Final Exam Module 1-8

Dunnage

Bubble wrap, Styrofoam popcorn, small inflatable airbags used in boxes, large inflatable bags used in shipping containers

Flexible Flow and Layout

A manufacturing strategy and layout that typically works well for producing end items (or services) that have relatively low demand levels and that may require a high level of customization. The work centers focus on a particular type of function like drilling, sanding, welding, painting, assembly, etc. While each work center performs a single function, a large degree of variation is possible at each workstation.

Planogram

A map of where every product goes on a retail store shelf.

Lean Manufacturing

A production philosophy that strives to meet consumer demand and desires but with minimal inventory levels and minimal supply chain waste because cunsumer desires are constantly evolving. . Also known as Just in Time or Toyota Production System

Established Channels of Distribution

Channels of distribution represent the chain of organizations that help bring a product into the hands of the end user. This might include packaging companies, delivery companies, warehouses, distribution centers, and perhaps even suppliers. So, established channels of distribution implies that a certain chain of organizations have an established history of working together and perhaps coordinating supply chain actions. This advanced relationship might imply that transactions occur regularly and perhaps more fluidly.

Cross-docking

Distribution of goods from an upstream supplier to a downstream customer through a distribution center with minimal handling and storage times typically less than 24 hours. Explained: Wal-Mart has thousands of retailers and thousands of stores. How can Wal-Mart quickly get products from suppliers to stores using the smallest number of distribution centers and minimal logistics resources? Cross-docking!

Economic Order Quantity (EOQ)

EOQ is the lot size (Q) that will minimize total annual inventory cost (TC); it is therefore seen as the optimal lot size. The formula for Economic Order Quantity. Explained: Basically, if a manager wanted to minimize total inventory cost they could calculate EOQ and find the optimal order size. EOQ is actually useful in many other situations as well. It can be helpful in manufacturing, transportation, and beyond. EOQ can also be described as the lot size where annual holding cost is equal to annual ordering cost.

Competitive Priorities

Good supply chains deliver the right mix of -cost -quality -speed -flexibility to their target market.

Near Sourcing

it refers to a shift in strategy, where a company used to manufacture goods very far away (example: 8,000 miles away) from the home market, but then shifts to manufacturing in a country that is much closer (example: 750 miles away) to the home market. Explained: The key words in the definition provided are "relatively close".

Cargo Qualifications

• Bulk - Cargo that is loose and free flowing. Bulk cargo is not in any type of bag, box, or packaging vessel. As such, bulk cargo is typically loaded and unloaded by being pumped, scooped, shoveled, etc. •Break bulk - Cargo that is packaged (box, bottle, can, etc.) and/or secured on a pallet. This type of cargo can then be placed inside of a standardized container or a truck trailer. •Neo-Bulk - Typically these are large items that do not quite fit into either the bulk or break bulk categories. This might include vehicles, logs, and livestock. Neo-bulk items are typically not moved in standardized containers.

How can supply chains be more sustainable?

• Eliminate waste - Good supply chain and business sustainability both value efficiency. • Legal and Ethical Business Practices - Treating customers, employees, and supply chain partners well is vital to controlling costs, maximizing productivity, and increasing sales. • Improve quality of life - While supply chains are supposed to efficiently deliver valuable products and services to customers, we can also extend this point to say that the best supply chain practices in business, government, and military can be useful to organizations that seek to save lives.

Keys to Lean Manufacturing

• High Performance Quality - Being devoted to the consumer. Companies with lean systems have the ability to be fast and flexible, thus they can innovate and bring their customers the very best products and services. • Consistent Quality - Customers expect consistency from one purchase to the next. Simplicity and reliability are keys to consistent quality. • Quality at the source - Empowering every employee to be a quality inspector and manager. By having knowledgeable employees that can identify errors and are then empowered the to act. Lean companies can find and fix errors as early as possible in the supply chain. The earlier errors are identified the lower the associated costs. • Continuous Improvement -Companies that do not focus on continuous improvement of the product, the processes, the buyer-supplier relationships, and materials used are overlooking opportunities to keep old customers, find new customers, improve quality, increase speed, offer more flexibility, and control costs. • Poka-yoke - Mistake-proofing.Find ways to completely eliminate certain types of errors. For example, suppose two digital devices are to be connected. Connecting them requires 5 wires be plugged from one device to the other. Suppose that the 5 wires each has a different connector that will only fit into a single connection point on the second device. This is a poka-yoke since it would be impossible to fit each of the 5 wires into the wrong connection point since they would not fit. • Close supplier ties - Good relationships, trust, and information sharing reduce uncertainty .This may lead to fewer stockouts, smaller safety stocks, fewer expensive rush shipments, and thus less consumer strife. • Small lot sizes - Does your company need to produce thousands of units to achieve a profit and/or economies of scale? When companies can produce small batches in a profitable manner they can control inventory levels and still meet consumer demand quickly. • Standardized components and work methods - They can also be rather complex, though. When companies work to create some standardization it allows the workers to feel more comfortable in performing their jobs and also in identifying mistakes as well as defective components. Lean organizations try and meet varying consumer demand, but when possible, being able to identify opportunities for standard components and work methods can reduce stress and aid in the identification and elimination of errors. • Dedication to the Workforce - Lean systems require finding errors, fixing errors, identifying opportunities for improvement, and relationship management with supply chain partners. Supply chains that do not invest in their workforce and do not value employee contributions have little hope of performing well today and improving in the future. Educating employees, keeping employees informed, and empowering employees to improve the supply chain are all vital to supply chain maintenance and growth. • Using Automation when Appropriate- Employees are excellent"problem solvers but they grow weary, they can lose focus, and when a job is too repetitive they can get bored. Utilizing automation can be helpful in certain situations. If processes are extremely repetitive, require consistent quality, and must be performed quickly, automation can be an excellent tool. On the other hand, when too much automation is used flexibility and quality improvements can be more difficult to achieve • Short Set-up/Change-over - Set-up time is the amount of time it takes to change a system from producing one product to producing a different item. Keeping short set-up times allows systems to run "leaner"

Push Characteristics

• High finished goods demand readily available for buyers • Opportunities to take advantage of quantity discounts • End-items are standardized with little opportunity for customization"• •Vulnerable to obsolescence of inventory, high holding costs, and poor demand forecasts that may result in stockouts or massive overstocks.

Pull Characteristics

• High raw materials inventory readily available to produce a specific consumer order • End-items are very likely offer a range of customization options • Vulnerable to sudden increases in demand, poor forecasts that may result in poorly planned production systems/facilities

3 Part of Social Responsibility (SR-Module 8)

• Legal and Ethical Behavior - Acting within the law in all of the nations in which they conduct business. It might also include treating stakeholders well - employees, business partners, and customers. • Sustainability - Earth-friendly business practices. Having business practices, products, and services that do not harm the environment in the present nor in the future. • Commitment to the Community - Investing in the well-being of the communities in which the business operates as well as the greater world. Explained: The concept may seem simple, but in fact it can very easily become manipulated or confused. All three categories are so broad and general that different parties can interpret them in different ways.

EOQ's Relationship to Holding & Ordering Cost

•AHC is greater than AOC - Holding costs are too high - You are to the right of EOQ on the chart below. Decrease lot size to reduce TC. •AOC is greater than AHC - Holding costs are too low - You are to the left of EOQ on the chart below. Increase lot size to reduce TC.

Contract Manufacturers

A company that produces goods on behalf of another organization. Explained: Apple designs numerous digital devices but they outsource manufacturing to companies like Foxconn and Pegatron. Foxconn and Pegatron would therefore be considered Apple's contract manufacturers

1st tier suppliers

A company's direct suppliers. A firm that directly provides goods and/or services to a company. The manufacturer's first-tier suppliers are the companies designated S1.

Established Supplier Base

A company's supplier base is the collection of companies from which an organization presently purchases products and/or services. So, an established supplier base implies that an organization has a group of companies with which they have developed a working relationship. This advanced relationship might imply that transactions occur regularly and perhaps more fluidly.

Customs House Broker

A contractor (company or person) that helps a client's goods clear customs in a foreign country. They take over the responsibilities of importing that occur before the goods reach the border as well as when the customs officials are inspecting the goods. • Before goods reach the border: Preparation of documents, issues relating to import fees and taxes • During inspection: Answers the customs agents' questions in an effort to facilitate customs clearance.

Freight Forwarder

A contractor (company or person) that helps companies organize the efficient and effective shipment of goods from one point in the supply chain to another. They negotiate and arrange for one or more logistics companies to prepare, secure, store, track, and move the cargo.

Third Party Logistics Company(3PL)

A contractor that performs one or more logistics functions for their client in an effort to facilitate effective and efficient movement in the supply chain. 3rd party contractor can neither be the buyer nor the seller of the items being moved. Example: Company that helps supply chain partners with any logistical needs.

2nd tier suppliers

A firm that provides goods and/or services to a company's first-tier supplier. The manufacturer's second-tier suppliers are the companies designated S2.

What is Free Trade Zone?

A geographic area sanctioned by the government where items are not under the control of customs authorities.Offer companies the ability to easily import materials and export finished goods with minimal hassle.

Hybrid Systems

A manufacturing layout that combines elements of both line flow and flexible flow layouts. In this layout, products may pass through a layout in a linear fashion, but each workstation would have the ability to allow for some level of customization. Items requiring low degrees of customization may be created in hybrid systems that very much resemble line flow systems except for one or two areas. On the other hand, items requiring higher degrees of customization may only utilize line flow elements in a few parts of their facility.

Postponement

A system that combines push and pull - pushing product elements that are considered standard and then allowing customers to pull product elements that can be customized. Those product elements that are standard will be produced in advanced, and then final production will be delayed (postponed) until the consumer places an order that specifies the customized elements. Example: Subway Sandwiches Bakes sandwich bread long before customers arrive. Meats, cheese, and vegetables have been pre-cut and pre-sliced. Thus when customers arrive they nearly need to ask for the appropriate sandwich items to get put together.(Baking of bread, and slicing of meats, cheeses and vegetables are all push elements of the system) Since Subway knew customers would want some combination of those times on many sandwiches they were prepared in advance. The pull elements all occur when the customer places the order. The customer can have a sandwich built to their exact specifications quickly and while still allowing for a reasonable level of quality consistency for all orders.

Pull System

A system that is activated by consumer demand." Example:(Casual Dining Restaurant), Filet mignon. While the raw steak was likely available in inventory, the steak was not cooked until the specific order was placed. Only then could the steak be served fresh and to the specific desires of the consumer.

C-TPAT( Customs Trade Partnership Against Terrorism)

A voluntary program, The program requires member organizations to report a significant level of detail related to supply chain partners and actions for each imported shipment. In exchange for providing this information to US Customs, member companies are allowed opportunities for speedier and more hassle-free customs clearance.

Cycle Time

Assembly lines work to fulfill a given demand during a certain period of work time (operating time). Cycle time is the pace at which product must move through the assembly line in order for the assembly line to keep pace with demand.

High vs Low Inventory

High Inventory Levels • Higher levels of customer service - Having inventory will help a company address their immediate demand for product • Quantity discounts may be possible - Lower per unit costs • Fewer orders will need to be placed - Possibly lower ordering costs and transportation costs • Greater security against unexpected demand variability Pros of Low Inventory Levels • Less storage space required - Costs of holding inventory may be lower • Lower chance of inventory obsolescence and shrinkage • Less inventory typically means less materials handling requirements • Less money invested in inventory means more money available for other investment opportunities

Downstream Supply Chain

In a supply chain, the direction that points toward the end consumer. In a company an executive that works in downstream supply chain management finds ways to get goods and services closer to the customer in an effective and efficient manner. Downstream activities might include: delivering goods from a manufacturer to a distributor, suppliers (S1) working to get parts prepared in time for manufacturers, distributors developing relationships with retailers so they can better understand the retailer's supply chain needs.

Upstream

In a supply chain, the direction that points toward the suppliers. In a company an executive that works in upstream supply chain management might be responsible for: ensuring that empty boxes at the retail level are returned to the distributor for reuse, developing relationships with a company's first-tier suppliers in order to better communicate the needs of the present and the future.

Pipeline Inventory

Inventory in transit between two points. Those two points establish the pipeline. So the inventory does not necessarily need to be on a truck or train. Consider this example: Let's define the pipeline from the time raw materials arrive until they are available for sale at the store.

Safety Stock (Buffer Stock)

Inventory kept to account for variation/uncertainty of demand. (Example: 100 shovels are sold per week Sunday to Saturday. Shipments arrive Sunday morning. Stores always wants to start Sunday with 125 units of inventory. The additional 25 units are safety stock)

Line Flow

Is a manufacturing strategy and layout that typically works well in producing end items (or services) that have relatively high demand and that require very little (if any) customization. The work centers are located in a linear path. Items begin on one end of the line and continue in a linear path to the last work center. Each work center performs the exact same work to every unit that passes through that work center.

Bullwhip Effect

Is a supply chain phenomenon where fairly stable demand results in a proliferation in the amount of inventory that is carried as one travels upstream in the supply chain. Distribution carries more inventory than retail. Manufacturing carries more inventory than distribution. Suppliers carry more inventory than manufacturers. And so on, and so on. Explained: In business, dealing with uncertainty is a constant challenge. One of the more common tools supply chain managers utilize to battle uncertainty is inventory. • Is there a chance of theft? Damage? Loss? • Is there a chance my sales forecast might be wrong?

Productivity

Maximize a company's high quality output using the fewest resources possible.

Omni-Channel Retailing

Multiple channels of communication that retailers use to engage with customers for example: Catalogs, phone calls, websites, email, internet chatrooms, social media sites or mobile apps, and stores Nordstrom is known for being the leader in omni-channel retailing

Value

Provide customers the best possible product and service bundle at the lowest possible cost and in the most convenient way possible.

Procurement

Purchasing better materials, fewer materials, safer materials

Last Mile

Refers to the portion of the supply chain btw the final inventory holding facility and the end consumer. Example:Amazon.com, the last mile might represent the hundreds of miles from the Amazon center that carries that product to the consumers home. Things to consider: -Last mile does not necessarily cover the final mile before the customer gets the desired good. -End consumer is not always a person living in a home. The end consumer can be an office that ordered printer cartridges, a repair person that needs a part to fix their client's refrigerator, or a factory that is awaiting raw materials. -Real challenges of last mile logistics are that there is so much variation - variation in order size, location, consumer expectations, etc.

TEU

Stands for Twenty-foot Equivalent Unit. This is how containerized cargo is measured. One 20-foot container is equal to 1 TEU. One forty-foot container is equal to 2 TEUs. TEUs are used to measure a number of things including:

Push System

System in which consumer demand is known and expected. As a result a supply chain will preemptively buy materials, manufacture finished goods, and even deliver them to a store or a picking and packing facility where consumers can buy them at a later date. Inventory is "pushed" toward the consumer in anticipation of consumer demand. Example: (Casual Dining Restaurant), an example of items likely produced using a push strategy would be the BBQ ribs, perhaps even the mashed potatoes, and the sliced fruit. These items were all ready in advance of the customer arriving.

Vertical Integration

The act of a company taking on additional supply chain responsibilities that were formerly done by outside parties. There are two classes of vertical integration: • Forward integration - Taking over supply chain responsibilities formerly performed by downstream supply chain partners. (Example: A bakery decides to open up a sandwich shop. Rather than just selling bread to sandwich shops, they now forward integrate and use their own bread for their sandwich shop) • Backward integration - Taking over supply chain responsibilities formerly performed by upstream supply chain partners. (Example: A bakery decides to purchase a flour company. Rather than purchase flour from a flour supplier they now use their new flour branch to both sell flour to other companies (including competitors) and they also use the flour in their own bakery.

Bottleneck

The largest workstation is your slowest workstation. In the given example the bottleneck would be WS3 with 50 seconds. This workstation limits the output of the entire assembly line. It is the weakest link.

Reverse Logistics

The management of products that flow backward in the supply chain, away from the consumer and back in the direction of manufacturers. (The management of materials moving upstream in the supply chain). Explained: When you return a defective television to the store what happens next? Moving products and packaging away from the customer can be costly. As a result, reverse logistics is an important segment of the logistics branch. It is also an excellent reminder of how important it is to be accurate. Making errors in shipping, making defective products, damaging goods in transport, or making products that do not satisfy the customer can increase the need for reverse logistics.

Business Process Outsourcing

The outsourcing of office activities like accounting, human resources, customer service activities (like call centers and customer chat).(Referred to as back office activities.) Example: IBM offers- -Business process outsourcing to companies in the US and around the world. -offers companies help in the areas of employee recruitment, supply chain services, customer care and management of financial data. If you owned a small company you might consider having IBM help manage these types of business activities rather than developing expensive departments internally.

Vendor Management Inventory Systems (VMI)

These are systems where buyers share inventory information with suppliers. Suppliers in turn take on the responsibility of managing inventory levels for the buyer by placing, delivering, and sometimes even stock the buyer's shelves. This system benefits all parties: Shelves are full so customers are satisfied, suppliers know the sales patterns of their product from each store, the store is less likely to experience stock outs since suppliers can better plan demand and deliveries. • Information sharing between supply chain partners. • Develop strong buyer-supplier relationships that result in the sharing of supply chain responsibilities and even strategy and planning. • Practicing lean manufacturing across the supply chain. Defects, waste, and a general lack of supply chain stability results in higher levels of uncertainty. Sound supply chain practices result in good products produced with minimal resources. These positive results require less safety stock to meet a much lower level of uncertainty.

Logistics

Transportation efficiencies, reduce fuel consumption

TL and LTL

Truckload Shippers - more commonly referred to TL Shippers - These types of shippers specialize in moving large amounts of goods, enough to fill an entire truck. If you are dealing with 20 or 40-foot containers instead of a truck, the term CL Shipper can also be used, where CL stands for container-load. On some occasions it is possible that you may see the term FTL, which stands for full container load. In general, there is no difference between TL and FTL. From our examples above, Apple would require the transportation services of a TL shipper. • Less-than-truckload Shippers - more commonly referred to as LTL Shippers - If a company has a reasonable amount of goods going to a single location, but not enough goods to fill an entire truck or container they have an LTL shipment. Again, in the case of a 20 or 40-foot container, this might be referred to as an LCL shipment (Less-than-container-load) From our examples above, Car Parts Inc. would require the transportation services of an LTL shipper.

Reneging

When a customer joins the line, gets frustrated and leaves the line.

Balking

When a potential customer sees the line, but never joins the line because they think it looks too long and/or too slow.

Intermodal

When cargo is moved from one vehicle or vessel to another vehicle or vessel without directly handling the cargo. Typically the cargo would be stored inside of a standardized container or a truck trailer. The standardized container can swiftly and securely be moved from a ship to a rail car, from a rail car to a truck chassis, etc. Explained: Intermodal shipments have become commonplace in shipping breakbulk cargo throughout the world. It is fast and secure. The ability to stack standardized containers also makes shipments rather efficient.

Difference btw Warehouse and DC

While both warehouses and distribution centers tend to be large buildings that contain inventory that will hopefully one day be used and/or sold, there are some differences that set the two apart: • Warehouses are typically used to store inventory for long periods of time (weeks, months, or even years). In a warehouse, storage is the primary function. Items need to be kept safe and preserved for future use. • Distribution Centers (DCs) focus on efficiently getting items to retail and/or wholesale outlets. DCs try to quickly get large shipments of a single good off of a single truck and then get those goods ready for distribution to dozens of downstream stores. The idea here is to have full trucks with large quantities of one (or a few goods) in-bound and then full trucks with small quantities of many different items outbound.