible - The philosophy of postponement ideally would begin in the drawing board so that products are designed with late configuration in mind
Differentiate between the robustness and the agility strategy
- Robustness: ability of a supply chain to resist change without adapting its initial stable configuration (proactive) - Agility: ability of a supply chain to rapidly respond to change by adapting its initial stable configuration (reactive)
What are the three categories SCM can be classified into?
- SCM as a management philosophy - SCM as an implementation of a management philosophy - SCM as a set of management processes
Explain the different stages in the Gartner Hype cycle
- Technology trigger: A potential technology breakthrough kicks things off. Often no usable products exist - Peak of inflated expectations: Early publicity produces a number of success stories - often accompanied by scores of failures - Trough of disillusionment: Interest wanes as experiments and implementations fail to deliver - Slope of enlightenment: Second- and third-generation products appear from technology providers. More enterprises fund pilots; conservative companies remain cautious - Plateau of productivity: Mainstream adoption starts to take off. Criteria for assessing provider viability are more clearly defined
What is the 2nd Leagility strategy?
- The Decoupling Point approach - buy-to-order - make-to-order - assemble-to-order - make-to-stock - ship-to-stock
What is the 1st Leagility strategy?
- The Pareto Curve approach - 80/20 rule: 80% of volume will be generated from 20% of the product line
What is Carter et al.'s six premises of a supply chain?
- The supply chain is a network, consisting of nodes and links - The supply chain as a network operates as a complex adaptive system, where every agent grapples with the tension between control and emergence - The supply chain is relative to a particular product and agent - The supply chain consists of both a physical supply chain and a support supply chain - The supply chain is bounded by the visible horizon of the focal agent - The visible horizon of the focal agent is subject to attenuation, where distance is based on factors including physical distance, cultural distance, and closeness centrality
Why is the supply chain becoming more vulnerable?
- economies of scale leads to centralized distribution/manufacturing and less flexibility - just-in-time and lean practices leads to efficiency rather then effectiveness - reducing costs leads to globalization and more complex supply chains - outsourcing of non-core business activities leads to loss of control - consolidation of suppliers leads to increased potential for supply failure
What are the different BPMN modelling elements?
- event - activity - sequence flow - gateway - parallell gateway - inclusive gateway - pool - lane - text annotation - message flow - message - event-based gateway - collapsed sub-process - exception flow
What are the causes of the bull-whip effect?
- members react to market dynamics (rationing game and price variations) - members optimise internal operations of inventory management (order batching and demand signal processing)
Explain the responsive part of the second dimension of Fisher's model
- minimise market mediation cost - costs that occur when when there is a mismatch between supply (product variety) and demand (what customers wants to buy) - high supply chain responsiveness
Explain proccess owner, resource owner and team leader
- process owner: responsible for a process, structure, suitability and efficiency - resource owner: responsible for resources, includes competence centers - team leader: responsible for a team, often cross-functional
What are the key enablers of manufacturing postponement?
- process standardisation - process resequencing - component standardisation
What are the 4 sources for the Bull-Whip effect?
- rationing game - demand signal processing - order batching - price variations
What are the possible future advantages of a supply chain based on 3D print technology?
- reduced costs - it can reduce the length of the supply chain - manufacturing centers can tackle inventory concerns - makes it possible to deliver goods in tight timescales - help meet the growing demand for personalised goods
List some strategies to control risk
- risk avoidance - risk reduction - risk transfer - risk sharing - risk taking
Explain the phases of supply chain risk management
- risk identification (identify causes of supply chain disruptions) - risk assessment (evaluate likelihood and impact that events will have on the business) - risk controlling (prioritise and develop strategies to reduce the risk) - risk monitoring (monitor the development of risk, e.g. political risk)
What is the 3rd Leagility strategy?
- separates base and surge demand - base demand: can be forecasted based on past data. It can be met through lean processes to achieve economies of scale - surge demand: more difficult to predict. Surge demand is provided for through agile, and probably higher cost, processes - increasingly being employed in the fashion industry where the base demand can be sourced in low cost countries and the surge demand "topped up" locally nearer to the market
Explain the functional part of the first dimension of Fisher's model
- stable, predictable demand - satisfy basic needs - do not change much over time - long life cycle - commodities: pasta, tomato soup
What are the assumptions of hierarchal organisations?
- there is one best way to do everything - it is possible to identify specialised work task - improvement of one task leads to increased overall improvement - it is the boss' task to think - employees have no or little education
What is a lane in the BPMN?
A lane is a sub-partition within a process, sometimes within a pool, and will extend the entire length of the process
Explain artificial neural networks
ANNs combine artificial neurons in order to process information
Define artificial intelligence
Artificial intelligence is the broader concept of machines being able to carry out tasks in a way that we would consider "smart"
What is the business process model and notation?
Business process model and notation (BPMN) is a graphical representation for specifying business processes in a business process model.
What is a supply chain strategy?
Determines the nature of procurement of raw materials, transportation of materials to and from the company, manufacture of the product or operation to provide the service, and distribution of the product to the customer, along with any follow-up service and a specification of whether these processes will be performed in-house or outsourced
Define risk sharing contract
Risk-sharing contracts specify which proportion of the transaction cost and risk is incurred by the manufacturer and which is incurred by the retailer
What is supply chain integration?
Supply chain integration is the combination of efforts to integrate supplier and customer information and inputs into internal planning. This includes practices used to internalize and share external inputs within the organization
What is a text annotation in the BPMN?
Text annotation is a mechanism for a modeler to provide additional text information for the reader of a BPMN Diagram
Define customer order decoupling point (order penetration point)
The decoupling point separates the part of the supply chain geared towards directly satisfying customer orders [=pull processes] from the part of the supply chain based on planning [=push processes]
Define supply chain management
The management of upstream and downstream relationships with suppliers and customers in order to deliver superior customer value at less cost to the supply chain as a whole
What is the supply chain risk metric time to survive (TTS)?
The maximum duration that the supply chain can match supply with demand after the disruption of a node - a supplier facility, a distribution center, or a transportation hub
What is just in time manufacturing?
The term just-in-time (JIT) is used to indicate that a process is capable of instant response to demand without the need for any overstocking
What is the supply chain risk metric time to recovery (TTR)?
The time it would take for a particular node - a supplier facility, a distribution center, or a transportation hub - to be restored to full functionality after a disruption.
Define value added
The value added by a firm; i.e. the value created by the activities of the firm and its employees, can be measured by the difference between the market value of the goods that have been turned out by the firm and the cost of those goods and materials purchased from other producers
Define vendor-managed inventory
The vendor assumes responsibility for managing inventories at buyers. Reviewing the buyer's inventory levels, the vendor makes decisions regarding the quantity and timing of resupply. This implies that inventory information at the buyer is accessible to the vendor
What is vendor managed inventory?
The vendor assumes responsibility for managing inventories at buyers. Reviewing the buyer's inventory levels, the vendor makes decisions regarding the quantity and timing of resupply. This implies that inventory information at the buyer is accessible to the vendor.
Define Lee's model "agile supply chains"
These supply chains have strategies in place that combine the strengths of 'hedged' and 'responsive' supply chains. They have the capability to be responsive to the changing, diverse, and unpredictable demands of customers on the front end, while minimizing the backend risks of supply disruptions.
Explain the visibility boundary
Visibility is limited. What lies beyond the realm of its visible range simply emerges for the agent
What is an "agile supply chain" in the Leagility model?
using market knowledge and a virtual corporation to exploit opportunities in a volatile marketplace
What is supply chain risk?
variation in the distribution of possible supply chain outcomes, their likelihood, and their subjective values
What are the assumptions for economic order quantity?
• Demand for the product is constant and uniform throughout the period. • Lead time (= time from ordering to receipt) is constant. • Price per unit of product is constant. • Inventory holding cost is based on average inventory. • Ordering or setup costs are constant. • All demands for the product will be satisfied. • No back orders are allowed
What is the difference between direct and indirect transportation networks?
• Direct Transportation Network: Each depot is directly connected to all other depots; no change of means of transportation. • Indirect Transportation Network: One or more central points (hub) and transportation relations around this point (spokes).
What are the three V's of big data?
• Volume: it is estimated that Walmart collects more than 2.5 petabytes of data every hour from its customer transactions. • Velocity: real-time or nearly real-time information makes it possible for a company to be much more agile than its competitors • Variety: Data takes the form of messages, updates, images posted to social networks
What is a group in the BPMN?
A group is a grouping of graphical elements that are within the same category
Define supply chain
"A network of connected and interdependent organisations mutually and co-operatively working together to control, manage and improve the flow of materials and information from suppliers to end users." "a set of three or more entities (organizations or individuals) directly involved in the upstream and downstream flows of products, services, finances, and/or information from a source to a customer."
Explain the efficient part of the second dimension of Fisher's model
- aim to minimise physical costs - these costs include costs to convert raw materials into finished goods, transportation of goods and warehousing - low supply chain responsiveness
What are the most likely objectives for business process redesign (BPR)?
- cost reduction - time reduction - output quality - quality of worklife/learning/empowerment
Explain the innovative part of the first dimension of Fisher's model
- difficult to predict (high demand uncertainty) - newness - change much over time - short life cycle - novelties: smart phone, fashion apparel
Mention 6 unintended consequences of artificial intelligence for the earth
- performance risk - security risk - control risk - ethical risk - economic risk - societal risk
What is Fisher's model?
A framework proposing that a physically efficient supply chain provides the best performance results for functional products, and innovative products perform best when aligned with a market responsive supply chain
What are the two primary reasons for understanding and measuring processes before redesigning them?
1. Problems must be understood so that they are not repeated. 2. Measurement can serve as a baseline for future improvements.
What is a message flow in the BPMN?
A Message Flow is used to show the flow of Messages between two Participants that are prepared to send and receive them
What is a blue number?
A bluenumber is a unique number that identifies people, organisations, places and things. This means that any person anywhere on the planet now has a digital identity and can connect it to other systems and organisations to be recognised and access services and benefits
What is a competitive strategy?
A company's competitive strategy defines, relative to its competitors, the set of customer needs that it seeks to satisfy through its products and services
What is a gateway in the BPMN?
A gateway is used to control the divergence and convergence of sequence flows in a process
What is a link?
A link is "the connection between two nodes. Links represent transactions consisting of the flow of materials, information, and/or finance between nodes"
What is a message in the BPMN?
A message is used to depict the contents of a communication between two participants
What is a node?
A node is "an establishment which is an agent that has the ability to make decisions and maximize its own gain within the parameters in which it operates"
What is a pool in the BPMN?
A pool is the graphical representation of a participant in a collaboration
What is a sequence flow in the BPMN?
A sequence flow is used to show the order that activities will be performed in a process
What is a business process?
A set of logically related tasks performed to achieve a defined business outcome
What is a 'vanilla box'?
A vanilla box is defined as a semi-finished product that can serve more than one final product. Inventory is stored in this intermediate form. Components and finished products can be seen as two extreme forms of vanilla boxes.
What is an activity in the BPMN?
An activity is a generic term for work that a company performs in a process.
What is an association in the BPMN?
An association is used to link information and artifacts with BPMN graphical elements
What is an event in the BPMN?
An event is something that "happens" during the course of a process or a choreography. These Events affect the flow of the model and usually have a cause (trigger) or an impact (result)
Define crossdocking
Crossdocking is a specific way of transshipment. In contrast to order picking, the units that contain the goods are not changed
What is a data object in the BPMN?
Data objects provide information about what activities require to be performed and/or what they produce
Define Lee's model "efficient supply chains"
For such efficiencies to be achieved, non-value-added activities should be eliminated, scale economies should be pursued, optimization techniques should be deployed [...], and information linkages should be established [...]
What is just in sequence manufacturing?
Just-in-Sequence (JIS) occurs according to a sequence defined by the customer throughout the supply chain. It can be implemented in delivery, production, and distribution
What differs Lee's model from Fisher's?
Lee extended the demand dimension by adding a supply dimension
Define machine learning
Machine learning is a current application of AI based around the idea that we should really just be able to give machines access to data and let them learn for themselves
What two strategies have a negative impact on the performance of supply chain?
Safe harbour and panic
Explain the term "strategic fit"
Strategic fit requires that both the competitive and supply chain strategies of a company have aligned goals
What is sustainability and the triple bottom line?
Sustainability is development that meets the needs of the present without compromising the needs of future generations. The triple bottom line is social, economic and ecological sustainability.
What does the square root law state?
The square root law is a simple rule of thumb, stating that safety stocks can be reduced by the square root of the number of distribution centers
Define Lee's model "responsive supply chains"
These are supply chains that utilize strategies aimed at being responsive and flexible to the changing and diverse needs of the customers. To be responsive, companies use build-to-order and mass customization processes as a means to meet the specific requirements of customers
Define Lee's model "risk-hedging supply chains"
These are supply chains that utilize strategies aimed at pooling and sharing resources in a supply chain so that the risks in supply disruption can also be shared. A company may want to increase the safety stock of its key component to hedge against the risk of supply disruption [...]
Explain economic order quantity
concept which determines the optimal order quantity on the basis of ordering and carrying costs
What is a "lean supply chain" in the Leagility model?
developing a value stream to eliminate all waste, including time, and to ensure a level schedule
What is the bull-whip effect?
phenomenon where orders to the supplier tend to have larger variance than sales to the buyer (i.e., demand distortion), and the distortion propagates upstream in an amplified form (i.e., variance amplification)
Define logistics management
that part of supply chain management that plans, implements and controls the efficient, effective forward and reversed flow and storage of goods, services and related information between the point of origin and the point of consumption in order to meet customers' requirements
What is a "leagile supply chain"?
the combination of the lean and agile paradigms
What is business continuity management?
the development of strategies, plans and actions which provide protection or alternative modes of operation for those activities or business processes which, if they were to be interrupted, might otherwise bring about a seriously damaging or potentially fatal loss to the enterprise
What is supply chain risk management?
the implementation of strategies to manage both everyday and exceptional risks along the supply chain based on continuous risk assessment with the objective of reducing vulnerability and ensuring continuity
Explain "supply chain fit"
the perfect strategic consistency between a product's supply and demand characteristics and supply chain design characteristics
What is supply chain orientation?
the recognition by an organization of the systemic, strategic implications of the tactical activities involved in managing the various flows in a supply chain
