Supply Chain Management Exam 1 UMD
Stages of Supply Chain Integration
1. the functions in the company operate in complete isolation of one another, sometimes called the "silo" mentality. Here operations, for example, may focus on maximizing production of products being produced without regard to sales or the buildup of finished goods inventories or the impact on working capital. 2. have internal functional cooperation and coordination, but not across the supply chain. 3. represent true supply chain integration. Here the concept of linkages and coordination extends beyond the boundaries of the firm to supply chain partners.
How are supply chain networks defined?
1. the number of companies that are part of the supply chain 2. the structural dimensions of the network 3. the number of process links across the supply chain
relationship management
An important characteristic of competitive supply chains is their focus on relationship building and collaboration among the different groups
Order Winners
Characteristics of an organization's goods or services that cause it to be perceived as better than the competition
Competing on Time
Companies in all industries are competing to deliver high-quality products in as short a time as possible. Rapid delivery refers to how quickly an order is received; on-time delivery refers to the number of times deliveries are made on time.
Competing on Cost
Companies that compete on cost offer products at the lowest price possible. The low-cost supply chain focuses on meeting efficiency-based metrics such as asset utilization, inventory days of supply, product costs, and total supply chain costs.
Supply Chain Management Activities
Coordination Information Sharing Collaboration
what are the benefits of outsourcing?
Cost, time: Enhanced decision making, Increased speed of change, Improved Service Portfolio Management, Financial compliance and control, Operational Control, Value capture and creation, Increased visibility, and Increased perception of IT.
Utilization Formula
(actual output/design or effective capacity) x 100%
Trends in SCM
-Globalization -Outsourcing -Technology -Postponement -The Lean Supply Chain -Managing Supply Chain Disruptions -Supply Chain Security -Sustainability and the "Green" Supply Chain -Innovation -The Financial Supply Chain
ERP Implementation
-analyze business processes -choose modules to implement -align level of sophistication -finalize delivery and access -link with external partners
Steps to Manage TOC
1. Identify the Constraint 2. exploit the constraint 3. subordinate all other processes to the above decision 4. elevate the constraint 5. when the constraint changes go back to step 1 6. engage in continuous improvement
two of the most common measures of capacity
1. design capacity 2. effective capacity
Three Step Approach used to segment a company's supply chain
1. identify key drivers of operational complexity. (This means identifying what matters most to a particular customer group or channel.) 2. Design differentiated supply chain segments tailored to address these unique complexities. 3. Create a customized end-to-end operational blueprint and performance metrics for each supply chain segment.
Three ways that process variation can be managed
1. reduce or eliminate as much variation as possible 2. create buffers to deal with variation. 3. designing more flexibility into the process to respond to the variation
Flow through Supply Chain
1. suppliers transport raw materials and other unfinished goods to manufacturers 2. manufacturers create the finished products and then shipped distribution centers or wholesalers 3. products are shipped to retailers who sell the product to final customers.
what is the difference between supply chain management and logistics?
SCM is about the collaboration between supply chain partners in a strategic effort to achieve superior competitiveness. Therefore, SCM requires managing different aspects of the coordination process, such as information, technology, distribution, products, raw materials, finances, and most of all, relationships. Logistics consists of the tasks involved in moving and positioning inventory throughout the supply chain. Logistics is a function that supports SCM on par with marketing, operations, and sourcing.
distribution strategy
a plan for delivering the right product to the right person at the right place at the right time
Business Process
a structured set of activities or steps with specified outcomes.
cost-productivity advantage
advantage comes from offering the lowest cost product or service
assemble to order
also known as built-to-order, is where the product is partially completed and kept in a generic form, then finished when an order is received. The inventory that the company holds is that of standard components that can be combined to customer specifications.
The Lean Supply Chain
based on reducing the cost by eliminating activities that do not directly add any value; primarily refers to elimination of waste
Sustainability and the "Green" Supply Chain
Environmental concerns, including climate change, energy use, environmental contamination, and resource depletion, are here to stay. Other aspects of the supply chain are also important to sustainability, such as packaging and transportation to reduce environmental impacts. Changes such as reducing the amount of cardboard or filler by designing "smart packages" can save companies money.
Customer Service Strategy
Goal is to attract and retain target customers to increase sales and profits. companies need to segment the market carefully and consider how to effectively meet demands of those segments.
what are the trading partners in a supply chain?
called stages 1. suppliers 2.producers 3. wholesalers 4. retailers 5. customers
Order Qualifiers
characteristics that customers perceive as minimum standards of acceptability to be considered as a potential for purchase
collaboration
collaboration between supply chain members so that they jointly plan, operate, and execute business decisions as one entity.
supply chain security
concerns are theft and product tampering. This is especially true for high-valued goods and pharmaceuticals. Supply chain security looks at different ways to protect the product, from using electronic seals to prevent tampering, using GPS technologies to track product location.
what are the problems with variation in a business?
consumes resources such as time, space, and labor complexity and uncertainty not enough inventory missing component parts carrying too much inventory
Coordination (SCM)
coordinating the movement of goods and services through the supply chain, from suppliers to manufacturers to distributors to final customers; it also includes movement of goods back up the supply chain, as products may be returned.
How do you achieve a competitive advantage in a supply chain?
cost productivity advantage and value advantage
five primary competitive priorities
cost, time, innovation, quality, service
experience curve
describes the relationship between unit costs and cumulative volume, where the cost per unit of a product decreases with increased volume.
Reliability
One factor that greatly improves reliability in supply chains is improved visibility. Typically, the further one goes up the supply chain, the more limited the "visibility" of downstream activities.
Process Improvement
efforts to increase the effectiveness and efficiency of specific business operations
Information Technology design
enables data sharing, communication, and process synchronization. Together the supply chain network design and IT system design support the supply chain strategy
Operations Role in a supply chain
ensures that the exact products customers want are produced efficiently and in a cost-effective manner.
how can segmentation be conducted?
fast moving vs slow moving products fast growth vs slow growth products high priority vs slow priority customers
Competing on Innovation
focus on developing products that the customers perceive as "must-haves" and thereby pull the product through the supply chain with significant demand. these companies can typically command a premium price.
transactional view
focuses on making supply chain processes more efficient and effective based on quantitative metrics. This can be achieved through supply chain network redesign to promote speed and eliminate redundancy.
relationship view
focuses on managing relationships across the supply chain. This involves managing relationships between people and organizations and linking-up processes across organizations of the supply chain.
big data analytics
has had one of the biggest impacts on supply chain management. Big data refers to large datasets whose size is so large that the quantity can no longer fit into the memory that computers use for processing.
how do companies gain a value advantage?
identifying "value segments" in the marketplace. This analysis permits the company to see which market segments place value on what product features.
information technology
important driver of supply chain management is technology. Technological advances have enabled companies to produce products faster, with better quality, at a lower cost, and this trend will continue.
Operations Strategy
involves decisions about how it will produce goods and services.
order fulfillment process
involves ensuring that customer orders are filled. It may involve activities such as receiving and processing the order, ensuring movement of product and delivery, and customer follow-up.
Outsourcing
is hiring a third party to perform a set of tasks for a fee. To be able to focus on core competencies, many companies outsource other activities to those that can do them better.
Supply Chain Strategy
long-range plan for the design and ongoing management of all supply chain decisions that support the business strategy.
What are the risks of outsourcing?
loss of control, benefits outweighed by long-term costs, no easy exit, and dependency risk
Examples of processes within a supply chain network
manufacturing process, which involves ensuring production of products; the demand management process, which balances demand requirements with operational and supply chain capabilities; and the distribution process, which involves distributing and delivering products to specified locations.
Competing on Quality
means that a company's products and services are known for their premium nature. Many aspects of the supply chain are altered when companies compete on quality versus another dimension, such as cost.
The Bullwhip Effect
occurs when distorted product-demand information ripples from one partner to the next throughout the supply chain. fluctuation and distortion of information increases as it moves up the supply chain, from retailers, to manufacturers, and to suppliers.
Building blocks of a Supply Chain Strategy
operations strategy, sourcing strategy, distribution strategy, customer service strategy
Productivity formula
output/input
Supply Chain Network Design
physical structure and business processes included in the system
make-to-stock strategy
produces finished products for immediate sale or delivery, in anticipation of demand. Companies using this strategy produce a standardized product in large volumes.
what is the one of the most important attributes of competing on quality?
product traceability. This means that the supply chain has the ability to easily trace a product from point of origin in the supply chain, through to the customer, and back down the supply chain in the case of returns.
What are the flows in a supply chain?
products, information, and funds
Value Advantage
providing a product with the greatest perceived differential value compared with its competitors
what can improvements in the supply chain do?
reduce inventory, distribution, and coordination costs
capacity
refers to the maximum amount of output that can be achieved by a process over a specified period of time.
Sourcing Strategy
relates to which of a company's business it is going to outsource versus the ones it will retain internally. This includes decisions regarding supplies and component parts, as some companies choose to make these themselves.
Marketing Role in a supply chain
responsible for linking the organization to its customers and identifying what customers want in products and services.
Logistics role in supply chain
responsible for moving and positioning inventory throughout the supply chain and ensuring that the right products are delivered to the right place at the right time
what are three characteristics of a competitive supply chain?
responsiveness reliability relationship management
information sharing
sharing relevant information among members of the supply chain.
strategic allignment
strategy and tactics of the orgnaization match the characteristics of the organization. all organizational functions should be designed to support the business strategy.
make to order
strategy for customized products or products with infrequent demand. It is used to produce products to customer specifications after an order has been received.
intraorganizational process
the collection of activities that take place within an organization to transform inputs into outputs that customers value The relationship between the functions of marketing, operations, sourcing, and logistics
Vertical Integration
the combination in one company of two or more stages of production normally operated by separate companies.
product positioning strategy and the three options available
the degree of customization operations strategies offer make to stock assemble to order make to order
Supply Chain Management
the design and management of flows of products, information, and funds throughout the supply chain. It involves the coordination and management of all the activities of a supply chain.
what is the driving force of the supply chain?
the final customer. the primary purpose for the existence of a supply chain is to respond to customer demands and generate profits for companies that are members of the chain. Therefore, meeting customer demands is the primary objective. The process is driven by a customer having a particular product need.
Sourcing role in a supply chain
the function responsible for linking the organization to its suppliers and ensuring an efficient supply of materials.
effective capacity
the maximum output rate that can be sustained under normal conditions. These conditions include realistic work schedules and breaks, regular staff levels, scheduled machine maintenance, and none of the temporary measures that are used to achieve design capacity.
what is a supply chain?
the network of all entities involved in producing and delivering a finished product to the final customer. This includes sourcing raw materials and parts; manufacturing, producing, and assembling the products; storing goods in warehouses; order entry and tracking; distribution; and delivery to the final customer.
Theory of Constraints (TOC)
the overall management system that strives to improve system performance by identifying, focusing on, and managing constraints. every system has one or more limiting factor that is preventing it from further achieving its goal.
Globalization
the process by which businesses or other organizations develop international influence or start operating on an international scale.
Competitive Priority
the way a company competes in the marketplace. Supply chain strategy and supply chain design greatly depend on a company's competitive priorities.
3D printing (additive manufacturing)
this piece of technology is removing the physical constraints historically associated with manufacturing, such as building molds, ordering parts, and reconfiguring assembly machinery. The manufacturing process can now be run through software. Driven by big data analytics, it drives the digital supply chain.
what is the purpose of a supply chain strategy?
to provide higher competitiveness to firms. Being able to measure competitiveness provides a scorecard for companies to evaluate how they are doing.
what are the two views on how to manage processes across the supply chain?
transactional and relationship view
postponement
where completion of the final product is postponed to the last possible moment until local demands are known. Postponement is an important strategy for companies to reach diverse geographic areas while still providing customization.
bottleneck effect
A constraint is anything that prevents the system from being able to achieve its goal
Responsiveness
The ability to respond to customers' requirements in ever-shorter time frames has become critical. The ability for a supply chain to have this level of responsiveness is often described as "agility," which is the ability to move quickly to meet customer demands.
why can we not compete on all dimensions?
The companies that succeed are those that understand which dimensions to excel on and are able to focus their energies on those dimensions. a company should have merely satisfactory performance, or stay within the norms of the industry, on those strategically less important dimensions.
Financial supply chain
The financial supply chain is intimately tied to SCM, and managing the flow of funds is an essential ingredient for its success. Another area of interest for management is the "cash-to-cash cycle," which is the time it takes to convert an order into cash.
Design Capacity
The maximum output rate or service capacity an operation, process, or facility is designed for
Competing on Service
These companies typically have exceptional order fulfillment systems, with fast invoicing that enables them to be consistent and reliable.
innovation
This can include designing new products that satisfy customer demands, designing new cost-cutting production processes, or coming up with more efficient product delivery mechanisms.
Managing supply chain disruptions
This can include transportation delays; industrial plant fires; work slowdowns or stoppages; natural disasters, such as earthquakes or hurricanes; and man-made disasters, such as the 9/11 terrorist attacks. Some strategies include having access to backup suppliers, building excess capacity into the system, screening and monitoring suppliers for supply chain risks, requiring suppliers of critical items to develop detailed disruption plans, and including the expected costs of disruptions in the total cost of sourcing.
