Marketing 300 final utk moon

Assumptions about SCM

- real time and accurate information regarding the nature of customer demand, operational capabilities, and supplier capacity was unobtainable.

Global geo-political and social changes.

There is global unrest. All across the globe there are political and social changes happening. These affect supply chains greatly. Including, tariffs, import and export restrictions, overseas extreme weather conditions affect supply/demand activities - demographics

Which of the following approaches would NOT help a business deal with the great divide?

creating a production-oriented focus across the supply chain

It is said today that marketing is responsible for identifying profitable demand and creating products to incentivize customers to buy, while supply chain management's role is to:

- Satisfy demand by putting the product in customer's hands at the right time, right place, right quantity, and right price.

Summary of Mod 2

- Supply chain supports organizational strategy by delivering on the promise of exchange through F, T, P -organizations that do this well create value that exceeds that of their competition - Significantly impact org performance through enhanced revenue, reduced cost, and improved asset management -

Capacity forecast

- best guess of what will we be able to make in future time periods

Supply Chain

- consists of the organizations, people, activities, information, and resources involved in moving a product or service from the origins of supply all the way to the point of final consumption - re-enters material that wasn't consumed back into the supply chain for reuse or recycling

Demand definitions

- demand is what customers would buy from us if they could. this is unconstrained demand - example: sony- PlayStation - demand forecast is a projection into the future of expected demand, given a stated set of assumptions. this is an unconstrained forecast - assumptions could mean price (Mercedes $500 versus $100,000) Plans are the managerial actions that result from the demand/supply integration process - supply plans - inventory plans - demand plans - financial plans

What does integration of the internal supply chain do?

- enables organizations to ensure that supply chain functions are synchronized around total operating costs and focus on fulfilling end customer demand rather than a focus on actualizing artificially derived forecasts and long-term plans

Demand forecast

- estimate of what future demand will be

Best supply chain practices

- focus on maximizing relevant value creation which is the value we create for customers & for organizations providing value - constant innovation -continuous improvement -better integrating and collaborating -technology helps to digitize supply chain (Apple with iTunes)

Keys to effective forecasting management

- forecasting is not planning - forecast demand, plan supply - communicate, coordinate, collaborate - use tools wisely - make it important - measure, measure, measure

Forecast vs plans

- forecasts are best guesses about what we think will happen - plans are decisions we make about what we will actually do

Which of the following utility does General Mills provide when it uses specific food ingredients to make Honey Nut Cheerios?

- form

Which economic utilities are associated with supply chain management?

- form - time - place

Types of goods sold and transported on Silk Road

- gold -stones -metal -ivory -furs -lacquer -bronze -ceramic -jade These goods would change hands often

What are the improved skills as a result of different managerial tactics due to a loss of direct control in many supply chains? what are these required to acheive?

- information connectivity - collaboration - contract governance - analytics and operational speed and agility - end-to-end integration

Too much demand?

- limit ad spending - turn off promo activities

scope of activities and processes that fall within supply chain management

- managing relationships between players in supply chain - information flows -develop talent to handle activities and processes - financial exchanges between players - management and measurement of performance - assessment of risk & mitigation of risk

Impact of 3D printing

- movement of many physical products may become obsolete as we digitize products and can move them electronically.

Logistics/Supply Chain management is closely tied with Marketing as it typically fills which ÒPÓ?

- place

Original focus of SCM

- procurement - Manufacturing - logistics

what does end-to-end integration result in?

- significant improvement in relevant value (the value provided to end customers and consumers, as well as the economic value derived by upstream firms in the supply chain. these improvements to relevant value are realized by coordinating demand signals obtained directly from consumers in retailers up through the various network players involved in providing form, time, and place value so that demand fulfillment is tailored to exact consumer specifications into creation

what ties in to the ERP backbone system and the data warehouse?

- supplier systems - sales mgt systems - CRM systems - demand forecasting sys - supply chain sys - financial analysis sys - marketing and marketing research sys - customer sys

Sales and Operations Planning (S&OP)

- the process by which a company matches its demand in the marketplace with its supply capabilities why? - so marketing will create demand for products that can be produced - so ops will supply products for which there is demand - all aspects of company need to work together

Operational activities

- traditionally been directed by long term plans by what needs to be procured, produced, and stored so that it can be held in advance of demand

Importance of marketing

- understanding exactly what the customers need is and what they're willing to exchange in order to have that need filled - no matter an organizations strength or complexity, they must be more than competent in marketing and supply chain management

Mass manufacturing era

- unit costs driven to incredibly low levels due to economies of scale by buying large quantities in procurement, making large quantities and moving and storing large quantities in logistics - low costs driven by economies of scale made it affordable for the masses to buy goods (model t ford)

What is NOT an innovation related to disruptive technology?

-Automotive distribution

As Delta invests in luggage tracking- it is switching to baggage tags with radio-frequency ID chips embedded, Delta will now be able to accurately track customers' baggage in real time! Even though the new technology costs a great deal, Delta could save on fewer luggage claims and deliveries. What does this example imply?

-Companies need to evaluate cost-to-serve versus the perceived benefits

An example of the role of the supply chain in a firm is

-Delivering on the promise made to your customers -increasing sales-being on one side of the great divide -demand creating -making a promise to customers

Disruptive technology

-Digitization -Unstructured data-IoT, Cognition -Automation and Robotics -Additive manufacturing and 3d printing

Emerging trend challenges in supply chain management

-Disruptive technology -Global Geo-Political and Social Changes -Talent and Skill Requirement

What emerging megatrends will greatly challenge supply chain managers?

-Disruptive technology, talent requirements and social changes

Which geo-political and social patterns will alter the conduct of supply chain management?

-Global unrest, and complexity in trade laws

Talent and skills requirement

-Many supply chains include multicultural/ multi-national members -need talent who knows end to end supply chain ins and outs -must have great soft skills at collab & team work -must be strong in analytics, understanding big data, and cognition to succeed

Trading network examples from history

-Phoenicia -Egypt -Greece -Ancient China -India -Mesopotamia -Indus River valley

Digitization

-related to structuring and exchanging massive amounts of data and use to to drive decisions. -Exchange data in real time and make real time decisions

Drivers and result of great divide

-siloed functional areas(procurement, MFG, logistics) -internal integration -end to end supply chain integration

Why do we need an accurate forecast? (results of forecasting)

1. minimize cost (cost reduction) - inventory costs - expedited freight (transportation - purchasing costs - set up costs - manufacturing costs 2. customer satisfaction - improved fill rates

2 categories of forecasting techniques

1. quantitative or stat forecasting (rearview mirror) - looking for patterns in historical demand - some patterns are a function of time- use time series techniques to identify - some patterns are a function of the way that other factors affect demand and we try to identify these patterns with regression analysis - finally, project them into the future once patterns are identified - time-series - regression or other causal models - regression analysis is useful when you think there are measurable factors that impact demand - demand = dependent variable - measurable factors are independent variables (internal or external) - internal (how much money are we spending on adv) - external (is the price of gasoline going up or down?) 2. Qualitative forecasting- or subjective or judgmental forecasting - process of turning the experience, judgments, and intuition of experienced people into formal forecasts - why use it? - when you have a reason to believe that the future will not necessarily look exactly like the past - new products with no historical data - new conditions will change the previous patterns - look to salesforce - most common example of qual forecasting - when they have insights into changing demand patterns at their large customers - when they have insights into probabilities of securing large orders - sales force composite BOTH SHOULD BE USED IN A COORDINATED WAY

Four major ways top performing supply chains impact their companies performance

1. supply chains can increase top line revenue by providing better product or service than enables the company to charge more 2. supply chains can increase bottom line profitability through lower cost of goods sold or more efficient manufacturing 3. supply chains can reduce the need for working capital through reducing inventories that are needed to effectively operate a companies supply chain 4. companies through well executed SCM can increase ROI through better utilization of fixed assets like property, equipment, etc.

Time series analysis components

1. trend - continuing pattern of demand increase or decrease - pattern can be a straight line or a curve 2. seasonality - repeating pattern of demand increases or decreases - nromally think of seasonality as occurring within a single year, and cycles are occurring over longer than 1 year periods 3. Noise - random fluctuation (less noise, more likely to find good patterns to project into the future) - that part of demand history which the other time series components cannot explain

When did trade routes begin to emerge?

1000 B.C. - used caravans with camels

Additive manufacturing (3D printing)

Changing essential economics of job sites, allowing for precision, on site, quickly and at low cost. Form, time, place value mix may be altered by this

IoT & Cognition

Cognitive age where computer systems learn and use unstructured data to make decisions or help make decisions

Better value

Could be - better product in general - better product, lower price - better product at a higher price because people pay premiums for premium products - substitution product for a lower price - people also pay more for convenience

Which of the following is not an element of the integrated supply chain for General Mills Honey Nut Cheerios?

Dairy Cow Farmers

Matching supply with demand

Demand - sales and marketing - downstream channel partners Supply - production - logistics - upstream suppliers Sales and operations planning is in the middle of demand and supply

S&OP Meetings

Demand meeting - should involve forecasters, marketers, and sales - outcome should be a consensus demand forecast Supply meeting - should involve operations, purchasing, and logistics - outcome should be a consensus capacity forecast Partnership meeting - should involve executives from both demand and supply sides, as well as finance - discussion should focus on balancing demand with supply - outcome should be agreed-upon demand plans and supply plans

Market Distribution network components

OUTbound logistics - process related to the movement and storage of finished products from the end of production line to the end user Customer Service & Post-sales support - service provided after delivery of final goods like repairs, maintenance, customer service reports.

Demand forecasting performance measurement

Dimensions - bias - accuracy - what can you always count on a forecast to be? you can always count it to be WRONG

Linking supply chain performance to financial performance

Figure explanation - SCM can have up to a 70% impact on earnings per share * Increase customer service impacts the profit and loss statement * Reduce total cost impacts the profit and loss statement and total operating expense statement * Reduce fixed capital impacts the balance sheet * reduce working capital impacts the current assets sheet

Form, Time and Place utility slide

Fiji vs Dasani Fiji - Form: spring water - Time: Single source far from market (Fiji) - Place: Limited availability as "premium item" Dasani - Form: purified tap water - Time: multiple sources close to market (coca-cola bottler) - Place: wide availability People pay premium for higher value of Fiji and some people pay lower cost for Dasani due to not being interested in fancy water.

How does supply chain management create value?

Form time place exchange - customers choose a company and create demand. then, businesses fulfill or supply that customer's demand

The nature of the business determines the nature of the process

Nature of the customer base - narrow? - broad? - regional different Nature of the data - age? - detail? - quality? Nature of the products - new products? - seasonal demand? - shelf life? - project based business? Nature of the people - resources? - education/training

Functional silos

Functional enterprise is comprised of procurement, operations and distribution. this is part of the product, service, and financial flows - linked to key performance indicators linked to satisfaction and cost - when subcompo all act to optimize their indivudal part of the whole, rather than making appropriate compromises to optimize the entire whole, the system fails to achieve possible optimization levels of performance - ex: when procurement optimizes a unit purchase price or manufacturing optimizes unit production cost, this generally involves buying in large lot sizes from the lowest cost provider or making in large lot sizes over a long time frame to minimize switch-over costs. can result in high logistics cost because products are forced to move longer distances or stored in larger volumes. in cases wehre the savings from large lot sizes and procurement manufacturing outweighs the additional logistics cost, it's a good decision. - separating upstream operations from real time demand masks changes in customer and makes the system unresponsive to marketer competitive changes. - this is a concern in our modern crazy competitive market

Forecasting time horizon

How far out into the future are you forecasting demand? - next month, quarter, 2 years??

Forecasting time interval

How frequently do you update your forecast?

New focus of SCM

Integrated end-to-end concept - internal functional boundaries - suppliers' suppliers' - customers - end consumers - intermediary goods and service firms

What does competition do

It forces brands to create exchange, form, time, and place

Functional Silos

Occur when business functions in the same firm operate independently with little cooperation, communication, or appreciation for other functions

Integrated Enterprise components

MFG/SVC operations - process and activities involved in transforming raw resources into finish products & those involved in planning and controlling the systems that produce these goods or services Order management - planning, directing, monitoring and controlling of the processes related to customer orders, manufacturing orders and purchase orders

Components of a supply chain

Materials to end customer= Product/Service management Supplier Base includes: - Procurement - INbound logistics Integrated Enterprise includes: - MFG/SVC operations - Order management Market/Distribution network includes: - ONboard logistics -customer service and post-sales service

The S&OP process

Process = decisions are made about what to do when demand and supply are NOT in balance Inputs - capacity forecast - what are we capable of producing? - demand forecast - what would customers buy from us if they could? SUPPLY SIDE - purchasing - manufacturing - transportation - warehousing DEMAND SIDE - brand mgt - consumer promotions - trade promos - sales OUTPUTS - supply plans - demand plans - financial plans

Supplier base components

Procurement - identification, acquisition, and management of goods and services needed to run a business or organization Inbound logistics - management of materials coming from sellers or vendors into the production process or storage facilities waiting for production

Most famous ancient trade route

Silk Road - 4000 miles long from Asia to Europe - Persia, India, China, Arabia were important - 200 B.C to 15th Century

example of real company in module 1

Starbucks

What is the best practice of SCM

The best practice of supply chain management can facilitate both cost efficiency and improved added value, enabling some firms to revolutionize their industries. - think Amazon- they tend to have the best prices, as well as place due to convenience

What is the end goal of competitive advantage?

The goal is to create better value than the competitor.

Demand forecasting systems

Two real functions accomplished by forecasting systems: 1. Statistical engine- software that does the stats 2. Communication - integration with other corporate systems (ERP, supply chain, etc.) - ability to share information with upstream (supplier) and downstream (customer) users

Forecasting level

at what level of granularity is your forecast expressed? (SKU, product family, etc.) - product forecast (how much beer will be demanded?) - brand forecast (how much bud lite will be demanded?) - SKU forecast (how much bud lite in 6-pack long neck bottles will be demanded?)

What are disruptive technology in manufacturing & distribution

automation and robots

Gaining competitive advantage through SCM- explanation of the 4 squares

bottom left- No differential - competitors have no advantage of any kind bottom right- cost leader - competitors use economies of scale to offer lower prices to customers which gives them an advantage - think Target, Dollar General, Walmart, etc. Top left- Form, time, and or place leader - offer better options for form, time, or place - example: place of comvenience Top right- optimal customer value - the best value in every aspect for the customer. Competitor has the ultimate advantage by leading in FTP and cost. They have the heightened level of FTP at a lower price

END OF MODULE QUESTION: The "great divide" in supply chain occurs between

demand focused activities and supply focused activities

Scope of Supply Chain

expanding includes physical flows and also, the activities and processes involved in managing relationships among all supply chain players, communication of information among them, and financial flows that exchange between intermediaries to facilitate exchange.

Unstructured data

find patterns to drive near real time decision making (soft data from social media, reward cards, online accounts...etc)

the great divide

gap between demand and the operational activities to fill demand - on one side of the great divide, the upstream activities in the supply chain namely procurement, inbound logistics, manufacturing and service operations, and placement of finished goods close to customers were conducted far in advance of actual demand in very large volumes to take advantage of the economies of scale of those areas. the real time cues are masked as the upsteam operations focus more on efficiently actualizing a long term plan rather than doing what customers want in the real time - downstream and closer to customers, demand is serviced from actual inventory, taking actual cues regarding the desires of market demand to be able to provide those products to customers exactly when and where they want them - result of large lot size, long lead time, efficient operation is the availability in markets of products that customers don't actually what or in places and times that they don't want them. costs are incurred in the form of stock outs and lost sales or in expedited sales to produce and or move & store small volumes and short lead times to accommodate what customers actually want. - alternative to ^ is that there are large volumes of unsold products that must then be sold at reduced prices or scraped as obsolete - all alternatives result in eroded margins often to the point of losing money on sales and the accumulation of large volumes of unsellable inventory

internal integration across one organization

how the organization coordinates its internal systems and processes

what has not been proven to generate competitive advantage?

integration across the internal functions of the supply chain - modern SCM is an integrated end-to-end concept that crosses not only internal functional boundaries but also all of the intermediary organizations that create value as part of the overall end-to-end supply chain network

Forecasting system overview

middle= ERP backbone system important points - companies need a data warehouse to guarantee data integrity - the forecasting system must integrate seamlessly with other corporate systems

Returns management

processes related to returning goods from customer to manufacturer due to obsolescence, performance problems or customer preference.

Companies that excel at supply chain management are structured to include all the following except:

siloed organizational structure

How do companies manage this forecasting process?

system called performance measurement that includes - techniques - management - systems

S&OP Should Be Both Tactical and Strategic in Nature

tactical: what should we make, and what should we sell over the next 1-6 months? strategic: what are the longer term trends that will affect both demand and supply over the next 6-24 months and beyond

End of Module question: supply chain management refers to _______

the management of up and downstream relationships with suppliers and customers to deliver superior customer value at less cost to the supply chain as a whole

Integrated Supply Chain

the systematic coordination of traditional business functions within a particular organization and across organizations within the supply chain for the purposes of improving the long-term performance of the individual enterprises and the supply chain as a whole - supply chains exist within the broader external business environment that consists of geopolitical forces, government regulations & compliance, industry and competitive factors, and the changing nature of markets and demand.

why integrate the functions of operation of operations, procurement and logistics

to improve system level performance metrics such as - customer satisfaction - total cost - total system inventory - all internal supply chain functional areas report to one supply chain officer who has reporting authority to the executive committee, one overall integrated budget, and one planning engine that coordinates all the internal activities in procurement, manufacturing, and service operations, and logistics operations & KPI's that lead directly to financial performance