Final Study Set

Echelons

Add to operating expense, Hold inventory, Add to cycle time, expect to make a profit

Anticipation inventory

Additional inventory above basic pipeline stock to cover projected trends of increasing sales, planned sales promotion programs, seasonal fluctuations, plant shutdowns, and vacations.

periodic review system

An inventory system that is used to manage independent demand inventory where the inventory level for an item is checked at regular intervals and restocked to some predetermined level.

Horizontal Marketplace

An online marketplace used by buyers and sellers from multiple industries. This marketplaces lowers prices by lowering transaction costs.

Consortia Trade Exchange (CTX)

An online marketplace, usually owned by a third party, that allows members to trade with each other. Such sites lower members' search costs and enable lower prices for the buyer.

Virtual Trading Exchange

An online trading exchange that enables both information integration and collaboration between multiple trading partners.

freight forwarder

An organization that puts many small shipments together to create a single large shipment that can be transported cost-effectively to the final destination, middle man

Logistics tactics include

- Coordinating functions - Integrating the supply chain - Substituting information for inventory - Reducing supply chain partners to an effective minimum number - Pooling risks

Plan validation and refinement include:

- Corporate strategy alignment - Corporate mission and culture alignment - Risk assessment - Centralized versus autonomous sourcing - Additional optimization - Planning for future growth

Factors when setting an inventory Policy:

- Customer demand - Planning horizon - Replenishment lead time - Product variety - Inventory costs - Customer service requirements

Some laded costs may or may not differ between the alternatives or maybe omitted from consideration to simplify analysis, include:

- Financing and opportunity costs- Sales and marketing - Administrative (executive, clerical, including billing/payment, and information system) - Reverse supply chain (returns) - Insurance and risk management - Taxes and foreign exchange

Benefits of using 4PLs

- Improved business focus - Higher-quality logistics operation (or reduced cost, or both) - Greater business flexibility

Benefits from using 3PLs

- Improved business focus - More current logistic technology - Greater technological flexibility - More efficient warehousing for rapid replenishment - Improved service to customer - More workforce and resource flexibility

Risks of 3PLs

- Loss of control - Potential for inefficiency

Risks of using 4PLs

- Loss of direct control - Potential for less effective or more costly operations

5 types of fulfillment channels are:

- Manufacturer storage with direct delivery - Manufacturer storage with drop ship - Manufacturer to distribution center to retailer - Independent distributor with omni-channel network - Independent aggregator with e-business's network

strategic relationship includes

- Ongoing relationship - Partnership - Collaboration/ strategic alliance

Buy on the market

- Organizations buy in response to immediate needs, choosing freely from among all the vendors that can meet those needs. - There is sharing of technical purchasing requirements rather than strategies or plans. ex: specifications and proposal components - Relationship is transactional and not going - not exclusive, the purchaser may be buying from competing vendors ether simultaneously or sequentially - lower-value relationships type of supplier relationship where traditional approach is for purchasing buys for an immediate need; (a) proximity - relationship is transactional and not ongoing or exclusive; (2) visibility - sharing of purchasing needs but not strategies or plans; (3) interaction with competitors - significant; (4) communication - computerized interaction; (5) culture - lower-value relationships

some important landed costs that frequently differ between alternatives are

- Purchase price/ production cost - Transportation cost, including special packaging costs - Customs and related costs (tariffs, duties, taxes, fees for various intermediary services) - Inventory costs (carrying, ordering and backorder costs) - Outsourcing cost - Monitoring and control costs, which are generally higher when outsourcing is used

2 KPI for inventory:

- Reduction of inventor costs: related to holding, ordering, and transporting materials, supplies, and finished goods - Achievement of customer service targets: related to the quality, availability, and on-time delivery of products and services

TCO Challenges

- Require sophisticated analytical tools such as a network model for scenario or simulation use or a DSS - Can be difficult to implement at an organization, much less across a supply chain

Logistics value proposition includes

- Service - Cost minimization

Some of carrying costs

- Storage costs - Capital costs - Risk costs

Function of Logistics

- Warehousing- Transportation - Import/export - Packaging - Materials handling - Inventory management - Logistics information system

Outsourcing logistics to a 3PL or 4PL consideration

- What are our current cost? - What customer skills does the contractor possess? What are the contractor's special strengths? - will the contractor hire the most-qualified partners?

Supply plans answer question:

- are we going to have centralized global sourcing, will each location source independently or will there be a combination of these methods? = will we seek local sources over cheapest sources? - will we allow sole suppliers? single -source suppliers? - what are our contingency plans for any and all supply risks? - what are the differences in our supply plans for strategic versus nonstrategic material sourcing?

Logistics objectives include

- meet customer requirements - To respond rapidly to changes in the market or customer orders - Minimize variances in logistics service - minimize inventory to reduce costs - consolidate product movement by grouping shipments - maintain high quality and engage in continuous improvement - support the entire product life cycle, including reverse logistics

Nonbonded Logistics Park

Cheaper rental rates, increasingly being developed on expanding road network

What is RCCP

Check of capacity against key resources, Bottleneck for MPS feasibility

Demand-Management Auctions

Clearinghouses to liquidate excess supply

Types of Warehouses

Cross-Docking Consolidation and/or Break-Bulk Public Private

Committee of Sponsoring Organizations of the Treadway Commission (COSO)

Developed an Enterprise Risk Management (ERM) framework in 2001. COSO ERM is a process that the board of directors, management, and staff enact to set risk strategy, identify risk events, and manage risk within the organizations risk appetite, with the goal of ensuring organizational objectives can be met.

Strategic driver supply chain

Demand generation and fulfillment are fully integrated; the supply chain contributes to development of the organizations overall strategy; forecasting, planning, and replenishment are fully integrated and visible; technological improvements, knowledge, and real-time information are shared with chain partners.

chase production method

Demand matching: producing the amounts demanded at any given time. Inventory levels remain stable while production varies to meet demand - the firm manufactures just enough at any one time to meet demand exactly. Low carrying costs, but volatile operating costs (ex. a restaurant) A production planning method that maintains a stable inventory level while varying production to meet demand.

Which quality type cost is the highest overall cost?

Eternal Failure Costs

Formal communication

Even if the tone or format seems casual, a formal communication is designed and intended to convey an official message that should be adhered to. Typical examples of formal communication include mission and vision statements, though not all formal communication is written.

Air Carriers

Expensive relative to other modes of transportation Generally the fastest mode of transportation. Transport about 5% of U.S. freight. Cannot carry extremely heavy or bulky cargo. Mostly for light, high value goods over long distances quickly. Half of the goods transported by air are carried by freight-only airlines, e.g., FedEx. Paired with trucks for door-to-door delivery

Exponential Smoothing Logic

Exponential Smoothing Logic = New forecast = (a)(latest demand) + (1-a)(old forecast)

Cost, Insurance and Freight (CIF)

For Sea and Inland Waterway Transport only Seller pays main carriage and insurance -Transportation costs: Seller -Loading costs: Seller -Insurance: Seller (must be transferable) -Risk transfers: when goods pass the ship's rail at point of shipment -Export customs/duties: Seller -Import customs/duties: Buyer

4 Components of a Business Plan

Finance, Engineering, Marketing, Operations

Best Cost Strategy

Firms that charge relatively low prices and offer substantial differentiation. Example: Lexus

Break even in units formula

Fixed Cost/ (Price per Unit-Variable Cost per Unit)

Niche Marketing

Design messages to be especially appealing to one or more market segments

Enterprise Resource Planning (ERP)

Framework for organizing, defining, and standardizing the business processes necessary to effectively plan and control an organization so the organization can use its internal knowledge to seek external advantage whole enterprise (not just prod.) taken into account

Obtaining Patent in Foreign Countries

From a compliance perspective, it is important to get in-country representation and legal review to protect the organization's interests. Organizations need to review not only each country's patent, trademark, and copyright laws but also product liability laws and relevant tax laws.

Commitment Decision Points

Frozen Zone Week 1,2,3 Firm Commitment Decision Point Slushy Zone Week 4,5...15,16 Volume Commitment Decision Point Liquid Zone Months 5 - 18+

Reactive supply chain

Fulfills demand but without concern as to costs; perceived as a cost center; needs minimal competitive or connectivity technologies and capital assets to respond to demand

General vs. validated export license

General allows export of most goods, validation is required for shippers selling military hardware, chips etc.

Functions related to shipment

Good need to be packaged, loaded, unloaded, warehoused, distributed and paid for whenever they change hands

Physical inventory can be replaced by better information

Improve communications, Collaborate with suppliers, Track inventory precisely, Keep inventory in transit, Use postponement centers, Mix shipments to match customer needs, Don't wait in line at customs

4PL benefits

Improved business focus, Higher-quality logistics operations ( or reduced costs, or both), Greater business flexibility

Benefits of 3PLs and 4PLs

Improved business focus, More current logistics technology, Greater technological flexibility, More efficient warehousing for rapid replenishment, Improved service to customer, More workforce and resource flexibility

pegging

In MRP and MPS, the capability to identify for a given item the sources of its gross requirements and/or allocations

A Plant (TOC)

In TOC, the A Plant has numerous subassemblies that merge into a final assembly

Motor Carriers

Most flexible mode of transportation. Carries > 80% of U.S. Freight. Competes with Rail and Air for short-to-medium hauls.

Modes of Transportation

Motor Carriers (Trucking) Rail Carriers Air Carriers Water Carriers Pipeline - Intermodal (combinations of others)

Moving Average Forecast Logic

Moving Average Forecast Logic = (sum of demand for 3 months) ÷ (# of months) = 4 month forecast

Life Mfg Process

Narrow range of standard products, low direct labor costs, high level of tech support

return on assets (ROA)

Net income from the previous 12 months divided by total assets. net income ÷ total assets

Product

No longer identical for all customers, can be customized for different segments

service-oriented architecture (SOA)

SOA has two main goals: to achieve loose coupling among each of the services in its architecture and to separate applications from their data so they achieve universal functionality

Safety Stock Formula

Safety Factor x Standard Deviation

Decline

Sales volumes decline and profits are reduced.

What three factors determine cash flow for an organization?

Sales, after-tax operating profit margins, and capital requirements

Motivating factors in reverse supply chain

Savings in the aftermarket, Competitive edge, Consumer and shareholder pressure, Growing market for environmentally safe products, Environmental awareness and regulations

What does the DBR method do?

Schedules constraints

Forecasted Demand Formula

Seasonal Index * Deseasonlized Period Forecast

Seasonal Demand

Seasonal Index x Average Demand

Seasonal Demand Formula

Seasonal Index x Average Demand

Foundation layer

Security systems such as firewall

DAP (Delivered at Place)

Seller delivers goods and buyer unloads, taking responsibility at destination

DAT (Delivered at Terminal)

Seller delivers goods at terminal, port or destination. Risk transfers to buyer there

FCA (Free Carrier)

Seller delivers goods to carrier's custody - this is where risk transfers from seller to buyer

Delivered at Terminal (DAT)

Seller delivers goods to terminal -Transportation costs: Seller pays to terminal, buyer pays after -Loading costs: Seller -Risk transfers: in terminal, both parties should agree on exact point -Export customs/duties: Seller -Import customs/duties: Buyer

Free Carrier (FCA)

Seller delivers to main carrier; buyer loads -Transportation costs: Seller pays to carrier, buyer pays after -Loading costs: Buyer -Risk transfers: when first carrier takes custody -Export customs/duties: Seller -Import customs/duties: Buyer

DDP (Delivered Duty Paid)

Seller incurs all costs, including import duty

Delivery Duty Paid (DDP)

Seller incurs all costs, including import duty -Transportation costs: Seller -Loading costs: Seller -Risk transfers: when goods have been delivered -Export customs/duties: Seller -Import customs/duties: Seller

CPT (Carriage Paid To)

Seller pays for freight, risk transferred from supplier ot buyer when goods delivered to first carrier's custody

FAS (Free Alongside Ship)

Seller pays for transportation to port. Buyer pays costs, freight, insurance, unloading costs

CIF (Cost, Insurance, Freight)

Seller pays main carriage and insurance

Carriage and Insurance Paid To (CIP)

Seller pays main carriage and insurance -Transportation costs: Seller -Loading costs: Seller -Insurance: Seller -Risk transfers: when first carrier takes custody -Export customs/duties: Seller -Import customs/duties: Buyer

CFR (Cost and Freight)

Seller selects and pays for carriage

Carriage Paid To (CPT)

Seller selects and pays for main carriage -Transportation costs: Seller -Loading costs: Seller -Insurance: buyer -Risk transfers: when first carrier takes custody -Export customs/duties: Seller -Import customs/duties: Buyer

Three Basic Supply Chain Entities

Supplier, Producer, Customer

Planning Horizon

The amount of time a plan extends into the future. For a master schedule, this is normally set to cover a minimum of cumulative lead times plus time for lot sizing low-level components and time for capacity changes of primary work venters or key suppliers. For longer-term plans, [this] must be long enough to permit any needed additions to capacity. See: cumulative lead time, planning time fence

price elasticity

The degree of change in buyer demand in response to changes in product price

CIP (Carrier and Insurance Paid To)

Similar to CPT but insurance is covered also

Design for Service

Simplification of parts and processes to improve the after-sale service of a product. Syn: design for maintainability.

Design for Manufacturability

Simplification of parts, products, and processes to improve quality and reduce manufacturing costs.

put-away

The activity of removing the material from the dock (or other location of receipt), transporting, and placing from a staging area to a specific location, and recording the movement and identification of the location where material has been placed

market share

The actual portion of the current market demand that a company or product achieves.

Risk Appetite

The amount of risk a company is willing to accept to achieve its goals and objectives. To avoid undue risk, risk appetite must be in alignment with company strategy.

consignment

To place inventory in the custody of another party without requiring them to purchase it, as a sales agent. Sometimes called vendor-owned inventory. VOI

expedite

To rush or chase production or purchase orders that are needed in less than the normal lead time; to take extraordinary action because of an increase in relative priority. Syn: stockchase

Which of the following is a primary purpose of the cash flow statement?

To show key stakeholders if the company has sufficient cash to pay debts, bills, and dividends to owners

Total Production Formula

Total Forecast + Backorders + Ending Inventory - Opening Inventory

Supply chain costs (SCOR) metric

Total cost to serve (i.e. COGS)

SCOR Levels

-Level 1 SCOR: strategic level metrics (plan, make, source, deliver, return, enable) -Level 2 SCOR: operational strategic metrics (make-to-stock, make-to-order) -Level 3 SCOR: schedule production activities, issue product, produce, package, stage, dispose waste, and release product

US EPA Clean Air Nonroad Diesel Rule

2015, reducing allowed particulate matter and nitrogen dioxides for industrial equipment, generators, transportation etc.

ordering costs

Used in calculating order quantities, the costs that increase as the number of orders placed increases. It includes costs related to the clerical work of preparing, releasing, monitoring, and receiving orders, the physical handling of goods, inspections, and setup costs, as applicable.

Quick Liquidity Ratio

=(assets - inventories) ÷ liabilities

Total Supply Chain Management Cost

=Sales - Profit - Cost of Serve

Commodities Inventory Turn

=Units Sole ÷ avg inventory in units

Risk rating

=probability x risk

Inventory Turnover

=sales ÷ avg inventory

Retail inventory turnover

=sales ÷ avg inventory at selling price

Passive Tag

A RFID tag that does not send out data and is not self-powered.

business strategy

A plan for choosing how to compete. Three generic business strategies are 1) least cost, 2) differentiation, and 3) focus

firm planned orders (FPOs)

A planned order which can be frozen in quantity and time. The planning system is not allowed to change them automatically; rather changes are the responsibility of the planner assigned

Available to promise

A portion of a firms inventory and planned production that is not already committed and is available to the customer is the uncommitted portion of a company's inventory and plant production maintained in masters schedule to support customer order promising

Deseasonalized Demand

Actual Seasonal Demand/Seasonal Index annual forecast/number of periods

Master Scheduling

based on the product family data in production plan breaks product family volume into an end-item mix, or rolls up end item forecasts to match product family volume. produces master production schedules for individual end items balances MPSs with available capacity may link to finite scheduling system

ending projected available balance

beginning projected available balance + scheduled MPS receipt - forecast

visibility

being able to access data within the supply chain, no matter where the data is located

Hedge Inventory

buffer against some event that may not happen Hedge inventory planning involves speculation related to potential labor strikes, price increases, unsettled governments, and events that could severely impair a company's strategic initiatives. A form of inventory buildup to buffer against events that may happen (weather, natural disasters, war, labor strikes)

Extended supply chain business modeling

building a strategic model of technology integration, setting financial goals and measurements, and deciding on profit allocation between partners. The results of this process are used to plan extended supply chain communications. These communications plans involve integration of partner policies, work processes, and tasks and roles.

bonded warehouse

buildings or parts of buildings designated by the US Secretary of the Treasury for storing imported merchandise, operated under US Customers supervision

Transactional Relationship =

buy on the market

cross docking

is the process of packing products on incoming shipments so they can be easily sorted at intermediate warehouses or for outgoing shipments based on final destination

inventory policy

it is a way of formalizing results of strategic inventory decision so that it can be implemented consistently. inventory policy codifies both broad and specific inventory management decisions.

leading indicators

key economic variables that economists use to predict a new phase of a business cycle

seasonality

known as seasonal variation also repetitive pattern of the demand from year to year (or otherwise repeating time intervals) with some period considerably higher than the others

the central warehouse may be further away from some production facilities than the smaller warehouses would be

lead times and transportation costs are likely to go up

influencing demand (moderately variable capacity strategy)

level production and carefully manage demand to meet optimal capacity

Costs of quality

line fallout, defects, in-house or field repairs, rework, returns, warranties

cycle

long-term upward and downwards cyclical moves generally correlated with business cycle. there can be long economics cycles or short cycles with them.

customs house broker

manages paperwork for international shipping and tracks and moves shipments through the proper channels

levels or amounts of conditionally accepted materials

materials that don't conform to specs but are accepted thru material review process

Functional Products

mature products that tend to have a low profit margin and a predictable demand high volume, low variety

Data mining

method of finding hidden patterns or relationships in data

Pooling risks

method of reducing stock outs by consolidating stock in centralized warehouses

Operations Splitting

method used to reduce manufacturing lead times

customer experience differentiation business strategy

minimize the number of options to reduce customer decision-based stress, offering just what is likely to be wanted. From a supply chain perspective, this minimizes inventory and markdowns.

reverse supply chain

moving items from consumer back to the producer for repair or disposal

portal

multi surface website that provides access to data that may be secured by each users role; collaboration with external parties

variability

natural tendency of all business activities to fluctuate above or below average value

ROA (return on assets):

net income ÷ total assets

multiple dysfunction enterprise 3 descriptors

no external links other than transactions, lack of coordination with partners, fulfill demand without regards to cost

Typically, the 4PL charges a fee for its service

not a markup

Abnormal Demand Characteristics

not in the forecast from non-regular customers random, nonrecurring and highly variable not received through normal channels

Independent demand

not related to the demand for any other product - must be forecast b/c not related to other demands The demand for an item that is unrelated to the demand for order items. Demand for finished goods, parts required for destructive testing, and service parts requirements are examples of independent demand.See: dependent demand

Available time (hours)

number of machines x hours a day x days a week

ending inventory

opening inventory + production - demand

Non-Vessel-Operating Common Carriers

operate like freight forwarders but use scheduled ocean liners, buys and sells space, performs physical work of loading cargo

Manufacturing Planning and Control (MPC)

operates within the direction-setting framework of strategic and business planning. Consists of short, intermediate and long term planning activities.

Production plan

overall level of manufacturing output planned to be produced

muri

overburden

Criteria for customer segmentation

profitability strategic importance to the business special needs

Planning Demand (fixed high capacity strategy)

providing the necessary capacity to meet the peak demand at anytime.

Export Trading Company (ETC)

purchases goods from one country and resells them in another

average inventory (EOQ)

q (lot size) / 2

Life cycle costs include

quality, durability, and maintainability versus price

Two types of forecasts

quantitative and qualitative

Reducing the number of partners can

reduce operating costs, cycle time and inventory holding cost

recycling

reduces disposal costs

triple bottom line

refers to the concept that corporate success should be measured in three dimensions—economic, social, and environmental—reinforcing that it is not only the traditional bottom line of relative profitability that's important to organizational leaders

Dependent Demand

related to the demand for another product - can be calculated b/c directly related to demand for other assemblies or products. demand that is directly related to or derived from the bill of material structure for other items or end products. such demands are therefore calculated and need not and should not be forecast.

point of sale (POS)

relief of inventory and computation of sales data at a the time and place of sale, generally using bar coding or software

Storage costs

rent, operating cost, taxes, material-handling cost, lease payments for equipment, depreciation, power costs, and operating cost

Aligning with business strategy

review org's business plan, financial statements, other info. learn orgs overall objectives, value proposition gathering information on the external environment (cust requirements, competitor business)review current SC capacity, resilience, sustainability, adaptability analyze actual alignment to bus strategy and current environment

Manufacturing & Service Objectives - Customer Perspective

right goods & services right quality right quantity right time right place right price

Mass Marketing

sending the same message to all potential customers

surveys

sent to SC managers in order to gather qualitative info on performance of suppliers; address overall performance, reliability, cost, order accuracy, delivery/timeliness, quality, business relationship, personnel, customer support, responsiveness, etc.

factors that influence retail customers to make a purchase

service > quality > price

Operation Time

setup time + run time

contact channel strategy

should address both contacting customers and being contacted by customers

segmentation by customer needs

specific product or service feature; preferred contact channels; customers search for best value, but value doesn't mean price...could be convenience, trust in reliability, ease of return, etc. (value profile)

Velocity

speed of all transactions in a supply chain

3 - month moving average

sum of past 3 months of inventory divided by 3

demonstrated capacity

sum of standard hours for past periods/past periods

# of floor failure events

supplier-caused discrepancy is found after part is shipped to stores or assembled, organization must adjust performance index

continuous replenishment model

suppliers are notified daily of sales or warehouse shipments and commit to replenish inventory without OOS and without receiving replenishment orders; turns are improved

The risk of stock outs increases as

supply chains reduces the safety stock held at each node and move towards JIT order processing

Distribution requirements planning (DRP)

system that forecasts when the various demand will be made by the system on central supply

Demand Filters

tag items with long lead time or heavy demand set filter limits at multiples of MAD or per other management policy assign planner to acdt on filter defaults daily; accept, partial fill or delay discuss actions with customers track all defaults separately increase capacity for items that constantly trip filters

segmentation by preferred channel

technology has provided more options and better service and lowered costs of doing business for companies; some offer potential savings for those willing to use technology channels; a CRM strategy must consider how receptive customers are to this type of contact point

Pilferage

the action of stealing things of little value.

planning horizon

the amount of time a plan extends into the future

forecasting

the business function that aims to predict sales and use of product so they can be purchased or manufactured in appropriate quantities in advance

allocation

the classification of quantities of items that have been assigned to a specific orders but have not yet been released from the stockroom to production. it is uncashed stockroom requisition. a process used to distribute material in short supply

Acquisition Cost

the cost required to obtain one or more units of an item. it's order quantity times unit cost = product cost or purchase price

Capacity variance costs

the costs of changing capacity beyond a normal range, including the costs of overtime, additional shifts, layoffs, or plant closings

Process change costs include:

the costs of evaluating choices and implementing the changes to the SC - Requirements identification and research - Product development - Contract sourcing (search, selection, qualification and legal review) - Process change and training of supplier and organization in each other's operations - Plant openings/closings, hiring/layoffs - Supplier education and integration

Ongoing costs

the costs of ownership that occur throughout the life of the product or equipment. - A durable product will have lower ongoing costs than one that costs less but has lower quality - Life cycle costs- Maintenance, repair, and operations and other ongoing service and repair part costs - Costs of quality - Sustainability costs (recycling, recovery of materials,...) - Reputation costs (customer loyalty versus lost customers)

absence of bias

the cumulative period forecast error of zero no matter what the value of the MAD

the logistics customer service implies that

the customer order was complete, undamaged, delivered on time and consistently correct over time

The most compelling reason to let another party take over logistics functions is

the decision to focus on core competencies - a common supply chain strategy

postponement

the delay of any modifications or customization to a product as long as possible in the production process

demand management process

the demand management process is a process that weighs both customer demand and firm's output capabilities and tries to balance the two. demand management is made up of planning demand, communicating demand, influencing demand and prioritizing demand.

Strategic Sourcing

the development and management of supplier relationships to acquire goods and services in a way that aids in achieving the immediate needs of the business

Define excess cost

the difference between the purchase cost of an item and its salvage or discounted value

Macro environment

the environment external to a business including technological, economic, natural, and regulatory forces that marketing efforts cannot control

Distribution resource planning (DRP II)

the extension of distribution reqs planning into the planning of the key resources contained in a distribution system (warehouse space, workforce, money, trucks, freight cars, etc.)

trend

the general upward downward movement of a variable over time

Macroeconomics

the study of the economy as a whole, including topics such as inflation, unemployment, and economic growth

SCOR's main focus is

the supply chain's management processes: plan, source, make, deliver, and return

In a 3PL arrangement

the third party takes over some or all logistics functions and perform them itself

Define set-up and ordering costs

the time and/or money to prepare all necessary materials and resources for production

primary function of ERP

to align the firm's strategy and operations

managing and prioritizing demand (fixed average capacity strategy)

to control the demand to the maximum extent possible through scheduling promotions, queues, and rationing

one way to measure a plan's flexibility is

to measure the baseline level of customer service, output capacity, and quality in the optimized supply chain and then calculate the incremental costs of increasing each factor

total production needed

total forecast demand+ ending inventory- opening inventory

Primary data sources of analytics

transaction records sales representatives service representatives market intelligence

Specialized carriers

transport commodities like liquid petroleum, household goods, building materials, and other types of specialized items.

collaboration/strategic alliance

type of supplier relationship ruled more by agreements than contracts; replaces shopping for competitive bids; (1) proximity - long-term relationship; (2) visibility - full sharing of goals, strategies, & tactics; attempt to reflect partners plans in own; (3) interaction with competitors - limited or none; (4) communication - extensive interaction; high level of trust; (5) culture - merging of cultures

ongoing relationship

type of supplier relationship where arms-length relationship involves repeated transactions with same suppliers regulated thru medium-term contracts; (1) proximity - medium-term contracts; (2) visibility - some sharing of goals and tactics; (3) interaction with competitors - some; (4) communication - designated contacts (account managers); (5) culture - awareness of culture

partnership

type of supplier relationship where length of relationship creates opportunity for increased understanding of each other's organizations and increased efficiencies thru greater communication; (1) proximity - longer-term contracts; (2) visibility - full sharing of goals, strategies, & tactics; (3) interaction with competitors - limited; (4) communication - increased interaction; some trust; (5) culture - awareness and adaptation to each other's culture

mura

unevenness

Innovative Products

unpredictable demand, relatively short life cycles and high contribution margins (20 to 60 percent) high variety, low volume

Reduce the following

use of raw material in product design, reduce the consumption of energy in manufacturing, Design the logistics network for efficient use of resource and energy

Monitoring and Controlling Process Group

used to put the data into context and do the analysis and interpretation needed to decide on a course of action

demand planning

using forecast and experience to estimate demand for various items at various points in supply chain. several forecasting techniques may be used during the planning process. often families of items are aggregated in doing this planning. aggregation also occur by geographical region or by lifecycle stage. forecast demand is compared to actual demand in order to measure and increase forecast accuracy.

utilization

utilization percent = hours actually worked / hours of available time * 100

Master Scheduling and RCCP

validates the production plan against required production and distribution resources in the intermediate term. Disaggregates product family volume into the MPS for end items.

3vs

visibility, velocity and variability

genchi genbutsu

visit the shop floor to see what's happening

Areas profitable customers can receive special treatment

volume discounts priority attention from sales and marketing

Three Vs of Big Data

volume, velocity, variety

assortment

warehousing technique that stores goods close to customers

the United Nations Global compact

was a means of helping businesses voluntarily align their operations and strategies with the ten key principles

muda

waste

supplier rating system

way to set supplier performance standards, measure performance against those standards, and take steps to improve supplier performance (like certification), and also include data from SC information systems and occur more often to capture ongoing performance levels; tool to measure and correct performance immediately

Executing Process Group

where the work is done and data is collected

Heijunka

workload leveling

extrinsic forecasting

• Based on external (extrinsic) indicators • Theory is that demand for a product group is directly proportional, or correlates, to activity in another field • i.e. housing starts, birth rates, disposable income

Tariff

A government tax on imports or exports

Target Level

Demand during Lead Time + Demand during Review Time + Safety Stock

Annual Carrying Cost

(Order Quantity in Units/2) x Unit cost in dollars x Annual carrying cost rate as a decimal

Inventory carrying cost (EOQ)

(Q/2) x c (unit cost) x i (inventory carrying cost rate)

critical ratio formula

(due date - present date) / lead time remaining actual time remaining ÷ lead time remaining

Average Ordering Cost per order formula

(fixed cost/number of orders)+variable cost

Days Sales Oustanding

(receivables÷annual rev) * 365

DOH - Days on hand

(Inventory ÷ annual COGS) * 365

Supplier performance index

(Materials Cost+Nonconformist Cost) / Material Cost

outsourcing CRM

(1) allows org leaders to focus on core competencies; (2) if CRM is core competency, you can save org money, identify trends, anticipate problems, keep up with industry changes, & are better equipped to capture & process the data; (3) will train customer service reps in organization; (4) must have clear performance expectations - SLA updated annually; (5) measure against expectations at regular intervals - continuous monitoring to measure against metrics and adjust when necessary; (6) maintain ultimate responsibility for CRM - org still responsible even if outsource day-to-day activities; (7) coordinate activities of multiple vendors and share experience and knowledge; (8) maintain exit strategy

why SRM

(1) consolidation has led to larger, but fewer customers that are better able to set terms that will lower their own costs; large customers have fewer suppliers to choose from and less flexibility in terms to negotiate; (2) pressure on price and profit margin has led to greater integration of manufacturers with suppliers; (3) if product is a true commodity, SC must compete on price and availability and cost-effective performance will be crucial; achieving and maintaining that performance will require close integration among SC partners, from planning thru order tracking and replenishment

implementation challenges with CRM & SRM

(1) macro-level or micro-level - both have technology piece (sharing information) and human piece (new attitude and new skills); (2) reengineering org structures and redefining workforce roles (new business vision and mission statement, new business organization, new job definitions); (3) creating virtual organizations (information no longer is proprietary but is shared among strategic partners for the benefit of each and for the benefit of the SC as a whole; integrated processes must be developed and adopted by all employees and implemented throughout all involved organizations; parts of virtual organization must decide on and manage to degree of risk they are willing to undertake in the merged environment): (4) reexamining existing technologies (systems must be more flexible, do more, and be capable of communicating with other partner's systems, change and loss of competitive advantage may cause org to leave behind outdated mgmt approaches and adopt more fluid, interactive IT tools that can leverage knowledge and skills of teams made up of people from various points in the SC)

strategic alliances

(1) relationship formed by 2 or more organization's that share information, participate in joint investments, and develop linked and common processes to increase performance of both companies; (2) goals for these relationships may include cost reduction, quality improvement, better delivery performance, increased flexibility, or new product introductions; alliances must be flexible and each partner must bring value to the relationship; (3) different from joint venture; joint ventures agree to create new entity & then share in revenues, expenses, and control; strategic alliances involves no equity stake by participants and is much less rigid arrangement; (4) when searching for strategic alliance, one must consider the suppliers' competencies, their ability to deliver required services, product and service quality level, capacity for innovation, willingness to collaborate, and most importantly their customer focus

strategic alliance considerations

(1) strategic importance - if component is critical to product differentiation or involves proprietary knowledge, then make in-house; if can't or expertise outside core competency, then firm must form strategic alliance with valuable supplier; (2) # of suppliers - if only 1 supplier available, then strategic alliance is warranted to ensure availability; (3) complexity - more complex the relationship between component and final product, the more value there will be in collaborative design; (4) uncertainty - if sourcing relationship has potential to jeopardize attaining business objective, the buying firm should develop close relationship with supplier; (5) new relationship - if new supplier, relationship must be managed carefully

why CRM

(1) today's customer is harder and more expensive to win and keep; (2) advances in technology and competition in a free marketplace have benefited customers by raising expectations for quality, trouble-free products and services; (3) today's customer assumes products will be of high quality, the competitive advantage is price or value; internet makes it easy to shop price, so market expands from neighborhood retailer to global marketplace or eager sellers

Days Payable Outstanding

(Accounts Payable÷COGS)*365

Annual Ordering Cost

(Annual Usage in Units/Order quantity in units) x Ordering cost in dollars per order number of orders x cost per order

avg inventory

(Beginning Inventory + Ending Inventory) / 2

Average Inventory Formula

(Beginning Inventory + Ending Inventory) / 2 Formula Order Quantity/2 + Safety Stock

average inventory

(Inv at start - Inv at end) / 2 annual cost of goods sold/ inventory turns

Microeconomics

the study of how households and firms make decisions and how they interact in markets

the SCOR model refer to

- A process reference model developed and endorsed by the Supply Chain Council as the cross-industry, standard diagnostic tool for supply chain management. - The SCOR model describes the business activities associated with satisfying a customer's demand, which include plan, source, make, deliver, and return. - Use of the model includes analyzing the current state of a company's processes and goals, quantifying operational performance, and comparing company performance to benchmark data. - SCOR has developed a set of metrics for supply chain performance, and Supply Chain Council members have formed industry groups to collect best practices information that companies can use to evaluate their supply chain performance.

mergers and acquisitions

- Business goals are shared; business areas participate in setting strategy and planning integration of capabilities, processes, and information - Competition has been eliminated - Level of trust, communication, and shared values will vary, depending on the effectiveness of the merger type of supplier relationship where suppliers are folded into purchasing entity; (1) proximity - ownership; (2) visibility - full sharing of goals, strategies, & tactics as internal, common knowledge; (3) interaction with competitors -none; (4) communication - varies; (5) culture - one culture

Characteristics of Relationship* Proximity: - Buy on the market: - Ongoing relationship: - Partnership: - Collaboration/ Strategic alliance: - Mergers and acquisitions:

- Buy on the market: Arm's length - Ongoing relationship: Medium -term contracts - Partnership: Longer -term contracts - Collaboration/ Strategic alliance: Long-term relationship - Mergers and acquisitions: Ownership

Characteristics of Relationship* Interaction with Competitors - Buy on the market: - Ongoing relationship: - Partnership: - Collaboration/ Strategic alliance: - Mergers and acquisitions:

- Buy on the market: Significant - Ongoing relationship: Some - Partnership: Limited - Collaboration/ Strategic alliance: Limited or none - Mergers and acquisitions: None

Characteristics of Relationship* Visibility - Buy on the market: - Ongoing relationship: - Partnership: - Collaboration/ Strategic alliance: - Mergers and acquisitions:

- Buy on the market: Technical requirements of purchase - Ongoing relationship: some sharing of goals and tactics - Partnership: - Collaboration/ Strategic alliance: - Mergers and acquisitions:

Characteristics of Relationship* Communication - Buy on the market: - Ongoing relationship: - Partnership: - Collaboration/ Strategic alliance: - Mergers and acquisitions:

- Buy on the market: computerized interaction - Ongoing relationship: through designated contact points such as account managers - Partnership: Increased interaction between related departments, some degree of trust - Collaboration/ Strategic alliance: Extensive communication; high levels of trust, enforced via contracts and licensing - Mergers and acquisitions: Varies

Characteristics of Relationship* Culture - Buy on the market: - Ongoing relationship: - Partnership: - Collaboration/ Strategic alliance: - Mergers and acquisitions:

- Buy on the market: not an issue - Ongoing relationship: awareness of culture - Partnership: awareness and adaptation to each other's cultures - Collaboration/ Strategic alliance: merging of cultures - Mergers and acquisitions: one culture

Delivered at Place (DAP)

-Seller delivers goods and buyer receives them when they are ready for unloading -Transportation costs: Seller -Loading costs: Seller -Risk transfers: at destination, both parties should agree on exact point -Export customs/duties: Seller -Import customs/duties: Buyer

Ways to reconcile just in time or lean with MRP

1 Small or bucket less system 2 Balanced flow

what is benefit of MPS

1 Assurance to sales people for delivery commitment 2 Assurance to operation people on production qty 3 For firm it gives low inventory /efficient use of resources

Customer Service ratio

1) A measure of delivery performance of finished goods or other cargo, usually expressed as a percentage. In a make-to-stock company, this percentage usually represents the number of items or dollars (on one or more customer orders) that were shipped on schedule for a specific time period, compared to the total that were suppose to be shopped in that time period. Syn: customer service level, fill rate, order-fill ratio, percent of fill. Ant: stockout percentage. 2)In a make-to-order company, usually some comparison of the number of jobs or dollars shipped in a given time period (e.g., a week) compared to the number of jobs or dollars that were supposed to be shipping in that time period. Syn: Fill rate

Stock Keeping Unit (SKU)

1) An inventory item. For example, a shirt in six colors and five sizes would represent 30 different items. 2) In a distribution system, an item at a particular geographic location. For example, one product stocked at the plant and at six different distribution centers would represent seven items.

Safety Stock

1) In general, a quantity of stock planned to be in inventory to protect against fluctuations in demand or supply. 2) In the context of master production scheduling, the additional inventory and capacity planned as protection against forecast errors and short-term changes in the backlog. Overplanning can be used to create safety stock. Syn: buffer stock, reserve stock

Available-To-Promise (ATP)

1) In operations, the uncommitted portion of a company's inventory and planned production maintained in the master schedule to support customer-order promising. [This] quantity is the uncommitted inventory balance in the first period and is normally calculated for each period in which an MPS receipt is scheduled. In the first period, [this] includes on-hand inventory less customer orders that are due and overdue. Three methods of calculation are used: discrete [...], cumulative [...] with look-ahead, and cumulative [...] without look-ahead. (2) In logistics, the quantity of a finished good that is or will be available to commit to a customer order based on the customer's required ship date. To accommodate deliveries on future dates, [this] is usually time-phased to include anticipated purchases or production receipts. See: discrete available-to-promise, cumulative available-to-promise.

Change Management Process

1) Prepare for change 2) Plan for change 3) Execute change 4) Monitor change

4 Stages of Continuous Improvement Model

1) Process Analysis: find locations where waste occurs 2) Process Assessment: measure how supply chain is performing 3) Project Planning: design, development, and review of the proposed supply chain 4) Implementation and change management: design is completed and implemented

What are the 10 knowledge areas listed in the PMBOK guide?

1) Project Integration Management (begin with the end in mind) 2) Project Scope Management 3) Project Time Management 4) Project Cost Management 5) Project Quality Management 6) Project Human Resource Management 7) Project Communications Management 8) Project Risk Management 9) Project Procurement Management 10) Project Stakeholder Management

Operational metrics fall into what 3 categories?

1) Quality 2) Productivity 3) Asset Management

Two major components of quality:

1) Quality of conformance, quality is defined by the absence of defects, 2) Quality of design, quality is measured by the degree of customer satisfaction with a product characteristics and features

Distribution Requirements Planning (DRP)

1) The function of determining the need to replenish inventory at branch warehouses. A time-phased order point approach is used where the planned orders at the branch warehouse level are "exploded" via MRP logic to become gross requirements on the supplying source. In the case of multilevel distribution networks, this explosion process can continue down through the various levels of regional warehouses (master warehouse, factory warehouse, etc.) and become input to the master production schedule. Demand on the supplying sources is recognized as dependent, and standard MRP logic applies. 2) More generally, replenishment inventory calculations, which may be based on other planning approaches such as period order quantities or "replace exactly what was used," rather than being limited to the time-phased order point approach.

Demand Management

1) The function of recognizing all demands for goods and services to support the marketplace. It involves prioritizing demand when supply is lacking. Proper demand management facilitates the planning and use of resources for profitable business results.2) In marketing, the process of planning, executing, controlling, and monitoring the design, pricing, promotion, and distribution of products and services to bring about transactions that meet organizational and individual needs. Synonym: marketing management. See: demand planning.

metric selection framework relies on these 3 principles:

1) competitive basis (responsive vs efficient) 2) measurement focus (strategic vs operational) 3) measurement frequency (diagnostic vs monitoring)

goals of supply chain management (3 Vs)

1) increased visibility 2) reduced variability 3) increased velocity

Logistics

1, in a supply chain management context, it is the subset of supply chain management that controls the forward and reverse movement, handling and storage of goods between origin and distribution points 2, in an industrial context, the art and science of obtaining, producing and distributing material and product in the proper place and in proper quantities

SCOR applies to

1. All customer interactions from OE to paid invoice 2. all product transactions including equip spare parts bulk product and software. 3. All market interactions from understanding aggregate demand thru order fulfillment

Ways to build a greener supply chain

1. Carbon foot print 2. Optimal plant location 3. IT network design 4. product or process design 5. Logistics design 6. Reduce reuse recycle 7. Green buildings 8. energy efficiency/alt energy

Types of Auctions

1. Classic or forward auctions 2. Reverse auctions 3. Dutch auctions 4. Demand management auctions 5. Stock-market-style auctions

Supply chain social contributions

1. Delivery socially desired and useful products or services. Also creating jobs 2. Avoiding or reducing negative environmental side effects of activities 3. Integrating green into the supply chain

3 reasons to build a lateral supply chain

1. Economies of scale 2. To improve business focus and expertise 3. Bcuz its possible.

10 keys to global logistics and trade excellence

1. Focus on total delivered cost management 2. Automate global logistics processes 3. Achieve end to end visibility 4. Leverage supplier portals and achieve advanced ship notice 5. Commit to total ID and regulatory compliance 6. Maintain transportation flexibility 7. Embrace variability management 8. Build integrated international and domestic workflows 9. Adopt an integrated planning and execution platform 10. Focus on financial supply chain management

"green" issues in the supply chain

1. Govt regulations 2. Sustainability concerns 3. Public opinion and consumer choice 4. Potential for competitive advantage

4 stages of supply chain evolution

1. Multiple dysfunctional: Transactional links only. Basic MRP. 2. Semifunctional enterprise: Efficiencies are started. Silos exist. MRP II intro'd 3. Integrated enterprise: (S&OP) Silos broken down, design for supply chain, JIT. ERP intro'd 4. Extended enterprise: internal and external networks. Partnerships, alliances

Opportunities created by interdependence of economies

1. New markets for goods and services 2. New resources and suppliers 3. New pools of labor

5 SCOR process

1. Plan 2. Source 3. Make 4. Deliver 5. Return

Three function of Production Activity Control

1. Plan / Re-Plan - getting ready to release the shop order to shop floor Ensure resources are available Schedule start and completion date Adjust if needed 2. Implementation - activities leading up to and including released of shop order Gather information from various sources to prepare a shop packet (shop order, assembly instruction, operator instructions) Release shop order to the manufacturing floor Executing the Plan - releasing Shop Order Packet to the shop floor, which must contain all the information needed by manufacturing to make the item? Information including: a) Order number, PN, Name, Description, Qty b) Engineering Drawing c) BOM d) Route Sheet e) Material issue ticket f) Tooling Requirement g) Job Ticket/Move Ticket/WO traveler 3. Control - Control begin at the time when shop order is released Establish and maintain order - Ranking of shop order by priority plan (aka priority control) Monitor and control WIP, lead time and queue Track and report production status and completion - involve comparing work order to The Plan, and make necessary adjustments Report work center performance - including efficiency, operation time, order quantity and scrap

Values the supply chain should try to deliver

1. Quality of product or service 2. Affordability 3. Availability 4. Service 5. Environmental impact

4 Levels of Capacity Management

1. Resource planning 2. Rough-cut capacity planning 3. Capacity requirements, planning and control 4. Input/Output control

Major functions of PAC include

1. Scheduling of work 2. Loading of work 3. Operation Dates 4. Tracking work in progress 5. Accept detailed recording 6. Dispatch system 7. Status and production reporting 8. Customer Service A forecast would be a part of demand management

Key Elements in the Communication Process

1. Sender 2. Message 3. Medium 4. Receiver 5. Filters 6. Noise 7. Acknowledgement 8. Feedback

Level 1 SCOR Metrics

1. Supply chain reliability-Perfect order fulfillment 2. Supply chain responsiveness-Order fulfillment cycle time 3. Supply chain agility-1. Upside supply chain adaptability 2. Downside supply chain adaptability 3. Overall value at risk (VaR)

Seasonal forecast

1. calculate seasonal index of demand for each period 2. develop deseasonalized demand by developing total forecast for a year and divide it by the number of periods 3. develop a seasonal forecast for each quarter by multiplying the deseasonalized demand by each quarter's seasonal index.

Level production plan

1. calculate total demand - sum of demand + desired ending Inv - starting inventory 2. divide total demand by number of periods

3 types of value created by supply chains

1. financial value 2. customer value 3. social value

calculate safety stock per target service level

1. number of order per period (total demand / order quantity) 2. calculate target service level (if 5 stockouts per period = ((100 - n(5)) / 100) 3. MAD (given) x MAD safety factor (found through looking on service level chart)

Clean Truck Program

2008 CA law, requires trucks to meet new environmental standards and reduce air pollution by 80%. Non-compliance means fine and ban from LA and Long Beach

Inventory Days Outstanding

365/inventory turnover

Fourth Party Logistics (4PL)

4PLs differs from 3PLs as: 1. the 4PL organization is often a separate entity formed by a joint venture or other long-term contract between a client and one or more partners 2. the 4PLs is an interface between the client and multiple logistics services providers 3. ideally, all aspects of the client's supply chain are managed by the 4PL organization 4. It's possible for a major 3PL organization to form a 4PL organization within its existing structure is a logistics specialist that plays the role of general contractor by taking over the entire logistics function for an organization and coordinating the combination of divisions or subcontractors necessary to perform the specific tasks involved

Business Process Management (BPM)

A business discipline or function that uses business practices, techniques, and methods to create and improve business processes. [A] holistic approach to the use of appropriate process-related business disciplines to gain business performance improvements across the enterprise or supply chain. It promotes business effectiveness and efficiency while striving for innovation, flexibility, and integration with technology. Most process improvement disciplines or activities can be considered [this].

Third Party Logistics (3PL)

A buyer and supplier team with a third party that provides product delivery services. This third party may provide added supply chain expertise actually perform or manage one or more logistics service, is an entity that provides product delivery services for a buyer and supplier team

Collaborative planning, forecasting, and replenishment(CPFR)

A collaboration process whereby supply chain trading partners can jointly plan key supply chain activities from production and delivery of raw materials to production and delivery of final products to end customers. It encompasses business planning, sales forecasting, and all operations required to replenish raw materials and finished goods. 2) A process philosophy for facilitating collaborative communications. It is considered a standard, endorsed by the Voluntary Interindustry Commerce Standards.

collaborative planning forecasting replenishment (cpfr)

A collaboration process whereby supply chain trading partners can jointly plan key supply chain activities from production and delivery of raw materials to production and delivery of final products to end customers. It encompasses business planning, sales forecasting, and all operations required to replenish raw materials and finished goods. 2) A process philosophy for facilitating collaborative communications. It is considered a standard, endorsed by the Voluntary Interindustry Commerce Standards.

Glocalization

A combination of "globalization" and "localization." In a supply chain context, [this] is a form of postponement where a product or service is developed for distribution globally but is modified to meed the needs of a local market. The modifications are made to conform with local laws, customs, cultures, and preferences.

International Financial Reporting Standards (IFRS)

A common global language for business affairs so that company accounts are understandable and comparable across international boundaries. They are a consequence of growing international shareholding and trade and are particularly important for companies that have dealings in several countries. They are progressively replacing the many different national accounting standards..."

make or buy cost analysis

A comparison of all of the costs associated with making an item versus the cost of buying the item.

bill of material

A complete list of components and the quantities of each needed to make one unit of the end item - also referred to as the "product tree" pegging

Supplier Relationship Management (SRM)

A comprehensive approach to managing an enterprise's interactions with the organizations that supply the goods and services the enterprise uses.The goal of [this] is to streamline and make more effective the processes between an enterprise and its suppliers.[It] is often associated with the automating procure-to-pay business processes, evaluating supplier performance, and exchanging information with suppliers. An e-procurement system is often an example of [this type of] family of applications. focuses on keeping suppliers satisfied by evaluating and categorizing suppliers for different projects, which optimizes supplier selection the way in which relationships with suppliers are developed and maintained to meet general goals of ensuring mutual profitability while meeting marketplace demands; may not apply to all suppliers, only those select who have been identified as key partners in the SC; stresses mutual profitability and meeting marketplace needs over individual profitability and individual needs; finding and building ongoing relationships with those trading partners who account for the majority of an organization's purchasing funds and who provide materials or services that are key elements in the final product or service; it is a methodology to structure and support relationships with suppliers that will assist in: (a) reducing procurement expenses and excess inventory; (b) support customer-focused business that delivers product customization in time frame; (c) improve processes in an on-going manner

Transportation Management System (TMS)

A computer application system designed to manage transportation operations. These systems typically offer modules focused on specific functions, such as intermodal transportation, import/export management, fleet service management, and load planning and optimization.

Bias

A consistent deviation from the mean in one direction (high or low). A normal property of a good forecast is that it is not biased.

Deemed export

A deemed export can arise when certain technology or software source code is released to a foreign national, usually for purposes of employment or contract work.

Upside Supply Chain Adaptability

A discrete measurement of the quantity of increased production a supply chain can achieve and sustain for 30 days.

Downside Supply Chain Adaptability

A discrete measurement of the reduction in quantities ordered sustainable at 30 days prior to delivery with no inventory or cost penalties.

Risk Register

A document in which the results of risk analysis and risk response planning are recorded. Risk register is a useful summary report on qualitative risk analysis, quantitative risk analysis, and risk response planning. The register contains all identified risks and associated details.

letter of credit (L/C)

A financial contract that states that the importer's bank will pay a specific sum of money to the exporter upon delivery of the merchandise.

Key Performance Indicator (KPI)

A financial or non financial measure that is used to define and assess progress toward specific organizational goals and typically is tied to an organization's strategy and business stakeholders. [This] should not be contradictory to other departmental or strategic business unit performance measures. A metric used to measure the overall performance or state of affairs. SCOR level 1 metrics are considered [these].

key performance indicators

A financial or non-financial measure that is used to define and assess progress toward specific organizational goals and typically tied to strategy

Income Statement

A financial statement that reports a company's revenues and expenses and resulting net income or net loss for a specific period of time.

Balance Sheet

A financial statement that reports assets, liabilities, and owner's equity on a specific date.

Cash Flow Statement

A financial statement that shows the flow of money in and out of the business.

keiretsu

A form of cooperative relationship among companies in Japan where the companies largely remain legally and economically independent, even though they work closely in various ways such as sole sourcing and financial backing. A member of keiretsu generally owns a limited amount of stock in other member companies. A keiretsu generally forms around a bank and a trading company, but "distribution" (supply chain) keiretsu alliances have been formed of companies ranging from raw material suppliers to retailers.

Work in Process (WIP)

A good or goods in various stages of completion throughout the plant, including all material from raw material that has been released for initial processing up to completely processed material awaiting final inspection and acceptance as finished goods inventory

Risk Category

A group of potential causes of risk. Risk causes may be grouped into categories such as technical, external, organizational, environmental, or project management. A category may include subcategories such as technical maturity, weather, or aggressive estimating.

LAN

A high-speed data communication system for Lincoln computer terminals, programs, storage and graphic devices at multiple workstations distributed over a relatively small geographic area such as building on campus

Master production schedule (MPS)

A line on the master schedule grid that reflects the anticipated build schedule for those items assigned to the master scheduler. The master scheduler maintains this, and in turn, it becomes a set of planning numbers that drives material requirements planning. It represents what the company plans to produce expressed in specific configurations, quantities, and dates. It is not a sales item forecast that represents a statement of demand. It must take into account the forecast, the production plan, and other important considerations such as backlog, availability of material, availability of capacity, and management policies and goals.

blanket purchase order

A long-term commitment to a supplier for material against which short-term releases will be generated to satisfy requirements. Often blanket orders cover only one item with predetermined delivery dates. Syn: blanket order, standing order

Total Quality Management (TQM)

A management approach to long term success through customer satisfaction

Extranet

A network connection to a partners network using secure information processing and Internet protocols to do business

Customer Relationship Management (CRM)

A marketing philosophy based on putting the customer first. Involves the collection and analysis of information designed for sales and marketing decision support (in contrast to enterprise resources planning information) to understand and support existing and potential customer needs. Includes account management, catalog and order entry, payment processing, credits and adjustments, and other functions. Syn: customer relations management starts with an adjustment of philosophy in an organization - the shift to a customer focused way of doing business - then moves to re-tooling all business processes that touch on the relationship with the customer; customer first, no matter what; responding to change is the difference between winning and losing; if business fails to understand satisfying their customers' needs and wants id their primary mission, then the business will fail; a competitive survival strategy; customers gain improved experience, business gain improved customer visibility (increases in ability to satisfy the customer, create lifetime customers, and realize potential profit from each customer)

Vendor-Managed Inventory (VMI)

A means of opting supply chain performance in which the supplier has access to the customer's inventory data and is responsible for maintaining the inventory level required by the customer. Accomplished by a process in which resupply is performed by the vendor through regularly scheduled reviews of on-site inventory. The on-site inventory is counted, damaged or outdated goods are removed, and the inventory is restocked to predefined levels. The vendor obtains a receipt for the restocked inventory and accordingly invoices the customer. See: continuous replenishment

Level of Service

A measure (usually expressed as a percentage) of satisfying demand through inventory or by the current production schedule in time to satisfy the customer's requested delivery dates and quantities. In a make-to-stock environment, [this] is sometimes calculated as the percentage of orders picked complete from stock upon receipt of the customer order, the percentage of line items picked complete, or the percentage of total dollar demand picked complete. In make-to-order and design-to-order environments, [it] is the percentage of times the customer-requested or acknowledged data was met by shipping complete product quantities. Syn: measure of service, service level.

Perfect Order Fulfillment

A measure of an organization's ability to deliver "perfect" orders to a customer. A perfect order is an order with no defects in any aspect including but not limited to the right quantity of the right product at the right place at the right time with all required documentation total perfect orders / total number of orders

Return on Working Capital

A measure of profit on the amount of cash consumed calculated as After-tax operating income/net working capital

Days Sales Outstanding

A measure of the average number of days that a company takes to collect revenue after a sale has been made calculated by the total accounts receivable/average daily sales rate (receivables÷annual rev) * 365

value-added network (VAN)

A network, often supporting EDI, providing services additional to those provided by common carriers

manufacturing resources planning (MRP II)

A method for the effective planning of all resources of a manufacturing company. Ideally, it addresses operational planning in units, financial planning in dollars, and has a simulation capability to answer what-if questions. It is made up of a variety of processes, each linked together: business planning, production planning (sales and operations planning), master production scheduling, material requirements planning, capacity requirements planning, and the execution support systems for capacity and material. Output from these systems is integrated with financial reports such as the business plan, purchase commitment report, shipping budget, and inventory projections in dollars. Manufacturing resource planning is a direct outgrowth and extension of closed-loop MRP. manufacturing planning and control system is a master game plan for all departments in the company - it the fully integrated planning and control system that coordinates between marketing and production

fixed-location storage

A method of storage in which a relatively permanent location is assigned for the storage of each item in a storeroom or warehouse

Risk pooling

A method often associated with the management of inventory risk. Manufacturers and retailers that experience high variability in demand for their products can pool together common inventory components associated with a broad family of products to buffer the overall burden of having to deploy inventory for each discrete product.

Quality Function Deployment (QDF)

A methodology designed to ensure that all major requirements of the customer are identified and subsequently met or exceeded through the resulting product design process and the design and operation of the supporting production management system. [It] can be viewed as a set of communication and translation tools. [It] tries to eliminate the gap between what the customer wants in a new product and what the product is capable of delivering. [This] often leads to clear identification of the major requirements of the customers. These expectations are referred to as the voice of the customer (VOC). (See: house of quality)

five-forces model of competition

A methodology for analyzing competitive pressures in a market and assessing the strength and importance of each of those pressures.

Porter's Five Forces

A methodology for analyzing competitive pressures in a market and assessing the strength and importance of each of those pressures. Specifies customer service, sales channels, a value system, asset footprint, and operating models.

Information System Architecture

A model of how the organization operates regarding information. The model considers four factors: (1) organizational functions; (2) communication of coordination requirements; (3) data modeling needs; and (4) Management and control structures. [This] should be aligned with and match the architecture of the organization.

Information system architecture

A model of how the organization operates regarding information. The model considers four factors: 1) organizational functions, 2) communication of coordination requirements, 3) data modeling needs, 4) management and control structure

Intranet

A privately or network that makes use of Internet technology and applications to meet the needs of an enterprise. It resides entirely within the department of company, providing communication and access to information, similar to the Internet, with webpages and so on for internal use only

Supply Chain Operations Reference (SCOR®) Model

A process reference model developed and endorsed by the Supply Chain Council as the cross-industry, standard diagnostic tool for supply chain management. The model describes the business activities associated with satisfying a customer's demand, which include plan, source, make, deliver, and return. Use of the model includes analyzing the current state of a company's processes and goals, quantifying operational performance, and comparing company performance to benchmark data. SCOR has developed a set of metrics for supply chain performance, and Supply Chain Council members have formed industry groups to collect best practices information that companies can use to evaluate their supply chain performance.

Risk response planning

A process that describes how to reduce threats and take advantage of opportunities, documents the plan for negative and positive risk events, and assigns owners to each risk.

Sales and operations planning (S&OP)

A process to develop tactical plans that provide management the ability to strategically direct its businesses to achieve competitive advantage on a continuous basis by integrating customer-focused marketing plans for new and existing products with the management of the supply chain. The process brings together all the plans for the business (sales, marketing, development, manufacturing, sourcing, and financial) into one integrated set of plans. It is performed at least once a month and is reviewed by management at an aggregate (product family) level. The process must reconcile all supply, demand, and new-product plans at both the detail and aggregate levels and tie to the business plan. It is the definitive statement of the company's plans for the near to intermediate term, covering a horizon sufficient to plan for resources and to support the annual business planning process. Executed properly, the process links the strategic plans for the business with its execution and reviews performance measurements for continuous improvement. a process for continually revising the strategic business plan and coordinating plans of the various departments. Cross-functional, the forum in which the production plan is developed, a plan for company resources that facilitates strategic plan

Design for Quality

A product design approach that uses quality measures to capture the extent to which the design meets the needs of the target market (customer attributes), as well as its actual performance, aesthetics, and cost.

Design for Manufacture and Assembly (DFMA)

A product development approach that involves the manufacturing function in the initial stages of product design to ensure ease of manufacturing and assembly (See: early manufacturing involvement)

WAN

A public or private data communication system for Lincoln computers distributed over large geographic area

ISO 9001:2008

A quality-related certification issued by the International Organization for Standardization (ISO). An international standard that specifies requirements for a Quality Management System (QMS) where an organization: a) Needs to demonstrate its ability to consistently provide product that meets customer and applicable statutory and regulatory requirements and b) Aims to enhance customer satisfaction through the effective application of the system, including processes for continual improvement of the system and the assurance of conformity to customer and applicable statutory and regulatory requirements.

Life Cycle Analysis

A quantitative forecasting technique based on applying past patterns of demand data covering introduction, growth, maturity, saturation, and decline of similar products to a new product family.

Active Tag

A radio frequency identification tag that broadcasts information and contains its own power source.

strategic alliance

A relationship formed by two or more organizations that share information (proprietary), participate in joint investments, and develop linked and common processes to increase the performance of both companies. Many organizations form strategic alliances to increase the performance of their common supply chain.

Sole source

A requirement that a product or service must be obtained from a single vendor in government work; also includes justification.

project life cycle

A set of project phases (objectives definition, requirements definition, external and internal design, construction, systems test, and implementation and maintenance), whose definition is determined by the needs of those controlling the project

Operating System (OS)

A set of software programs that control the execution of the hardware and application programs. The operating system manages the computer and network resources through storage management, desk and put output, communication linkages, program scheduling and monitoring system usage for performance and cost allocations

Material requirements planning (MRP)

A set of techniques that uses bill of material data, inventory data, and the master production schedule to calculate requirements for materials. It makes recommendations to release replenishment orders for material. Further, because it is time-phased, it makes recommendations to reschedule open orders when due dates and need dates are not in phase. The time-phased version of this begins with the items listed on the MPS and determines (1) the quantity of all components and materials required to fabricate those items and (2) the date that the components and materials are required. This time-phased approach is accomplished by exploding the bill of material, adjusting for inventory quantities on hand or on order, and offsetting the net requirements by the appropriate lead times. plan for the production and purchase of the components used in making the items in the MPS a planning process that translates the master production schedule into planned orders for the actual parts, components, and resources needed to produce the master schedule items

manufacturing resources planning (MRP)

A set of techniques that uses bill of material data, inventory data, and the master production schedule to calculate requirements for materials. It makes recommendations to release replenishment orders for material. Further, because it is time-phased, it makes recommendations to reschedule open orders when due dates and need dates are not in phase. Time-phased MRP begins with the items listed on the MPS and determines (1) the quantity of all components and materials required to fabricate those items and (2) the date that the components and material are required. Time-phased MRP is accomplished by exploding the bill of material, adjusting for inventory quantities on hand or on order, and offsetting the net requirements by the appropriate lead times.

Advanced Planning and Scheduling (APS)

A software system that uses intelligent analytical tools and techniques to develop realistic schedules across an organization's headquarters, various plants, and its first tier suppliers and B2B customers Techniques that deal with analysis and planning of logistics and manufacturing during short, intermediate, and long-term time periods. APS describes any computer program that uses advanced mathematical algorithms or logic to perform optimization or simulation on finite capacity scheduling, sourcing, capital planning, resource planning, forecasting, demand management, and others. These techniques simultaneously consider a range of constraints and business rules to provide real-time planning and scheduling, decision support, available-to-promise, and capable-to-promise capabilities. APS often generates and evaluates multiple scenarios. Management then selects one scenario to use as the "official plan." The five main components of APS systems are (1) demand planning, (2) production planning, (3) production scheduling, (4) distribution planning, and (5) transportation planning.

middleware

A software that interconnects incompatible applications software and databases from various trading partners into decision-support tools such as ERP

random-location storage

A storage technique in which parts are placed in any space that is empty when they arrive in a warehouse. It often requires less storage space than other methods

Multicountry strategy

A strategy in which each country market is self-contained. Customers have unique product expectations that are addressed by local production capabilities.

planned orders

A suggested order quantity, release date, and due date created by the planning system's logic when it encounters net requirements in processing MRP

Green supply chain

A supply chain that considers environmental impacts on its operations and takes action along the supply chains to comply wit environmental issues

Quick Response program (QRP)

A system of linking final retail sales with production and shipping schedules back through the chain of supply; employs point-of-sale scanning and electronic data inter change, and may use direct shipment from a factory to a retailer.

automatic identification system (AIS)

A system that can use various means, including bar code scanning and radio frequencies, to sense and load data in a computer

continuous replenishment

A system that involves continuously monitoring merchandise sales and generating replacement orders, often automatically, when inventory levels drop below predetermined levels.

Radio Frequency Identification (RFID)

A system using electronic tags to store data about items. Accessing or retrieving this data is accomplished through a specific radio frequency and does not require close proximity or line-of-sight access (see: active tag, passive tag, semi-passive tag)

Waste hierarchy

A tool that ranks waste management options according to what is most environmentally sound. It gives top priority to preventing waste in the first place, and can be applied to various applications.

Private Trading exchange (PTX)

A trade exchange hosed by a single company to facilitate collaborative e-commerce with its trading partners. As opposed to public e-marketplaces, a private exchange provides the host company with control over many factors, including who many participate (and in what manner), how participants may be connected, and what connects should be presented (and to whom). The ultimate goal might be to improve supply chain efficiencies and responsiveness through improved process visibility and collaboration, advanced integration platforms, and customization capabilities.

Bilateral Contract

A type of contract that arises when a promise is given in exchange for a return promise.

Exponential Smoothing

A weighted-moving-average forecasting technique in which data points are weighted by an exponential function. (alpha) x (latest demand) + (1-alpha)(previous forecast)

Broad Differentiation Strategy

Achieved by offering unique product attributes that a wide range of buyers find appealing and worth paying for. Example: Burger King create product/service attributes that appeal to many buyers looking for a variety of goods; customer experience and/or quality are often basis for competition attributes and variety appeal to many buyers, e.g. Amazon, Dell

ABC Classification

ABC Classification = Price X (projected volume) or other criteria this array is then split into three classes called A,B and C

Standard Costing

Accounting method that assigns costs to cost objects at predetermined amounts.

Business layer

All buying and selling activities

Risk Management

All efforts designed to preserve assets and earning power associated with a business. As a discipline, Integrate, model, Diversify and add flexibility, quantify, perform due diligence, insure against hazards and business disruptions. The identification, assessment, and prioritization of risks followed by coordinated and economical application of resources to minimize, monitor, and control the probability and/or impact of unfortunate events or to maximize the realization of opportunities.

Application Layer

All web specific applications and tools for creating interactive websites

Fluctuation Inventory

Also called safety stock. Covers random fluctuations in supply, demand and lead time.

Semi-passive Tag

An RFID tag that sends out data, is self-powered, and widens its range by harnessing power from the reader.

Trade Bloc

An agreement between countries intended to reduce or remove Barriers to trade within member countries. Frequently, but not always, those countries are geographically close. (Ex: European Economic Community and the North American Free Trade Agreement (NAFTA) Syn: trading bloc

Contract

An agreement between two or more parties that is enforceable in court

Root Cause Analysis

An analytical technique used to determine the basic underlying reason that causes a variance or a defect or a risk. A root cause may underlie more than one variance or defect or risk.

Total Cost of Ownership (TCO)

An economic measure of the full cost of owning a product (typically computing hardware and/or software). TCO includes direct costs such as purchase price, plus indirect costs such as training, support, and maintenance. In supply chain management, the total cost of ownership of the supply delivery system is the sum of all the costs associated with every activity of the supply stream. The main insight that TCO offers to the supply chain manager is the understanding that the acquisition cost is often a very small portion of the total cost of ownership.

safety lead time

An element of time added to normal lead time to protect against fluctuations in lead time so that an order can be completed before its real need date.

Cash-to-Cash Cycle Time

An indicator of how efficiently a company managers its assets to improve cash flow. Calculated as inventory days plus accounts receivable days minus accounts payable days. See: cash conversion cycle. defined as the time it takes for an investment to flow back into a company after it has been spent for raw materials. Days sales outstanding + inventory days of supply - days payable outstanding

Stable Stage

An industry or company that is sheltered from globalization and uncertain demand patterns

ISO 22301

An international standard that specifies requirements for setting up and managing an effective Business Continuity Management System.

Harmonized System Classification Codes

An internationally standardized description of goods that uses a system of numbers to provide increasingly detailed classification and descriptions.

Reverse Auction

An internet auction in which suppliers attempt to underbid their competitors. Company identities are known only by the buyer.

Demand During Lead Time (DDLT)

Annual Demand/Lead Time

Delphi technique

Anonymous questionnaires are collected and compiled in multiple rounds until the group reaches consensus.

liquid zone

Any change can be made to the MPS as long as it is within the limits set by the production plan. Changes are routine and are often made by the computer program without the need for input from the planner.

Filters (Communication Process)

Any factor influencing how the information is received or interpreted

Promotion

Any form of communication used to inform, persuade, or remind. Creation of brand image (name, logo and image)

Noise (Communication Process)

Anything that can distort or interfere with the reception of a message; i.e. background sounds, distractions

A visual product inspection is what type of quality type cost?

Appraisal Costs

The salary of a quality control inspector is what type of quality type cost?

Appraisal Costs

Order Losers

Areas or aspects of an organization in which poor performance can cause loss of business. For example, failure to meet customer expectations with delivery of the product is an order loser.

Order Loser

Areas where poor performance can cause loss of sale

Growth

As the product becomes accepted, production increases and unit cost drops.

the attributes of basic customer service (3)

Availability, operational performance, and customer satisfaction

Surplus or Shortfall

Available Hours - Load

Takt Time

Available production time divided by customer demand. Precisely matches production with demand Available Production Time/Rate of Customer Demand avail. production time ÷ orders/demand

Average job element time

Average job element time = (Sum of the time needed to perform each task) ÷ (Number of job cycles)

cost-plus contracts

Buyer agree to pay the seller all acceptable costs of the product up to a max cost plan plus a fixed fee

EXW (Ex Works)

Buyer pays all costs and assumes all risks

Ex Works (EXW)

Buyer takes over goods at seller's location and loads on collecting vehicle -Transportation costs: buyer -Loading costs: Buyer -Risk transfers: Buyer assumes all risk -Export customs/duties: Buyer -Import customs/duties: Buyer

Bonded Logistics Parks

BLPs, located near ports, cost-effective holding areas where shipping orders can be consolidated prior to export

Line haul costs

Basic costs of carrier operation to move a container of freight, including driver's wages and usage depreciation. These vary with the cost per mile, the distance shipped, and the weight moved.

Line Haul Costs

Basic costs of carrier operation to move a container of freight, including drivers' wages and usage depreciation. These vary with the cost per mile, the distance shipped, and the weight moved.

Ending Projected Available balance formula

Beginning PAB+scheduled MPS receipt-demand (orders or forecast) Beginning PAB + scheduled MPS receipts - forecast

Relative Ranking of Transport Modes

Best to Least: Water/Ocean: 20 Pipeline: 16 Air: 16 Rail: 12 Truck: 11

Alignment of Strategies

Business Strategy > Organizational Strategy > Supply Chain Strategy

Business-To-Consumer (B2C)

Business being conducted between businesses and final customers, largely over the internet. It includes traditional brick and mortar businesses that also offer products online and businesses that trade exclusively on the internet.

Business-To-Business Commerce (B2B)

Business conducted over the internet between businesses. The implication is that this connectivity will causes businesses to transform themselves via supply chain management to become virtual organizations - reducing costs, improving quality, reducing delivery lead time and improving due-date performance.

Order Qualifier

Characteristics needed to be a viable competitor

Order Winner

Characteristics that cause a customer to choose a firm's product or service over the competitor

Four strategies for developing a production plan

Chase strategy Production leveling Subcontracting Hybrid strategy

Gross Profit

COGS - revenue

strategic phase

CTM phase 1 defines front-end agreement to collaborate and formalize period of time and scope of relationship; specify party to manage carrier and how gained benefits will be shared

tactical phase

CTM phase 2 defines process flow; shipping forecast is shared so they can determine where and how the projected forecasts can be supported

operational phase

CTM phase 3 defines process for executing customer orders; uses agreed-upon standards, distribution methods, and carrier assignments to translate orders into shipments

Capacity

Capacity = (# of shifts) X (# of hours a day) X (# of machines) X (# of days a week)

Available Time (Capacity)

Capacity = Number of machines x hours a day x days a week

Pilferage contributes to which of the following costs?

Carrying costs

Supply chain asset management (SCOR) metrics

Cash-to-cash cycle time, return on working capital, return on supply chain fixed assets

SA8000

Certification that focuses on social responsibility in the work place (+child labor - less than 15 years) a widely recognized international standard for managing human rights in the workplace. it provides an auditable framework.

Electronic Process Codes (EPCS)

Codes that are used with RFID tags to carry information on the product that will support warranty programs.

HTS (Harmonized Tariff Schedule)

Coding system used by 200+ countries, required for international business (not for eBay international). In US, two versions - one for imports and one for exports. HS based on country of import.

What are the basic elements in a supply chain that can impact its ability to respond competitively to changes in the global marketplace (3)

Collaboration, time, distance

DSP - Detailed Scheduling and Planning

Collectively MRP and CRP. Near term planning. determine: end item and component quantities needed; when; how much are in stock; which items are on order and sufficiency of workers and equipment

Software as a Service (SaaS)

Computer services... Provided by a third-party that keeps all the software and hardware in this place of business and the company using the services accesses them via the internet

Rail Carriers

Compete for transportation when the distance is long and the shipments are heavy or bulky. slow and inflexible offer point-to-point pickup and delivery service known as trailer-on-flatcar (TOFC) service. use each other's rail cars. Keeping track of rail cars and getting them where needed can be problematic. Infrastructure and aging equipment are also problems for the railroads. Paired with trucks for door-to-door delivery

Proactively managing risk rather than being reactive provides which of these benefits to the organization?

Competitive advantage

enterprise environmental factors (EEFs)

Conditions outside the control of the project team that influence or constrain a project

payment terms

Conditions surrounding payment for sale, providing a time frame in which a customer can pay without late penalties or additional fees.

Design for the Environment (DFE)

Considering health, safety, and environmental aspects of a product during the design and development phase of product development.

Commercial invoices - consular vs. pro forma

Consular - written in language of importing country. Pro-Forma - may be sent to potential buyer before actual sale, can be used to help with LOC (avoid hidden costs)

Exports Management Companies (EMCs)

Consultants, used to acquire representation in a market where EMC has special knowledge and connections

An effective logistics strategy depend upon

Coordinating functions to create maximum value for the customer, Integrating the supply chain, Substituting information for inventory, Reducing supply chain partner to an effective minimum number, Pooling risks

joint replenishment system

Coordinating the lot sizing and order release decision for related items and treating them as a family of items. The objective is to achieve lower costs because of ordering, setup, shipping, and quantity discount economies.

Low Cost leadership strategy

Cost is the basis of competition, sometimes achieved through economies of scale in purchasing, low overhead, or a highly efficient supply chain. Example: Walmart

4 Strategy Approaches

Customer Focus & Alignment, Forecast Driven, Demand Driven, Product Type Driven

Order Point Formula

DDLT + Safety stock

Manufactured Items Costs consist of these 3 things

Direct Material Direct Labor Factory Overhead

COGS equation

Direct material +Direct Labor + overhead

Stock-Market-Style Auctions

Dynamic pricing based on the buy and sell offers and multiple buyers and sellers for commodities

EOQ squared

EOQ squared = 2AS ÷ (i*c)

Decentralized Inventory

Each supply chain stage determines its own inventory requirements and places orders independently. Inventory decision making exercised at each stocking location for SKUs at that location.

Organization for Economic Co-operation and Development (OECD) Guidelines for Multinational Enterprises

Economic Co-operation and Development (OECD) Guidelines for Multinational Enterprises To ensure that these enterprises' operations align with government policies. To reinforce the trust and confidence between enterprises and the societies in which they operate To strengthen the foreign investment climate and augment contributions to sustainable development made by the enterprises

lagging indicators

Economic signs that help economists determine how long the current economic situation will last

What is an essential component of any risk management system?

Economical application of resources

Effective Capacity

Effective Capacity = Expected Capacity ÷ Design Capacity

product returns

End user to retailer, Retailer to wholesaler, Wholesaler to distributor, Distributor to manufacturer

Design for the Supply Chain

Enhancement of a firm's product design in consideration of the issues that will arise in the supply chain, from raw materials to the final stage of the product's life cycle

Exports Trade Companies (ETCs)

Exporters, look for companies making goods it wants to buy and resell in a foreign market (example is Japan Sogo Shosha)

A customer product recall is what type of quality type cost?

External Failure Costs

FOB

FOB value includes cost of goods and amounts paid by the exporter to move it from dock and onto ship

Free Alongside Ship (FAS)

For Sea and Inland Waterway Transport only Buyer lifts cargo onboard -Transportation costs: Seller pays to point of shipment, buyer pays after -Loading costs: Buyer -Insurance: Buyer -Risk transfers: at the pier of point of shipment -Export customs/duties: Seller -Import customs/duties: Buyer.

Free on Board (FOB)

For Sea and Inland Waterway Transport only Seller puts goods on main transport vessel -Transportation costs: Dest - Seller, Orig - Buyer -Loading costs: Dest - Seller, Orig - Buyer -Insurance: Dest - Seller, Orig - Buyer -Risk transfers: Named point -Export customs/duties: Seller -Import customs/duties: Buyer

Cost and Freight (CFR)

For Sea and Inland Waterway Transport only Seller selects/pays main carriage -Transportation costs: Seller -Loading costs: Seller -Insurance: Buyer -Risk transfers: when goods pass the ship's rail at point of shipment -Export customs/duties: Seller -Import customs/duties: Buyer *This term is intended for use in shipping ocean freight pier-to-pier cargo that is not containerized, such as oversized goods that cannot be loaded in a container and overweight shipments that exceed container shipping weight limitations

Contracts for the international sale of goods (CISG)

Governs sale in international environments. Enable exporters to avoid choice-of-law issues.

Net Requirements Formula

Gross Requirements-scheduled receipts-prior projected available Gross requirements - available inventory

Brainstorming

Group meeting to discuss risks with the experts.

Shipping Associations

Help small companies negotiate similar rates to large companies

Fishbone

Helps develop cause Cause-and-effect diagram (fishbone or Ishikawa diagram) helps organize causal factors that affect a problem or process being investigated.

decision tree analysis

Helps organizations decide between two alternatives, each with possible best- and worst-case

Hofstede's Cultural Dimensions: Uncertainty avoidance

High: Overall workplace culture cannot tolerate deviant people or diverse ideas; rules are established; may need to gather more data and apply a more structured decision-making process to gain acceptance by the people you're working with. Low: Overall workplace culture is characterized by tolerance and self-control; fewer rules, written or unwritten.

Utilization Formula

Hours actually worked / available hours x 100

Server

I computer or software package that provides a specific kind of service to client software running on other computers

ISO 14001:2015

ISO Framework for holistic approach (industry specific eco policy)

ISO 28000

ISO Spec the requirements for a security management system, including those aspects critical to security assurance of the supply chain. An International Standard that specifies the requirements for a security management system, including those aspects critical to security assurance of the supply chain.

ISO 31000

ISO Standard related to guidelines on Risk Management

ISO 14001:2004

ISO documentation standards that require participating companies to keep track of their raw materials use and their generation, treatment, and disposal of hazardous wastes

International Organization for Standardization (ISO)

ISO standards are voluntary. ISO develops standards for which there is a market need. Registration. Generic management system standards. ISO certification must be renewed every three years.

Aggregation layer

Intermediaries such as brokers and service providers

A line defect is what type of quality type cost?

Internal Failure Costs

You're the supply chain manager responsible for the overall performance of the chain. Which of the following is the most desirable?

Increased velocity, reduced variability, increased visibility

Ship Broker

Independent, helps exporters with details of arranging international shipment

Hofstede's Cultural Dimensions: Individualism/collectivism

Individualist: Individuals tend to define themselves by their job. Collectivist: Relationships are more important than one's job; need for consensus-based decision making and involving the group in business activities to build a strong relationship.

Water Carriers

Inexpensive Slow and inflexible Includes inland waterway, coastal and intercostal, and deep-sea. Inland waterway transportation is used for heavy, bulky, low-value materials (e.g., coal, grain). Barge Competes with rail and pipeline. Paired with trucks for door-to-door delivery.

Four Primary Flows in the Supply Chain

Information Flows, Primary Product Flow, Primary Cash Flow, Reverse Product Flow

Business Intelligence

Information collected by an organization on customers, competitors, products or services, and processes. [It] provides organizational data in such a way that the organizational knowledge filters can easily associate with this data and turn it into information for the organization.Persons involved in [these kind of] processes may use application software and other technologies to gather, store, analyze, and provide access to data, and to present that data in a simple, useful manner. The software aids in business performance management and aims to help consumers make better business decisions by offering them accurate, current, and relevant information. Some businesses use data warehouses because they are a logical collection of information gathered from various operational databases for the purpose of creating [this].

Lender Values

Interest, long-term stability, return of principal

Inco Terms

International Commercial Terms, not legally binding, Inco Terms 2010 used, rules for international shipments

Inventory carrying costs

Inventory carrying costs = (Q ÷ 2) ci

Decentralized Inventory Control

Inventory decision making exercised at each stocking location for SKUs at that location.

Pipeline Stock

Inventory in the transportation network and the distribution system, including the flow through intermediate stocking points. The flow time through the pipeline has a major effect on the amount of inventory required in the pipeline. Time factors involve order transmission, order processing, scheduling shipping, transportation, receiving, stocking, review time, and so forth, Syn: pipeline inventory See: distribution system, transportation inventory.

Centralized Inventory Planning

Inventory is pushed out to later stages in the supply chain. Distribution centers have no say in what they receive

inventory ordering system

Inventory models for the replenishment of inventory. few ways to determine through - order point system; periodic review system; min-max system; time-phased order point; demand driven materials requirements planning

lot-size inventory

Inventory that results whenever quantity price discounts, shipping costs, setup costs, or similar considerations make it more economical to purchase in larger quantities than needed

Manufacturing Inventory turnover

Inventory turnover =COGS ÷ avg inventory at cost

Distribution Inventory

Inventory, usually spare parts and finished goods, located in the distribution system (e.g., in warehouses, in transit between warehouses and the consumer)

Costs for Inventory Management Decisions

Item, Carrying, Ordering, Stock out, capacity associated

JIT Drawbacks

JIT is limited to repetitive manufacturing JIT requires a stable production level JIT does not allow very much flexibility in the products produced JIT still requires work-in-process when used with Kanban so that there is "something to pull" Vendors need to be located nearby because the system depends on smaller, more frequent deliveries

Soga Sosha

Japanese ETC - handles most of imports and 1/3 exports for Japan

Employee Values

Job security, compensation, opportunity, safe working conditions

Government Values

Laws, regulation, overall impact

The levels of SCOR metrics are as follows:

Level 1 SCOR: These are the strategic level metrics. This level defines the scope and content of a given supply chain. Here is where the competitive basis of the organization is translated into high-level performance targets. Level 2 SCOR: These are the operational strategy metrics. Examples of operational strategies include make-to-stock and make-to-order. Level 3 SCOR: This level is used to configure the individual processes and enable execution of the strategy. It involves defining processes, inputs and outputs, process performance (including more detailed performance metrics), practices, technology capabilities, and staff skills. Level 4 (not in scope for SCOR): These are the industry-, company-, or location-specific processes and practices needed to achieve required performance. Metrics at this level will be defined by the organization.

Assets

Liabilities + Owner's Equity

Integrating the supply chain requires taking a series of steps when constructing the logistic network

Locate in the right countries, Develop an effective export import strategy, Select warehouse location, Select the right number of partners, Develop state of the art information system.

Hofstede's Cultural Dimensions: Long-term/short-term

Long-term: Traditions may change and adjust to the times. Short-term: Traditions must be honored and not changed.

Resource Requirements Planning

Longest planning range

Risk of 3PL

Loss of control, Potential for inefficiency

Risk of 4PL

Loss of direct control over the logistics process and all specific functions. Potential for less effective or more costly operations if the 4PL writes biased contracts with favorite supplier rather than seeking out the most efficient partners

5 Common Business Strategies

Low Cost, Best Cost, Broad Differentiation, Focused Differentiation, Focused Low Cost

Pipeline Carriers

Lowest per unit cost for transportation Limited in the variety of commodities they can carry. Most reliable form of transportation Little maintenance needed once the pipeline is running. Materials are transported in a liquid or gaseous state.

ATP for periods 2 - 6

MPS scheduled receipt - customer orders before next MPS scheduled receipt

Evolution of MRP software

MRP : It assume infinite capacity of workcenter. It result in impossible schedules Closed loop MRP MRP- II

time-phased order point (TPOP)

MRP-like time planning for independent demand items where gross requirements come from a forecast not from BOM explosion; can be used to plan distribution center inventories as well as service parts since MRP logic can plan items with dependent, independent, or both demand

forecast driven enterprise

MTS, push system, bullwhip effect

spend management

Managing the outflow of funds in order to buy goods and services. The term is intended to encompass such processes as outsourcing, procurement, e-procurement, and supply chain management. managing the purchase of goods and services in a supply chain, including outsourcing and procurement activities. It often deals with consolidating internal demand across business functions, divisions, or extended partners and/or consolidating suppliers to find areas for purchasing and transportation quantity rate discounts.

component returns

Manufacturer to Raw material supplier

Risk managers role

Map the entire supply chain and understand interdependencies Identify potential failure points along the supply chain Create risk awareness throughout the supply chain.

Inputs to MRP?

Master production schedule Inventory status Bill of material Planning factor

Hofstede's Cultural Dimensions: Masculine/feminine

Masculine: Overall emphasis is on work more than family, particularly in terms of time. Feminine: Balance between work and family life, especially in time

Key Manufacturing Planning Issues

Material flow from suppliers through distribution Customer lead time requirements Deployment and use of production resources Relationship with suppliers and customers

Components of a physical distribution system

Material handling, transportation, warehouses, distribution inventory, protective packaging, order processing & communication

Buffer Inventory

Materials purposely maintained at different points in the production process

Ownership

Merger/ acquisition

Normal time

Normal time = (average element time) x (Performance rating ÷ 100)

Available Time

Number of Machines x Number of Hours x Number of Days Each Week

Yield Formula

Number of Units/Work Center Yield

New Safety Stock

Old Safety Stock x √New Lead Time/Old Lead Time

ATP for Period 1

On Hand + MPS Scheduled receipt in Period 1 - customer orders due before next MPS scheduled receipt

interplant demand

One plant's need for a part or product that is produced by another plant or division within the same organization. Although it is not a customer order, it is usually handled by the master production scheduling system in a similar manner.

Dutch Auction

One seller and multiple buyers but finite quantities of the same item for sale. Price starts high and is lowered

Classic Auction

One seller and multiple buyers who bid up price for product until highest bidder gets the item

Ordering costs are all those cost that do not vary due to .......... but vary only by the ...........

Ordering costs are all those cost that do not vary due to quantities ordered but vary only by the frequency of ordering

Customer Service Level

Orders or Period - Stockout chances per Period/Order per Period

Annualized Contract

One year sets pricing, continuous material, future requirements.

data dictionary

One, a catalog of requirements and specifications for an information system, 2) A file that stores facts about the files and data bases for all systems that are currently being used or for the software involved

single-source suppliers

Only one vendor used by a firm for a particular good or service to minimize the variation in quality of production inputs.

Operations time per work order (LOAD)

Operations time per work order (LOAD) = (# of pieces) X (run time per piece) + setup

Average Cycle Inventory Formula

Order Quantity / 2

Supply chain responsiveness (SCOR) metric

Order fulfillment cycle time

Free Trade Zone

Organized around many seaports, helps with imports and only setback is countries miss out on imports fees

Production Activity Control (PAC)

PAC is a closed-loop system, monitor, and evaluate its progress and make adjustment as necessary Production Activity Control - Consisting of Planning, Scheduling, and Control of Resources PAC is the function of routing and dispatching the work to be accomplished through the production facility and of performing supplier control. PAC encompasses the principle, approaches, and techniques needed to schedule, control, measure, and evaluate the effectiveness of production operation. PAC objectives: 1. Execute the MPS and MRP 2. Optimize use of resources 3. Minimize work in process (WIP) 4. Maintain Customer Service

quick response program (QRP)

POS data is given to suppliers to synchronize their production and inventory activities with sales at retailer

demand driven enterprise

PTO, MTO, ATO, pull system

Supply chain reliability (SCOR) metric

Perfect order fulfillment

seasonal index formula

Period Average Demand/ Average Demand for All periods

Sender (Communication Process)

Person with ideas, concepts, requests or other information to convey

Min-max system

Places a replenishment order when the on-hand inventory falls below the predetermined minimum level. An order is placed to bring the inventory back up to the maximum inventory level.

Output of MRP?

Planned order Planned order release exception release

time fence

Policy or guideline established to note where various restrictions or changes in operating procedures take place

WMS with web-based interfaces or portals

Portals allow visibility and control because users can push data and inventory to supply chain members or they can pull the data and inventory to themselves. Such portals can be available from purchased software or as SaaS, which is a web-based subscription service. SaaS eliminates risk of failure, setup time, and upgrade costs.

Vertical Integration

Practice where a single entity controls the entire process of a product, from the raw materials to distribution

A poka-yoke device is what type of quality type cost?

Preventive Costs

Which quality type cost is always the overall lowest cost?

Preventive Costs

Actual Backlog

Previous Actual Backlog + Actual Input - Actual Output

Planned Backlog

Previous Planned Backlog + Planned Input - Planned Output

Ending Projected Available Balance Before Demand Time Fence

Prior Period PAB + Scheduled MPS Receipts - Customer Orders

Ending PAB After Demand Time Fence

Prior Period PAB + Scheduled MPS receipt - Greater of Customer Orders or FC

Projected Available Balance

Prior Projected Available + Scheduled Receipts + Planned Order receipts - Gross Requirements

What is the correct order of activities in the waste hierarchy, starting from the top of the pyramid?

Reduce, reuse, recycle, recover energy, responsible disposal in landfill

Cycle Time

Process Time/Operators In materials management, it refers to the length of time from when material enters a production facility until it exits.

Multisourcing

Procurement of a good or service from more than one independent supplier. Syn: multiple sourcing. Ant: single sourcing. See: dual sourcing

Chase strategy

Producing the amounts demanded at any given time

Laid Down Cost

Product cost + (Transportation cost per mile)(Distance)

Production Activity Control

Production Activity Control - Consisting of Planning, Scheduling, and Control of Resources PAC is the function of routing and dispatching the work to be accomplished through the production facility and of performing supplier control. PAC encompasses the principle, approaches, and techniques needed to schedule, control, measure, and evaluate the effectiveness of production operation. PAC objectives: 1. Execute the MPS and MRP 2. Optimize use of resources 3. Minimize work in process (WIP) 4. Maintain Customer Service

Introduction

Products are introduced with sales promotion and advertising.

Company Values

Profits, market share, image

Mix forecast

Projection of the proportion of products that will be sold within a given product family, or the proportion of options offered within a product line. Product and option mix as well as aggregate product families must be projected. even though the appropriate level of units is forecasted for a given product line, an inaccurate projection can create material shortages and inventory problems.

Extrinsic forecasting techniques

Projections based on external indicators that relate to the demand for a company's products

Qualitative Techniques

Projections based on judgement, intuition, and informed opinions

Export packing companies

Provide special packing for cargo that passes customs and travels far

ISO 73:2009

Provides the definitions of generic terms related to risk management. It aims to encourage a mutual and consistent understanding of, and a coherent approach to, the description of activities relating to the management of risk, and the use of uniform risk management terminology in processes and frameworks dealing with the management of risk. ISO 9001

data warehouse

QA logical collection of information - gathered from many different operational databases - that supports business analysis activities and decision-making tasks

seasonal index

Quarter Average/ Total Average average demand for a period divided by deseasonalized average demand for all periods

Trailer-on-Flatcar (TOFC) or Container-on-Flatcar (COFC)

Rail and motor carriers or rail and water carriers point-to-point pickup and delivery service

Rated Capacity

Rated Capacity (Standard Hours)= available time x utilization (decimal) x efficiency (decimal) Rated Capacity = Hours available X Efficiency X Utilization

Investor Values

Return on investment, quality communications

Income

Revenue - Expenses

Net Income Equation

Revenues - Cogs - MGMT costs

Throughput Formula

Revenues Received - Variable Costs/ Units of Time Period sales revenue - true variable costs

Risk Checklists

Risk Checklists include key points to be considered while identifying risks, common risks encountered in Scrum projects, or even categories of risks that should be addressed by the team. Since risk analysis has been conducted in the past at the organization and other organizations, a list of risks from other processes or projects can be reviewed to see what applies.

Three ways of expressing an organization's attitude toward risk

Risk appetite: Amount and type of risk that an organization is willing to pursue or retain. Risk tolerance: An organization's or stakeholder's readiness to accept a threat or potential negative outcome in order to achieve its objectives. Risk threshold is a cutoff point below which a risk will be accepted and above which some type of proactive response is required.

Logistical value proposition

Service and cost minimization

What are the top three factors, in order of importance, that influence most retail customers' decisions to purchase products?

Service, quality, price

Focused Low Cost Strategy

Serving a niche market with low cost products or services. Example: Mail order prescription service design to meet well-defined (niche market) buyer needs at a low cost; responsiveness can be the basis for competition well-defined niche market buyer, low cost, responsiveness, e.g. Harbor Freight

Focused Differentiation Strategy

Serving only one segment of the overall market and trying to be the most differentiated organization serving that segment. Example: Zara Clothing Company Develops unique strategies for targeted niche markets to meet unique buyer needs; niche marketing and innovation are important examples of this type of competitive basis unique strategies for target niche market, e.g. Starbucks, Apple, IKEA

ISO 9000 series

Set of international standards on quality management and quality assurance

ISO 14000 series

Set of quality-control procedure that extends the concept of the ISO 9000 series, identifying standards for environmental performance A collection of the best practices for managing an organization's impact on the environment.

Demand Prioritization

Setting time fences to keep operations running on time and on budget once they are committed rather than allowing disruptive last minute changes. Includes allocation of supply, which must be measured and managed so customer service levels are met

Operation Time per Work Order

Setup Time + Run Time (Quantity x Standard Time per Unit)

Benefits of Trade Blocs

Smaller companies can compete with bigger ones

Database Management System (DBMS)

Software design for organizing data and providing the mechanism for storing, maintaining, and retrieving that data on a physical medium. A DBMS separates data from the application programs and people who use the data and permits many different views of the data

Warehouse Management System (WMS)

Software packages that control the movement and storage of materials within a warehousing facility A computer application designed to manage and optimize workflows and the storage of goods within a warehouse. Often interfaces with automated data capture and enterprise resources planning systems

Stage 2: Semi-functional Enterprise

Sometimes called an efficient reactive supply chain, it has improved internal cooperation from an efficiency standpoint, but decision making is still in silos. It focuses on cost cutting and efficiency technologies nucleus improves effectiveness, efficiency, and quality; information flow improved but functional areas still in silos (one after another) reactive efficient Information flow improved, but not super collaborative, not most effective. At this stage, there are no partnerships with customers & suppliers This is a REACTIVE EFFICIENT supply chain Supports competitive positioning by serving as an efficient, low cost and integrated unit Focuses on efficiency and cost management on the total delivered cost of finished goods Places greater importance on connectivity technology and new equipment to automate functions to reduce labor costs and improve capacity and throughput Individual company undertakes initiatives to improve effectiveness, efficiency, and quality in specific functional areas Ex largely manual processes augmented with additional of basic equipment Inventory management may find ways to reduce levels of inventory within the company's own facilities Procurement take advantage of new purchasing strategies to obtain supplies / svs at lower price Traffic dept reduce transport costs by strategic selection of carriers/ routes While some/ all functions engage in improvement initiative, little to no overlap in decision making from one department to another

Speed of performance

Speed in terms of operational performance is the elapsed time from when a customer places an order until the product is delivered to the customer and is ready for use.

leveling

Spreading orders out in time or rescheduling operations so that the amount of work to be done in sequential time periods tends to be distributed evenly

Efficiency formula

Standard Hours produced/Hours Actually Worked

Price

Strategic decision based on competition, perceived value, and brand identity

Message (Communication Process)

Subject matter of the process, the translation of the sender's information into a systematic set of symbols or sounds

moving average forecast

Sum of Demand of Most Recent Periods/Number of Periods

Demonstrated Capacity (standard hours)

Sum of Standard Hours per Time Bucket/Number of Time Buckets

Proactive efficient supply chain

Supply chain recommends new raw material or product design to reduce complexity and costs; instigates changes to product designs for greater efficiencies; invests in integrated information systems to facilitate sharing of information across functions.

Reactive efficient supply chain

Supports competitive positioning by serving as an efficient, low cost, and integrated unit; focuses efficiency and cost management on the total delivered cost of finished goods; places greater importance on connectivity technology and new equipment to automate functions to reduce labor costs and improve capacity and throughput

content management applications

Supports the evolutionary life cycle of digital-based information and makes information dynamically updatable online; includes the ability to publish content to a repository and support access to digital-based content.

Fill Rate

Syn: Customer Service Ratio

TCO integration can be accomplished if

TCO is incorporated into control and continuous improvement tools such as a scorecard or dashboard

Community Values

Tax base, protection of environment, jobs

Intrinsic Techniques

Technique that uses historical data to forecast

Automatic Identification and Data Capture (AIDC)

Technologies that collect data about objects and then sends the data to a computer without human intervention. (EX: radio frequency wireless devices and terminals, bar code scanners, and smart cards.)

ATA Carnet

Temporary admission - can cross several boundaries duty and tax-free without customs inspection. Intended for samples, equipment, items for presentation at tradeshows etc.

Governance, Risk, and Compliance (GRC)

The GRC framework is like a three-legged stool: each leg must be in place for the organization to remain balanced: governance, risk management, and compliance. GRC risk focus categories include commercial and financial risk, IT security risk, and legal and external risks.

The Level 2 SCOR measure for cost of goods sold includes which of the following supply chain costs

The SCOR Level 2 metric for cost of goods sold includes all the costs related to the five SCOR supply chain processes (plan, source, make, deliver, and return).

Supply chain resilience

The ability of a supply chain to to anticipate, create plans to avoid or mitigate, and/or recover from disruptions to supply chain functionality

make-or-buy decision

The act of deciding whether to produce an item internally or buy it from an outside supplier. Factors to consider in the decision include costs, capacity availability, proprietary and/or specialized knowledge, quality considerations, skill requirements, volume, and timing.

cross-docking

The concept of packing products on the incoming shipments so they can easily sorted at intermediate warehouses or for outgoing shipments based on final destination. The items are carried from the incoming vehicle docking point to the outgoing vehicle docking point without being stored in inventory at the warehouse.

Carrying Costs

The cost of holding inventory, usually defined as a percentage of the dollar value of inventory per unit of time (generally one year) Average of starting and ending inventory x carrying costs/ unit

cost of quality

The costs associated with providing poor quality products or services

Risk Tolerance

The degree, amount, or volume of risk that an organization or individual will withstand.

Design

The development of a new product to meet customer expectations

forecast error

The difference between actual demand and what was forecast. Stated as an absolute value or as a percentage.

Electronic Document

The electronic representation of a document that can be printed.

Supplier Partnership

The establishment of a working relationship with a supplier organization whereby two organizations act as one. Syn: collaborative supply relationship.

inventory visibility

The extent to which inventory information is shared within a firm and with supply chain partners

Stage 3: Integrated Enterprise

The firm breaks down silo walls and brings functional areas together in processes such as Sales and Operations Planning with a focus on company wide processes rather than individual functions. silo walls come down; functional areas come together (S&OP); IT important proactive efficient Individual company begins to focus on company wide business processes rather than individual compartmentalized functions. This shift in SC strategy is associated w/ the late 80s early 90s (same time computers more powerful, reliable, affordable) Few key milestones for this phase: introduction of mfg and enterprise-wide software, increased cross-functional communication and training, centrally located and easily accessible databases and files, and periodic sales and operations planning meetings This is a PROACTIVE EFFICIENT supply chain: Recommends new raw materials or product designs to reduce complexity/cost Instigates changes to product designs for greater efficiencies Invests integrated information systems to facilitate the sharing of info across functions(Graphic)Email- communication, etc Variety of initiatives- MRP upgrade to MRP II, allows for cross functional communication between manufacturing and finance. ERP extends by adding modules for each functional area Product design- team effort At this point, the nucleus company may begin to take a step toward integration with the external members of the Supply chain by contracting with a logistics supplier

Risk Threshold

The level of risk exposure above which risks are addressed and below which risks may be accepted. Above which she sort of proactive response is required. is a cut-off point below which a risk will be accepted and above which some type of proactive response is required

Electronic Data Interchange (EDI)

The paperless (electronic) exchange of trading documents, such as purchase orders, shipment authorizations, advanced shipment notices, and invoices, using standardized document formats

Stage 4: Extended Enterprise

The firm integrates its internal network with the internal networks of selected supply chain partners to improve efficiency, product/service quality, or both. internal networks are integrated with internal networks of suppliers to gain efficiencies; intranets, e-commerce, peer-2-peer networks strategic driver Hallmark of this stage is the decision to extend at least one business process beyond the boundary of the individual corporation.(graphic) This is a STRATEGIC DRIVER supply chain: Demand generation and fulfillment are fully integrated Supply chain contributes to the development of the organization's overall strategy Forecasting, planning, and replenishment are fully integrated and visible Technological improvements, knowledge, and real-time information are shared w/ chain partners Unique to this stage Initial exploratory collaboration b/w channel master and one or several partners in the SC. if first collab succeeds, can lead to more fully networked relationship b/w first 2 partners. Technology enables extended enterprise to reach farther, add new partners, to move faster in response to market changes, and to operate with broader scope than in stage 3 Stg 4, advances in e-commerce The goal for a sc strategy is to ensure that the organization's sc is at stage 4 and to assess if there are gaps that are keeping it from fully realizing this level of connectivity and visibility.

Capacity Management

The function of establishing, measuring, monitoring, and adjusting limits or levels of capacity in order to execute all manufacturing schedules.

Medium (Communication Process)

The pathway through which the message is sent

Receiver (Communication Process)

The intended audience

network

The interconnection of computers, terminals and communication channels to facilitate file and peripheral device sharing as well as affective data communication

order point system

The inventory method that places an order for a lot whenever the quantity on hand is reduced to a predetermined level known as the order point. order point = demand during lead time + safety stock

Operating Exposure

The risk caused by fluctuating exchange rates that affect production, warehousing, purchasing and selling price.

Placement

The means to get a product to the customer, can include contact channel strategy

Stage 1: Multiple Dysfunction

The multiple dysfunction or reactive supply chain only has transactional external links, is seen as a cost center, and has little technological connectivity. nucleus firm lacks goals & definitions; forecasting is guesswork, over inventory, only external links are transactional; no plan reactive possible for nucleus company in lateral SC to lack any disciplined mgmt for internal and external chains. REACTIVE supply chain- fulfills demand w/o much concern to cost In this stage...Internal activities undertaken impulsively rather than to plan Mgmt provides only most general sense of mission Forecasting tends to be mostly guess work (inflated sometimes mkting optimism) Products designed without advice of other areas like marketing/ mfg Warehouses sited near each mkt, over inventoried, laborers w/ little training trucks/ trains unloaded when arrive w/o warning Payment flows (but collection often poorly executed) and material flows, but info exchange tends to be tied mostly to giving orders internally MRP takes place at basic level, involving BOM, master schedule, current on hand/ on-order data

Inventory Turnover

The number of times that an inventory cycles, or "turns over," during the year.A frequently used method to [this] is to divide annual cost of sales by the average inventory level.EX: The annual cost of sales is $21 million divided by an average inventory of $3 million means thats inventory turned over seven times. Syn: inventory turns, turnover. See: inventory velocity. =sales ÷ avg inventory

Supplier's/Customer's/Product's risk rating

The numerical valuation for hazards related to the supplier, client or goods created. Normalized and used for comparison purposes.

Sole-Source Supplier

The only supplier capable of meeting (usually technical) requirements for an item. See: single-source supplier

Qualities of a risk management plan

The plan says how risks will be identified, grouped, and assessed. Contains a budget for a given period of time or a project duration. It should include a reserve fund for unknown risks. When a formal plan is generated, it can be used as a tool to get buy-in and sign off/funding for the plan. it will specify who will be responsible for implementing the plan, who is accountable for success, and who has authority to approve funding for specific risk responses or release funds from a reserve fund.

organizational project assets (OPAs)

The policies, procedures, processes, plans, and organizational knowledge base of the organization.

Demand Shaping

The practice of using the 4 Ps (product, pricing, placement, promotion) and other market variables to influence the demand of a product or service so that the demand better matches the available supply.

Capable-To-Promise

The process of committing orders against available capacity as well as inventory. This process may involve multiple manufacturing or distribution sites. Used to determine when a new or unscheduled customer order can be delivered. Employs a finite-scheduling module of the manufacturing system to determine when an item can be delivered. It includes any constraints that might restrict the production, such as availability of resources, lead times for raw materials or purchased parts, and requirements for lower-level components or subassemblies. The resulting delivery date takes into consideration production capacity, the current manufacturing environment, and future order commitments. The objective is to reduce the time spent by production planners in expediting orders and adjusting plans because of inaccurate delivery-date promises.

Rough-cut capacity planning (RCCP)

The process of converting the master production schedule into requirements for key resources, often including labor, machinery, warehouse space, suppliers' capabilities, and, in some cases, money. Determines whether resources will be available to meet the demand for capacity created by MPS. RCCP addresses the need for capacity at the end item level in terms of key resources...such as labor, machinery, warehouse space and supplier capabilities, and whether adequate resources will be available, using weekly time buckets. Comparison to available or demonstrated capacity is usually done for each key resource. This comparison assists the master scheduler in establishing a feasible master production schedule. Three approaches to performing RCCP are the bill of labor (resources, capacity) approach, the capacity planning using overall factors approach, and the resource profile approach. See: bill of resources, capacity planning, capacity planning using overall factors, product load profile, resource profile checks whether critical resources are available to support the preliminary MPS; critical resources include "bottleneck" operations, labor, and critical materials convert the master production schedule into requirements for the key resources (labor, machinery, warehouse space, money, etc) and check for constraints

Product Life Cycle Management (PLM)

The process of facilitating the development, use, and support of products that customers want and need. Helps professionals envision the creation and preservation of product information, both to the customer and along the reverse-logistics portions of the supply chain

Sourcing

The process of identifying a company that provides a needed good or service

Maturity

The product is well-established in the marketplace. Competing products exist

Tactical Buying

The purchasing process focused on transactions and nonstrategic material buying. It is closely aligned with the "ordering" portion of executing the purchasing transaction process. Characteristics include stable, limited fluctuations, defined standard specifications, noncritical to production, no delivery issues, and high reliability concerning quality-standard material with very little concern for rejects. See: strategic sourcing

tactical buying

The purchasing process focused on transactions and nonstrategic material buying. It is closely aligned with the "ordering" portion of executing the purchasing transaction process. The characteristics include stable, limited fluctuations, defined standard specifications, noncritical to production, no delivery issues, and high reliability concerning quality-standard material with very little concern for rejects.

planned order receipts

The quantity planned to be received at a future date which have not been released are referred to as

Acknowledgment (Communication Process)

The receiver acknowledges the message in a medium to signal that it was received

Return on Supply Chain Fixed Assets

The return an organization receives on its invested capital in supply chain fixed assets. This includes the fixed assets used to Plan, Source, Make, Deliver and Return.

Risk definition

The scope and time frame of each risk must be well understood before organizations can decide what would be an appropriate response. The APICS SCC notes that each identified risk must also have a time dimension or a specific time horizon (e.g., day, month, year) and a specific perspective or view that defines the scope (e.g., boundaries, what is not included, etc.).

organizational strategy

The strategy of an enterprise identifies how a company will function in its environment. The strategy specifies how to satisfy customers, how to grow the business, how to compete in its environment, how to manage the organization and develop capabilities within the business, and how to achieve financial objectives

Overall Value at Risk (VaR)

The sum of the probability of risk events times the monetary impact of the events which can impact any core supply chain functions (e.g. Plan, Source, Make, Deliver and Return) or key dependencies.

Marketing Research

The systematic gathering, recording, and analyzing of data about problems relating to the marketing of goods and services. Such research may be undertaken by impartial agencies or by business firms or their agents. Marketing research includes several types: (1) market analysis (product potential is a type) is the study of the size, location, nature, and characteristics of markets; (2) sales analysis (or research) is the systematic study and comparison of sales (or consumption) data; (3) consumer research (motivation research is a type) is concerned with the discovery and analysis of consumer attitudes, reactions, and preferences. Syn: Market research.

Market research

The systematic gathering, recording, and analyzing of data about problems relating to the marketing of goods and services. Such research may be undertaken by impartial agencies or by business firms or their agents. it includes several types: (1) market analysis (product potential is a type) is the study of the size, location, nature, and characteristics of markets, (2) sales analysis (or research) is the systematic study and comparison of sales (or consumption) data (3)consumer research (motivation research is a type) is concerned with the discovery and analysis of consumer attitudes, reactions, and preferences.

Supply Chain Risk Management

The systematic identification, assessment, and quantification of potential supply chain disruptions with the objective to control exposure to risk or reduce its negative impact on supply chain performance

Electronic Commerce (E-Commerce)

The use of computer and telecommunication technologies to conduct business via electronic transfer of data and documents.

project management

The use of skills and knowledge in coordinating the organizing, planning, scheduling, directing, controlling, monitoring, and evaluating of prescribed activities to ensure that the stated objectives of a project, manufactured good, or service are achieved

accounts receivable

The value of goods shipped or services rendered to a customer on which payment has not yet been received.

Consolidation and/or Break-Bulk

This involves several orders being consolidated at a manufacturing plant or central warehouse and sent to a breakbulk warehouse where they are broken down into individual orders and distributed. Powerpoint Definition: Shipments are broken down and items combined into specific customer orders.

intermodal transport

This mode of transport includes package delivery and container services, and integrates the different modes of transportation in various combinations to take advantage of their specific capabilities

Service Level

Times must not be stockout/Orders per year

reasons for lateral supply chain

To achieve economies of scale and scope To improve business focus and expertise To leverage communication and production competencies

Purpose of Customs

To confirm that the goods actually have the value stated. Items have all the correct markings. To weed out any forbidden items. To enforce quotas

Purchased Items Cost consist of 3 things (landed Cost)

Transportation Custom Duties Insurance

Common Carriers

Transportation available to the public that does not provide special treatment to any one party and is regulated as to the rates charged, the liability assumed, and the service provided

Exempt Carriers

Transportation not subject to economic regulation of their rates and terms of service. They are responsible for compliance with state laws governing licensing and safety. The market determines their rates, services, and availability

ANSI Z10 - 2012

US Safety Management A voluntary consensus standard on occupational health and safety management systems. It uses recognized management system principles in order to be compatible with quality and environmental management system standards such as the ISO 9000 and ISO 14000 series.

Demand During Lead Time

Units per Period x Lead Time

Supply chain agility (SCOR) metrics

Upside supply chain flexibility, upside supply chain adaptability, downside supply chain adaptability, overall VAR

distributor integration network

Using modern information and communication systems, distributor integration relationships allow distributors to share access to products and services.

Utilizations

Utilization = (Hours actually worked) ÷ (hours of available time) x 100%

Spread

Variability of an action. Often measured by the range or standard deviation of a particular dimension.

Feedback (Communication Process)

Verbal or non-verbal reply or reaction to the message

Horizontal and Vertical Dependency

Vertical - dependency of a component on its parent Horizontal - when components depend on each other

Differentiate between vertical and horizontal integration

Vertical Integration refers to the practice of bringing the supply chain inside one organization (Ford) primary benefit is control. Lateral Integration Outsourcing various activities, it loses control of these aspects of the supply chain and will deal separately with members of the chain as suppliers or customers. Each of them will focus on their core comps. - To achieve economies of scale and scope -To improve business focus and expertise (pricing, quality or both) - To leverage comm and production competencies.

TMS functions

Visibility, centralize control over shipment planning, integration between transportation planning an order for filament, execution control and automation

Waste exchange

Waste exchange

Questions to ask before outsourcing

What are our current cost ? What customer skills does the contractor possess? What are the contractor's special strengths ? Will the contractor hire the most qualified partners

Fair Market Value

What the market will currently pay

Tax Advantage Strategies

When rethinking procurement strategy, multinational corporations may decide to set up a central, global procurement and sourcing center. In this way, the supply chain benefits from various efficiencies created by consolidation of staff and equipment.

order processing

the series of activities that occurs between the time an order comes into the organization and the time a product goes out the door

Ship Agent

Works for carrier (not independent), helps exporters with details of arranging international shipment

EU Low Emission Zones (LEZs)

Zones where high-polluting trucks are prohibited, vehicle emissions are classified, driver must know emissions standard for their vehicle

statement of cash flows

a financial statement that shows the flow of cash and its timing into and out of an organization/project; purpose is to show lenders/investors that debt can be paid

random variation

a fluctuation in data that is caused by uncertain or random occurrences

intrinsic forecast

a focus based on internal factors such as and average of past sales

Histogram

a bar graph that displays the frequency distribution of measurement data.

Pareto chart

a bar graph that displays the results of a Pareto analysis. It may or may not display the 80-20 variation, but it does show a distinct variation from the few compared to the many"

Reverse logisitics

a complete supply chain dedicated to the reverse flow of products and materials for the purpose of returns, repair, remanufacture, and / or recycling

Aggregate Demand-Aggregate Supply (AD-AS) model

a downward-sloping line. It shows that as price decreases the total real GDP increases. This happens in part because there is more real wealth and thus more consumption spending and in part because as more money is circulating, interest rates fall, which increases capital spending and more goods are demanded in the aggregate.

Balanced Scorecard

a list of financial and operational measurements used to evaluate organizational or supply chain performance. Dimensions of the balanced scorecard might include customer, business process, financial, and innovation and learning perspectives. It formally connects overall objectives, strategies, and measurements. Each dimension has goals and measurements. Customer perspective Business process perspective Innovation and learning perspective Financial perspective

In a 4PL arrangement

a logistics specialist take over the entire logistics operation and subcontracts some or all specific functions

trading partner agreement

a long-term contract between partners that should be mutually beneficial. It may be customized, should precede pilot and full implementation, and should always be measured for improvement.

fixed order quantity

a lot sizing technique in MRP or inventory management that will always cause planned or actual orders be generated for a predefined fixed-order-quantity, or multiples thereof, if net requirements for the period exceed the fixed order quantity.

lot-for-lot ordering technique

a lot sizing technique that generates planned orders in quantity is equal to the net requirements in each period.

SWOT analysis

a planning tool used to analyze an organization's strengths, weaknesses, opportunities, and threats an assessment of a firm's current state divided into four categories—strengths, weaknesses, opportunities, and threats—that are due to internal and external factors. It may include some items that are helpful and others that are detrimental to the firm.

economy of scale

a proportionate saving in costs gained by an increased level of production.

Check sheet

a simple and easy-to-use tool for summarizing a tally count of event occurrences.

Mean absolute deviation (MAD)

acronym for mean absolute deviation. the average of absolute values of the deviations of observed values from some expected value. it can be calculated based on observation and the arithmetic mean of those observations. an alternative is to calculate absolute deviations of actual sales data - forecast data. these data can be averaged in the usual arithmetic way or with exponential smoothing. sum of absolute errors/number of periods (if incorrect in negative direction, still count as positive)

Random-location storage

a storage technique in which parts are placed in any space that is empty when they arrive at the storeroom

supply chain strategy

a strategy for how the supply chain will function in its environment to meet the goals of the organization's business and organizational strategies.

Developing a supply plan is the strategic design of

a supply network based on: - total cost of ownership - make-versus-buy decisions- desired levels of buyer -supplier relationships

By using a central warehouse to hold parts common to many products

a supply network can reduce storage costs and the risks of stock outs that would experienced in smaller, decentralized warehouses

Scatter chart

a tool for showing the relationship of two variables in terms of whether they are interdependent

Cost-based contract

a type of purchasing contract in which the price of a good or service is tied to the cost of some key input(s) or other economic factors, such as interest rates

Export Management Company (EMC)

acts as a long term consulting partner and smooths the way through foreign customs and politics, can provide special knowledge about their particular geographic area, does not buy cargo

Tracking Signal Formula

algebraic sum of forecast deviations/MAD

key processes supply chain managers need to develop SCM strategy

aligning with the business strategy; creating the SCM strategy

TCO Measures the net effect of

all cost increases and cost reduction

subcontracting

always producing at the level of minimum demand and meeting any additional demand through subcontracting. Lowers production costs but high purchase costs

Joint venture (JV)

an agreement under which two or more partners own or control a business

vendor managed inventory

an approach for improving supply chain efficiency in which the manufacturer is responsible for maintaining the retailer's inventory levels in each of its stores

qualitative forecasting techniques

an approach to forecasting that is based on intuitive or judgement evaluation. it is used generally when data are scarce, not available or no longer relevant.

quantitative forecasting techniques

an approach to forecasting where historical demand data are used to project future demand

Supply Chain Stages

an assessment of one's maturity that may reveal that the organization still needs to advance further or it may have slipped backward

Supplier Certification

an assessment that verifies effective procedures related to the buyer's requirements Certification procedures verifying that a supplier operates, maintains, improves, and documents effective procedures that relate to the customer's requirements. Such requirements include cost, quality, delivery, flexibility, maintenance, safety, and ISO quality and environmental standards.

Lateral integration

an organization specializes in its core competencies and relies on other specialists for the rest of the supply chain

predictive churn

analytical model to identify vulnerable customers

Inventory turns

annual cost of goods sold / average inventory in dollars = (Average inventory level) ÷ (Annual cost of goods sold)

number of orders

annual demand / lot size

Total Inventory cost (EOQ)

annual ordering cost + annual carrying cost

average daily usage

annuals sales / 365

Distribution planning

applies to finished goods inventory reports distribution inventory, forecasts and customer orders acts on disaggregated demand data from ERP systems plans logistics resource requirements for S&OP plans distribution inventory and logistics requirements for master scheduling; end item level plans replenishment order releases to factory supply

Contract Carriers

are for hire. can provide services on one-time basis or on a counting basis.

owners equity

assets - liabilities

extended enterprise 5 descriptors

at least one business process extended, collaborate with suppliers and customers, one demand forecast, one inventory database, fully web enabled

Trading Partner Agreement

automate negotiating processes and enforce contracts between participating businesses

performance alerts

automated alerts on areas of concern related to supplier operational performance

Jidoka

automation with a human touch

tact time

avail. production time ÷ orders/demand

Rated Capacity Formula

available time x utilization x efficiency

Available time

available time= number of machines (or workers) x hours per day x days per week

average annual inventory

average annual inventory = order qty ÷ 2 + safety stock

Average Demand

average demand = (total expected demand) ÷ (# of production days)

Infinite scheduling

calculation of the capacity required at work centers in the time periods required regardless of the capacity available to perform this work

vision system

can read text printed on a box. The other systems require some form of tag or encoded symbol to work.

reuse

can reduce purchasing and transportation costs

demand time fence / frozen zone

capacity and materials are committed to specific orders. orders are therefore frozen inside the fence

planning time fence / slushy zone

capacity and materials are not as strongly committed as those inside frozen zone. there is a room to negotiate in slushy zone

scorecards

capture quantitative and qualitative data and provide historical, plan, and predictive views of supplier performance; should be sent on a regular basis; deficiencies shold be addressed by supplier thru written corrective action plan

S&OP forecasting

captures overall market demand trends at the product family level

Truck-load (TL)

carriers are used when you have enough to fill the truck, or you don't want other suppliers cargo on your truck (security, faster delivery)

Less-than-truckload (LTL)

carriers move small shipments, when you don't have enough to fill a truck. Stop at depots and transfer locations to match load to the final location.

General freight carriers

carry the majority of goods shipped. Includes common carriers.

risk diagramming techniques

cause and effect diagrams, system or process flow charts, influence diagrams. Flowcharts to show a process. Flowcharts or other relationship diagrams can be used to show a process. Analysis of such charts can reveal weaknesses. Also, various tools from the quality discipline such as a cause-and-effect or Ishikawa diagram can be leveraged for risk analysis.

COSO ERM

committee of sponsoring organizations of the treadway organization developed enterprise risk management

Private Carriers

company must own or lease vehicles for its use, manage their operation, and must not be primarily in the transportation business

Control chart analysis (process control chart)

compares performance data with statistical control limits.

B2B web services

consist of XML and other XML-based standards that wrap electronic messages in a shell for universal message receipt, advertise the existence of web services, and specify how requests and responses must be formatted

Customer Order Fulfillment

consists of a set of actions that result in the production and/or shipping of goods to customers.

Production leveling

continually producing an amount equal to the average demand. Smooth level of operation, high carrying costs or possible shortages

Vertical Integration 4 benefits

control all functions, no dealing with competitors, enhanced visibility, same ownership

inventory turnover formula

cost of goods sold/average inventory

Modular design

creates mix-and-match components that can be combined into different products

integral design

creates one product from a unique set of components

MPC balances conflicting objectives of

customer service levels inventory investment cost of production

benefits of segmentation

customers expect market to come to them instead of them going to market; lifetime customer relationships are more likely when customers feel a company is meeting their unique needs; CRM business have more opportunity to learn about customers and use that to make them lifetime customers and increase profit

C-TPAT

customs trade partnership against terrorism

conformation rates

data from each inspection or test is documented in system

Creating supply chain strategy

define cust svc objectives select revenue model, sales channel mapping SC objectives to business objectives align in-house vs contracted SC operating models and cost structure to organizational core capabilities and strategy document the strategy present & market strategy for exec and SC approval compare strategy to capacity, resilience, sustainability, and adaptability create action plans to resolve misalignments

Hybrid strategy

demand is matched to some extent, production is partially smoothed and in the peak period some subcontracting takes place (one of many combinations)

cycle stock

depletes gradually as customer orders are received and is replenished cyclically when supplier orders are received.

Process mapping

describes a process in depth and then analyzes the process to find the root causes of inferior performance

supply chain management

design, planning and execution of supply chain activities to create net value, and synchronize supply and demand

environmentally sensitive engineering

designing with consideration of how product or its packaging will ultimately be disposed

6 steps to network optimization

determine goals, create teams, organize SC processes/IT mission, design in change management, create conceptual model, establish technical infrastructure

gri reporting framework

is the framework that sets out the principles and performance indicators organizations can use to measure and Report their human rights labor environment and anti-corruption practices and outcomes

Resource Planning

determines whether resources will be available to meet the demand for capacity created by the sales and operations plan and production plan in the medium to long term. Resource planning involves determining the need for resources with long-lead time to meet monthly, quarterly, or annual product priorities. It deals with capacity at the product family level and determines the need for long lead-time resources by the average product within a product family establishes, measures and adjusts limits of key resources required by product families in the long term: equipment, facilities, labor, materials, and engineering.

inventory control

determining order quantities, inventory ordering system, calculation of safety stock and safety lead time, organization of storage locations, methods of tracking inventory, and methods of assessing inventory accuracy.

Value proposition

differentiate the customer experience from rivals increase customer retention provide insight into impending customer orders

distributor integration (DI)

distributors are integrated using modern IT so the expertise and inventory located at one distributor is available to others; integrated for better inventory control and better customer service; distributors gain flexibility without having to carry excess stock; challenges to creating a DI include distributors doubting benefits of participation and some responsibilities may shift from some distributors to chosen few

customer segmentation

divides a market into categories that share similar attributes such as age, location, gender, habits, and so on

break-bulk

dividing truckloads of homogenous items into smaller, more appropriate quantities for use

Nodes

each of these nodes represents an echelon in the supply chain network

lateral integration 2 benefits

economies of scope (focus on core competencies), economies of scale

Efficiency

efficiency percent = standard hours of work produced / hours actually worked * 100 Efficiency = actual output ÷ effective capacity

Order Management

encompasses the receiving, entering, and processing of orders from internal and external sources: customers, distribution centers and interplant operations.

trade credit

encourages sales / buying in greater quantities because payment is not due right away

Green SCOR

environmental model establishing the following principles: reliability, responsiveness, flexibility, costs, and asset management

integrated enterprise 5 descriptors

external integration, introduce ERP software, increased cross-functional communication, centralized databases, S&OP

Causes of supply and demand imbalances

failure to understand demand long order lead times inability to respond to customer order levels and changes

EEI (Electronic Export Information)

filed for exports valued $2500+

communicating demand (high variable capacity strategy)

flexible enough to increase our reduce capacity spontaneously as demand changes

forecast accuracy

forecast accuracy equals to 1 - forecast error as a percentage

demand forecasting

forecasting a demand for a particular good, component or service

Distribution Planning forecasts

forecasts are for both the product families and end item or SKU's at distributed inventory stocking locations.

Master Scheduling forecasts

forecasts are for the product mix at the individual end-item level as required by the MPS

Master schedule

forms the link between production planning and what manufacturing will actually build

barge

freight

ISO 31010

guidance on the selection and application of techniques for assessing risk in a wide range of situations (supports ISO 31000) risk assessment techniques

Strategic importance customers

have considerable leverage with respect to their suppliers overall profitability.

Manufacturing & Service Objectives - Supplier Perspective

high levels of customer service efficient use of resources low inventory investment

segmentation by customer value

historically, all customers were treated the same, same level of service and charged the same fees for products; today companies can treat customers differently depending on their contributions to the bottom line; greater customer value, better treatment the customer gets; ironically, a small % of customers (20% or less) provide the most significant % of revenue and profit; must develop CRM strategies that (1) define 'valuable' customers - dominance, volume, profit?; (2) deliver timely, detailed info that will help companies identify most valued customers - most commonly used feature or service, most rapid form of shipping?; (3) measure impact - measuring segments in CRM?

collaborative transportation mgmt (CTM)

holistic process that brings together SC trading partners and service providers to drive inefficiencies out of the transport planning and execution process; adds value by identifying transportation inefficiencies in most order fulfillment processes; helps reduce wait time carriers experience before loading and unloading, optimizes weight and volume capacity of transport resources, and decreased deadhead miles by coordinating transportation assets within transportation network to ensure drivers have return loads; designed for inbound and outbound flows

strategy of an enterprise (organization) identifies

how a company will function in its environment. It also specifies how to satisfy customers, how to grow the business, how to compete in its environment, how to manage the organization and develop capabilities within the business, and how to achieve financial objectives.

strategic plan

how to marshal and determine actions to support the mission, goals, and objectives of an organization. It generally includes an organization's explicit mission, goals, and objectives and the specific actions needed to achieve those goals and objectives.

risk of stock outs rises

if buying exceeds expectations

Landed cost

includes the product cost plus the costs of logistics, such as warehousing, transportation, and handling fees

Supply chain event management (SCEM)

increases real-time information sharing among supply chain partners focusing on reducing response time to unexpected events A term associated with supply chain management software applications, where users have the ability to flag the occurrence of certain supply chain events to trigger some form of alert or action within another supply chain application. [It] can be deposited;oyed to monitor supply chain business processes such as planning, transportation, logistics, or procurement. Can also be applied to supply chain business intelligence applications to alert users to any unplanned or unexpected event.

semi-functional enterprise 3 descriptors

info flow improved, functional areas defined, no partnerships, efficient integrated unit

S&OP and Resource Planning

intermediate to long term. connects business planning to tactical planning in MPR balances supply and demand at the product family level plans at the volume level, not the individual product mix level involves sales, manufacturing, logistics, finance and others.

ISO 26000:2010

international guidelines for organizational social responsibility ISO 26000 is the international standard developed to help organizations effectively assess and address those social responsibilities that are relevant and significant to their mission and vision; operations and processes; customers, employees, communities, and other stakeholders; and environmental impact.

4 stages of product life cycle

introduction, growth, maturity, decline

Logistics add value to the supply chain if

inventory is strategically positioned to achieve sales

days of supply

inventory on hand / average daily usage Inventory-on-hand metric converted from units to how long the units will last. For example, if there are 2,000 units on hand and the company is using 200 per day, then there are10 days of supply. As a financial measure it is the value of all inventory in the supply chain/ the average daily cost of goods sold rate.

environmentally responsible manufacturing

is a collection of manufacturing activities that includes design of the product, facility, manufacturing processes, Logistics, and Supply relationships that reduce or eliminate environmental waste through Innovation and improvements

environmentally responsible business

is a firm that operates in such a way as to minimize delete tarius impact to society

Global reporting initiative

is a network based organization that has Pioneer the development of the world's most widely used sustainability reporting framework

a risk register

is a useful summary report on qualitative, quantitative, and risk response planning. The register contains all identified risks and associative details

Data Integrity

is an assurance the data accurately reflects the environment is representing expected monetary value equals probability times impact

risk mitigation

is applying preventive measures to reduce the probability indoor impact of identified risks

risk avoidance

is changing a plan to eliminate a risk or to protect plan objectives from its impact

Reducing the use of resources in the first place

is considered the most responsible option in the reverse logistics hierarchy

risk acceptance

is decision to take no action to deal with a risk or an inability to format a plan to deal with the risk

End of life management

is planning for the phase-out of one product in the phase-in of a new product to avoid both the excessive inventory of an out-of-stock situation with the old product before the replacement product is available

risk transfer

is purchasing insurance or contractually transfer a risk to an Outsourcing partner this is to share the risk

Innovation

plays a major role in keeping supply chains flexible enough to respond to rapid changes in demand and to the more gradual evolution of markets and technologies. Innovation is the key to strategic flexibility—not just innovation in product design but in organizational design and supply chain processes as well.

spot-stocking

positioning of inventory for seasonal or promotional demand

currency hedging

practice of insuring against potential losses that result from adverse changes in exchange rates

supplier co-location

practice of locating one or more suppliers within a single location; primary benefit is highly integrated operations and supplier can become integral part of business; allows problems to be addressed quickly; reduced concept-to-customer time

Production Activity Control (PAC) aka Execution and Control (ECO) objectives

prioritizing and sequencing work to be performed; executing plans; reporting activity results and performance reporting feedback

Customer Values

product/service quality, affordability, availability

Production planning

production must be able to meet the demand of the marketplace; finding the most productive way of doing so if the responsibility of production planning

total cost concept

the idea that all logistical decisions that provide equal service levels should favor the option that minimizes the total of all logistical cost and not be used on cost reductions in one area alone, such as lower transportation charges Total cost = (Fixed cost) + (Variable cost) x (total volume)

Discounted Payback Period

the length of time required for an investment's discounted cash flows to equal its initial cost

supply chain risk

the likelihood of a disruption that would impact the ability of a company to continuously supply products or services

cumulative lead time

the longest plan length of time to accomplish the activity in question. it is found by reviewing the lead time for each bill of material part below the item; whichever path adds up to the greatest number define cumulative lead time

Define shortage cost

the lost profit from not being able to make a sale, plus any loss of customer goodwill

The more partners there are in the chain

the more difficult and expensive the chain is to manage

cash flow

the net flow of dollars into or out of the proposed project/organization-less inventory results in higher net cash flow

Corporate Social Responsibility (CSR)

the notion that corporations are expected to go above and beyond following the law and making a profit

churn

the number of consumers who stop using a product or service, divided by the average number of consumers of that product or service

projected available balance (pab)

the on hand inventory balance minus allocation reservations backorders and quantities held for quality problems. often called beginning available balance or net inventory

economic order quantity (EOQ)

the order size that gives you the lowest total cost for carrying and ordering cost. SQRT ((2AS)/ic) a = annual unit ss = order cost i = inventory carrying cost rate c = item cost

Target costing

the process of designing a product to meet a specific cost objective. It involves setting the planned selling price and subtracting the desired profit as well as marketing and distribution costs, thus leaving the required manufacturing or target cost.

Risk Identification

the process of determining and documenting the potential risks that could occur on a project. Causes, triggering events, impact, effect.

strategic planning

the process of developing a strategic plan

tracking signal

the ratio of cumulative forecast error to the corresponding value of MAD, used to monitor a forecast

Currency Exchange Risk

the risk caused by the varying exchange rates between the currencies of two countries