Supply Chain Management Exam 4

The silo mentality

"I win, you lose" Using the cheapest suppliers. Ignoring customers. Assigning few resources to new product & service design

cost per time period to expedite

(CC-NC)/(NT-CT)

solutions to the silo mentality

-Align SC goals with firm goals & incentives -Performance reviews of managers must include their ability to integrate processes internally and externally

performance measurement systems must

-Link SC trading partners to achieve breakthrough performance in satisfying the end users -Overlay the entire supply chain to assure that all contribute to supply chain strategy -Be jointly agreed on by all SC members

productivity

-common/ popular -how well resources are being used -relative- it is meaningful only when you compare it to another value --compared over time --compared to others at the same point in time OUTPUTS/INPUTS

traditional performance measures

-cost and profit based -use with caution -costs and profits can be hidden or manipulated -does not reflect the underlying performance of an organization's productive systems

Supply chain operations reference (SCOR) model

-developed by the supply chain council -used for SM diagnostic benchmarking and process improvement -separates supply chain operations into 6 process categories

What are the 4 perspectives of the balanced scorecard

-financial perspective -internal business process persepctive -customer perspective -learning and growth perspective

developing world class performance measures

-identify the firms strategic objectives -determine each functional areas requirements for achieving strategic objectives -design and document performance measures for each functional area -assure compatibility and strategic focus of performance measures to be used -implement the new performance monitoring system -identify internal and external trands likely to affect firm and functional area performance over time -periodically re evaluate the firms performance measurement system as trends and changes occur

quality

-number of defects per unit produced and per unit purchased -number of product returns per units sold -number of warranty claims per units sold - number of suppliers used -lead time from defect detection to correction -number of work centers using statistical process control -number of suppliers who are quality certified -number of quality awards applied for number of awards won

what are the 6 process categories for the SCOR model

-plan -source -make -deliver -return -enable

cost

-scrap or spoilage losses per workcenter -average inventory turnover -average setup time -employee turnover -average safety stock levels -number of rush orders required for meeting delivery dates -downtime due to machine breakdowns

companies use SCOR-based benchmarking to

-set reasonable performance goals based on the SCOR model -calculate performance gaps against a global database -develop company specific roadmaps for supply chain competitive success

SC performance measures

-total scm costs -sc cash to cash cycle tie -sc production flexibility -sc delivery performance -sc perfect order fufillment performance -supply chain e business performance -supply chain environmental performance

A firm can compete based on supply chain strategy IF they can

-understand the end customer -leverage partner requirements and trade offs -adjust SC member capabilities

project crashing steps

1. Identify all project activities 2. sequence activities and construct network 3. list out all paths and determine the critical path 4.find cost per time period to expedite 5.reduce project completion time (one time period at a time reduce on Cp only and te CP may change as project is reduced)

align SC strategies

1. customer relationship management 2. customer service management 3. demand management 4. order fufullment 5. manufacturing flow management 6. supploer relationship management 7. product development and commercialization 8. returns management

CPM with a single time estimate steps

1. identify all project activities 2. sequence activities and construct network 3.determine slack times (fine the ef and es for each activity, find the ls and lf for each activity) 4. determine the critical path

supply chain integration model activities overview

1. identify critical SC trading partners 2.review and establish SC development strategies 3. align SC strategies with key DC process objectives 4. develop internal performance measures for key processes 5. assess and improve internal integration of key sc processes 6. develop external perfomance measures for key processes 7. assess and improve external process integration and performance 8.extend process integration to 2nd tier sc partners 9. reevaluate the integration model annually

extend process integration to as least 2nd tier SC partners

> integrate process to 2nd tier partners and beyond >radio frequency identification (RFID) tag - relays

Types of critical path methods

>CPM with a single time estimate >time cost models and project crashing >cpm with three activity time estimates

functional project disadvantages

>aspects of the project that are not directly related to the functional area get short-changed >motivation of team members is often weak >needs to the client are secondary and are responded to slowly

Activities that cause bullwhip effect

>demand forecasting updating --->inconsistent times between updates ----->number of >order batching --->non-periodic ---->hockey stick (where you have steady sales but you need to reach quota so they jump up) >price fluctuations >gaming (the customer is ordering a number they actually dont need in hopes they receive all of it)

pure project disadvantages

>duplication of resources >organizational goals and policies are ignored >lack of technology transfer >team members have no functional area "home"

matrix advantages

>enhanced communications between functional ares >pinpointed responsibility >duplication of resources is minimized >functional "home" for team members >policies of the parent organization are followed

assess and improve internal integration of key SC processes

>formation of cross functional teacms >management support and resources >ERP system >develpp and understanding of the internal supply chain

review and establish SC strategies for

>information technologies used >sustainability >Parts purchased and suppliers >shop layout and manufacturing processes >design of the products manufactured >mode of transportation >warranty and return services >employee training methods

develop Internal Performance measures for key processes

>performance should be continuously measured >create a consistent emphasis on the overall supply chain strategy >firm is able to track progress in each key process

lack of trust

>successful process integration requires trust >Trust occurs over time

critical path

>the path taking the longest time through this network of activities >provides a wide range of scheduling information useful in managing a project

pure project advantages

>the project manager has full authority over the project >team members report to one boss >shortened communication lines >team pride, motivation, and commitment are high

matrix disadvantages

>too many bosses >depends on project manager's negotiating skills >potential for sub-optimization

functional project advantages

>typically, a team member can work on several projects >technical expertise is maintained within the functional area >the functional area is a home after the project is completed >critical mass of specialized knowledge

cpm with a single time estimate

>used when activity times are known with certainty >used to determine timing estimates for the project each factivity in the project and slack time for activities

cpm with three activity time estimates

>used when activity times are uncertain >used to obtain the same information as the single time estimate model and profitability information

time-cost models and project crashing

>used when cost trade off information is a major consideration in planning >used to determine the least cost in reducing total project time

Prerequisites for critical path method

A project must have well-defined activities whose completion marks the end of the project; independent activities; and activities that follow a given sequence.

critical path method

CPM helps to identify the critical paths in the project networks

Managing supply chain risk

Continuity >increase safety stocks also known as stockpiling and forward buying >identify backup suppliers and logitics services >diversify the supply base >utilize a supply chain IT system >develop a formal risk management program

functional project

Housed within a functional division example:project b is in the functional area of research and development

basic initiatives

Physical security; personnel security; standard risk assessment; computing security; continuity plan; freight protection

proactive initiatives

`director of security personnel with military or government experience formal security risk assessment adv computing security participation in security groups

project

a series of related jobs usually directed toward some major output and requiring a significant period of time to perform

SCORmark

a tool whicha llows meber firms to benchmark performance against peer companies

difficulty in scm

adding tiers of suppliers and customers complicates performance measurement

reevaluate the integration model

annually trading partners should revisit the integration model annually for changes within supply chains assess the impact of changes on integration efforts

environmental sustainability

assessments of or targets for environmental performance

time-cost models

basic assumption: relationship between activity completion time and project cost time cost models: determine the optimum point in time cost tradeoffs

assess and improve external process integration and performance

build and maintain and strangthen relationships >share knowledge management solutions such as forecast information new products and expansion plans (enables real time collaboration and flow of information between SCM partners

asset management

cash to cash cycle time inventory days of supply asset turns

winning

companies using performance measurement are more likely to achieve leadership positions an twice as likely to handle a major change successfully

ultimate goal of supply chain management

create vlaue for end customers and firms in the supply chain

advanced initiatives

customer supplier collaboration, learning from the past. formal security strategy, sc drills, simulations, emergency control center

decisions of stock and company performance

decisions to maximize current stock prices do not necessarily reflect that the firm is performing well

ES

determined by the earliest finish time of the precedent activity if there are two or more precendent activities this time is the same as precedent activity with the latest earliest finish time

develop extrnal performance measures for key processes

ecternal performance measures should align with internal performance measures >monitor links with trading partners in key SCM processes >trading partners should monitor measures across member firms for each of the SC processes.

customer service

flexibility --average num of labor skills --avg production lot size --no of customized services available dependability --avg service response time --% of delivery promises kept --acg no of days late per shipment -avg no of stockouts -no of days to prcess warranty claim innovation --investment in R&D --% of automated processes -- no of new product or service introductions --no of process steps required per product

total productivity formula

goods and services produces/ all resources used

lack of supply chain visibility with solution

inability to easily share or retrieve trading partner information in real time solution:require both technology and good communicaiton processes

intra v inter

intra is within the company and the inter is between companies

the balance scorecard

kaplan and norton created BSC to align an organizations performance measures with its strategic plan and goals the BSC framework consists of four perspectives. also referred to as score carding

partial (single factor) productivity

labor productivity = output/labor capital productivity= output/ capital

lack of knowledge

lack of process or IS skills >technology changes allow process integration across extended supply chains >firms must spend significant time influencing and increasing the capabilities of themselves and their partners >training of supply chain pertner employees is also known as collaborative educaiton and can result in more successful supply chains

reactive initiatives

larger security organization, ctpat compliance supply base analysis supply continuity plan limited training

reliability

on time delivery order fill rates order accuracy rates

responsiveness

order lead times or speed

total productivity

outputs/ cost of (labor+capital+energy+material)

idiosyncratic

performance measurements vary from company to company

integration

performance measures must be visible and communicated to all members of the SC

draw backs of standard, actual and variance

performance variance -locally optimal, globally sub optimal -Standards can reinforce the idea of the functional silos

network planning models

project is made up of a sequence of activities that form a network representing a project

Integration includes

project management process integration performance measurment

RFID

radio frequency identificaiton tag relatys products location as it moves through the supply chain

agility

response times for unforeseen events production flexibility

identify critical SC trading partners

sell and deliver products to final customers >Identifying primary trading partners allows the firm to concentrate on managing links with these companies >map the network

green supply chain management

share responsibility legal implications

cost

supply chain management and logistics costs cost of goods sold\ warranty and returns processing costs

demand driven supply networks

supply chains with enough flexibility to quickly respond to changes in the marketplace

Slack

the difference if an between the earliest start and latest start times or the earliest finish and the latest finish times

performance variance

the different between the standard and actual performance

EF

the earliest you can complete an activity determined by adding the activity time to the earliest start time (ES+t)

LF

the latest mand activity can edn without delaying the project it is the same as the latest start time of the next activity if there are two or more subsequent activities this time is the the same as the earliest of those Latest start times

project management

the management activities of planning, directing, and controlling resources (people, equipment, and material) to meet the technical, cost, and time constraints of a project

LS

this is the latest an activity can start without delaying the project latest finish time minus the activity time (LF-t(

Pure Project: Organizational structure

where a self contained team works full time on the project