Midterm 1 - ITM 608
How can a company minimize small value purchases?
(1) accumulate small orders to create one big order; (2) use fixed interval ordering
What does purchasing contribute to?
(1) actively seeking better materials and reliable suppliers; (2) work closely with strategic suppliers to improve quality materials; (3) involving suppliers and purchasing personnel in new product design and development efforts
Why is it important to increase supply chain responsiveness?
(1) benchmark needed to improve and meet demand regularly, (2) faster product delivery
What are the keys to a successful partnership?
(1) build trust; (2) share the same vision and objectives; (3) develop personal relationships; (4) mutual benefits and needs; (5) commitment and top management support; (6) change management; (7) information sharing; (8) capabilities; (9) continuous improvements
How do you calculate capacity and cycle time?
(1) calculate capacity of each operation; (2) calculate capacity of the system (based on bottleneck); (3) calculate direct labor utilization (also based on bottleneck)
What are the advantages of decentralization?
(1) closer knowledge of requirements for products; (2) local sourcing; (3) less bureaucracy
What are the advantages of centralization?
(1) concentrated volume; (2) avoid duplicated orders; (3) specialization; (4) lower transportation costs; (5) no competition within units due to common supply base
What are the consequences of the bullwhip effect?
(1) costs of inventories between manufacturers and the supplier varies; (2)costs of carrying the inventory may be costly; (3) risk product/supply expiring if held in inventory; (4) remaining current with technology advancements; (5) product recalls; (6) long cash-to-cash cycle; (7) marketing of new products
What are the advantages of having multiple suppliers?
(1) create competitions; (2) information; (3) spread risk of supplier interruption; (4) special kinds of business (5) capacity capabilities
What are the disadvantages of MRPII?
(1) doesn't integrate all functions; (2) primary focus on one unit's internal operations; (3) lacks capability to directly interface with external supply chain members; (4) lacks analytical capabilities
What are the primary goals of purchasing?
(1) ensure uninterrupted flows of raw materials; (2) improve quality of finished goods; (3) optimize customer satisfaction
What are the advantages of having one supplier?
(1) establish good relationship; (2) lower costs; (3) less quality variability; (4) willingness to take risks; (5) transportation economies; (6) proprietary product; (7) higher quality
What are the advantages of a supply chain?
(1) flexibility (select suppliers who offer greatest value); (2) chain is as strong as its weakest link
Solutions for bullwhip effect?
(1) forecast based on point-of-sale, not by the prior supplier; (2) order smaller quantities and more frequently
Why have many ERP systems failed upon implementation?
(1) lack of top management commitment; (2) lack of adequate resources; (3) lack of proper training (prevention); (4) incompatible system environment
What are the consequences of the bullwhip effect?
(1) longer lead times; (2) all forecasting is based on each supplier; (3) batch ordering to reduce per-unit costs
What are the responsibilities of each organization of a supply chain?
(1) meet deadlines; (2) reduce lead time; (3) provide quality; (4) just-in-time; (5) provide right costs
What are the advantages of preferred suppliers?
(1) provide early supplier involvement; (2) formation on latest trends in materials, processes and design; (3) information to supply markets; (4) capacity for meeting unexpected demand; (5) cost efficiency due to economies of scale
What are the elements of the supply chain?
(1) purchasing, (2) operation, (3) distributor/customer relationships, (4) integration
What are the advantages of ERP Systems?
(1) real time and current information that enables management to make better decisions that affect the supply chain; (2) communicates with supply chain members about operation changes, with little delay; (3) standardization processes, eliminating redundant resources; (4) tracks employee performances
What are the problems with JIT?
(1) reduction of inventory levels cause problems to surface in the organization; (2) no excess to meet/satisfy alternate or unexpected demand; (3) no cover for any unexpected errors or problems
How can a company improve bottleneck efficiency?
(1) reorganize workplace to make bottleneck process faster; (2) use technology to automate and speed up the process; (3) combine bottleneck with another operation that has idle time (usually most common strategy); (4) hire a new worker
What are the disadvantages of ERP systems?
(1) substantial capital investment to implement; (2) adopting firm must change its business model and processes to fit the built-in business model designed into the ERFP system
What are examples of waste (generally)?
(1) wait times; (2) inventories; (3) materials & people movement; (4) processing steps; (5) variability; (6) all other non-value-adding activities
What is forward outsourcing?
Acquiring customer operations
What is backward outsourcing?
Acquiring sources of supply
What does lead-time need to be as short as possible?
Allow for customer preferences to be met more closely
Why is it important to have just-in-time ordering?
Allow for quick fulfillment of customer demand
What is waste?
Any non-added value activities
What is purchasing?
Anything you buy from an outside vendor (tangible or intangible)
What is the best number of suppliers to have?
As little as possible; but enough to spread the risk
What is outsourcing?
Buying components from suppliers instead of building in house
How can a company reduce costs?
By reducing waste
What is International Organizations for Standardization (ISO)?
Company has the tools and procedures necessary to fulfill promises for customers
What is a Vertically Integrated Organization?
Company makes everything in house (all raw materials and the building of the product)
Why is supply chain management important?
Customers seek value - high quality products at lowest possible costs
What is the core competency for companies to focus on?
Design of the final product and service
True or False: The bullwhip effect is easier to control with more suppliers
False: the bullwhip effect is more difficult to control with more suppliers because it can increase the cash-to-cash cycle
What is the cost reduction formula?
Identifying waste and how it can be reduced
What is the main activity of the MRP (short-range materials requirement)?
Links internal operations, purchasing and inventory control to improve purchasing, production and delivery; doesn't factor in capacity
Why is a vertically integrated organization not the best option?
May cause for the company to have increased costs and reduced quality
What is breadth?
More global suppliers and customers (bigger relationships with direct suppliers, more local)
What is a supplier partnership?
Mutual commitment with mutual benefits, over a long period of time; share risks and rewards
What is supplier certification?
Process to reduce the supplier base by identifying the most reliable suppliers; the point at which trust is established amongst the company and suppliers
What is a bottleneck?
Systems that slows the flow of an assembly
Who determines waste?
The customer, as they determine what adds value products and services
What is Supply Chain Management?
The design and management of seamless, value-added processes across organizational boundaries to meet the real needs of the end customer
Why is it important for suppliers to know about the end customer?
To allow for the suppliers to create better, more cost-efficient products for the retailers
True or False: Supply chains have the advantage of economies of scale
True
True or false: Quality and standards of suppliers may vary regardless if both hold ISO certifications
True
True or false: Vertically integrated organizations have higher costs due to lack of economies of scale
True
What is a single ERP integration system?
applications from only one vendor
What is medium-range capacity (RCCP)? (also known as rough-cut capacity plan)
checks feasibility of master production schedule and converts it from production needed to capacity required
What is Long-Range Aggregate Production (APP)?
construction of facilities and major equipment purchase
What is centralized purchasing?
department for purchasing is located at the firm's corporate office, for all purchasing decisions
What is the master production schedule?
detailed disaggregation of the aggregated schedule, listing the exact end times of all activities
What is short-range materials requirement (MRP)?
detailed planning process for component and parts to support the master production schedule
What is a firmed segment?
from current period to several weeks into future; only altered by senior management; not easily changed
What is a tentative segment?
from end of the firmed segment to several weeks further
What is Just-in-time? (also known as Toyota Production System (TPS))
getting your supplies at the right time in the right quantities and quality
What is decentralized purchasing?
individual, local purchasing departments, such as at the plant level, to make own purchasing decisions
What is MRPII (Manufacturing Resource Planning)?
integrates internal functions of an organization to coordinate manufacturing plans with sales while providing the management with essential accounting and financial functions
What is Resource Planning (RRP)?
long-range capacity planning, checks whether aggregate resources are capable of satisfying aggregate production
What is the Bullwhip Effect?
magnification of inventory between the companies in the supply chain and the fluctuation of inventory (aka the waste amongst the supply chain)
What is capacity?
measure of output per unit time, when fully busy
What is direct labor utilization?
measure of the percentage of time that workers are actually contributing value to the service; aka labor efficiency
What is the problem with best-of-breed ERP Systems?
multiple databases may have to be used to link multiple applications from different vendors
What is depth?
relationships with 2nd and 3rd tier suppliers and customers
What is an operation system?
responsibility of each organization of the supply chain
What is the capacity requirement?
short-range capacity planning technique that is used to check feasibility of materials required
What is intermediate-master production (MPS)?
shows the quantity and timing of end items
What is a supply base?
supplies that a firm uses to acquire its materials, services and equipment
What is a cycle time?
the average time between completions of successive units
What is a bill of materials?
the components needed to make the final product
What is a best-of-breed ERP system?
use best application for each supply chain function
What is Enterprise Resource Planning (ERP)?
use of one central database to integrate all functions of the enterprise
What is the problem with a single ERP integration system?
user's processes must conform to the approaches used int he software logic; not customizable
What is a MRP closed-loop
added capacity requirement planning and feed to describe the progress of the orders being manufactured
What is a disadvantage of increased deliveries?
Increased transportation and operation costs
What is the most imperative requirement for a successful supply chain?
Information sharing/communication
