SCM 300 Exam One

Overproduction

Making products no one needs is a waste of time, money, and effort

E-procurement System

purchasing through electronic connections between buyers and sellers - usually online

FTZ

Free Trade Zone Not under control of custom authorities Goods can come in and out of country without inspection

Cross-docking

From an upstream to downstream supplier customer through a distribution center with minimal handling and storage times, less than 24 hours Tying together supplier, store, DC, trucking, and sales DATA

Laws

labor, intellectual property, environmental regulations, criminal

Pros of low inventory

less storage space required (lowering holding cost), lower chance of inventory shrinkage, less materials handling, less money invested in inventory

Centralized Purchasing

personnel in one office does all purchasing for all units in that organization -cost-effective and time-saving

3PL (Third Party Logistics)

(1) A logistics model where the manufacturer outsources a package of transportation and logistics activities. (2) A firm to which logistics services are outsourced.

Cargo Classifications

(1) Bulk: cargo that is loose and free flowing (usually pumped, scooped, shoveled, etc.) (2) Break bulk: Cargo that is packaged and/or secured on a pallet. (3) Neo-bulk: typically large items that don't quite fit into either the bulk or break bulk categories. (Ex. Vehicles, logs, and livestock)

Seven Types of Waste

(1) Defects (2) Overproduction (3) Transportation (4) Motion (5) Waiting (6) Inventory (7) Over-processing *It should be noted that often decreasing one of the seven wastes may increase another.*

Line Balancing Rules

(1) Identify workstation candidates (2) Choose one of the candidates for placement into the workstation (3) Test viability of candidate chosen

Steps in Purchasing Process

(1) Requisition (2) Supplier Selection (3) Place Order (4) Track Order (5) Receive Order

5 Modes of Transportation

(1) Road (2) Rail (3) Ocean/Water (4) Air (5) Pipeline: used only for liquids or items that can be shipped in a slurry.

Types of Intermodal Railcar Shipments

(1) Trailer on a Flat Car (TOFC): When a truck trailer is place directly on a rail car. (2) Container on a Flat Car (COFC): When standardized containers are placed directly on a rail car. (3) Doublestack: When two containers are stacked on top of each other on a single but specialized railcar.

Assembly Line Challenges

(a) Bottlenecks (Slowest area of assembly line) (b) Too many employees and/or workstations (c) Employee inequities (d) Present need versus future demands

Supply Chain Tools

(a) Supply chain metrics (b) Information technology tools (c) Relationship management skills (d) Financial resources (e) Organizational integration

Choosing a Supplier

*Consumer needs*- Do they have a part that will make your product more desirable to your customer? *Cost, Quality, Speed, and Flexibility* - What do you and your customer want? Are your goals similar to their goals?" *Technological capability* - Do they offer a product or service no one else can offer? *Location* - Will the distance between their facility and your facility significantly increase lead time or increase supply chain risk? Will transportation and tariffs pose cost challenges? *Information Technology system* - Will their system and your system be able to share data selectively and securely? *Ability to innovate* - Do they have money to invest in R&D? Are they interested in innovating? Your product can't improve if their parts do not improve. *Capacity Potential* - Is their present capacity or their potential for growing capacity sufficient to help you meet your growing demand? *2nd and 3rd tier suppliers* - If we look farther downstream in the supply chain are we comfortable with the risks or opportunities their suppliers may pose? Are they willing to let us develop a relationship with their suppliers? - their problems are your problems *Reliability* - How often do they actually deliver on their promises? When they can't meet our deadlines what is the typical outcome? *Service* - In addition to great products, what else do they offer? If we are buying a commodity where the market drives the price, what does this supplier offer to differentiate themselves from their competition?

First Tier Suppliers

-A company's direct suppliers; typically, a firm that directly provides goods and/or services to a company. -Explained: These are suppliers that are one step to the left in the illustration above. Thus, the manufacturer's first-tier suppliers are the companies designated S1. Similarly, the first-tier suppliers of S1 firms are the S2 companies and a retailer's first-tier supplier is their distributor.

Business Model

-A company's plan for how it will purchase items, transform them, deliver them and sell them in an effort to produce a profit. -Explained: Amazon.com vs. a traditional bookstore. Here is an example of two companies that are in the same industry but that have different business models. Both are trying to sell books, but their individual plans for accomplishing that goal are quite different. As customers, we see two obvious differences in their business models - purchase and delivery. We buy books from Amazon online and they are sent to our home. We must travel to traditional bookstores and buy the book in a building. However, if we look at other parts of their supply chain, we will likely see other differences in how they distribute, buy and handle book returns. Business models often help define the structure of a supply chain, so supply chain managers must understand their importance. As an organization develops a business model it should consider the following questions: · -Do we sell to individual consumers or to big companies? · -Do we sell online, in-stores, or both? · -Do customers make individual purchases or are they subscribers? · -Do you purchase a main part (razor) and then buy the other disposable parts (blades) as needed? -With every answer to these questions, the requirements of your supply chain take shape.

Second Tier Suppliers

-A firm that provides goods and/or services to a company's first-tier supplier. -These are suppliers that are two steps to the left in the illustration above. Thus, the manufacturer's second-tier suppliers are the companies designated S2. Similarly, the second-tier suppliers of the distributors are the S1 companies and the retailer's second-tier supplier is the manufacturer. It is important to note that a weak S2 company can create problems for their S1 customer. For example, if the S1 company is working with a weak S2, they may have problems fulfilling the needs of the manufacturer. Poor second-tier suppliers increase the risk-level of their customer's customer.

Stock Keeping Unit (SKU)

-A specific product or service's identification code used to track inventory or catalog sales. -Explained: Most of us are used to seeing a Universal Product Code (UPC) like the one shown below. We know that it represents that product's individual stock number, or SKU. While many of us have an understanding of what a SKU is, some might not know just how many SKUs there are. A Wal-Mart store typically has between 125,000 and 150,000 SKUs in their system. And yes, each one of those SKU's comes with its own inventory decisions.

How do American suppliers feel about Japanese and American car manufacturers?

-American Car Manufacturers: No sense of trust, very confrontational -Japanese Car Manufacturers: Demanding, but loyal; help improve production system

Types of Line Flow

-Assembly Line: can be stopped -Continuous Flow: must be ran to completion -Fast -Standardized -Make-to-Stock: auto assembly

Inventory Calculations

-Average amount of inventory: Q/2. -Number of orders per year: D/Q. -Time between orders (in weeks): (Q/D)*52

Risk's Relationship to Inventory

-Carrying inventory can come at a hefty price, thus there is risk. Not carrying inventory also comes at a risk: The risk of not having inventory and the risk of not being able to satisfy the needs of the customer. -Explained: Inventory and its related costs are the cost of insurance; insurance against the risks posed to a company, their supplier and also their customers. By having inventory, a company could potentially be buffered against this short list of risks that could cause unexpected shortages in supply or unexpected increases in demand. --Company Risks: Theft or damage to inventory, late shipments from supplier, employee sickness, employee strike, machine malfunctions, harsh weather --Supplier Risks: Employee sickness or strikes, sudden increases in demand for your company's supplies, the risks posed by their suppliers · --Customer Risks: Sudden increase in demand, damage to customer's inventory

Reasons for outsourcing

-Cost advantage -Insufficient capacity -Lack of expertise -Quality

Operations

-Design, operation, and improvement of the production systems that efficiently transform INPUTS into Finished Goods and Services Examples: Process management, Plant management Capacity planning - resources, speed (How much, how fast?) Scheduling jobs/people Waiting line management Process improvement projects

How does Honda use report cards?

-Honda sends reports to its suppliers' top management every month -Typical report has 6 sections: quality, delivery, quantity delivered, performance history, incident reports, and comments

Downstream Supply Chain Management

-In a supply chain, the direction that points toward the end consumer. -In the provided supply chain illustration, the downstream direction is to the right. 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, and distributors developing relationships with retailers so they can better understand the retailer's supply chain needs.

Upstream Supply Chain Management

-In a supply chain, the direction that points toward the suppliers. -In the provided supply chain illustration, the upstream direction is to the left. 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 and developing relationships with a company's first-tier suppliers in order to better communicate the needs of the present and the future.

Types of Packaging

-Industrial Packaging: pallets, slip sheets, supplier to manufacturer -Commercial Packaging: Cans, Bottles, Shrink Wrap, Boxes -Reusable Packaging: Pallets, Bottles, Fast Food Cups, Commercial and Industrial Packaging.

Purchasing Documents

-Materials Requisition -Request for Quotation -Purchase Order

Despite the low cost wage opportunities presented by Chinese and Indian suppliers Toyota and Honda did not switch suppliers. Why?

-Neither company sources very much from those countries primarily because suppliers there only offer them wage savings -That isn't enough for Toyota and Honda which believe that suppliers' innovation capabilities are more important than their wage costs

In-Class Lecture Examples

-Outsourcing homemade pizza example (you don't have enough to make the pizza you love, you have your neighbor make it for you. Decide if their home is equipped for the job, their attitude on the process, their experience in the field, how will you pay them) -Candy factory assembly line example: two girls sitting next to each other on the assembly line wrapping chocolates. They are weakest link (workstation took most time) nobody should have been going fast than them. They also should have been sitting across from each other, not next to each other. -Plumbing system or pipe system is only as strong as its smallest link

Reasons for Making

-Protect proprietary technology -No competent supplier -Better quality control -Use existing idle capacity -Control of lead-time transportation, and warehousing cost -Lower cost

Supply Chain Management

-Suppliers and Manufacturers -Transporters, Distribution Centers, Warehouses -Retailers and all other parties associated tasked with the successful delivery of the final product and/or service. -EFFICIENCY IS IMPOSSIBLE WITHOUT INTEGRATION

Logisitics

-The COORDINATED Planning and Execution of the following: Preparation of Packaged Product Movement Itinerary (Transport) Storage Itinerary (Warehousing) Product Distribution throughout the Supply Chain - Who gets what? When? How? Examples Distribution/Warehousing, Infrastructure Mgmt. Packaging, containerization, transportation, documentation Third-party management and communication Reverse Logistics

Procurement

-The process of obtaining services, supplies, and equipment in conformance with organizational regulations Examples include: Supplier selection Purchasing negotiations Managing supplier relationships - Motivation, Development Materials/Inventory management Operations

Explain the benefits of Honda's Best Practices program to both Honda Suppliers and Honda.

-The program has increased suppliers' productivity by about 50%, improved quality by 30%, and reduced costs by 7% -Suppliers have to share 50% of costs savings with Honda -The reduced costs also become the baseline for new contracts that suppliers sign with Honda -Suppliers benefit too because they can apply what they have learned to their other product lines for Honda and its competitors and keep all of those savings

Productivity

-The ratio of outputs to inputs. From a manufacturing perspective, companies seek to maximize the amount of outputs that can be produced and delivered to market, while minimizing the required inputs. Productivity is a relative term, so typically it can only be compared to the productivity of periods that precede the present productivity. Explained: Consider the following: · A company makes 300 backpacks in June. · Each backpack is valued at $25. Energy, labor, and material costs to create the backpacks totals $3,000. The productivity would be measured as: (300 * $25) / $3,000 Productivity = 2.50 -If the productivity in May was 3.0, that would mean productivity had decreased in June. In other words, inputs were not used as resourcefully in June as they were in May. Conversely, if the productivity in May was 1.75, that would indicate that productivity had increased in June. In this case, the company was able to produce more backpacks for the same amount of cost.

Japanese cars are seen as durable, reliable and high in quality. How do they both improve quality and manage cost?

-Toyota and Honda have brought down the manufacturing costs of the Camry and Accord by about 25% during the 1990s -Still, the companies are recognized for their initial quality and long-term durability

Why did Toyota divide components into two categories?

-Toyota and Honda share information carefully when they're developing new products with their suppliers -Toyota divides components into 2 categories: those that vendors can design by themselves and those that must be developed by Toyota -The same principle-that inundating people with data diminishes focus while targeted information leads to results-extends to strategy

Value

-Value is the ratio of "output purchased" divided by "inputs used to purchase" the product or service. Customers seek value. Value can be increased by giving the customer more for the same price or by giving them the same amount at a lower price. Explained: When you go to the grocery store and see two cans of chicken noodle soup, one can costs $2.50 and one can costs $3.00, will you  always buy the can that costs $2.50? Some people will but most will consider their options. Why would someone pay more? Most reasonable consumers will do a rough calculation of value in their head - not necessarily with numbers, though. Value can be simplified as: What did I buy? / What did it cost me? -But it doesn't just have to be about money or the amount of soup in each can. We could also look at other features in each part of the formula: -Amount of Soup, Taste of Soup, Brand Name, Ease of Cooking Money Paid for Soup, Convenience of Purchase -While customers always want maximum value, companies should seek to maximize value by either improving the items in the numerator or by making the denominator of the calculation more appealing.

What did American companies do to copy the Japanese partnering model? Despite the efforts of American car manufacturers, why did cost resurface as the key criterion

1. American companies slashed the number of suppliers they did business with, awarded the survivors with long-term contracts, and encouraged top tier vendors to manage the lower tiers 2. Also got top-tier suppliers to produce subsystems instead of components, to take responsibility for quality and costs, and to deliver just in time 3. 1st Reason: Companies were more easily able to source globally, notably from China 4. 2nd Reason: The development and spread of internet-based technologies allowed companies to get suppliers to compete on cost more efficiently-and more brutally-than they used to

What are the general steps outlined in the supplier-partnering hierarchy? How should companies go about fulfilling each step?

1. Conduct joint improvement activities 2. Share information intensively but selectively 3. Develop suppliers' technical capabilities 4. Supervise your suppliers 5. Turn supplier rivalry into an opportunity 6. Understand how your suppliers work

How did the relationship between Honda and Atlantic Tool and Die develop?

1. Honda was considering using Atlantic Tool and Die as a source for stamping and welding jobs 2. Honda sent one of its engineers to spend a year with the Cleveland based company 3. For 12 months, the middle manager studied the way the organization worked, collected data and facts, and informally shared the findings with his counterparts at Atlantic 4. Over time, they agreed with the Honda engineer's conclusion and implemented many of his suggestions, which led to marketed improvements on the shop floor 5. Atlantic signed partly because it believed Honda was acting fairly by allowing it to make a profit on the first deals 6. Because of the engineer's visit, the supplier also felt confident that, it would be able to reduce its costs

Key to be a Successful SCM Manager

1. Satisfy the needs of the customer 2. Satisfy the needs of the company 3. Be prepared for the future. Things change.

How did Johnson Controls benefit from its' relationship with Toyota?

1. Toyota challenged Johnson Controls to make more seats in an existing building 2. That seemed impossible at first, but with the help of Toyota's lean-manufacturing experts, the supplier restructured its shop floor, slashed inventories, and was able to make seats for Toyota in the existing space 3. In 1987, Johnson Controls and Araco set up an American Joint venture, Trim Masters, in which each held 40% of the equity and Toyota held 20%

Supply Chain Strategy

1. Understanding the product/service and the market's desires 2. Develop a business model 3. Organizing the right group of supply chain partners

Costs of Inventory

1. cost to purchase 2. holding cost 3. ordering cost 4. stockout cost

Hybrid Strategy

A manufacturing layout that combines elements of both line and flex flow. Products may pass through in linear layout, but each workstation has ability to allow for some customization. Good for items with low degrees of customization (laptop or computers)

Flex Flow

A manufacturing strategy and layout that works well for producing end items/services that have relatively low demand levels and may require high level of customization (physical therapy clinic, painting centers)

Line Flow

A manufacturing strategy and layout that works well in producing end items/services that have high demand and require little customization. Work centers located in linear path. Each item performs same work to every unit that passes it. (Assembly line can be stopped at any time and not compromise inventory flow or spoil the products i.e. cars, trucks, devices) Continuous flow systems must run to completion once progress started (i.e. food)

Supplier Scorecards

A report card that can be used to communicate desires before a sales presentation or shipment

Bottlenecks

A section of the supply chain that limits the overall output of the assembly line. Typically, the slowest or weakest workstation in the assembly line

Relationship Management Skills

A supply chain is a team of companies working together to satisfy an end-consumer. Having the ability to work with executives and employees at other companies is vital to developing focused and healthy supply chains.

GT Cells (Group Technology)

A type of hybrid strategy that utilizes a line-flow layout for a low-volume process (couch, table, chairs)

Workstation

A workstation is the collection of one or more work elements

Total Cost of Ownership (TCO)

All of the costs incurred before, during, and after a purchase

Why were the Japanese faster at manufacturing cars?

Americans: 2 to 3 years Japanese: 12 to 18 months Reason: Toyota was rated among the best and Honda rated above average at promoting innovation. Chrysler, GM, and Ford were below average at fostering innovation with vendors

Lot Size

An accepted order size. This sometimes also refers to a possible order size increment. Example: Lot size of 100 units. Ordering 100, 200, 300, etc. would be possible order sizes.

Return On Investment

An economic measure that helps evaluate the return of an investment. In its most simple form, an ROI is a ratio of total profit to total investment. ROI = Total Profit / Total Investment Explained: Making $10 million is a great thing but could you have done better. Did your investment provide a significant return? Consider the following example: Scenario 1: · Profit = $10 million; Investment = $1 billion · ROI = $10,000,000 / $1,000,000,000 = 0.01 Scenario 2: · Profit = $10 million; Investment = $1 million · ROI = $10,000,000 / $1,000,000 = 10.0 Scenario 2 obviously provided a better ROI - 1000 times better! Supply chain managers seek to help companies maximize ROI. By controlling costs, investment can decrease; by creating great products and delivering them quickly and in great condition, customers may be willing to pay more, thus improving your chances of increasing profits.

Supplier Base

An established group of suppliers for which a company makes most of its purchases -Like the PAB Approved Vendor List

Precedence Diagram

An illustration that shows the relationship between all work elements in the assembly line process

Facilities, infrastructure, and utilities

Are the site and available facilities adequate for the intended purpose

Cycle Time

Assembly lines work to fulfill a given demand during a certain period of work time. This is the pace at which product must move through the assembly line to keep assembly line on pace with demand. Cycle time = Operating Time (OT) // Demand (D)

Customs House Broker

Contractor (person or company) that helps a clients goods clear customs in a foreign country.

Intermodal

Cargo moving from one vessel/vehicle to another w/o directly handling Cargo Stored inside standardized container/trailer

Profit

Companies invest money to make and deliver products and/or services. Materials, labor, real estate, machines, etc. these expenditures are called costs. Companies then sell the products and/or services for money - this is revenue. The difference between revenue and cost is profit. Explained: Most folks in business understand that the goal of a business is to make a profit, to make more money than you spend. As stated above: Profit = Revenue - Cost What some companies fail to acknowledge is that supply chains play a role in both revenue and cost. From the list below, it is easy to see that supply chain managers play a large role in controlling many types of cost that ensure the manufacturing and delivery of the very best products and services. Important supply chain costs: materials, labor, energy, transportation, packaging, storage, defects, insurance... It is also important to remember, though, that poorly manufactured products that are delivered late and/or damaged will not make customers want to buy a company's products at premium prices. Thus, we can see that supply chains are crucial to generating revenues.

Competitive Priorities

Companies, and supply chains more specifically, are very often competing in four areas stated above. As a result, tracking performance in cost, quality, speed and flexibility is vital to knowing whether the company is meeting its goals in the present and working toward better performance in the future. Explained: Think of a fast-food chain versus a fancier sit down restaurant that both sell hamburgers, they can both be successful but their clientele likely have different priorities.  Fast Food: · Average but consistent quality · Quick delivery of your order · Flexible in terms of what may be on your burger · Low Cost Meal  Sit Down Restaurant: · High quality burger · Delivered in a reasonable period of time · Preconceived specialty burgers with lots of topping options -So, if a company understands their clientele's competitive priorities and the supply chain can deliver that mix of competitive priorities to their customer, the company has a chance at being successful. Another thing to consider consider is how detailed each of the four categories are. Cost: Materials, energy, wages, transportation, rent... · Quality: Design, reliability, consistency, materials and fabrics... · Speed: Delivery, on-time, innovation time... · Flexibility: Customization, size of order, design...

Outsourcing Considerations

Consider whether they make it better than you, if they are equipped for the job, does it make sense, do they meet the standard, is it convenient, are you going to provide them with anything etc.

Organizational Integration

Customers are identified, products are designed, financial plans developed, products are advertised... All of these things are typically done by employees outside of the supply chain management group. Trying to run a successful company while having a lack of communication between marketing, design, finance, advertising and the individuals in supply chain is like trying to cross the street blindfolded. Supply chains serve the customer and the other branches of the company. Not giving supply chain departments information and not involving them in planning often results in disaster.

Rules for Line Balancing

Cycle time rule (in order for each work station to be allowable, the workstation must have total task time equal to or less than cycle time and precedence rule (all tasks in work station must not violate precedence relationship illustrated in diagram)

Over-Processing

Doing work that is unnecessary or undesired is a waste of time and resources

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 EOQ: EOQ = Sqrt[ (2DS) / H ]

Incoterms

Established by the International Chamber of Commerce (ICC) Provide clarity on issues of shipment responsibility, ownership, export, and import responsibilities, and cost. Logistics documentation

New Product Development Considerations

How much is this going to cost us, how much of these do we need to make, how big is the market. (Keep it Simple Stupid) (Standard vs. Customization is like Honda civic vs civic SI)

Line Balancing

Goal of assembly line balancing are to equitably group precedence diagram tasks into fewest number of workstations

Motion

If employees move too much in a SC they could get tired, injured, or be wasting time

Three SCM Flows

In order for supply chains to function and develop, three things must continuously flow: materials, money and information. Explained: Supply chains are known as systems or networks that are tasked with moving materials from suppliers all the way to end customers, so it is rather obvious that if materials stop flowing then the supply In order for supply chains to function and develop, three things must continuously flow: materials, money and information. Explained: Supply chains are known as systems or networks that are tasked with moving materials from suppliers all the way to end customers, so it is rather obvious that if materials stop flowing then the supply

Safety Stock (Buffer Stock)

Inventory kept to account for variation/uncertainty of demand. For example, 100 shovels are sold per week Sunday to Saturday, with shipments arriving on Sunday morning. Stores always want to start Sunday with 125 units of inventory. In this case, the additional 25 units are safety stock.

Anticipation Inventory

Inventory that is created and stored for future use. This is typically used to absorb uneven rates of demand that may be related to seasonal demand or planned price reductions. For example, shovels that are assembled in the summer and stored through the fall, in anticipation of large winter demand, would be classified as anticipation inventory.)

Information Technology Tools

Knowing what is happening in a global supply chain at any given moment requires information technology tools that can collect, organize and report data to supply chain managers.

Relationship... Marketing, Design, SCM

Marketing identifies a target market, designers and engineers develop products that satisfy needs of target market, scm must then buy parts, manufacture those items, and distribute them.

Assembly Line Goals

Meet demand, make the product well, do it using the fewest resources possible, consider the worker and the machine, be prepared for changes in demand and the assembly line

Financial Resources

Motivating employees and suppliers, investing in technology to help companies track information and produce better products, purchasing higher grade materials, shipping goods faster... this all costs money. In order to improve supply chain performance, companies need to be willing to invest in supply chains.

Transportation

Moving products doesn't make the product better, it increases the possibility of theft, damage, and loss

Multimodal

Multiple modes of transportation during a single shipment

John Craven

Navel Officer Blind Man's Bluff Created a group of diverse people and isolated them to think to avoid groupthink Developed a series of scenarios and had them rate how likely each scenario was Used Bayes' Theorem for "collective" group answer 5 months later was found 220 yards from collective answer

How to Balance an Assembly Line

Need a list of assembly line tasks and time it takes to complete each one, a precedence diagram illustrating precedence relationships between tasks, and product demand for a given period of time

Freight Forwarder

Negotiate and arrange for one or more logistics companies to prepare, secure, store, track, and move cargo Helps companies organize shipment of goods Logistics Manager

Central Return Center

Performs a number of reverse logistics functions

Defects

Poorly manufacture products are garbage

Last Mile

Portion of SCM between the final inventory holding facility and end consumer

Effective Cycle Time

Proving how effective the assembly line is with this formula. This is a ratio of used time to idle time. Efficiency = t/nc

Inventory Calculation Variables

Q - Lot size · D - Annual demand · C - Cost to purchase one unit of inventory · H - Cost to hold one unit of inventory for one year S - Cost to place a single order

Hyper-competitive Markets

Refers to an industry that is heavily concentrated in a region, where companies compete fiercely. (results in rad innovation but short cycles of competitive advantage i.e. Detroit for cars)

Established Channels of Distribution

Represent the chain of organizations that help bring a product into the hands of the end-user. (packing companies, delivery companies, warehouses, distribution centers, suppliers)

Inventory

Shelf items are not providing an immediate return, could be lost, broken, or stolen

Actual Number of Work Stations

Sometimes theoretical minimum is not easily achieved, so we have actual number of workstations

Strategic, Design, Operation

Strategic decisions are made at the highest levels of organization. (decisions that require target markets, business models, product categories for the future), Design decisions seek to satisfy the target market in particular product or service (provide specific roadmap to satisfying strategic goals), Operating decisions impact the organization in the short-term (typically operating decisions relate to daily ops performed in a company daily)

Primary Goals

Sustainable Long-term Profits and Maximize ROI How is this earned? Make money (profit), avoid waste/efficiency (ROI), and be different/better

SCM Visibility

The ability to see what is happening with inventory upstream and downstream in a supply chain. Explained: Suppose you are the manager of a retail hardware store and you are running low on garden tools right as the growing season is beginning. As a manager, you want to know when the next shipment of garden tools will arrive. You also want to know how many will arrive. If you can easily find that out, you have a supply chain, or inventory, visibility. Knowing when that shipment of hammers will arrive from a distributor is one thing, but if a top-level supply chain executive knows the location of every hammer in the supply chain, that would be a much greater level of supply chain visibility. Knowing how many are at each store, at each distribution center, on each truck at this moment. Where are those trucks located? How many hammers are at the manufacturing facility? How many are finished goods ready to leave the plant and how many are work in process? How many parts are ready to ship from the suppliers...? That information would allow for a significant level of inventory visibility. It is that level of supply chain visibility which is extremely helpful in making good supply chain decisions.

Vertical Integration

The act of taking on additional supply chain responsibilities that were formerly done by outside partners Forward Integration-taking over supply chain responsibilities formerly performed by downstream supply chain partners Backward Integration- Taking over supply chain responsibilities formerly performed by upstream supply chain partners

Established Supplier Base

The collection of companies from which an organization presently purchases products and/or services. (having this allows comfort and familiarity in day-to-day operations)

Global Supply Chain Management

The coordination of the flow of raw materials, components, semifinished goods, and finished products around the world.

Total Annual Inventory Cost Calculations

The most basic calculation for total annual cost of inventory uses the following formula: TC = DC + (Q/2)*H + (D/Q)*S TC = DC + AHC + AOC In an effort to decode the formulas, see below: -Annual cost to purchase inventory = DC -Annual holding cost (AHC) = (Q/2)*H -Annual ordering cost (AOC) = (D/Q)*S

Lead Time

The period of time between when an order is placed and when the order is received by the customer

Tasks/Work Elements

The smallest units of work that must be accomplished to complete an end item on the assembly line

Total Task Time (t)

The sum of all the tasks on the precedence diagram

Theoretical Minimum Number of Work Stations

Theoretical minimum number of workstations. TM = total task time (t) // cycle time (c)

Shipping Documentation

Transportation Financial International Shipments Commercial Invoice Packing List Bill of Lading Shippers Export Declaration Validated Export License Certificate of Origin

Types of Loads and Shippers

Truckload Shippers: Move large amounts of goods (Apple) Less-Than-Truckload Shippers (LTL): Reasonable amount Container Load (CL): deals with 20 and 40 Foot containers, Car Parts INC Less than Container Load (LCL) Small Package Shippers: Less than 150 pounds per item

Reverse Logistics

Turn waste into something useful (ex. empty trucks driving around)

TEU

Twenty Foot Equivalent Unity 20 Footer = 1 TEU 40 Footer = 2 TEU

Standardized Containers

Two Sizes Twenty Footers, 20'x8'x8.5 (Length, Width, Height) Forty Footers, 40'x8'x8.5' (Length, Width, Height) Over 75% of cargo moves in forty footers High Cubes: 1 foot taller than a Forty Footer, 40x8x9.5 Controlled Atmosphere: Reefers because they are refrigerated. Control humidity, composition of air, and pressure. Garmentainers: Have rod or cable for easy and secure movement of clothing

One Worker, Multiple Machines (OWMM)

Typically a line-flow layout that is designed to be operation by a single employee, usually in a U-shaped layout

Fixed Position Layout

Used for very large and hard to move items (ships, planes, buildings)

Cube vs. Weight

Weighing Out means maximizing on weight limit of cargo but there is still space Cubing out means maximizing volume but not weight

Supply Chain Metrics

What defines a successful supply chain for your company? A company needs to be able to report success and failure, and when to provide help to their employees. On the flip side, if things are going well and the numbers are good, that will inform the supply chain manager that perhaps good decisions are being made or that workers are motivated.

Facilities Location Considerations

Where are your customers located, where are your suppliers, import/export taxes, mode of transportation of product (ports for ships, airports, roads, trains), labor issues in area, hypercompetitive market, cultural issues, management styles (smoking vs non-smoking)

Waiting

Work-in-process waiting to be finished was made too early. Items should not be produced too far in advance

Idle Time

amount of time not utilized at each work station Idle Time = nc-t

Supplier Certification

an assessment that verifies effective procedures related to the buyer's requirements

What is kieretsu?

close-knit networks of vendors that continuously learn, improve, and prosper along with their parent companies

Multiple Supplier

competition can breed innovation, risk is spread out among multiple suppliers, capacity flexibility, and location advantages

Local Risks

crime, law enforcement, politics

Pros of High Inventory

higher levels of customer service (having inventory addresses immediate demand), quantity discounts possible, fewer orders will be placed, greater security against unexpected demand variability

Decentralized Purchasing

individual departments or separate locations handle their own purchasing requirements

Pipeline Inventory

inventory that is created when an order for an item is issued but not yet received (inventory is in transit between two points)

Single Supplier

quantity discount opportunities, lowest total cost, intellectual property advantages, quality control, relationship management is easier, and collaboration is easier

Resource Availability

supplies, raw materials, fuel, energy

Infrastructure

the basic physical and organizational structures and facilities (e.g., buildings, roads, and power supplies) needed for the operation of a society or enterprise.

Drop Shipment

three-party system made up of a retailer, a manufacturer, or wholesaler, and a consumer. The consumer places an order w/ the retailer (usually online), who tells the manufacturer/wholesaler, who packs the shipment and sends it to the consumer.

Layout

wages, technical skills, work ethic, culture, language

Climate

will the temperature and weather conditions be appropriate for the product, machines, and employees (Transportation and transportation infrastructure) (trade agreements, tariffs, quotas)