SCM 300 Final Exam

Basic Characteristics of Lean Manufacturing

(JIT): low inventory and high efficiency. Strives to meet consumer demand and desires but with minimal inventory levels and minimal supply chain waste. Production philosophy that strives to meet consumer demand but with minimal inventory levels and minimal SC waste. (Also known as Just-in-Time (JIT) and/or the Toyota Production system (TPS)). Quality at the source, high performance quality, poka-yoke, atomization, close supplier ties, etc.

Vendor Managed Inventory

(Vendor Managed Inventory) Inventory planning and replenishment system where supplier(vendor) accepts negotiated responsibilities that typically include monitoring and restocking. Value to retailer: fewer responsibilities, decrease cost. Value to vendor: better understanding of demand rates, fewer retailer errors, responsive..

How can supply chains be more sustainable?

-Procurement: Purchasing better, fewer, and safer material. -Logistics: reduce fuel consumption, -Manufacturing and Operations, Facilities: energy consumption, reduce emissions, -Reverse Logistics: Looking both up and down the SC -SC sustainability catalysts: Large, powerful companies can be catalysts and influence thousands of suppliers. -Rethink design: lean manufacturing -Sustainability Accounting: help find areas of cost related to unsustainable business practices. -Develop Sustainability Metrics (Walmart sustainability index) -Life Cycle Analysis (cradle to cradle and cradle to grave)

Competitive Priorities

1. Cost 2. Quality 3. Speed/Time 4. Flexibility

Primary Reasons for ERP

1. Integrate Financial Data - One Story vs. Many, One Set of Numbers 2. Integrate Inventory Data - Supply Chain Visibility, Reduce Inventory 3. Standardize Human Resources Data - Tracking Employee Time, Benefits, 4. Manufacturing and Business Process Data - Standardization, Speed, Visibility 5. Integrate Customer Order Information -Supply Chain Coordination

3 Parts of Social Responsibility

1. Legal and Ethical Behavior - acting within the law in all of the nations in which they conduct business. 2. Sustainability - Earth-friendly business practices. 3. Commitment to the Community - investing in the well-being of the communities in which the business operates as well as the greater world.

Possible Causes of Bullwhip Effect

1. Order Batching 2. Forward Buying 3. Rationing 4. Short Gaming

What should be considered in choosing a supplier?

>>Cost >>Quality >>Location >>Innovation >>Flexibility >>Speed ect.. Cost, Quality, location, innovation, flexibility, speed, core competencies, time, reliability, commitment to improvement, etc.

Benefits of High Inventory Levels

>>Higher levels of customer service >>Quantity discounts >>Fewer orders placed >>Greater security for demand variability (Cons for Low): BUYING the Inventory - Cost to purchase (consider quantity discounts) •STOCKING OUT - Poor customer service levels, PAYING the Purchasing People- Costs to order inventory, TRANSPORTATION: Ease, Cost

Benefits of Low Inventory Levels

>>Less storage space >>Lower change of obsolesence >>Less materials handling requirments >>More money available for investment opportunities (Pros for Low): Cost of holding Inventory, Materials handling - Cost to handle inventory, loss of Inventory - Shrinkage/Obsolescence, ties up your cash - Capital investment options

What are the potential obstacles for RFID?

>>Market standardization >>Getting supply chain partners on board >>Justifying costs to finance >>Hardware range, managing numerous signals >>Middleware development >>Managing data >>Security and privacy issues

What are the potential benefits of RFID?

>>Planning, scheduling, and execution >>Inventory and materials management >>Security issues >>Retail checkouts >>Advertising and marketing possibilities >>Customer service possibilities

ERP Benefits

>>Rapid corporate turnaround? >>Fewer work hours? >>Guaranteed efficiency? >>Cuts operational costs? >>Guaranteed increase in profits?

What are the issues associated with modern SCM IT systems?

>>Resource Management - Inventory HR Money >>Operations Management - JIT, Lean Manufacturing Postponement >>Logistics Management - Scheduling Planning >>Customer Management - Business Processes, Point of Sale Information

Consider scenarios where RFID would be helpful to supply chain and/or customer

>>Security cards, parking structure cards, etc. >>Automatic toll payment systems >>Locate lost or stolen pets, child anti-kidnapping >>Radio Frequency Activation (RFA) devices >>Retail applications >>Inventory tracking, theft management >>Sorting recyclable item >>Readers in your home, workplace >>Readers for tracking, advertising, payments, security, crime... >>Implants?

What's the difference between centered curves and un-centered curves?

A centered curve means that the majority of the curve falls in the boundaries of the defect free zone. Vice versa, a off-centered curve means that the majority of it is not within boundary of the defect free zone (could be left of right). In simple words, is it on target?

Vertical Integration

A company taking on additional supply chain responsibilities that used to be done by outside parties

Describe: Major Cargo Classifications. Examples

Bulk: which is free flowing cargo stored loose and is usually loaded by shovel. (EX: coal, rice)- usually pumped, scooped, shoveled, etc.) Break Bulk: which is general or packaged cargo often containerized, Cargo that is packaged and/or secured on a pallet. Neo-Bulk: typically, large items that don't quite fit into either the bulk or break bulk categories. (Ex. Vehicles, logs, and livestock)

Briefly describe the basics of some of the ERP support systems

CRM - Customer Relationship Management SRM - Supplier Relationship Management Understand needs of the system by separating them into groups.

Requirements and goals of Business IT Systems

Collect data from everyone Make data accessible to everyone Turn your data into information

How IT impacts big picture supply chain and also business processes

Collected data from everyone, making it accessible to everyone, and turned that data into information >>Used within and between businesses. Aids in planning, execution, support, and creating an efficient supply chain

Postponement

Combo of push and pull - flexibility, cost control, allows for some customization with speed and efficiency. EX: power cords example (hatch on box). When you delay the final assembly of the end item

Requirements and goals of SCM IT systems

Communication - Inter and Intra Organizational Collect and Store Data Aid in Planning and Analysis Aid in Execution - Purchasing, Scheduling, Processing... Support other Functions/Parties - $, HR, Products, Delivery information, Customers, Inventories Facilitate Supply Chain Compression - Create efficiencies

1st Tier Supplier

Companies direct supplier

Contract Manufacturers

Company that produces goods on behalf of another organization, i.e. Flextronics for Microsoft: Xbox

Customs House Broker

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

Freight Forwarder

Contractor (person or company) that helps companies organize the efficient and effective shipment of goods from one point in the supply chain to the other.

Reefer

Controlled atmosphere container, refrigerated

Difference between data, information, and knowledge

DATA: Collection of raw details with no meaning by itself INFORMATION: Meaning derived from ordering the available data. Discovering data relationships KNOWLEDGE: Ability to make decisions based on information derived from data. Understanding the patterns

Flexible Flow

Demand: Customized Items, Low Volumes, Dynamic Industry. Layout: Process Focused/Flexible Flow Layouts. Manufacturing system: Job Shops. Make-to-order system. Key points: High per unit cost, High performance and design, Slow production rates, Customization opportunities likely, difference between products may be great, Make-to-order, Start-up costs relatively low.

Hybrid Systems

Demand: Moderation (Customization, Changes, Industry). Layout: Hybrid Layouts. Manufacturing system: Group Technology (Cellular) Layout. Possibly an Assemble-to-order system. Key points: Assemble-to-order, Start-up costs are moderate, Labor, machines, tools= mix, Lead times dictated by both processing rates and delivery, Changeovers= depends, Inventory= depends.

Line Flow

Demand: Standard Items, High Volumes, Static Industry. Layout: Product Focused/Line Flow Layouts. Manufacturing system: Assembly Lines, Continuous Flow Systems. Make-to-stock systems. Key points: Low per unit Cost(long-term), Consistent Quality, Fast Production Rates, Minimal Customization Opportunities, Product Lines very consistent, Make-to-Stock, Start -up costs may be very high

Operations Management

Design, operations, and improvement of product systems that efficiently transform inputs into finished goods and services which leads to maximizing productivity.

Crossdocking

Distribution of goods from an upstream supplier to a downstream customer through a distribution center with minimal handling and storage times, typically less than 24 hours (fast mixing, inventory moves quickly)

What is the EOQ?

Economic Order Quantity, the optimal order size, using it you will get the lowest total cost for the given cost structure and demand forecast. When annual holding costs=annual ordering costs you get the EOQ.

ERP

Enterprise Resource Planning Focus is on integration of data Collects and Stores data for Analysis, Forecasts ALL Business Functions See/Share Same data - Fast, Immediate

Distributing Center

Facilitates movement

Queuing System - Goals and Trade-offs

Find the proper balance between long lines/unhappy customers and idle staff/high cost AND Companies that have shorter lines are perceived to have better service, but shorter lines typically means employees with less work. Looking at Wait times vs customer satisfaction.

TL

Full Truckload

What is a Free Trade Zone

Geographic area sanctioned by the government where items are not under control of customs and authorities.

Established Supplier Base

Implies than an organization has a group of companies with which they have developed a working relationship

Compression relationship to Mapping your Process

In order to compress supply chain need to map out processes to identify areas that need improvement

Safety Stock

Insurance inventory

Pipeline Inventory

Inventory in transit; , orders that have been placed but not yet received or paid for by the customer

Logistics

Is the COORDINATED Planning and Execution of product distribution, preparation of packaged product, transport and warehousing.

LTL

Less than a Truckload

Plannogram

Map of where every product goes on a shelf in the store, schematic drawing that illustrates product placement

Potential positive outcomes of Supply Chain Compression

Mapping it out helps find cow paths; Map all related processes, each step, responsibilities, relationships; makes you really look at your system and find issues, ambiguity, etc so you can fix your processes

Cycle Time

Maximum time allowed for work on one unit at each station. This dictates the total time it takes for one unit to come off assembly line. CT helps us determine our max capacity.

Intermodal

One container entire trip, when cargo is moved from one vehicle or vessel to another vehicle or vessel without directly handling the cargo.

Bottleneck

One station taking more time required than the rest of the stations and creating a back up in unfinished goods. If you have too many bottlenecks or even just one bottleneck it increases your total task time, and thus diminishing your max capacity. (You're only as strong as your weakest link)

Productivity and Value

Organization vs. Customer Productivity: Supplier Perspective- what did I get? / What is the price? Output/input Value: Customer Perspective- what did I make? /What was the cost?

Business Process Outsourcing

Outsourcing of office activities like accounting, human resources, and customer service activities.

Postponement relationship to Pull System

PULL only the customization options offered to customers.

Important considerations before purchasing a new IT system? Purchase, Implement...

PURCHASE: >>What are your needs? >>Buy or lease? >>off the shelf or customized? >>Total cost? IMPLEMENT >>Dealing with consultants - now and forever? >>Training employees - bad habits, fear, confusion >>Change processes or customize IT system? >>Testing before roll-out FUTURE >>Corporate mergers and acquisitions >>IT company - mergers, acquisitions, or out of business? >>Evolving techniques

Postponement relationship to Push System

PUSH through the standardized portions of manufacturing

Last Mile

Portion of the supply chain between the final inventory holding facility and the end consumer.

2nd Tier Supplier

Provide tier 1 with supplies

Warehouse

Provides storage

What is RFID?

Radio Frequency Identification >>Tags and readers Costs - Readers, Infrastructure, Software Benefits - Data, Tracking and Analysis? Issues - Cost, Compatibility, Security

Established Channels of Distribution

Represent the chain of organizations that help bring a product into the hands of the end user.

Omni-Channel Retailing

Retailers fully committed to engaging customers via catalogs, phone calls, web, email, and social media. Fully committed to engaging customers via catalogs, phone calls, websites, email, internet chatrooms, social media sites, or mobile apps, and in stores. i.e Nordstrom.

Pros of 4 Modes of Transportation AND Cons of 4 Modes of Transportation

Road (trucks) • Pros: Accessibility, Flexible (Any Product), Versatile (Any Place w/ roads) , Reliable (On-Time Reliability Very High - 95%), Speed - 2nd fastest mode of transport-Much Cheaper than Air, Vital to Intermodalism • Cons: Vulnerable to increases in fuel prices, tolls, taxes, fees, Long Trips usually mean excessive regulations - Multiple states; Multiple weight limits, driver and truck regulations, one driver, one truck, insurance, LTL's and LCL's will usually make many stops Railroad (Train) • Pros: Total Cost - More affordable than road transport, Fuel Cost - Not as susceptible to increases in energy/fuel costs, Load - Ability to carry heavier loads than trucks (road weight limits), Fewer in-transit regulations - Better for long distances, More capable in poor weather conditions • Cons: Damage - Susceptible to loss/damage due to in-transit vibrations (about 3%), On-time reliability - Very poor, 70% in a good year, Speed of shipment - Total trip's average speed typically less than 30mph, Access to infrastructure required - tracks, loading equipment Ocean/Water • Pros: Low Cost (vs. Air Transport), High Cube cargo (Savings of money per mile), High Weight cargo (Savings of money per cargo ton) Transport almost any form of Cargo, Large (Volume) Shipments - 200 TEU's, Heavy Shipments (High Density) - Steel, Bulk shipments easier to load and move - Oil, Grain..., Oversized and oddly shaped shipments - Cranes, Tunnels • Cons: Much Slower than Air - Increase in time, theft, damage, required insurance, Port Capabilities - Safety, Handling, Warehousing • Channel Depth Challenges - Summer, Winter Air • Pros: Speed is the obvious advantage and fastest growing transport mode - Becoming more affordable, shorter lead times, lower inventory levels required, prevents downtime, increased shelf life, less packaging and security, less handling • Cons: Extremely expensive, Incompatible containers - Intermodal challenges Pipeline: used only for liquids or items that can be shipped in a slurry. (ex. oil)

Bullwhip Effect

SC phenomenon where fairly stable demand results in a proliferation in the amount of inventory that is carried as one travels upstream the SC. Very high and very low supply levels despite fairly constant demand levels.

Downstream

Stage in the production process involves processing the materials collected during the upstream stage into a finished product

Upstream

Stage of the production process involves searching for and extracting raw materials.

Offshoring

Strategy where a company moves manufacturing out of its "home" country to another country.

Dunnage

Stuffing placed to fill space within a package. Ex: packing peanuts. Used to fill the empty space inside boxes, tubes, etc, Loose fill (Popcorn packaging), Air Bubble Cushioning Materials - Bubble-wrap, Inflatable Plastic Bags

What is SCM

The efficient integration of supplier's manufacturers, transporters, DC, warehouses, retailers, and all other parties associated in delivering the final good or service.

Procurement

The process of obtaining services, supplies, and equipment in conformance with corporate regulations.

Reverse Logistics

The process of planning, implementing, and controlling the efficient, cost effective flow of raw materials, in-process inventory, finished goods and related information from the point of consumption to the point of origin for the purpose of recapturing value or proper disposal.

TEU

Twenty foot equivalent unit- (how containerized cargo is measured)

Supply Chain Compression

Using IT to remap processes to find more efficient methods, which leads to faster processing and possible cuts to costs EX: Whirlpool

Outsourcing

When a company contracts an outside firm to perform services, operations, or business processes that could be or were previously performed in-house.

Reneging

When people enter the line but then leave because of the wait time

Balking

When people fail to enter the line because of the number of people already present (people don't even enter the line- decide its not worth the wait)

What does it mean if AHC < AOC? Increase or decrease Q?

You should increase quantity, because it below the EOQ.

What does it mean if AHC > AOC? Increase or decrease Q?

You would lower quantity, because it is above the EOQ.

Near Sourcing

a type of offshoring or offshoring and outsourcing where the location of the manufacturing facility is relatively close to the location of the consumer; typically refers to a shift in strategy where a company used to manufacture goods very far away from the home market, but then shifts to manufacturing in a country that is much closer to the home market.

Third-Party Logistics Company (3PL)

contractor that performs one or more logistics function for their clients in an effort to facilitate effective and efficient movement in the SC. (can't be a buyer or selling of the goods being moved.)

DMADV

is used in designing NEW processes - Design, Measure, Analyze, Design, Verify

Push System

system in which consumer demand is known and expected. Characteristics: Opportunities to take adv. Of quantity discounts, High FG demand readily available, end items have little ability for customization, Vulnerable to obsolescence of inv, high holding costs, and poor demand forecasts can result in stock outs or overstocks

Pull System

system that is activated by consumer demand. Characteristics: high raw materials inv. Readily available to produce a specific consumer order, end item likely offer a range of customization options, Vulnerable to sudden increase in demand, poor forecasts may result in poorly planned production

What is Customs-Trade Partnership Against Terrorism? (C-TPAT)

voluntary program developed by US Customs and Border Protection for companies importing goods into the US. They must provide data relating contents of shipment and all SC partners assoc. to the shipment. In return opportunities for faster & more hassle-free customs clearance.