Supply Chain Management Test 2

Largest transportation mode

railroad

Multi-criteria analysis is a tool that helps you compare "distinctly different" options.

T

Organizations that manage inventories effectively can have a powerful competitive advantage, but this has to align with strategy and market positioning.

T

ACA

online way for people to select health plans that fit their needs. at the start, only 1% of interest customers had success. costs went from 94 mil to 291 mil. result of poor project management *good project managers make an average of 20% more

Lean in services

putting the customer first. the cleveland clinic used to do one-off solutions to help one patient at a time but now transforms processes to reduce the costs and wait times for patients support by poka yokes and standard product

Simple forecasting techniques

moving average, weighted moving average, exponential smoothing, regression

Commonly used approach to partitioning heterogenous SKU's into smaller, more homogenous groups

ABC analysis

The biggest transportation mode in terms of spending is:

trucking

The strategic sourcing matrix: a. Is used to segment purchases b. Is widely used in practice c. Considers the importance of the category and the complexity of the market to classify purchases d. All of the above

D

By investing in prevention and appraisal costs, your real goas is what?

Identify and eliminate the causes of problems before they occur

Historically, businesses arranged activities by:

Marketing Logistics Manufacturing Purchasing

8 wastes

Waste Definition Manufacturing Example Personal Example Defects Any work or product that is less than perfect. Scrap Damaged parts Parts that don't meet quality specifications. Doing homework incorrectly. Turning homework in late. Overproduction Making more than the customer wants or than you have known demand for. Batching to meet "efficient" production rather than customer demand. Using a "push" production system. Cooking too much food so that some of it spoils. Turning in extra homework problems. Waiting Idle/wasted time when resources are not ready/available to use. Machine downtime waiting for repairs, delaying production. Shortage of needed materials, delaying processing. Waiting in line, doing nothing at the grocery store. Continually trying to buy concert tickets on an overloaded, very slow website. Not Utilizing Staff Talent Not challenging employees or listening to and encouraging their ideas. If this is blatant, employees can actually undermine your efforts to improve on the other seven wastes! People idle in one work station and behind at another because they are not cross trained. Delaying production because the specialist who does a job is on vacation. Doing an entire team project yourself. Not asking the quiet person on a team project what he/she thinks. Transportation Movement of materials or information that does not add value. Moving products to different locations for further processing. Moving materials or packaging to be used in production to get them out of the way. Running errands without a route map so that you end up backtracking. Turning in paperwork to the university admissions office when you really needed to resubmit it to housing. Inventory Excess materials that customers or manufacturing don't currently need. Carrying extra raw materials to buffer defective materials or scrap in production. Ordering more materials than needed to get discounts. Holding on to discontinued products or unused equipment. Buying so much food that some of it spoils. Buying huge quantities of something that is on sale because it is a "good deal". Motion Movement of people that does not add value. Reaching or walking to get materials for each item rather than having materials come to you. Repetitive movements that can cause injury. Going to five different supermarkets each week to buy on-sale items. Hub-and-spoke airline terminal systems that take you from Ohio to Atlanta to get to Los Angeles. Excess Processing Activities that the customer does not value and is not willing to pay for. Using more expensive materials that do not improve the product in the customer's eyes. Buying a high-tech machine and using only some of the features because others aren't needed. Inspecting goods rather than doing it right the first time. Buying a phone with 256G of memory when you have never used more than 64G. Getting the latest and greatest Fitbit when you really just want to know how many steps you walk per day.

Linear Programming

a managerial tool that allows you to find solutions to problems that will optimize a business objective with restraints

Which of the following is not a process in the SCOR model/methodology?

activate

Anatomy of a supply chain

You begin with the "focal firm"—that is, the company in the middle. Suppliers are on the left and customers on the right. Suppliers and customers are organized in columns, called "tiers," which are numbered in sequence moving away from the focal firm. Demand information flows from right to left; that is, from the end customer all the way up the chain to raw materials. Purchased goods and services flow the opposite direction—from upstream suppliers, through the focal firm, to downstream customers. Money flows from right to left; that is, from the end customer all the way up the chain to the raw material suppliers?

Competitive advantage

Lean Principle How It Improves Competitiveness The Customer Rules Stay up to date with the customers' changing tastes and demand patterns Low Inventory Don't have huge amount of inventory tying up assets that you have to sell-off if the environment changes Zero-waste Efficient use of resources allows for lower prices to customers and/or higher margins, while maintaining excellent quality Continuous Improvement Always getting better, adapting to external demands and employee insight Respect for all employees Creates a positive work environment which reflects in employee longevity and the way that they interact with customers

Examples of capacity

The number of products you can produce on an assembly line in one shift. How many calls a customer service agent can handle per hour. The number of meals served by a restaurant during lunchtime. How many patients an emergency clinic can handle in one day. Effective capacity= design capacity- lost production

Why are operations important?

You want to enjoy a higher standard of living—now and in the future. Better living standards depend on gains in productivity as well as innovation. Future prosperity thus depends on how well we manage and improve service operations. Service operations are very different from—and, in many respects, more challenging to manage than—manufacturing operations.

What type of costs might still remain after you outsource an item? a. Variable plant costs b. Materials costs c. Fixed overhead costs

c

Why is too much inventory bad

having too much or having the wrong inventory: -higher costs: hold or carrying costs, can account for 25% of item value -greater opportunity cost: storing inventory creates limited, if any, value. the capital use would be better off in value-adding activities. -more frequent setups: it takes time and money to switch from one activity to the next without adding value. this is setup/changeover/order cost. fewer setups means carrying a lot of inventory and higher carrying costs -greater loss in inventory value: if it is held for too long (deteriorates, becomes obsolete, gets damaged, lost, stolen

Metrics for measuring inventory

inventory turnover, days of supply, fill rate, cycle level, stockout risk

Fill rate

percentage of demand that is met from inventory a 100% fill rate is nearly impossible and not always desirable

Weighted moving average

place more weight on recent data forecast = weight * averages summed

Processing

visibility is key. Dell shifts their routes to a final destination where the need is greater and demand shifts. today 3rd party logistics providers perform a variety of value-added activities. Customized packaging: wait for better information before finalizing product assembly. Final assembly: light manufacturing at the warehouse. Repair: you can do this at a warehouse other than your own. *creativity might be the biggest limit on the ability to create value with logistics. *must analyze costs to make sure the innovative solutions make sense.

Exponential Smoothing

weighting your last period's demand with your last period's forecast Stable (i.e., you want to smooth out noise). You believe demand shifts are temporary and non-representative. You therefore place minimal weight on your previous period's actual demand, shifting more weight to your previous forecast. Responsive (i.e., you want to catch new trends quickly). You think unexpected changes in demand reflect future trends. Thus, you weight the previous period's actual demand more, placing less weight on the previous period's forecast. forecast = sf(actual) + (1-sf)forecast wait and see approach? use a small sf chasing trends aggressively? use a large sf

Control decisions

-forecasting -inventory control -scheduling -quality control

Two moments of truth

1. When the customer decides what to buy- right product at the right place at the right time, demand and supply must be balanced, 2. When the customer actually uses the product

Gannt Chart

4 steps: Step 1. List all of the activities for a work package. Step 2. Build your work breakdown structure. Step 3. Create an activity schedule; that is, sequence activities based on precedence. Remember, some activities may be independent; i.e., you can do them in parallel. Be sure to indicate the earliest start date and your estimates for how long it will take to do each activity. Step 4. Display activities in a bar chart format (see Figure 5.8). Companies use a variety of software packages (for example, Microsoft Project) to create and keep track of Gantt charts.

EOQ final equation

EOQ = square root of: 2DK/H d= demand per period k= order cost per order h= holding cost/unit/period

Performance benefits from cpfr

Benefits Range of Percent Improvement Increased Forecast Accuracy 20-30% Increased Sales 10-30% Increased Margin Rate 2-6% Improved On-Time Delivery 5-10% Increased In-Stocks 2-7% Decreased Inventory 10-30% Decreased Operating and Logistics Costs 10-28%

What is the goal of forecasting?

Getting the amount of inventory just right is the goal of a well-designed-and-executed forecasting system.

The core questions to be addressed as part of a Kaizen event are:

How can the process be improved & How will changes we make affect elated processes?

Modeling Process

Step 1: Define the Decision Variables First, you define the parameters that you can change to find the best solution for the problem - these are your decision variables. For instance, should you open sites on a given region? Step 2: Define the Objective Function You need to define the objective you desire to optimize and formulate it as linear mathematical relationships - this is your objective function. For instance, you want to minimize total cost. Step 3: Define the Constraints You define the restrictions you face on the set of possible solutions - this are your constraints. For instance, you may have capacity limitations for sites in a given location. Once you have formulated those elements mathematically, you can use modeling algorithms to solve it. Let's work through a problem to see how this works in practice.

Which step in the process asks you to fill in your comparison matrix?

evaluate options

Why is apple running into problems overseas?

global companies are producing lower-cost alternatives, the fall in the chinese yen has raised the cost to produce an iphone

Four key points about forecasting

history, accuracy, confidence, ownership

Third-party logistics providers may help with the following activities:

transportation and warehousing

Critical items (on the strategic sourcing matrix) are: a. Also called strategic items

A

Freight terms and conditions

FOB is the most common for shipping terms. take ownership at the suppliers' dock- arrange and pay for shipping there. if you opt for destination, the supplier owns the product and shipping delivery until it arrives at your dock. ownership determines who shows the inventory as an asset on financial statements. standard terms can be negotiated. *see picture

Breakbulk warehouses

Facilities that receive large truckload (TL) shipments that are destined for several customers. These shipments are broken down into smaller quantities and delivered to customers using less-than-truckload (LTL) services. goal= minimize the total tons shipped by the much more expensive LTL option and improve service First choose an option Option 1: Direct ship to customers using LTL. Costs = ∑ LTL Shipping Costs Option 2: Use breakbulk facility. Costs = ∑ TL + Breakbulk + ∑ LTL Then identify the location to put the warehouse to minimize total costs

Three realities of a service setting

Services are consumed as they are produced. Services cannot be inventoried. Because customers are involved, each instance of service delivery is unique.

As the graph shows, the order quantity is minimized when average cycle inventory cost equals annual order

T the curve is low at the EOQ and becomes steeper as order quantity varies from the EOQ a lot

Sensitivity analysis

What if our volume goes up or down significantly? What if we can use the plating space for something else and don't have to have the other operations absorb that $120,000 of overhead? What additional risks does outsourcing create?

Third party logistics

companies turn to them because they suck at it. companies outsource operational activities that are repetitive and capital intensive The goal: avoid the hassle of managing detail-heavy activities while keeping assets off their books and reducing headcount

Keys for the process map

double arrow = arrival to the process single arrow = direction flow ovals = start and end boxes = activity triangles = waiting diamonds = decisions

Managing activities by process instead of by function was revolutionary, because ___?

it changed the focus from results depending on activities to results depending on processes

Movement

permits goods to flow from one place to another. decisions begin with modal choice- the right kind of transportation affects speed, reliability, cost, and other service factors. makes global trade possible.

As you look at a supply chain map, you can be confident you are looking at a winning supply chain if it depicts the right ______________ and the right _________________.

players and relationship

Why is inventory ugly?

problems are hidden. if you pull a defective item from a group you might just grab another one, but the more time passes the more difficult it is to remember why the defect may have occurred making it harder to solve the problem. in a small batch the consequences would be more immediate- you wouldn't have the part you need and would find the problem easier

During which step of the strategic sourcing process do you actual purchase items you have contracted for?

procure

Tradeoff summary

tradeoffs are everywhere. our job is to identify them, evaluate them, and try to balance them to achieve the right cost/equation to meet customers' needs. low cost, high service is a winning approach

Reorder point system

used by most major retailers, used to adjust the timing system for demand when demand is uncertain. don't want to have excess inventory and also don't want to stockout

Inventory levels vs. lost sales tradeoff

Increasing inventory typically decreases lost sales. The greater the variability of customers' needs, the more stock you need to meet customers' service level requirements. Sometimes the cost gets too high

Project closure

administrative close-out, post-implementation review Dimension Considerations Scope Claritiy of deliverables Schedule Optimistic vs. realistic Costs Approved vs. actual Quality Appropriate level specified Changes Management of budget, schedule, and scope changes Communication Degree of agreement, awareness, and coordination amongs stakeholders Risk Planned and responsiveness to new risks Purchasing Appropriateness of supplier selection and contract agreements *be customer-focused, be objective, consider positives and negatives, use hindsight to your advantage, focus on the future, demand candidness, document results

How did your project turn out?

ask these three questions: 1. Did the outcome meet your expectations? 2. Did you bring the project in on time and on budget? 3. Did you make any mistakes along the way—mistakes where you thought, "Wow, how did that happen? I wish I could do that over."

Sensitivity Analysis

asking "what if ...?" questions to evaluate likely scenarios and tradeoffs. Then you can change the weights or scores in your evaluation system to reflect those likely alternatives. The objective is to make your site decision robust

Why not to export

avoid protectionism, logistical factors, localization, signaling market commitment

Project plan

decompose- identify three sub-deliverables, delegate, schedule- define dependencies and estimate durations, evaluate- reanalyze work packages, consider the tradeoffs, communicate

Why do we wait until the last minute to do something?

most common causes are lacking motivation or feeling overwhelmed

Strategic alliance

relationship goal= maximize value, assure availability nature of the relationship= high value, interdependent, long-term, joint planning, share resources, shared risk and rewards

Demand balancing

sometimes the best levers we can pull for results are found downstream (shaping demand to accommodate supply)

Warehousing

storage, decouples production and consumption, enabling you to take advantage of economies of scale in production and transportation

Process

A process is a set of activities. A process helps accomplish specific objectives. A process represents the way the organization executes work.

Lean outcomes for New Balance

Reduced work-in-process inventory by 98%. Reduced cycle time from 8 days to 2.5 hours (i.e., the time to complete a pair of shoes from start to finish). One pair of shoes comes off the line every 45 seconds. Decreased manufacturing footprint (square footage) by 30%. Improved in-stock availability from 84% to 98%.

As part of supplier integration:

a and d

Potential supplier contributions from ESI include:

all the above

Which of the following statements is correct?

b and c

Services

can't be shipped, inventoried and they're hard to control

CPFR (Collaborative Planning, Forecasting, and Replenishment)

helps traders agree on one forecast. the company knows what your sales will be

One of the scary things about implement lean is:

requires management to give up control

Reasons to keep inventory include

responding to uncertain demand

Most significant drivers of product cost

collective costs of finished goods, work-in-process inventory, machine parts, and raw materials *also the most significant items on the balance sheet

Pareto chart

helps you make priorities visible by showing the frequency

ABC breakdown

A= items corresponding to low/high volume. ordered infrequently and in small quantities, require a comprehensive approval approach for purchasing, and inventory subject to strict control mechanisms such as being bar-coded for accountability or physically secured B= items correspond to immediate volume and volume C= items correspond to low/high volume. similar to A but simple ordering processes and less attention when receiving inventories

Value stream mapping

"As-is" mapping b. Amount of time something is in process c. Amount of time during which value is added d. Use of standard symbols

A good analogy for a cross-dock operation is a hub-and-spoke airport

T

F

The book the Machine that Changed the World is about how the race to space forced us to improve quality.

When it comes to negotiations, it is important to know that: a. Knowledge is power

A

Which of the following is not one of the four reasons to include a multi-criteria analysis in your toolkit? a. Comprehensiveness

A

Cross-functional workers

have them in order to be agile, contributes to a culture of success, creates a sense of achievement and job satisfaction, bring out their best ideas benefits include Substitution when a worker is out b. Improved understanding of more processes by the workforce c. A sense of achievement by the multi-skilled workers d. A broader knowledge base for participating in Kaizen events

Global coordination

how and to what extent you align and synchronize each of the globally dispersed supply chain management. ranges from none, to where you let others work autonomously, to high, where you tightly link activities to one another

Why is project management and improvement important?

if you aren't constantly improving, someone else will and steal your customers ultimately putting you out of business

Types of 3pl's

look at what they own or considering what they do 1. Asset vs. non-asset own their own trucks and warehouses, non-asset act as brokers or intermediaries between you and the actual service provider

Goal of logistics

make money and meet customers needs

Effectively shaping this connectedness among international operations (how the operations of your company in one international location will interact with that of other location and how you spread them) is a complex and strategic managerial issue that can affect competitive advantage.

T

Quality

is not conformance to specifications, the real measure of quality is whether or not a product/service lives up to customer expectation

Managing Relationships

want to minimize costs and deliver maximum value to customers 1. Transactional relationships 2. Cooperative 3. Strategic collaboration: become partners in profit

Four core behaviors of project management

initiating- define objectives, scope, feasability, roles and responsibilites of members planning- breakdown ideas into smaller deliverables, assign activities, estimate time and costs delivery- monitor, control, and communicate progress closure- close the project

EOQ equation and graph

H= the cost of holding one unit of inventory for one period average cost of holding inventory for one period: average cycle inventory x holding cost per period --> Q/2 x HThis means that as order quantity goes up, Average Cycle Inventory Cost also goes up in a linear manner. K= order cost: annual order cost= annual number of orders x cost per order --> D/Q x K decrease in an order Total annual cost: average cycle inventory + annual order cost

Quality Dimensions

Product quality, service quality,

Quality

conformance to specifications whether or not a product or service lives up to customer expectations

Issues of global connectedness

configuration and coordination

Inventory benefits vs. costs

Inventory Benefits: Meet demand and customer service improvement Better able to manage demand and supply Cost efficiencies in price and volume discounts Effective resource utilization Lead time management Effective growth planning Costs: Higher costs in holding, setup, and opportunity Loss in value due to damage, deterioration, obsolescence, and theft Hidden problems

Standardizing the process

Learning Matters. If batching items made the work go faster, you wonder how a specialized, standardized process might work. Not All Recycled Clothing Is Equally Profitable. You sold the jeans and jackets faster—and at a higher margin—than the T-shirts and blouses. You decide to focus on jeans.

What does a successful business do to insure work is finished on time?

defines the workflow of tasks

ABC analysis

partitions SKU's based on relative value. value of total sales of each SKU is first computed and items ranked from highest to lowest value. these values are then expressed as a percentage of total sales. this shows the highest ranking SKU account for a percentage of the total value of inventory but a small percentage of total items by value

Total quality management

perfect quality is needed to run lean and lean problems. doing things the right away eliminates wasted time and cost

Key things customers look for in quality

product quality, service quality

Two value-added parts of OSCM

project management: any activity designed to produce a unique product, service or result process management: ongoing and repetitive, designed to create the same product each time

How to reduce the cost of EOQ

reduce demand, increase the cost of carrying inventory, or reducing the cost of placing orders***

Transactional relationship

relationship goal= minimize costs, assure availability nature of the relationship= low value, arms-length, short-term, minimal events

Qualitative forecasts

rely on expert's opinions, identify the key informants and ask them the right questions, use when domain knowledge is critical and pertinent data is scarce

Incoterms

rely on them for international shipping. responsible for 11 activities: Export customs declaration Transportation to the port Unloading at the port Loading charges at the port Long-haul transportation fee Unloading at import location Loading to the next mode of transport Transport to the next destination Insurance Import customs clearance Import taxes

The tool that monitors processes and keeps them production high-quality products is?

statistical process control

Classifications of process

strategic process, operational process, enabler process

Warehouse management systems

technology decisions begin before the truck gets to the back door, the brain of the operations receives and processes orders, directs putaway as well as order picking and packing, tracks inventory, and talks to all of your other IT systems, including your enterprise resource (ERP) system. *see diagram

Days of supply

the ability to meet demand from on-hand supply days of supply= current inventory/average daily usage -particularly useful in making decisions about when to produce/order more after observing trends

Forecast error

the difference between what you predict and what actually happens occurs naturally

Bullwhip effect

The bullwhip effect demonstrates how interdependence among members of a supply chain influences behavior and performance (see Figure 1-9). In the food distribution chain described above, the 104 days of inventory exist because the cereal manufacturer, the distributor, and the retailer all hold just-in-case inventory. Just-in-case inventory, or safety stock, is kept on hand to compensate for poor information sharing, possible transportation delays, and other unexpected events.

Design capacity

maximum output rate that a process can achieve under ideal conditions

Honda's BP program

As Honda pioneered and popularized the sharing of engineering talent with suppliers, let's learn from what is often called, "The Honda Way." Honda's philosophy is simple: "When we select suppliers, we expect to be with them for years. . . . To score big with suppliers, you have to win their hearts."1 To win suppliers hearts, Honda "lends" them a process development team for a 13-week carefully charted program designed to teach suppliers how to improve their own processes. Honda's goal: Help suppliers learn the skills to become more competitive and self-reliant. Honda's BP process follows Deming's widely used four-stage Plan Do Check Act (PDCA) model shown in Figure 11.6 .

Theory of constraints

Eli Goldratt's theoryBefore Theory of Constraints. Operations were behind schedule over 50% of the time. As a result, the program was only producing five vehicles per month (only half of demand). After Theory of Constraints. Post implementation, not only did operations stay ahead of schedule but operations were so efficient that the program had grown demand by double, to over 20 vehicles per month.

Six basic steps in process mapping

Define the Process. Ask, "Why do I want to develop a process map?" Use your answer to help you define and describe your process of interest. A simple description might be, "Understand how to fulfill an order after a customer makes a purchase." Identify the Process Trigger. Ask, "What triggers or starts the process?" For example, a customer walks into the store. (See the "Double Arrows" and "Start" in Figure 6.6.) Identify Key Activities. Observe the process and how it really works. Add each successive activity to your map. Use the symbols for "Activities," "Wait," or "Decision." Show Flows. Connect linked activities using "Single Arrows." That is, identify what leads to what (this is precedence). Define the Ending Point. Follow the process through to its appropriate conclusion using the "End" symbol.

Four production process types

Hand Crafted: Orrefors, the Swedish producer of fine leaded crystal uses an artisan-based, glass-blowing process. Assembly Line: Toyota mastered the pull system to automate massive assembly lines to build automobiles. Fixed Location: Embraer, the Brazilian aircraft manufacturer, uses semi-fixed assembly process to produce regional jets. Customer Engagement: Benihana engages customers in the preparation of delicious meals.

The first step in the 5Ss process

It allows you to understand what you need and use on your job b. It allows you to free up space by eliminating things that are not used on the job

Options for inventory

Option #1: You can build for peak demand and live with excess capacity in off-peak hours—an expensive option. Option #2: You can build for average demand and lose sales during peak times—a brand-damaging option. Option #3: You can try to change consumer behavior to match demand to capacity—a great strategy if you can make it work.

Services provided

Originally, these players were niche players. Integrators offer a full range of value-added services across a global geography—doing everything you used to have to source from a bevy of specialists

PDCA

Plan. First, you need to define the problem and identify the root cause. Deming argued that you need to ask the question "Why?" five times in order to get past the superficial symptoms and to the real root cause. Once you know what the root causes are, you can develop an action plan. Do. Next, you implement your corrective action to solve the problem. Check. Then, you check to see if the corrective action really solved the problem. If you don't follow through, you won't make progress. Worse, members of your team will begin to view problem solving efforts as hollow "sloganeering." Act. Finally, if your solution worked, make it a formal part of the process. Share your process, solution, and results wherever and whenever possible. Now, it is time to look for new quality problems and their underlying sources of variance so you can begin the cycle anew.

Two levers of influence in demand

Price. When was the last time you booked a flight online? Did you notice how big the price differences were for different flights to your city of choice? Popular flights cost more. Less convenient flights are discounted to entice you to shift plans and fill a seat that otherwise would go empty. Lead Time. Automakers use time—aka, convenience—to help align demand with supply. You can buy the car that is on the lot and drive it home today. Or, you can wait several weeks to get the car with the exact options you want. Even better, your odds of negotiating a better price are higher for the car that is already on the lot.

Modal service characteristics

Selection Determinants Railroad Motor Ship Air Pipeline Cost/Ton Mile 3 4 2 5 1 Transit Time 3 2 4 1 5 Delivery Reliability 4 2 5 3 1 Ideal Distance 2 1 5 3 4 Green House Gases 3 4 2 5 1 1-5 scale, where 1=best, lowest cost, fastest, most relaible, shotest/most flexible distance, lowest GHG

Other applications of TCO

Standard Buys. For simpler purchases—i.e., standardized items with clear specifications for which good suppliers are easy to compare—you can probably use a limited TCO view known as total landed cost analysis. Landed costs include price paid plus all the costs (transportation, duties, handling) to get the items to the location where you need them. Capital Acquisitions. For capital purchases (equipment, buildings), you need to capture the present value of lifecycle costs—i.e., purchase price, repairs, maintenance, and so on—based on how you anticipate the asset will be used. The bottom line: You'll make much better decisions is you think holistically, identifying and comparing the key relevant costs.

Processes as stories

Stories Processes Key Question Examples Beginning Inputs What is needed to go into the process? Data, materials, energy, money, people, equipment, etc. Middle Flows What should happen during the process to achieve the desired outcome? Information or physical materials move through the process, etc. End Outputs What should the outcome be in order to achieve the business objective? Information, services, or physical goods, etc. Characters Resources What is needed for the process to work smoothly? People, equipment, information systems, money, etc. Plots Structure How should the parts of the process be organized? Sequencing, positioning, scheduling, linking, etc. activities.

A high concentration of local high quality suppliers can potentially generate efficiencies and facilitate innovation. As you need to maintain a total cost of ownership mindset, examining the presence and quality of local suppliers will strengthen the quality of your network design decisions.

T

Designing the network following a global strategy, companies can achieve competitive advantage from its international presence by either concentrating the configuration of its supply chain activities, coordinating the dispersed activities, or both

T

IBP helps you align supply and demand. You are better positioned to meet customer needs. And, because you are working collaboratively and proactively, you can do so more efficiently Companies known for high ibp report powerful intangible benefits

T

Internal functions are disconnected and don't fully trust one another. Looking downstream, retailers lack category insights that key suppliers could provide. Turning upstream, suppliers have a limited view of future demand. Everyone forecasts demand independently and runs his or her own race. Getting everyone to work together is the role of integrated business planning (IBP)

T

Throughput accounting

Throughput. Throughput is the rate at which the entire organization generates money through sales for a product or service. Inventory. Inventory represents all the money tied up by an organization in the things it intends to sell. Goldratt's definition includes facilities, equipment, obsolete items, as well as raw material, work in process, and finished goods. Operating Expense. Operating expense is all the money an organization spends turning Inventory into Throughput. Examples include direct labor, utilities, consumable supplies, and depreciation of assets. *Maximize throughput while minimizing inventory and operating expense

Speed allows you to delay purchase decisions until you are sure you really need something, minimizing the money and space tied up by inventory.

We are only willing to pay a certain price for speed.

Reasons to sell abroad

company growth, lower dependence on domestic economy, threat of foreign competition, global opportunities

Transportation

connects your supply chain network. defines the geographic reach- resources and profitability.

Types of control charts

control chart for variables and attributes

Lean's applicability

lean in manufacturing, services,

Critical trade-offs

locating in global regions where cost factors are more advantageous may not necessarily produce benefits. Your company may gain tremendous efficiencies in the form of lower wages, for instance, but this advantage can be more than offset by the increase in other costs related to operating facilities abroad

Because services can't be shipped, you lose decision-making flexibility. ___________________ and _____________________ are everything.

location and timing

Inventory

most companies manage it as an insurance policy Inventory is a buffer b. Inventory helps you avoid dealing with problems c. Inventory may prevent you from understanding the true cause of problems d. Customers want you to have adequate inventory readily available for their needs

Leverage purchases: a. High volume, high complexity b. A buyer's dream c. Your best opportunity to really save money d. Are an example of the KISS principle e. All of the above f. Only b and c

only b and c

Cycle inventory is most closely associate with

order quantities

The core foundation of supply chain management is___?

managing processes within and across companies.

Effective capacity

output rate of a process during normal conditions

F

A value stream map should be created before the Kaizen event begins.

Performance improvements from sales and operations

Benefits Range of Percent Improvement Increased Forecast Accuracy 18-25% Increased Sales Revenue 10-15% Improved On-Time Delivery 10-50% Reduced Inventory 18-46% Reduced Safety Stock 11-45% Increased Productivity 30-45%

What issues should determine the time and energy put into purchasing?

Cost Minimization. You are mostly managing transactions. You don't see an obvious opportunity for distinctive value co-creation. Service. HBSC wants continuous uptime. You wonder if you can share risk and reward by paying the supplier based on copier performance. Continuity. You see a continual need for copiers—at least for the foreseeable future. And HBSC wants the supplier to stand behind them. So, you want to build an ongoing relationship. Availability. Copiers won't help create differential performance for HBSC—and there are a lot of available suppliers.

Make vs. buy process

Don't outsource strategic activities. Don't outsource activities that you do better than suppliers. Consider outsourcing when a supplier does something better than you do.

Independent demand inventory

Inventory items whose demand levels are beyond a company's complete control

Benefits of warehousing

Production Economies. Warehousing lets you produce in large lots and then sell product as customer demand emerges. Transportation Economies. Warehousing enables you to ship in full truckloads, breaking down inbound shipments and consolidating outbound shipments at the warehouse. Of course, holding inventory in a warehouse costs money. You tie up capital and suffer product obsolescence, damage, and loss. If you mix and match freight quickly so that product doesn't sit in the warehouse for long, you can reduce costs. Walmart innovated flow-through warehousing (aka cross-docking) to keep product moving, minimize distribution costs, and keep its shelves stocked at everyday low prices. As a warehouse manager, your goal is to keep product in storage for the shortest time possible

Three-step proven path

Step 1. Apply The theory of constraints to identify where you will get the biggest bang for your buck—that is, to identify the bottleneck. Step 2. Implement lean techniques to reduce waste at the bottleneck. Step 3. Once wastes are removed, employ six sigma to reduce process variation at the bottleneck and to control the process moving forward.

In 2008, shipping costs skyrocketed. We introduced slow steaming to save fuel and lower costs, helped absorb excess capacity, and lowered emissions. Maersk, the largest shipping line, began to design Triple E ships. This increased capacity dramatically. By 2016, shipping rates had dropped below the cost of operating ships. The result: Container lines started merging to improve ship utilization and they started scrapping ships to reduce capacity.

Sustainability Topoff

Excess inventory impacts businesses, social impacts, and increases greenhouse gases

T

U.S. citizens waste a total of 40% of the food they purchase

T

S&OP can help you smooth out the handoffs among different functions across your company. S&OP also helps you move from a traditional annual planning process to a _______ re-planning process.

continuous

A strategic alliance is most likely in which spend category?

critical

Forecasting

one of the most important things your company does bc almost every decision made is based on the forecast of the future an educated guess about the future even the best forecasts are wrong

The make or buy decision analysis tells us: a. It is not that important to the company's success to outsource items that are not strategic to our success b. We should make all strategic items internally c. Before outsourcing a strategic item, we should seriously consider our own ability to successfully make that item

only a and c

Lean manufacturing

was once just-in-time manufacturing: products are made at the right time in the right quantity to meet customers demands. lean and quality go hand-in-hand

Global configuration

where you will perform each supply chain activity and at what scale (inbound logistics, operations, outbound logistics) range from concentration, where a firm performs the activity, in one location and serves foreign locations from it, to dispersed, where the firm performs a supply chain activity in various countries concentrate activities either in one location or dispersed in various locationsr equires that you locate each activity on the value chain where it maximize goals (e.g., direct, transportation and coordination costs). It also requires that you assign tasks at the right scale to each location in the global network. This involves making many trade-offs to find the best balance between customer service and effective utilization of resources. So, the location and number of sites, and the scale of each, are optimized from a global systems perspective.

Total cost approach

you can't consider one thing by itself. need a total cost mindset. TCO= all the costs sourcing from or operating in a particular global location, including labor and costs, utilities, taxes, duties, currency, delivery, incoming quality costs, inventory and warehousing costs, and manufacturing costs BCG global manufacturing cost-competitive index= measures change in direct manufacturing costs among the world's top 25 exporting economies. develops competitiveness scores based on manufacturing costs, productivity, energy costs, and currency exchange rates (indonesia's is 12% lower, germany's is 15% higher) Deloite **= ceo survey collects and consolidates the key decision makers into a single decision Forum's global competitiveness report= defines competitiveness at the state of institutions, factors, and policies that determine the level of productivity in the economy

Impact of global operations and global network designs

1. 95% of the world's consumers live outside the US- toyota vehicles are sold in more than 170 companies 2. unique resources are found outside of the home market- opening up research centers facilitates access to additional sources of innovation and allows the company to leverage expertise from former NASA engineers. this propels technological sophistication. you cannot win without going global

Steps in the forecasting process

1. Decide what to forecast: What forecast do you really need as an input into your planning process? 2. Analyze appropriate data: -identify the right data If the product is relatively new, your data is probably limited and your best option may be to look at the sales history of a "similar" product. That said, what do you do if your product is not just new but also unique? Answer: You may need to use a qualitative forecasting method that doesn't require quantitative data -understand the data 3. Select your forecasting method 4. Create your forecast: If you employ sales and operations planning (S&OP) or collaborative planning, forecasting, and replenishment (CPFR), you will share your forecast on a regular cadence with key decision makers inside your firm and with supply chain partners. 5. Assess forecast accuracy: Use this insight to improve the forecasting process. Don't forget, forecasting is an ongoing process—one you want to continuously improve via more appropriate methods and better data.

How to build a mean chart

1. Define your sampling plan 2. Calculate the center line 3. Calculate the upper and lower limits 4. Make your results visible

Lean's origins

1950's toyota visited ford and came up with the idea to make the first true lean system (important to japan at the time) toyota's repeat part is a process plan of plan-do-check act

Poka yoke

A visual cue b. A system that you put in place to keep things organized c. Is often self- explanatory

Four types of forecasting methods

Amount and Type of Data. One fact you need to know—and remember—is that different forecasting techniques require different types and quantities of data. Simpler methods—like the time series methods discussed below—don't require a lot of data. Sophisticated models are data intensive. Degree of Accuracy Required. Developing accurate forecasts can be expensive. If you don't need great accuracy—e.g., when the cost of excess inventory or stockouts is low—you can probably use a simple method. If forecast accuracy is a deal breaker, you need to invest in a more sophisticated method. Length of Forecast Horizon. As we pointed out above, near-term forecasts are often easier to make and require less sophisticated, data intensive methods. Complex macro-economic issues likely require more sophisticated techniques. Data Patterns. Let's reiterate the really important point we made above: You need to pick a technique that fits your data patterns.

How product characteristics influence transportation

Characteristics Implication Example High Density The truck will not be very full when it reaches full weight Steel, grain, engine blocks, beer Lightweight but bulky Truck will fill up in volume before weight; you will have to pay full weight Tortilla chips, many bakery items High Value or Easy to Resell Will be targeted for theft. Need to disguise and have extra security and/or insurance DVD release of a new movie, weapons, jewelry, computer chips, alcohol, cigarettes, designer clothing Easily Damaged Will probably have to pay more for protective packaging, extra care in handling Eggs, bakery items, delicate computer parts

Costs associated with stockouts

Costs Associated with Stockouts Lost Revenues: How much could you have sold if you had the product in stock? Goodwill and Reputation: How will your customers view you—and your rivals? Follow-on Business: Will your customers abandon you for a more reliable "partner"?

Top 10 most competitive global economies

Country Global Rank 2015-2016 Switzerland 1 Singapore 2 United States 3 Germany 4 Netherlands 5 Japan 6 Hong Kong 7 Finland 8 Sweden 9 United Kingdom 10

Excess Inventory

Excess inventory also hides problems in value-added processes. If you can't see the problems, you'll never identify their root causes and you'll never fix them. The problems—and the waste—persist, costing you money up and down your supply chain. But, if you reduce inventory so you can identify and fix problems, you will be able to run your company more lean than rivals. This gives you a competitive advantage

Types of supplier development

Increase Supply Options. Sometimes, what you want to buy isn't readily available. For example, when Apple launched its Apple Watch, Apple developed a device called the taptic engine to create a unique "tapping" sensation on your wrist. Since nobody had ever produced a "taptic engine" before, Apple worked with suppliers to bring the device to the market. Improve Process Capabilities. Sometimes, plenty of supply capacity exists, but you want to help your suppliers improve their own capabilities. Your goal: Build a stronger, more competitive supply base that will help you win in the marketplace.

Process improvement trio

Lean Management. Lean helps you maximize customer value by eliminating process waste, wherever it is found (e.g., redundancies, excess movement, waiting, defects, overproducing). Six Sigma. Six sigma is a disciplined approach you use to reduce process variation. You do so by employing a data-driven roadmap referred to as DMAIC (Define, Measure, Analyze, Improve, and Control.) Theory of Constraints. The theory of constraints focuses your attention on the constraints—often referred to as bottlenecks—that affect your operations. By targeting constraints, you can improve throughput very efficiently.

Lean's principle

Lean Principle How It Improves Competitiveness The Customer Rules: Stay up to date with the customers' changing tastes and demand patterns Low Inventory: Don't have huge amount of inventory tying up assets that you have to sell-off if the environment changes Zero-waste: Efficient use of resources allows for lower prices to customers and/or higher margins, while maintaining excellent quality Continuous Improvement: Always getting better, adapting to external demands and employee insight Respect for all employees: Creates a positive work environment which reflects in employee longevity and the way that they interact with customers

Movement, Storage, Processing

Movement: transportation Storage: warehousing --> in transit Processing: flow of information --> tracking and visibility --> value-added activities

The total-cost-of quality framework breaks out quality costs into which four categories

Prevention costs, appraisal costs, Internal failure costs, external failure costs

ISO's core principles of TQM

Principle Description Primary Benefits Customer-focused Your organization should understand customers and seek to meet, and exceed, their expectations. Increased customer loyalty revenue. By focusing on customers, you can spot new market opportunities, increase process effectiveness, and satisfy customers. Leadership Your organization should have clear objectives. Employees should be actively involved in achieving them. Increased employee engagement and increased motivation. If employees are kept 'in the loop' with regards to business vision they are likely to be more productive. Involvement of people Employees are your organization's most important asset. Their engagement is key to success. Increased employee motivation and innovation. Engaged and accountable employees bring their best efforts—and ideas—to work. Process approach Leaders should focus on managing processes as well as the inputs and outputs that tie these processes together. Reduced costs. Process management helps you use resources effectively, drive continuous improvement, and achieve consistently better results. System approach to management Decisions should be made holistically, recognizing that decisions have local as well as cross-disciplinary impacts. Better focus and more holistic decision making. By better understanding how key value-added activities interrelate, you focus on the processes that drive success and better manage tradeoffs. Continuous improvement Continual improvement should be an active business objective. Increased ability to embrace new opportunities, and improve performance. Businesses that adapt quickly as the market changes are able to thrive. Fact-based decision making Evidence-based decision-making is good business sense. Informed decisions and clarity. Fact-based decision-making reduces turf conflict and leads to better decisions and broader buy-in. Mutually beneficial supplier relationships Your organization should build strong relationships with key suppliers. Optimization of costs and resources. Long-term relationships enhance "flexibility of joint responses to changing market or customer needs and expectations."

Factors that tend to reduce the need for inventory include Decreasing supply uncertainty

T

Inventory performance can be improved by using forecasting effectively

T

Inventory strategy should Depend on a company's competitive goals.

T

Internet of things

The Internet of Things (IoT). The Internet is also making smart devices—from phones and thermostats to cars and factory equipment—possible. You can already set your home's thermostat or check in on your factory's assembly line from anywhere in the world (as long as you have Internet access). As IoT evolves, the Factory of the Future, where the factory runs itself with minimal human intervention, is coming closer to reality.

T

The eight wastes were discovered by Toyota after observing Ford's processes. It is important for value stream maps to include performance statistics.Seeking perfection through continuous improvement is an important step on the lean journey.

Purchasing

The identification, acquisition, access, positioning, management of resources and related capabilities the organization needs or potentially needs in the attainment of its strategic objectives -obtaining the right material -in the right quantity -with the right service -for delivery to the right place -at the right time -from the right supplier -at the right total cost.

To strike a balance between the costs of carrying inventory and the risk of running out, organizations establish Cycle Service Levels (CSL) or desired probabilities of being able to meet demand from inventory

The leftover percentage is the stockout risk

Truckload vs. Less-than-truckload

Truckload carriers offer direct door-to-door service between two locations for a single shipper (i.e., customer). The loads are large enough to consume most of the weight and space capacity of a trailer. Don't need a lot of infrastructure, most are small privately held operations. Less-than-truckload carriers consolidate smaller loads from multiple customers to fill a trailer and achieve shipping economies. LTL loads are typically smaller than 15,000 pounds. Shipping LTL usually takes longer and exposes your freight to greater loss or damage. Require extensive options for pickup and delivery terminals that collect and breakbulk freight. Capital intensive, large, publicly traded companies.

3pl's that specialize in global trad

Type Description Freight Forwarder or NVOCC Freight forwarders (like Expediters or UTI) are sometimes called the "export connection." They arrange for transportation across different modes and sell insurance for international shipments. They also sell expertise—expecially regarding export regulations and documentation. Customs Brokers Customs brokers are sometimes referred to as the "import connection." A customs broker is responsible for knowing all of the relevant rules and regulations from the point of origin through to the destination. Customs brokers know the right people at the right government agencies to help avoid or resolve shipping problems.

Keeping vs. reducing inventory

When Deciding How Much Inventory to Keep Evaluate: Tools for Deciding How Much Inventory to Reduce Expectations of demand Time it takes to re-supply Consequences of running out How much it would cost to store: cost and space Forecasting Mix of SKUs Improvement supply processes Real-time demand monitoring Effective inventory tracking

In its relationship with Gordon Foods, Bob Evans did which of the following?

a and c

Tradeoffs

a number of variables should be used to calculate how much inventory to hold. What are expectations of demand, and how confident is the organization in these expectations? How long does it take to acquire more inventory and how predictable is this process? the more uncertain the environment, the greater need to hold more inventoryHow important is an item, and what are the consequences of running short of that item? How much space is needed to store the item, and how much will it cost? What are the tradeoffs between price, shipping costs, carrying costs, and order costs? How do these tradeoffs change when suppliers offer quantity discounts or preferential pricing for larger order quantities?

Steps for strategic sourcing execution

analyze, source, bid/negotiate, procure, reconcile/pay

Warehouse layout

critical for effective cross-docking, defines the efficiency of any type of warehousing. goal is to minimize waste. *see picture 1. For warehouse location, use total cost perspective: To minimize the costs of poor customer service, companies are now building smaller fulfillment centers closer to population centers 2. For long-term efficiency, employ the right technology 3. In day-to-day operations, minimize distance traveled, wasted space, and unnecessary movement

Quantitative forecasts

data driven, two approaches are correlation and time-series data

The last-mile problem

ecommerce is the fastest-growing freight market. amazon owns about 40%. last mile deliveries are expensive: many packages/stops and a few to each home. Jeff Bezos announced that by 2017, Amazon's Prime program has more than 100 million paying customers. Prime subscribers buy twice as much from Amazon as non-Prime members ($1,300 versus $700) BUT they still don't know how to deliver profitably. click and collect locations like whole foods

Transportation costs vs. lost sales tradeoff

faster, more reliable transportation is expensive, so we let customers choose their shipping time and price. again as cost goes up, lost sales decrease

Two most important decisions to be made about inventory

how much and when to order simple quantitative tools can improve decision making

Simple moving average

increase stability by including more time periods of data forecast = averages summed / number of averages

Project delivery

monitoring, control, communication

Cycle service level/stockout risk

same as fill rate *specifically measures the probability that demand will be met from inventory -stockout risk is the probability that demand is not met from inventory service levels are typically not 100%, a small stockout risk is accepted to reduce the costs of carrying inventory, particularly when demand is uncertain

Which step in the process helps you determine how important each criterion is?

set weights

Names for purchasing

strategic sourcing, commodity, supply management, supplier management, procurity

Intermodal transportation

trucking's top selling point is access. exploded in the 50's. containerization made it easy to transport products from one mode to another. these include reefers, tankers for hauling liquids, and auto haulers. make moving goods of all kinds safer and more efficient. goal is to minimize costs for the most miles. low-cost rail or water are used for long hauls. truck is used on the front-end to leverage flexibility and speed. the goal is to assure on-time delivery.

Weight-factor modeling

versatile managerial tool that allows you to evaluate various alternatives across multiple decision criteria, allows you to quantify more subjective or qualitative criteria

Stockouts

very expensive, caused by problems such as underestimating demand, long shipping times, parts shortages limiting production

Ishikawa brainstorming sessions

what are the potential sources of variation- people, methods, machines, materials, measurements, environment

Project initiation

why? win- three elements in a triangle: scope, schedule, budget. who? what? whoops

Bottlenecks

you can find them anywhere in business Physical Bottlenecks. The number of loading doors in a distribution center constrains how many trucks can be unloaded in a day. Policy Bottlenecks. Company policies may limit how quickly customer complaints can be resolved. Don't you hate it when a customer service representative says, "I can't do that. It's against store policy." Partner Bottlenecks. The amount of raw material available at suppliers may hinder your ability to increase production.

Supplier segmentation using the strategic sourcing matrix occurs during which step of the strategic sourcing process? a. Analyze

A

Less formal definition of logistics

7 rights: getting the right product to the right customer at the right time in the right condition in the right quantity at the right place for the right cost.

Logistics costs

8% of the world's GDP. companies with better logistics infrastructure and operations are more competitive, which raises the standard of living.

As the value of a product goes up, related logistics costs for the product increase

Inventory Costs: Higher-value products tie up more money in inventory. Further, insurance costs go up, more security is needed, and losses are higher if something goes wrong. Transportation Costs: Transport costs increase for many of the same reasons. You may also opt for more expensive modes to get product where it is going faster and free up cash faster. Packaging Costs: Packaging costs increase primarily because you want to protect the product from loss, damage, or pilferage. You may even want to use packaging to disguise a product. Warehouses that store tobacco, liquor, and guns are often protected by armed guards, include tight security for entry, and house products in locked cages. *these all go up as the value of an item increases

Drivers influencing supply network design and decisions

Resource chaser: Nike is the most successful apparel company. they focus on innovation, marketing and distribution by outsourcing. their factories are made by independent contract manufacturers. having a tight grip on costs is critical to any company's profitability. they developed a winning cost structure by locating it's labor-intensive operations globally and acquiring raw materials Market chaser: Standard & Poor's 500 companies generate over 40% their revenue in global markets, a considerable percentage

Four collaborative activities

Strategy & Planning: You hold a kick-off meeting to establish ground rules for the relationship and agree to a joint business plan. During this process, you answer the following questions: What products will be sold? Where will they be sold? What strategic initiatives will be pursued? You review and update this operating framework periodically. Demand & Supply Management: Via a regular "cadence" call, you discuss expected demand, share forecasts, and talk about upcoming promotions. Promotions and other "special events" can dramatically change future sales from their past history. You do this on a rolling-horizon basis. Discussing plans that are far out on your planning horizon gives you a heads up regarding capacity and materials needs. As you draw closer to a specific sales period, you refine your forecasts and operating plans. Execution: During execution, you place orders, prepare and deliver shipments, receive and stock products on retail shelves, record sales transactions, and make payments. Analysis: To help you improve performance and build stronger relationships, you perform an after-action report to answer these questions: What worked? What didn't? Why? What do we need to do differently?

Sales and Operations Planning

brings the customer-facing and supply-facing of the company together to agree on: The nature of the business environment. Each group's role in supporting the corporate strategy. How to work together to synchronize the value-added activities of the firm. A single forecast; i.e., "one-forecast" planning. Sales & Operations Planning is a process led by senior management that evaluates and revises time-phased projections for demand, supply, product and portfolio changes, strategic projects, and the resulting financial plans. This is done on a monthly basis, typically over a 24-month rolling planning horizon. It is a decision-making process that realigns the tactical plans for all business functions in all geographies to support the company's business goals and targets. A primary objective of S&OP is to reach consensus on a single operating plan, to which executives of the management team hold themselves accountable and allocate the critical resources of people, equipment, inventory, materials, time, and money to most effectively satisfy customers in a profitable way

Risk

uncertainty that matters Identification, knowns-knowns, knowns-unknowns, and unknowns-unknowns Risk Assessment- what is the likelyhood an event will occur and what is the impact if it doesn't occur? Risk Prioritization- proximity (when will it happen?), urgency (when do we have to do something about it?), propinquity (how much does it matter?) Risk Mitigation- now that we know what's up, what do we do about it?

Why is logistics important?

you don't get paid until the items are delivered. once a product has fulfilled its purpose, like come to the end of its useful life, it needs to be disposed of. they need to be returned in an economically sensitive way- reverse logistics

Economic order quantity

3 main approaches Lot for Lot: Order enough to meet current period demand. Period Order Quantity: Order enough to meet a certain number of period's worth of demand. Fixed Order Quantity: Order a fixed quantity based on administrative convenience or other criteria another approach is to determine the order quantity in a way that reflects the tradeoffs between different inventories *based on minimizing the total cost of placing orders and carrying inventory *based on number simplifying assumptions, the most important of which are that demand is met

8 product quality dimensions

Eight Quality Dimensions of Products Dimension Questions to Assess Quality of Product Performance Does the product do what you want it to do? Features Does the product possess the features you are looking for? Reliability Does the product consistently perform as it is supposed to over time? Conformance Does the product conform to design specifications? Durability How long will the product perform or last, and under what conditions? Serviceability Is the product relatively easy to maintain and repair? Aesthetics Does the product look, sound, taste, or smell the way it should? Perception For any dimension that cannot be observed directly, does the product seem like a high-quality product?

Four trend patterns

Level. If your data fluctuates around a consistent mean, you have a level pattern. Many products in the maturity phase of the life cycle exhibit a level pattern. As you might guess, level patterns are pretty easy to forecast. Trend. If you look at a plot of your data and see an upward or downward pattern, your data is revealing a trend. Many products show a linear trend. Hit products may show an exponential trend. Seasonal. If your data plot reveals a regularly repeating pattern, you are witnessing seasonality. Think about how sales skyrocket for beach towels in summer or ski goggles in winter. Of course, a repeating pattern might occur on a weekly or even daily basis. Cyclical. If you see a repeating pattern, but it doesn't recur regularly—that is, its duration or magnitude are less predictable—you are probably observing the effects of an economic cycle. Recessions, inflation, or even product development cycles (think iPhone introductions) can create fluctuations that affect your business.

Supply chain management in practice

Managers increasingly recognize that operations and supply chain management is the value creation engine of every organization. Creating more customer value than your rivals is the only way to win tough competitive battles for the heart and mind of the customer. Competition is getting even tougher. As McKinsey consultant Kenichi Ohmae emphasized, you need a strong team to compete: "Companies are just beginning to learn what nations have always known: in a complex, uncertain world filled with dangerous opponents, it is best not to go it alone."

Areas for low-cost delivery

Modal Choice. You need to decide how—that is, on what type of vehicle—to ship your product to meet customer expectations at the lowest cost. Because modal choice determines the service characteristics and costs of the transportation system, it is the driver of transportation system design. Carrier Selection. Once you pick a mode, you need to pick a partner. For each mode, you have a lot of options. For example, when you ship something to a friend, you can pick DHL, FedEx, UPS, or the U.S. Postal service. In B2B settings, you have more options. Transportation Routing. The last time you made a long trip, your Google maps may have offered you multiple routes based on shortest distance, shortest time, or your mode of transportation. You picked the route that best fit your needs. You do the same when shipping freight. Outsourcing. Because logistics, including transportation, is complex, sometimes it makes sense to hire someone else to manage the process for you. These experts are called third-party logistics service providers (3PLs).

Quality thought leaders

Quality Guru Contributions to Total Quality Management W. Edward Deming No permanent impact has ever been accomplished in improvement of quality unless top management carries out their responsibilities. These responsibilities never cease; they continue forever. Joseph M. Juran Over 80 percent of quality defects are controllable by management. The quality trilogy: Plan, Control & Improve. Identify the few vital projects. Discover the causes of the problem! Armand V. Feigenbaum Control must start with identification of customer quality requirements and end only when the product has been placed in the hands of a customer who remains satisfied. "Hidden plant" to signify that 15 to 40% of capacity exists to find & fix poor work. Philip Crosby Doing things right the first time adds nothing to the cost of your product or service. Doing things wrong is what costs money. Shigeo Shingo Toyota's engineering genius who developed JIT philosophy, Single-minute Exchange of Die (SMED), & "Zero Quality Control" which aims to eliminate inspection through "poka-yoke"—mistake proofing production operations. Kaoru Ishikawa Developed Quality Control Circles (QCCs) & "fishbone" diagrams. Expanded TQC to all non-specialists & labeled it Company-Wide Quality Control (CWQC). Emphasized statistical methods on factory floor. Genichi Taguchi Quality is a virtue of design. The "robustness" of products is more a function of good design than of on-line control, however stringent, of manufacturing processes. You gain virtually nothing in shipping a product that just barely satisfies the corporate standard over a product that just fails. Get on target, don't try to stay in-spec. they integrated these approaches to a hollistic view- TQM

What does a great process management team do?

Respect Every Individual. When people feel respected, they bring not just their hands but also their minds and their hearts to work. You need everyone's best ideas if your goal is to find ways to do work better. Of course, to get everyone else to bring their best ideas, you need to lead with humility. Create Value for the Customer. Value must be defined through the lens of what a customer wants and is willing to pay for. You can't afford to lose sight of your customers' needs—if you want to stay in business. Focus on the Process. It is nearly impossible for good people to produce great results from a poor process. Thus, you need to think systemically and embrace scientific thinking. You will then see hidden connections and be willing to try new things. Assure Quality at the Source. Perfect quality can only be achieved when every element of work is done exactly right the first time, every time. You need to look for solutions where the actual work is being done by the actual people that do it. Seek Perfection. The pursuit of perfection creates a mindset and culture of continuous improvement. You need to empower people to fail even as you seek excellence.

Motor carriers carry the most freight

T

How companies accomplish competitive advantage

Walmart keeps a limited amount of a wide assortment low-cost products using Stock Keeping Unit (SKU) to keep track of distinct items in stores in numerous retail lovations. But they also use sales data to rapidly replenish stores from distribution centers that are strategically located nearby to provide short delivery lead times. Costco competes even more aggressively on cost than Walmart by carrying a smaller range of items in any given product category so that fewer SKUs are needed, and by using a smaller number of facilities that all allow the company to keep infrastructure costs low. Nordstrom competes by using high levels of customer service. They will commit to finding and delivering items to customers that cannot be found in store. This system makes it possible for them to carry a carefully tailored assortment of SKUs. Amazon stores a very wide assortment of items in large warehouses located in low-cost areas and leverages their relationship with technology and logistics companies to deliver to customers' homes.

Bottleneck Analysis

1. Map the process 2. Calculate activity times 3. Determine target values 4. Determine bottleneck impact

Although service industries account for about 80% of jobs in the U.S. economy, they only represent about 40% of the U.S. GDP.

F

Improving process capability

change the specifications, modify the process, outsource

Relationships of theory of constraints metrics

inventory/operating expense decrease + throughput = profit

Project planning

Wait Until the Last Minute. Did you know that 85-95% of students wait until the last minute to do class projects? Practiced Procrastination. Would you believe that over half of all students report that they regularly procrastinate their studies? Not Just Students. Among working professionals, the practice of procrastinating has quadrupled in the last 30 years.

Bottleneck

You don't buy a lot of bottleneck items (also known as unique items)—and they don't represent a large dollar value. But, the complex supply market means you can never be sure of availability, let alone of getting the best price! Suppliers in this segment often have special expertise or technology that is hard to replicate, limiting your options. To make matters worse, you don't spend enough money for major suppliers to make you a priority. Your goal: Avoid supply disruptions and manage price as best as possible. Note that sometimes a bottleneck is created by unexpected events. A routine item, for example, can suddenly become a bottleneck when a strike shuts down a port or a supplier's factory catches fire. What approaches are good for managing bottleneck items? For project-oriented items that you buy periodically, you may want to join a purchasing consortium, pooling your buy with other companies to leverage spend and minimize risk. For critical items that are bought in small volumes, you may need to enter into a collaborative partnership and work to build supplier skills and increase production capacity. The bottom line: Scarcity transfers power to the supplier, making your job more challenging! When possible, you might try to persuade the end user to accept a more standardized, readily available item. difficult to manage

Characteristics

Customer Contact: Customers rarely, if ever, touch the assembly line that builds their cars or smart phones. By contrast, customers play a key role in service delivery. For example, a doctor can't surgically repair your knee if you aren't there to participate in the process? You may, of course, be more familiar with bagging your own groceries, withdrawing money from an automated teller machine (ATM), or shopping virtually online. These last two examples show how technology is transforming how you interact with service delivery. Tangibility of Offering. You can't hold service offerings in your hand. They are intangible. But, you do experience them. Think, for example, about the last movie you saw in a cinema. Despite critical reviews and the ratings on Rotten Tomatoes, you really don't know if you like the movie until you "consume" it. By the time you take your seat in the theater, it's too late to return the ticket for a refund.

Why do you need to put process mapping into your decision-making toolkit?

To give everyone a better understanding of the process b. To ask questions c. To share ideas that help solve problems d. To get better solution

5 quality dimensions

Five Quality Dimensions of Services Dimension Questions to Assess Quality of Service Tangibles How pleasing is the appearance of the physical facilities, equipment, personnel, and communication materials? Reliability How dependably can the service provider provide promised service? Responsiveness How willing, able, and promptly is the service provider to help you? Assurance How knowledgeable and courteous are the service employees and how well do they convey trust and confidence? Empathy How well does the service provider provide caring, individualized attention to its customers?

Control chart logic

Target. Processes are designed to produce to a specific quality target. Frito Lay promises that each bag of Lays potato chips will weigh 10 ounces. Each bottle of Budweiser should contain 12 ounces of beer. And, 24% of each bag of M&Ms should be blue. You build your control chart—i.e., the upper and lower limits—around this target. Variability. All processes, no matter how well they are performing, include some variation. Some bags of Frito Lay potato chips weigh more than 10 ounces (some less). One bottle of Budweiser may contain a tinge more than 12 ounces—the next less. And, one bag of M&Ms may contain 26% blue M&Ms and the next only 24.3%. The amount of random variability in a process will largely determine how far the upper and lower limits are from the target. Confidence. You set control limits based on the level of confidence you want to have that the process really is out of control (typically 3 or 99.74%). If a sample of data you collect from the process falls above the upper limit or below the lower limit, you can be confident something unusual is going on—that is, the process is out of control and you need to fix it.

Lean

creating more value for customers with fewer resources. the job is to limit waste to create customer value. do more with less and less—less human effort, less equipment, less time, and less space, while coming closer and closer to providing customers with exactly what they want.

e-commerce

eCommerce. The Internet made eCommerce a reality. Today, you can go to a store to check out the new TV (or whatever else) you're shopping for and then do all of your comparison-shopping online. The convenience of shopping at your leisure and having products delivered to your door has led to dramatic growth in eCommerce (see Figure 1-4). However, companies are still trying to figure out how to manage eCommerce operations profitably.

Process Design

incredibly complex, the matrix includes: Project- a one of a kind output (custom home or software app) Job Shop- low volume, distinctive (autobody shops) Batch- when you customize basic models by offering a few unique options, products follow a similar flow (bakery) Continuous Flow- when volumes are large and you can't distinguish one product from another, capital intensive, highly automated continuous process, upfront investments are huge, run the equipment every minute of the day, can employ low-skilled workers *need to much variety and volume of the product you'll be producing

Six sigma

motorola Six Sigma is a disciplined, data-driven methodology that helps you improve process capabilities. Six Sigma is built on a critical fact: Variability in a process produces defects, errors, and waste. Six sigma's core objective is to reduce process variation. By minimizing variation, you improve quality—and organizational efficiency and effectiveness Variance reduction

Despite the fact everyone in business is responsible for managing projects..

over 60% of projects fail to meet value, cost, and timing goals

How is the statistical concept of six sigma used?

uses tools to find variation

Product Quality dimensions

Eight Quality Dimensions of Products Dimension Questions to Assess Quality of Product Performance Does the product do what you want it to do? Features Does the product possess the features you are looking for? Reliability Does the product consistently perform as it is supposed to over time? Conformance Does the product conform to design specifications? Durability How long will the product perform or last, and under what conditions? Serviceability Is the product relatively easy to maintain and repair? Aesthetics Does the product look, sound, taste, or smell the way it should? Perception For any dimension that cannot be observed directly, does the product seem like a high-quality product?

Six sigma certification

Managers who possess strong Six-Sigma skills earn one of several certifications, which are highly valued in industry. Since Six Sigma is a project-based approach to improving quality, if you want to Six Sigma certify, you need to show you are an effective project manager and have participated in quality-improvement projects. You can earn any of five certifications. White Belt: You understand basic Six Sigma concepts and have worked on a local problem-solving team, but may never have been part of a Six Sigma project team. Yellow Belt: You understand Six Sigma concepts, review process improvements, and participate as a Six-Sigma project team member. Green Belt: You have led a Green Belt project and may have assisted with data collection and analysis for Black Belt projects. Black Belt: You have led problem-solving projects and trained/coached project teams. Master Black Belt: You have trained Black Belts and Green Belts. At this level, you are a Six Sigma technologist and internal consultant, helping set strategic direction and develop the metrics to help your organization accomplish key goals.

Cost of quality

Prevention costs- designing and maintaining Appraisal costs- measuring and monitoring activities, evaluating information, processes, etc. Internal failure costs- remedying defects before delivery to a customer External- remedying defects discovered by the customer

Process design characteristics

Process Design Process Characteristics Job Batch Line Continuous Flow jumbled disconnected connected continuous Flexibility high moderate low very low Labor Expertise high moderate low very low Product Characteristics Variety high high-moderate low-moderate low Volume low low-moderate high-moderate high Examples Manufacturing machine shop printing shop auto production energy plant Service house repair bakery fast food phone app

Five focusing steps of theory of constraints

Step Objective Identify Apply bottleneck analysis to identify the current constraint. Every process has one, and only one single bottleneck constraint at any given time. This is the single part of the process that most limits the rate at which the goal of the process is achieved. Bottlenecks can often be easily spotted. Bottleneck activities are always busy, with no idle time and work typically piles up in front of them and subsequent activates are usually waiting on the bottleneck. Exploit Increase the output of the bottleneck. Make improvements to the throughput of the constraint using existing resources. Remove any non-value adding work or interruptions to the bottleneck. Subordinate Review all other (non-bottleneck) activities in the process to ensure that they are aligned with and truly support the needs of the bottleneck. Shift load from the bottleneck to non-bottleneck activities. Elevate If the constraint still exists, consider what further actions can be taken to eliminate it from being the constraint. Normally, actions are continued at this step until the constraint has been "broken" (until it has moved somewhere else). In some cases, capital investment may be required. Repeat The Five Focusing Steps are a continuous improvement cycle. Therefore, once a constraint is resolved another constraint will become apparent and that next constraint should immediately be addressed. This step is a reminder to never become complacent - aggressively improve the current constraint...and then immediately move on to the next constraint.

Supplier selection

1. decide on eight criteria: Quality, cost, delivery, responsiveness, financial viability, relationship potential, and sustainability. 2. set weights 3. define the scoring system 4. evaluate options 5. calculate resultsFactor Weight Buckeye Razor Back Red Hawk Spartan Volunteer Quality 20% 98 95 98 95 95 Cost 20% 90 98 95 85 80 Delivery 15% 95 90 99 85 98 Responsiveness 15% 98 90 90 85 98 Sustainability 15% 85 98 95 80 80 Financial 5% 98 85 90 90 90 Relational Potential 10% 95 90 98 98 90 Supplier Score 100% 93.7 93.55 95.5 87.8 89.9

Implementing Lean

Look through the Eyes of the Customer. Begin with the end in mind. That is, how does the end customer view your product's value proposition? What does the customer really want? Delivering the value your customers want is the essence of effectiveness. Eliminate Process Waste. Identify and evaluate all of the supply chain processes used to make and deliver your product. Eliminate all activities that do not add value. Eliminating waste equals efficiency. Eliminate Wasted Time and Space. Look for and eliminate wasted time and space between the value-added processes to improve the flow to your customer. Repeat. Strive for perfection—create the right value with no waste—by revisiting these steps. The best lean companies pursue a continuous cycle of "Plan, Do, Check, Act." Recognize, however, that perfection is a moving target. You will never arrive, but you will get better.

Why is carrying inventory good?

-meet demand quickly: provide a high level of customer satisfaction -manage demand and supply uncertainty: safety stock- try to protect against unknown processes, suppliers and deliveries -navigate price/generate cost efficiencies: cost savings can come from fluctuations in price allowing for extra inventory (quantities larger than demand) this is cycle inventory -keep resources utilized: When part of a process breaks down or fails to generate output for whatever reason, downstream processes that rely on this output will be starved of their input. However, inventory can continue to feed those downstream processes. There is always inventory flowing between processes that is not yet available for use. this is pipeline inventory -prepare for long lead times: carry extra inventory in order to compensate for long production or setup costs -prepare for demand growth: build up inventory. this is anticipation inventory

Types of decisions

2 phases: high level strategic considerations- results in the broad strategy and overall conceptual design on the network, shows what the company will make, the capabilities it needs to support, and general infrastructure. issues include: The company's strategy and customer value proposition Desired profitability, costs and constraints Nature of competition and needed capabilities and the selection of specific sites This includes the stages of the value chain and the supply chain functions the company will perform in-house and the ones the company will outsource, whether competition will be local or global, the capabilities the network needs to support, and consequent decisions regarding whether certain supply chain functions and stages will be concentrated or dispersed globally, and the level of coordination among them.Next you examine regional demand forecast and variability, sources of risks, and regional tariffs to identify attractive regions to operate and disperse supply chain activities defined previously. 2. location decision- Stage I. Examine aggregated data to identify a location for potential sites within the region. Stage II. Examine country level data to identify a location for potential sites within the country. Stage III. Examine community factors and data to select the specific site location.

Sales and operations planning process

5 monthly planning reviews Product Management Review: In the product review, you talk about product launches, assortment plans, and discontinuances. Your goal is to ensure a healthy innovation pipeline so that you have the right mix of products to meet customer needs profitably. Your product plan will influence both demand and supply planning. Demand Review: During the demand review, you determine how and how much product you are going to sell. This unbiased demand plan defines how much product you will request from the end-to-end supply chain over a rolling 18-to-24-month horizon. It also clarifies assumptions, risks, and opportunities. Supply Review: During the supply review, you discuss how you will ensure supply—i.e., prevent stockouts! You examine manufacturing capacity, supply chain inventory, transportation, and logistics/DC capacity—and you develop contingency plans to address demand risks and opportunities identified by the demand review. Integrated Reconciliation: Because each group above has different ideas about how the future will turn out (and thus different forecasts), you need to get together to identify and resolve key imbalances identified in the product, demand, and supply reviews. You also build your integrated financial plan, focusing on revenue, margin and other P&L, balance sheet, and cash flow effects. Management Business Review: Despite the reconciliation process, some imbalances are hard to resolve at the functional level. Marketing might demand more production. Supply might argue that materials are not available or that marketing really "won't sell that much." You take these "problems" to senior management in the business review. During this review, you align plans and decisions with overall business goals.

Modal choice

5 shipping options: rail, trucking, air, pipeline, ship. a new mode is cyberspace (netflix- put blockbuster out of business), and drones may be used in the future. must consider the type of product, infrastructure available, customer requirements, and the modes/costs service characteristics.

Benefits of early supplier development

Better overall design and quality Increased product manufacturability Reduced overall development time A fresh set of eyes to discover design and production efficiencies4

What is business forecasting?

Business Forecasting is the process of using analytics, data, insights, and experience to make predictions and respond to various business needs. The insight gained by Business Forecasting enables companies to automate and optimize their business processes. A Forecaster's goal is to go beyond knowing what has happened and provide the best assessment of what will happen in the future to drive better decision-making.1

During which step of the strategic sourcing process would you identify potential suppliers? a. Analyze b. Plan c. Source

C

Processes as stories

Classification Purpose Description Examples Strategic Processes Define and deploy business strategies Involve the business vision Strategic planning: marketing and market research, planning and monitoring objectives, review the business strategy, monitoring of competitors, evaluation of customer satisfaction Operational Processes Deliver value to internal and external customers Involve the mission (carrying out the vision) of the business Sourcing, innovation, quality, customer relationship management, demand management, production, etc. Enabler Processes Support strategic and operational processes Involves maintenance, control of other processes Administration, accounting, call center, technical support

Costs associated with overstock

Costs Associated with an Overstock Opportunity Costs: What could you have sold if money wasn't tied up in product that isn't selling? Holding Costs: How much money does inventory, and a place to store it, cost? Markdown and Disposal Costs: How much will it cost to either liquidate or dispose of old inventory?

Critical

Critical items (sometimes called strategic) are high-volume/value items that you buy in complex, risky markets. you need a strong work ethic and a lot of practice to be able to effectively... Analyze your firm's spend and understand your supply markets, Use the right tools and build the right skills to optimize your buys, and Establish the right relationships with the right suppliers so your effort and resources align to your buying needs. If you do your job well, you will help your company win customers' loyalty!

Not all inventory are the same

It follows the pareto principle that a small proportion of items account for the greatest amount of cost and therefore needs the greatest amount of control

Open systems view

Open Systems. All businesses, including yours, compete to survive in an open system. Each change in the environment—e.g., a new rival starts up or a new technology emerges—impacts your strategy and your ability to compete. To prosper, you need to recognize opportunities and threats, be quick to respond, and create more value than your rivals. Resource Access. Everyone—including your toughest rivals—has pretty much the same access to inputs. Empowered Customers. On the output side, you need to remember that your customers have information and options. They can buy from someone else—and will—if you don't meet their needs. How, Not What. In the marketplace described by the previous three bullet points, success is driven more by how you use resources than by what you make. Rivals can, and will, copy products and services. It is much harder to copy processes and culture. This is the secret of the Toyota Production System (better known today as lean manufacturing).

How to achieve quality

Prevention. Avoid problems in the first place. To do this, build in safeguards called "Poka-yokes" to catch errors at every stage of a process. Sensors can prevent a robot from working if parts are improperly positioned. At Honda, sensors perfectly position each windshield before adhering it to the car. Personal Responsibility. Promote a "stop and fix-it" mentality. When an error is identified, return the part immediately to the person who made the mistake. By pausing the process to fix the defect immediately, workers learn how to avoid making the same mistake again. Standardization. Promote standardized work. Standardized work makes defects more obvious when they occur. Corrective measures can be standardized as well. At Microsoft, for instance, machine-learning applies standard fixes to common errors, freeing up engineers for more difficult, one-of-a-kind problems.

Types of forecasts

Qualitative Methods Quantitative Methods Correlational Models Time Series Models • "Grass Roots": Talk to customers Regression: Y= Variable to be forecast Xn=Variables that predict Y Model: Y = f (X1, X2, . . ., Xn) Key: You have to find the right predictive variables; i.e., the ones that really are related to Y. Forecasts based solely on k past values of the variable being predicted: Yt = f (Yt-1, Yt-2, . . ., Yt-k) • Market Research: Surveys, Focus Groups • Expert Panels: Talk to the experts • Executive Judgment: Based on executive experience • Historical Analogy: Use similar "product" from past • Moving Averages • Delphi: Iterative polling and pooling of expert opinion • Exponential Smoothing

Different types of buys

Routine Items. For simple, low-dollar value buys, you will probably buy at list price and avoid the contracting process altogether. Leverage Items. Competitive bidding is appropriate in situations where a large spend is involved, the buy is straightforward and the risk is low. To run an effective bid, you need to clearly express the requirements and identify a number of suppliers who want the business. When it's appropriate, bidding is cost effective. Strategic and Bottleneck Items. Because negotiation is expensive and time consuming, you reserve it for complex situations. Your goal: Use negotiation to help you and the supplier better understand each other's needs—and come to a better deal. The first rule of negotiation is, "If you don't ask, the answer is no." The second rule is, "Information is power." Simply put, you need to be creative and you need to get the facts about the market, pricing, your company, and the supplier. You use these facts to make your case and get the best deal for your company. If you negotiate well, both you and your supplier will be better off. That is, you want to create a win-win scenario. Why, you ask? You will likely need to do business with the supplier in the future.

Value-added services in distribution centers

Service Description Breakbulk Unload large shipments and breakdown the contents to go into smaller shipments. Taking a full truckload of laundry detergents and shipping out pallets full of detergent. Mix/Assort Take a variety of products from different places, mix them into one shipment and ship them out together. Adding pallets of tissues to the shipment of laundry detergent. Store Hold inventory securely until it is needed. Stockpiling canned corn after harvest and selling it off throughout the year. Free Trade Zone Place to store imported goods so you don't have to pay customs/duties until they are removed from the DC. If re-exported, you can avoid duties altogether. Customization Hold semi-finished products until an prder is received then customize to customer specifications before shipping out. Adding a monogram to a hat. Also referred to as configure to order. Final Assembly Putting a bicycle together before shipping to a customer. Returns Processing Accepting, processing, and sorting customer returns via e-commerce so the customer does not need to visit a store. Repair or Refurbish Doing basic repairs on returned items or trade-ins, like cellphones, and creating refurbished units for resale or warranty replacement.

Philips does the following

Shared Expertise. Philips sustainability experts provide training and share best practices on workplace health and safety. Shared Audit Results. Philips works with other EICC members to share audit results so that suppliers can focus on being sustainable rather than preparing for another audit. Philip's goal: Create a mutually beneficial process that encourages sustainability across the electronics supply chain.

Process of a multi-criteria analysis

Step 1: Decide on Criteria. The modeling process starts with the identification of the most important factors in the location decision and the evaluation of their relative importance. For instance, let's assume that your team has identified the following factors as the most important criteria for a location decision: market size, industrial development incentives, future demand, per capita income, exchange-rate, political risk, and labor climate. Step 2: Set Weights. Next, the team develops a weight for each of the criteria selected to reflect their relative importance vis-à-vis the overall conceptual design and company goals. The sum of the weights needs to add up to 1. This can be seen on Table 9.3. Step 3: Define Scoring System During this planning phase of the modeling, you also need to define a scoring system to evaluate the performance in each criterion. You are going to use this scoring system (e.g., 1-10 or 1-100) to rate each of the criterion on your evaluation system. Step 4: Evaluate Options Now the team can collect data and then use the tool to rate each potential location on each of the criteria, computing a total score for each location. Step 5: Calculate Results In this step, first you compute the total score by calculating the product between the ratings for each criterion by the weight of the criterion. Then, you add up the product across all the criteria to compute the total score of each location:

Retailers have failed to advertise products on the shelf 16.5% of the time. It is logistics' job to deliver products to the right place at the right time. They create two utilities- time utility and place utility. When logistics work well, nobody really notices. More companies are leaning on logistics for strategic advantage.

T

Balanced cycle times

TAKT= available minutes for production/required units of production

Logistics defined

That part of supply chain management that plans, implements, and controls the efficient, effective forward and reverse flow and storage of goods, services and related information between the point of origin and the point of consumption in order to meet customers' requirements.

How does a grantt chart help us?

To build a Gantt Chart, you need to do your homework and learn about the details of your project. A Gantt Chart informs you when work falls behind schedule. You can then make needed course corrections. *increase project visibility to lead to better decisions

Types of integration

Type of Integration What it's all about Collaborative Forecasting You work together with your supplier to develop a joint demand forecast, enabling both sides to plan better. Vendor Managed Inventory You let your supplier take care of your inventory levels for their products (they decide when to reorder more). Insourced Warehousing You rely on the vast warehousing capabilities of companies like FedEx and UPS to flexibly manage distribution. Early Supplier Involvement in NPD The supplier is part of your NPD efforts in the very early stages, tapping into their expertise and optimizing product or service design. Supplier-Integrated Manufacturing Your suppliers establish manufacturing or assembly operations within your facilities. A close parallel involves co-locating a facility next to your plant to deliver materials more quickly direct to your assembly line.

UPS commercial for logistics

When it's planes in the sky for a chain of supply—that's logistics. When the pipes for the line come precisely on time—that's logistics. A continuous link that is always in sync—that's logistics. Carbon footprint's reduced bottom line gets a boost—that's logistics. With new ways to compete, there will be cheers on Wall Street—that's logistics. When technology knows right where everything goes—that's logistics. Bells will ring, ring-a-ding ring-a-ding ring-a-ding—that's logistics. There will be no more stress cause you called UPS—that's logistics. Logistics creates value through movement, storage and processing

Warehouse operations

Warehouse Type Description Warehouse A generic term for a facility where product is stored. Distribution Center Combine inventory from multiple locations to mix and match to fulfill customer orders. Thus, they are often called "mixing facilities." Cross-dock Receive incoming products and unload and reload on to a waiting trailer, mixed with other products, for shipment. This is practiced by Walmart, Costco, and others in getting the right size loads and mix of products to their stores. Breakbulk Warehouses receive large-volume truckload (TL) shipments that are destined for several customers. Shipments are broken down into smaller quanitities and delivered to customers using less-than-truckload (LTL). Customs Warehouse Facilities where you can store imported or exported materials in order to delay the payment of duties (taxes). These facilities are sometimes called bonded warehouses.

To get your forecasts right you need to answer 3 questions

What does a well-designed forecasting process look like? How can you effectively coordinate forecasting across intra- and inter- firm decision makers? How can you improve the quality of your forecasts?

Evolution of purchasing

before ww2= viewed as a clerical function ww2= material shortages increased emphasis of purchasing 1950's-70's= managerial function 1970's80's= lean mgmt makes it quasi-strategic 1980's-90's= outsourcing makes purchasing strategic tomorrow= supply chain integration

How to reduce inventory

by reducing uncertainty 1. forecasting 2. visibility of demand 3. eliminate unnecessary sku's 4. carefully consider actions that tend to increase demand variability for suppliers: focus on improving processes like long lead times or poor quality to reduce variability and inventory. this might also reduce the time and cost associated with setups making it feasible and practical to produce/order in small quantities. Not only does this reduce the need for cycle inventory, it also increases company flexibility in responding to changing demand which can further reduce the need for safety stock. 5. manage what the company already has. walmart aggressively leverages point-of-sale technology to maintain accurate inventory

Global network strategy

network design aims at achieving global competitive advantage multinational design is where a company has facilities in multiple countries, but each location operates independently The simplest global strategy is to concentrate most of the supply chain activities in one location, serve the globe from this site, and tightly coordinate any value chain activities that must be performed near the buyer

Inventory

owning inventory makes it too easy not to put things away when you are done using them. this is the root cause for taking so long to find a missing item. inventory hides problems, when toyota discovered this and started taking inventory out of production systems, lean manufacturing was born

Inventory turnover

the level of sales that can be supported by a given investment in inventory. Conversely, it is the amount of inventory needed to achieve a certain level of sales: inventory= annual cost of goods sold/average value of inventory *it is better to have less and a higher value of inventory turnover, this can create a competitive advantage. it's particularly useful in making comparisons between organizations and time.

What is the single most important project-management tool?

the work breakdown structure- depicts your structure as a tree diagram, makes your project visible by breaking down the key components. as projects grow in size and complexity, discipline and visibility are even more important

Storage

where and how long you hold inventory. becoming more strategic. location options include consignment at your customers' operations, in a warehouse or distribution center, or on site. goal is to balance inventory levels, locations, and choice of transport for quick and low-cost service. B2B and B2C customers create an increase in online-ordering, requiring management of brick-and-mortar and clicks-and-mortar supply chains

A purchase where there are a large number of competitive suppliers and you buy a fairly large amount relative to the market would most likely be classified as: a. Leverage

A

As-is value stream map

A depiction of the key steps in the process c. Performance statistics related to process changes

Key value-creating roles

Executive management defines company strategy and allocates resources to achieve it. Research and development (R&D) is responsible for new product design. Supply management coordinates the upstream supply base, finding the right suppliers and building the right relationships with them. Operations transforms the inputs acquired from suppliers into more highly valued products. Logistics moves and stores materials so they are available when and where they are needed. Marketing manages the upstream relationships with customers, identifying their needs and communicating to them how the company can meet those needs. Human resources designs the systems used to hire, train, and develop the company's employees. Accounting maintains business records that provide information needed to control operations. Finance acquires and controls the capital required to operate the business. Information technology builds and maintains the systems needed to capture and communicate information among decision makers.

Costs of external failure

Recall Costs. Lululemon spent a lot of money recalling 17% of the sheer yoga pants. Rework. Each of the recalled pants had to be sent back up the supply chain to be fixed. Lost Sales. Analysts estimated that Lululemon lost $67 million in sales in 2013. Lost Customers. Lululemon's brand was tarnished. Disgruntled customers often don't come back—ever! Others; i.e., potential future customers never make the first buy. Stock Price Depreciation. Bad press almost always hurts a company's stock price.

How to apply the 5Ss

continuous improvement approach Sort. Maybe you need to organize your homework by class—one file folder per class. Simplify. You often aren't sure what is due—or when. Maybe you should prioritize by due date. And, it wouldn't hurt if you put together a stop-doing list to give you more time to study. You might even start to study at consistent times and in the same place. Sweep. Is your desk a mess? How about your backpack? Cleaning things up and keeping your work area tidy can make a big difference. Standardize. Set aside time each day to review the status of pending homework. Then, build a schedule that you can stick to. Sustain. Make the preceding steps a habit—not a one-time event.

Six Sigma is built on which very critical fact?

variability