Operations Management

Supplier certification

process of approving suppliers in order to place them on a firm's "certified" list. It involves site visits, contacting the supplier's other customers for information and reference, credit checks, and financial statement analysis. This can be very important because unreliable suppliers who don't deliver on time as well as suppliers that deliver products with unacceptable quality could cause many problems for a firm.

Logistics

the movement of goods, services, cash, and information in a supply chain.

Would it make sense for a business to vertically integrate and be its own supply chain?

Doing so would reasonably involve becoming well versed in many different operations. Getting up to speed would require time, new people, training, adding resources, and adding new managers. Companies who specialize in various aspects of a supply chain are typically better able to handle those activities (e.g., 3PLs). And unless demand was steady over time, instead of say intermittent or seasonal, operating certain portions of a supply chain would be extremely inefficient. Most certainly, this would put a business at a competitive disadvantage

What is meant by the term inventory velocity and why is it important? What is information velocity?

Inventory velocity refers to the rate at which the inventory (material) goes through the system. The faster the inventory moves through the system, the better it is because the quick movement of materials not only results in lower inventory costs but also faster delivery and service to customers. Information velocity refers to the speed at which information is transferred within a supply chain. The higher the information velocity, the better it is because quick two-way flow of information results in faster decision-making on the supply chain.

Centralization Vs. Decentralization

Organizational placement of the purchasing function as well as the level of centralization is a strategic decision. Centralized Purchasing: A single purchasing department handles all purchasing and related functions. Advantages of centralization include: a. The ability to obtain quantity discounts due to large volume generated. b. More attention from suppliers due to high volume. c. The ability to maintain a specialized staff who can concentrate on a selected few items consistent with their background and expertise. Decentralized Purchasing: Individual departments are responsible for their own purchasing requirements. Advantages of decentralization include: a. The ability to respond to "local" or "department specific" needs. b. The flexibility to obtain quicker service and deliveries. c. Less paper work and bureaucracy.

What are the strategic, tactical, and operations responsibilities in supply chain management?

Strategic issues in supply chain management include determining the number, location and capacity of facilities, deciding whether to make or buy a product. Tactical issues in supply chain management involve policies and procedures related to procurement, processing, purchasing, logistics, inventory and quality. Operational issues in supply chain management are related to production planning and control which involves scheduling of workforce, machinery, production, deliveries and distribution of goods or services.

Explain strategic partnering

Strategic partnering involves two or more business organizations with complimentary products or services to join together so that each partner gains a strategic benefit. For example, the retail buyer may be able to purchase certain products at a lower price from a supplier provided that it also purchases other complimentary products that the supplier produces.

Viewing suppliers as advertisers Vs partners

Suppliers should be viewed as outside partners who can contribute to the long-term success of the firm rather than as adversaries.

Explain the importance of supply chain visibility

Supply chain visibility involves a major trading partner to connect any part of a company's supply chain to access data in real time on inventory levels, shipment status and similar key information. This type of information sharing allows companies to prepare for future actions of their trading partners. For example, assume that a customer on the supply chain has a low level of inventory and an extremely high level of future orders and forecasted demand. Supply chain visibility will allow a company supplying this customer to look at their customer's inventory records and forecast information, and realize that high level of customer orders will be coming in the future and begin planning production and capacity requirements accordingly. This type of monitoring of suppliers' and customers' records enable companies to be proactive and react to situations before a problem develops.

Vendor Analysis

Vendor Analysis: Studying various key characteristics of potential suppliers in order to select dependable, reliable, competent, progressive sources of supply. In vendor analysis, the criteria used in choosing among alternative suppliers include quality, lead time, on-time delivery, and price.

What is the bullwhip effect and why does it occur? How can it be overcome?

Bullwhip effect is the increase of inventories on a supply chain starting at the end of a supply chain with the final customer and working backwards towards the initial supplier (supplier of raw materials). The main reason for the occurrence of this phenomenon is the lumpiness and variability of demand at different stages of the supply chain. In order to protect themselves from the uncertainties resulting from lumpy and variable demand, suppliers carry larger amounts of inventory as safety stock. As the need for carrying inventory increases, the batch or order size also progressively increases on the supply chain from customers all the way back to initial suppliers. Setup time reduction methods and CONWIP (constant work-in-process) systems can alleviate the bullwhip effect because these methods generate smaller batch sizes, which result in smaller quantities of inventory.

RFID

RFID tags provide an improved way to track shipments, and therefore, improve supply chain visibility. That, in turn, will lead to better decision making all up and down the supply chain.

Why is managing returns important?

Reverse logistics refers to the management of returned merchandise. It usually involves screening items to reject items that aren't returnable, then sorting those that are according to whether they can be repackaged and sold as is, need rework, need to be scrapped, etc., in order to extract as much value as possible.

Cross-docking

avoids the costs associated with warehousing, including moving goods in and out of the warehouse, plus holding costs. It also gets goods to customers more quickly.

What is a supply chain

a sequence of organizations- their facilities, functions, and activities- that are involved in producing and delivering a service. The chain begins with suppliers of raw materials and extends all the way to the final customer.

Explain the increasing importance of the procurement function.

a. As a result of increased outsourcing, the cost of materials is higher than cost of labor for many end items. b. The requirements of JIT and lean production include smaller lot sizes, high quality goods, precise, correct timing of deliveries and correct quantity. In order to ensure that all of the above take place, the purchasing function assumes greater responsibility in managing the supply chain. c. Increased globalization involves international suppliers, joint venture agreements and other forms of global supplier-customer partnerships, which require significant participation of the purchasing department.

Three different ways the technology has improved the ability of the firm to manage supply chains:

a. The ability to integrate the databases of different firms to allow faster and easier access to information by trading partners. b. The ability to use fax, e-mail, teleconferencing and other forms of advanced communication systems to allow companies to exchange information and ideas quicker and more efficiently. c. Utilization of computers and specifically e-commerce and e-business to generate more business for a firm.