BMGT372 Intro to Supply Chain Final

What are the key differences between arbitration and mediation?

-Arbitration: there really is no discussion between the two parties, a person reads over the rules you decided on beforehand and just picks a winner. -Mediation: there is an open forum between the two parties to come to an agreement.

What are the assumptions of EOQ?

-Demand is satisfied -The rate of demand is continuous, constant, and known -The replenishment cycle is constant and known -There is a constant price of product independent of order quantity or time -There is an infinite planning horizon -There is no interaction between multiple items of inventory -No inventory is in transit -No limit is placed on capital availability

List the three stages of global development.

-export/import -international operations -globalization

What factors affect the management of global supply chains?

-longer cycle times -dependence on ocean going transportation -cabotage and bi-lateral agreements -language -documentation -Countertrade -IT -third party logistics providers.

List the factors that impact global supply chains.

-market and competition -cost -technology -culture -infrastructure -politics -economy

What is the general approach to dealing with risk?

-risk identification -likelihood -consequence -response

Be familiar with the general model of supply chain risk

-sources of risk: Bad weather -drivers of risk: Turn risks into -consequences; Inadequate Road Maintenance consequences of risk: Impacts of the Risk Sources; Delayed Delivery because -- -strategies to deal with risk: Contingent Actions: Rescue Services Mitigation Actions: Vehicle Maintenance

What are the primary approaches for dealing with risk? What do they entail?

-transfer -reduce -mitigate -absorb These are alternative approaches to risk. Transfer means you transfer it to someone else, e.g., insurance. Reduce or mitigate means that you take steps to minimize the risk or the impact of risks, absorb means you simply accept the risk, e.g., self-insurance.

What are the steps in the six sigma approach?

1) Jointly define value, 2) conduct supply chain capability analysis, 3) develop key financial and operational metrics, and 4) identify and implement system improvement

Understand how acknowledged dependency and information sharing impact supply chain relationships.

Dependence among and between supply chain partners is essential to the smooth functioning of the supply chain. Only in this manner can they achieve optimal efficiency and effectiveness. Dependence among and between supply chain partners is a given. individuals and entities involved in supply chains need to recognize this dependency in order to exploit and optimize the relationship.

What is the nature of decisions that are likely to be decentralized?

Decisions related to day to day operations and customer service are most likely to be decentralized.

What type of decisions is most likely to be centralized?

Decisions related to overall corporate planning and supply chain design and policy related to supply chain design are likely to be centralized.

How does uncertainty influence inventory decision making?

Demand Uncertainty: Solution to this is SS (safety stock) Performance Cycle Uncertainty

Define EOQ? What factors are traded off to determine EOQ?

EOQ - Economic Order Quantity. Defines the amount to order each time. Balances the cost of ordering versus the cost of holding average inventory TC = DC + (D/Q)*S + (Q/2)*H TC=total cost, D=annual demand, C=unit cost, Q=order quantity, S=ordering cost, H=holding cost

What is the point of these types of arrangements that lead to cooperation and coordination with supply chains?

Each provides a mechanism for achieving cooperation and coordination that is essential to the success of the supply chain. As we move from left to right, there is increased levels of commitment, cooperation and coordination among the supply chain partners.

What is the essence of our focus on sustainable supply chains?

Focus is on supply chains that can maintained over time. That can achieve the goals and objectives of the supply chain with a minimal adverse impact on the environment and society as a whole.

Understand how SCM decisions such as facility location, packaging, material flow and inventory control affect the environment and how these activities may be carried out in a more responsible manner.

Focus on environmental impacts such as energy consumption, waste of materials and resources, recycling of packaging and resources used in production and manufacturing.

Define the functions/benefits of inventory.

Geographic Specialization: Inventory maintained at different locations and stages of the value-creation process allows specialization Decoupling: allows economy of scale within a single facility and permits each process to operate at maximum efficiency rather than having the speed of the entire process constrained by the slowest Supply/demand balancing: Accommodates elapsed time between inventory availability (manufacturing, growing, or extraction) and consumption Buffering: Accommodates uncertainty related to demand in excess of forecast or unexpected delays in order receipt and order processing in delivery and is typically referred to as safety stock

What are the functions or benefits of inventory?

Geographic specialization, decoupling, supply/demand balancing, and buffering.

List the key activities that are important in maintaining relationships.

Mutual goals, two way performance and feedback.

What are the four categories of the cost of quality?

Prevention costs, appraisal costs, internal failure costs, external failure costs

What is the nature of trust? Why is trust important in managing relationships?

Trust is essential to optimal supply chain operation, however, it is often difficult to achieve and maintain since the supply chain partners are often independent entities and may be involved in multiple supply chains.

What is supply chain visibility?

Visibility means having information about where products are in the manufacturing and SC process. This is helpful from the micro point of view, the firm, since it better enables them to plan. From the macro, government perspective, visibility is related to security, i.e., know what is being shipped from where to where to ensure supply chain security and integrity.

Because of the interdependence within a SC, one weak link can bring the whole thing down, so the risk culture must be:

-Agile: Focuses on effectiveness. This is the opposite of a lean SC. Best option for mass customization. Remain Agile to avoid risk. -Resilient: So you can respond and adapt and absorb risk. -Sustainable and Adaptable: Develop methods so that you are sustainable to scale and maintain risk solutions.

Understand the merits of being proactive in dealing with risk

-Basically you can never eliminate risk, something bad will always happen so just be prepared -Business continuity plans -Contingency plans

List the major opportunities provided by global supply chains.

-Increased market share -Lower wages -Wider range of manufacturer opportunities -Expertise -Significant economies of scale -Sources of raw materials -Increase in efficiency because costs are reduced.

Identify the driving factors that will influence supply chains in the future

-Increased pace of operations -Shorter product life cycles -Product proliferation and complexity -Global networks -Supply and demand volatility -Increased regulatory oversight -Focus on cost reduction and increased efficiency

What are the major challenges of global supply chains?

-Lead times -Cultural differences in communication and business practices -Legal, political and economic risks -Infrastructure access -Concern for security -More complex total cost analysis -Dependence on 3PL's.

Define the primary factors associated with lean logistics.

-Lean Production: Developing an efficiently coordinated system that makes it possible to produce the exact products desired and deliver them in the right quantities to where they are needed just in time JIT. A pull production system that keeps minimal levels of inventory, relies on efficiencies gained by repetition, elimination of all unneccessary steps and motions, and use of visual signals -Total Quality Management (TQM): Identifies customer quality standards and serves to eliminate waste such as defects, scrap, and rework. No level of defects other than zero is acceptable in Lean. The entire supply chain must be designed to provide the level of quality expected by the final customer. -Respect for people: Lean considers people the most important resource and their involvement is central to the lean philosophy. Lean is treating all employees with respect and offering rewards for well performed tasks. Respect for people extends to all members of the supply chain where the focus is on developing long-term relationships

List the major tactics for problem solving.

-Listening -Asking -Inventing -Referencing

Define the major tactics for problem solving.

-Listening: Separate the people from the problem. -Asking: Ask open ended questions and ask people to clarify what they mean. Tone is key. -Inventing: Create creative ways to reconcile competitive interests and promote joint gain. -Referencing: Evaluate the outcome of a dispute with objective criteria to which both sides can agree.

Define the four distinct approaches to resolving conflict.

-Litigation: Formal. You are suing someone. This one is pretty basic. It is binding and there is no confidentiality. There are several third parties ie) lawyers, jury, judge. -Arbitration: Informal. You have some third party person read over your terms of agreement and decide who is in the right. This is confidential and it is binding. -Mediation: This is an informal meeting - think kind of like an intervention? You have a third party help you talk over your issues and the two parties come to a (potentially binding or non binding) agreement. It depends on what rules you set. It is more flexible than Litigation or Arbitration - but the talk is confidential. -Negotiation: This is the most informal of the four options, it's just the two people who have issues talking it out and coming to a conclusion. It is confidential and can be binding. No third party.

What are the roles of management, workers, and suppliers in lean logistics?

-Management: Create and environment of cultural change among workers. -Workers: Cross functional utility. Involved with output quality -Suppliers: Maintain long term relationships with them!----->How? Via having multiple shared goals and consistent performance and feedback standards.

Define the factors that impact global supply chains.

-Market and competition: Customer expectations -Cost: Total SC Costs -Technology: (lack of) infrastructure, ie) shipping somewhere that has a dock but no means of unloading. Ie) Puerto Rico - getting goods inland -Culture: Acceptable behaviors and norms -Politics and Economy: Regulations/ Currency fluctuations, exchange rates -Infrastructure: (see technology) They go hand in hand.

Define the four categories of the cost of quality.

-Prevention costs: Incurred to prevent or avoid quality problems Associated with design, implementation, and maintenance of the quality management system---->Planned and incurred before actual operation---->Includes: product or service requirements, quality planning, quality assurance, training -Appraisal costs: Associated with measuring and monitoring activities related to quality---->Associated with the suppliers' and customers' evaluation of purchased materials, processes, products, and services---->Includes: verification, quality audits, supplier rating -Internal failure costs: Incurred to remedy defects discovered before the product or service is delivered to the customer---->Includes: waste, scrap, rework or rectification, failure analysis -External failure costs: Incurred to remedy defects discovered by customers---->Includes: repairs and servicing, warranty claims, complaints, and returns

Be familiar with process, control, supply, demand and environmental risk. Define these risks and understand the ramifications of each category of risk.

-Process and Control Risk: Internal to the focal Firm; Organizational Risks -Supply and Demand Risk: External to the focal Firm but Demand Risk is also Internal to the SC---->Demand risk is both External to the focal firm and Internal to the SC -Environmental Risk: External to the SC; Macro. Policy. Labor costs, exchange rates etc

Define the five source of conflict that may arise within supply chains.

-Relationship: Result of strong emotions, poor communication, and repetitive negative behavior. We often attribute negative attributes to organizations we do not understand. -Data: Caused by lack of information, misinformation, different views on what is important, and different interpretations of presented data. Even if data is the same, people can see if differently, which leads to conflict. -Structural: Caused by destructive patterns of behavior, unequal control or ownership, geographical, physical, or environmental factors that hinder cooperation---->Most prominent source of conflict in SC's -Value: Caused by having different criteria (or values) for evaluating ideas or behaviors. -Interest: Caused by perceived or actual competition. Can arise from procedural conflict such as a protocol for processing orders. Also come about via psychological interests ie) placing blame or praise---->In SC- conflict can come about when you do not equally share costs among members.

What are the primary factors associated with this concept?

-Sigma capability: measures the capability of the process to produce defect-free outputs -Proactive Quality: create a process that will produce fewer or no defects -DMAIC: Define. Measure. Analyze. Improve. Control. -3.4 defects in 1 million opportunities -quality control

What supply chain factors might impact the proper EOQ calculation?

-Volume transportation rates - lower rates for larger volumes is common -Quantity discounts -Production Lot size - economies of manufacturing -Multiple Item -Purchases -Dedicated Trucking

What are the types of arrangements that can lead to cooperation and coordination with supply chains?

-contract -outsource -administered -alliance -corporate -enterprise extension

Be familiar with the 10 mega-trends in supply chains of the future.

1) Supply chain performance is now synonymous with business performance as most CEOs recognize the strategic value of supply chain 2) Multi-enterprise collaboration in real time is becoming a necessity as end-to-end cycle times continue to compress, and partner performance increases supply chain risk 3) Sensor enabled supply chain (ex: RFID, barcodes, etc., becoming more popular) is critical to providing real time visibility of end-to-end supply chain compliance and performance 4) Demand driven supply chain (sensing and responding to demand faster than competitors) 5) Lean supply chain thinking is being modified to avoid brittle supply chains in today's complex and highly volatile demand-driven economy 6) Supply chain business continuity is becoming more important as outsourcing, talent shortage, and increasing demand volatility increases supply chain risk 7) Low cost country sourcing is an option but is often associated with increased lead times, poor product quality, and increased supply chain risk 8) Supply chain outsourcing continues to rise as the complexity of logistics increases and the supply chain talent shortage grows 9) Shifting demographics are forcing a major redesign of global supply chains. There's a whole scale redesign of supply chains to balance low cost sourcing opportunities with new regions of growth 10) Green supply chains are becoming a reality as fuel costs and increased consumer focus on sustainability allow the alignment of corporate social and fiscal responsibilities

What are the ramifications of centralized inventory strategies?

Advantages: -Stronger, more professional managers who can be thoroughly trained -Special buying opportunities can be more effectively explored -Can easily adopt a total company "big picture" view -Lower levels of inventory Disadvantages: -Problems associated with a lack of knowledge/understanding of local conditions at each location -Lost opportunities and unintentional overstocks related to a one-size-fits-all attitude -Local management may feel disenfranchised by not having control -Lack of ownership can stifle innovation and impact productivity -Customer service may suffer

What are the ramifications of decentralized inventory strategies?

Advantages: Personnel are aware of local factors and upcoming events They may be aware of unique input regarding the plans of major customers Fosters a sense of control and ownership for the local office Disadvantages: Local personnel may lack well developed inventory management skills and operate on a highly subjective basis Without a global view, they might operate by "feel" rather than by formula Overreaction to events is common

Be familiar with the evolution of logistics as a management function within organizations.

Initially logistics functions were dispersed throughout the organization primarily within the functional areas of manufacturing and operations, marketing, and finance. Beginning in the 1960's it became clear that combining all of the logistics activities in a dedicated department could significantly improve the efficiency and effectiveness of logistics. Thus, activities dealing with inventory, transportation, ordering, warehousing, packaging, and location were combined within the area of logistics. Over time, the focus on logistical activities within the firm was replaced with a broader concern for the operations of the supply chain, all of the firms in the channel.

What role does safety stock plan for organizations that practice JIT?

JIT assumes no safety stock. It relies on accurate demand forecast and a perfectly functioning supply chain.

Define lean logistics.

Lean logistics focuses on efficiency; produce now and sell later. Lean Logistics creates customer value through efficient use of resources.

Identify the four distinct approaches to resolving conflict.

Litigation, Arbitration, Mediation, Negotiation.

List the primary benefits of lean logistics.

Lower costs. Focuses on providing value to the consumer via the efficient use of resources.

How does litigation differ from the other processes? What is management's perspective of litigation?

Management hates litigation because it is costly and a PR nightmare. Litigation is different because you can formally appeal the binding decision.

What is the primary difference between reactive inventory strategy and proactive inventory strategy?

Reactive Inventory Strategy: Responds to channel members inventory needs. (Pull) Proactive Inventory Strategy: Relies on the initiation of manufacturers and marketers (Push)

List the five sources of conflict that may arise within supply chains.

Relationship, Data, Structural, Value, and Interest.

What is meant by segmented customer service strategies? What is the key assumption of this strategy?

Segmented customer service means that different categories of consumers have different needs that need to be met at different levels. The concept of segmented customer service is simply that different market segments may require different levels of customer service. Thus, firms should be aware of those differences and provide them according to the requirements of the customer.

What does it mean to say that risk can be internal or external to the local firm and internal or external to the supply chain?

Simply that risks can happen within the firm, within the supply chain or outside the firm and the supply chain. Implications are for control. The organization has the most control within the firm and the least control in the external environment.

Define Six Sigma quality.

Six Sigma: A methodology for continuous improvement, for creating products/processes that perform at high standards; is a management technique

Explain the ABC inventory approach?

Some inventory items are more important than others. Classifying inventory based on degree of importance allows us to give priority to important inventory items and manage those with care. It also prevents us from wasting precious resources on managing items of less importance. ABC is based on Pareto's law, which states that a small percentage of items accounts for a large percentage of value. -Determine annual usage or sales of each item -Then, determine the percentage of the total usage or sales by item -Next rank the items from highest to lowest percentage -Finally classify the items into groups

How does the concept of comparative advantage affect supply chain relationship planning and decision making?

Supply chains relationships based on cooperation, collaboration and coordination are likely to permit those organizations within the supply chain to achieve a competitive and comparative advantage. Efficient and effective supply chains create a comparative and a competitive advantage. Establishing cooperative relationships is part of this process. Decisions made by management in the design and operation of supply chains focus on establishing and maintaining these advantages.

What are the primary factors associated with lean logistics?

TQM, lean production, respect for people

Define safety stock.

The extra inventory that is carried to serve as a cushion for uncertainties in supply and demand.

What is the re-order point? How would you calculate it?

The level of inventory that triggers an action to replenish that particular inventory stock. R = D X T R= reorder point in units D = Average daily demand in units T = Average performance cycle in days If uncertainty, add Safety Stock (SS) to formula. -> R = (D X T) + SS

Define inventory carrying costs. What are the key variables that contribute to this cost factor?

The total expenses associated with maintaining inventory. Key variables include Capital (funds tied up in inventory), taxes, insurance, Obsolescence (deterioration of product during storage, loss of fashion, appeal, or timeliness), and storage costs

What are the key arguments in favor of supply chain managers incorporating sustainability into their SCM decisions?

These principles use scarce resources most effectively. Social responsibility as it relates to sourcing, especially labor.

What do these key activities that are important in maintaining relationships do?

They help to create and maintain relationships among supply chain partners, i.e., coordination, cooperation and improved communications.

What is the primary goal of statistical quality control?

To reduce the variance or production variability.

Explain what it means when we say that inventory decisions are high risk and high impact.

Too little inventory can result in shutdowns, lost sales and customer dissatisfaction. Too much inventory can lead to lost investment opportunities, lower profits, and higher costs.

What is the paradox of inventory? Hint: Everyone needs it; no one wants to carry it.

Too much inventory can kill a business, but operating with too little can be just as bad