Supply Chain Management

Fluctuating operations lead to

1. Backlog 2. Customer Satisfaction 3.System Buffering

Why do firms care about tiers of suppliers?

1. Costs 2. Quality of good 3. Reliability 4. Innovation 5. Evolution

Why do firms care about tiers of customers?

1. Derived demand 2. quality of chain 3.Market Orientation 4. Reverse logistics 5. evolution

Current Issues in Logistics

1. Empowered Customer 2. Technology 3. Globaliztion 4. Increased Competition from deregulation

Improving Demand Planning (4)

1. Improving Information 2.Reducing Lead time 3.Redesigning the product 4. Sharing Information

Three types of inventory

1. Raw Materials 2.Work-In-Progress 3.Finished Goods

Forecast Quality

1. Short term forecasts are more accurate than long term forecasts 2. Aggregate forecasts are more accurate than detailed forecasts 3. Information from more sources yields a more accurate forecast

Reasons for carrying inventory

1. Uncertainty 2. Economies of Scale

Customer Service is used to

1.Differentiate product in the market 2.Charge a premium price 3.Improve customer satisfaction and loyalty

Total logistics cost components are

1.Place/customer service costs 2.Transportation costs 3.Warehousing costs 4.Order processing/information systems costs 5.Lot quantity costs 6.Inventory carrying costs

Competitive advantage

A business is profitable if the value it creates exceeds the cost of performing the value activities. To gain competitive advantage over its rivals, a company must either perform these activities at a lower cost or perform them in a way that leads to differentiation and a premium price

What is the goal of logistics?

Achieve customer service level while minimizing the total logistics cost

Assemble to Order (ATO)

Assemble a product (from WIP inventory) when a customer places an order

Uncertainty in Supply

Availability and prices

Demand Planning

Both forecasting and managing customer demand to reach operational and financial goals

Customer vs. Consumer

Consumer uses product, customers are businesses

Derived demand

Demand derived from consumer demand that creates the supply chain from consumers to suppliers ( right to left )

Engineer to Order (ETO)

Design and make a product to customer specifications

Order Cycle

Determines Customer Experience Determines cashflow

Inventory models are

Deterministic Stochastic

Tier/Echelon

Different layers of customers/suppliers

Focal Firm

Firm at the center of the supply chain

Customers

Firms on the right of focal firm

Suppliers

Firms that are on the left of the focal firm

Seasonal Stock

For specific seasons

Demand Management

Influencing either pattern or consistency of demand

In-transit Stock

Inventory that is on its way

Downstream

Left to right, consumers

Make to Order (MTO)

Make a product (from raw materials) when a customer places an order

Make to Stock (MTS)

Make and stock products in anticipation of customer demand

Minimize cost or maximize revenue?

Maximize revenue

Products are defined by

Physical and Intangible aspects

Which P of marketing does logistic affect?

Place: where to sell, how to deliver, when to deliver

two types of forecasts

Point and range forecasts

Demand Forecasting

Predicting Future Demand

Determining customer service levels based on

Product availability Cost/Revenue Trade-offs Customer Classification Service Audits

Upstream

Right to left, finished product to raw material, suppliers

CPFR

Sharing Info with suppliers and customers to improve coordination

Uncertainty in demand

Stock out cost vs. inventory carrying cost

Consumer Demand

The origin of the supply chain

Lead Time

The time between ordering a good or service and receiving it.

Value Chain

This concept divides a company's activities into the technologically and economically distinct activities it performs to do business. We call these the 'value activities.' The value a company creates is measured by the amount that the buyers are willing to pay for a product or service

What utilities do logistics provide

Time and Place Utility

Uncertainty in Production

To have a smooth flow of production

Uncertainty in Transportation

Transportation could be unreliable

Third party entities

Unrelated entities that contribute to supply chain (gov't, warehousing, consulting)

Inbound

What the company receives

Outbound

What the company ships

Safety Stock

What you don't expect to sell

Cycle Stock

What you expect to sell

Logistic Management

is 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.

Supply Chain Management

is the integration of key business processes from end user through original suppliers that provides products, services and information that add value for customers and other stakeholders.