Global Supply Chain Management
Define Fixed & Variable Costs and Discuss Pros & Cons with RAIL transportation
High FC & Low VC Pro: speed, dependability, capability
Define Fixed & Variable Costs and Discuss Pros & Cons with PIPELINE transportation
High FC & Low VC Pros: Dependability Cons: Limited Situations
Push philosophy
Materials are produced according to a planned forecast and moved to the next stage of the supply chain Relates to MTS
Vertical Integration
Ownership, or at least control, of upstream end of suppliers and downstream customers
Pros and Cons with Offshoring
+ Company still in control/own/manages process + lower wages, taxes & regulations - lack of control, monitoring, transportation costs/risks
Pros and Cons with Outsourcing
+ Cost Saving + Flexibility + Strategic Reasons + Lack of technology - Finding the right outsourcer - Resource demanding to monitor
Criteria for Selecting Outcourser
- Price/Cost Reduction - Reliability - Delivery lead time - Financial capability - Performance & trade record - Responsiveness - Record of CSR - Senior Management Attitude
Supply Chain View's 2 Dimensions of Value
1. Cost Savings 2. Service Enhancement
What are 4 causes of the Bullwhip Effect? Define and Describe
1. Non-Zero Lead times & Demand Signal Processing (time lag & lack of visibility of orders cause inaccurate upstream decisions) 2. Order Batching or Burbridge Effect (impacts of ordering in batches. Benefits Supply but not Demand. JIT overcomes this problem) 3. Price Variation (E.g. "3 for 2": generates sales but causes peaks & troughs in demand -> amplified upstream) 4. Rationing & Shortage Gaming (Over-ordering due to stock shortages; Houilhan effect)
Six Supply Chain Evolution Factors
1. Reduced Transport Intensity 2. Falling Product Prices 3. De-regulation of Transport 4. Productivity Improvements 5. Emphasis on Inventory Reduction 6. Changes in Company Structure
Failures of Outsourcing Relationships
50% fail - Late Delivery - Quality Consistency - Cost Realisations - Consistency of quality - Confidentiality
Consignment
A shipment of freight which is passed on from a manufacturer or other source
Name a few Transport Security Technologies
Access Control Biometrics; ID cards & fingerprint or retina scans Detection Systems; CCTV closed circuit television, Motion Detectors, X-ray & Gamma-ray
Demand Amplification
Amplification of demand Upstream in the supply chain; where Downstream activities create fluctuations in demand causing suppliers to overproduce
AEO
Authorised Economic Operator (an EU voluntary security initiative; designed to reflect US C-TPAT)
Horizontal Collaboration
Collaboration between competitors and other supply chain actors. More uncommon than vertical.
Virtual Organisations
Companies which outsource most major functions
Geocentricity
Company acts independent of geography
Polycentricity
Company adopts host country perspective
Cosignor
Company who SENDS the consignment
CM
Contract Manufacturers (First tier suppliers who manufacture products for OEMs
Define CC. When were they added to the SC?
Consolidation Centers. Added in 1990s Delivers from suppliers to DCs in full truckloads
Define the levels in a "top-down" perspective on SC Strategy
Corporate Strategy: financial & growth targets Business Unit Strategy: targets & perf for specific products/markets Functional Strategy: Specific departments of a firm
What were the three main developments of manufacturing?
Craft Production (low output vol, high customisation) Mass Production (high output vol, low customisation) Mass Customisation (high output & customisation)
Order Qualifiers
Criteria/performance expectations that a company must meet for a customer to even consider it as a possible supplier
Downstream
Customer end of supply chain
C-TPAT
Customs Trade Partnership Against Terrorism (Vol. Government-business to improve overall Int SC. States that shippers must send detailed info about the cargo & its origin 24hrs before arrival)
What are other names for the Postponement approach?
Delayed Product Configuration Delayed Product Differentiation Late Stage Customisation
Define the "Principle of Postponement" and it's pros
Delaying the customisation process as far Downstream as possible. Creates flexibility to cope with demand fluctuations and economies of scale
Agile Supply Chain
Demand-pull chain designed to cope with volatile demand. Structured to allow maximum flexibility & often incorporates postponed production. Manages surge demand.
DFM
Design for Manufacture (designing products that can be assembled efficiently and cheaply)
Bullwhip Effect
Distortion of orders along supply chain. Where small fluctuations in end consumer demand result in amplification of demand upstream
Define DC. When did they emerge?
Distribution Centers. Emerged 1970s Efficiently deal with cargo. Large warehouse where various suppliers store products
Define Efficient Supply Chain and Responsive Supply Chain. Who suggested these two different types of SCs?
Efficient: for Functional Products Responsive: for Innovative Products Suggested by Professor Marshall Fischer.
EPOS data
Electronic Point of Sale (electronic available data that captures sales to customers)
ESI
Environmental Separation Index (measures difference b/w working environments of outsourcer and outsourcee companies)
What are the main problems for SC with the Bullwhip Effect?
Excessive inventory -> Consumes Warehouse Capacity -> Cost Implications -> Products may never be used
Define FGP
Factory Gate Pricing (retailer takes control of delivery to their DCs) Pros: Single point of control, increase SC visbility
FTK
Freight Tonne Kilometers (macro measures of volumes of freight being transported)
FCL
Full Container Load
LPI
Global Logistics Performance Index (measures logistics performance per country by 6 dimensions; customs, infrastructure, international shipments, logistics competence, tracking&tracing, timeliness)
Internal Integration
Integration between business functions with a single organisation
External Integration
Integration of business process across more than one organisation in supply chain
Backward Integration
Integration with selected first & second tier suppliers
Forward Integration
Integration with selected first-tier customers or service providers. Uncommon within second-tier
Forward & Backward Integration
Integration with suppliers & customers. "Total" integrations is rare but theoretically ideal
ITU
Intermodal Transport Unit (freight moves within a loading unit- moves in different modes but remains within unit at all times)
Define ISPS Code
International Shipment & Port Security Code (Mandatory security initiative from 1 July 2004 applies to all countries members of IMO) Prevents and detects security threats
Why is this perspective criticized?
It does not take a cross-functional approach but instead separates the activity into functional silos
JIT
Just-in-time Inventory Management (Idea of making do with the minimum possible level of inventory holding)
Describe the "Taxonomy for selecting global supply chain strategies"
LEAN: Short lead time + Predict. Demand Continous Replenishment AGILE: Short lead time + Unpredict. Demand Quick Repsonse. Postponement Approach. ZARA LEAN: Long lead time + Predict. Demand Plan and Execute. More planning required LEAGILE: Short lead time + Unpredict. Demand Post-postonenent "Hybrid Strategy" Combines Lean and Agile logistics philosophies. Decoupling stage: Stage between LEAN and AGILE
Define/Discuss main difference between Lean and Agile strategies?
Lean: Manages base demand. Forecast-driven approach. Focuses on Functional Products; predictable demand, long product life cycles, low variety and long lead times. Agile: Manages surge demand. Demand-driven approach. Focuses on Innovative Products; unpredictable demand, short product life cycles, high variety and short lead times.
LCL
Less than full Container Load
LSCI
Linear Shipping Connectivity Index (measures costal countries access to container shipping services)
LSPs
Logistics Service Providers (Various types of companies that provide logistics services)
Re-labeling view
Logistics has been re-labeled by SCM
Unionist View
Logistics is part of the wider entity SCM
Define Fixed & Variable Costs and Discuss Pros & Cons with AIR transportation
Low FC & High VC Pros: Super Speed Cons: limited weight, dependent on other forms of transportation to/from airport (AirTrucking)
Define Fixed & Variable Costs and Discuss Pros & Cons with ROAD transportation
Low FC & Medium VC Pro: speed, flexibility, availability, dependability, frequency Cons: low volume and weight
Pull philosophy
Materials are only produced and moved when required Relates to MTO Prevents stock piling & inefficiency
MTO
Make-to-Order (Producing product only to meet actual customer demand)
MTS
Make-to-Stock (Producing product which is placed in storage)
Define and Describe the Four Stages an Outsourcer-Outsourcee Relationship can move across
Master-Servant Stage: outsourcer sets rules and expectations and the outsourcee delivers. Low cost is the main driver. Consultative Stage: "consult-client". Factors such as quality/reliability/responsiveness are main drivers. Peer-to-Peer Stage: Ideal stage. More synergistic long-term relationship creating "win-win" situations for both parties. Competitive Stage: Original outsourcee company takes the lead and starts to compete with the outsourcing company
Define Fixed & Variable Costs and Discuss Pros & Cons with WATER transportation
Medium FC & Low VC (economies of scale) Pros: Large volume & weight Cons: Speed, depends on other transportation to/from port
Aggregated Procurement
Method for selecting suppliers based on their capabilities rather than individual suppliers tendering for particular orders
Directional Imbalances
Mismatches in the volumes or types of freight moving in opposite directions in a freight market
NDC
National Distribution Center
Solutions to Offshoring
Nearshoring - move closer to home country Backshoring - move back to home country
Supply Chain
Network of organisations that are involved through upstream and downstream linkages, in the different processes and activities that produce value in the form of products and services in the hands of the ultimate consumer
Order Winners
One ore more criteria that leads to the selection of a particular outsource by an outsourcing company
Order-losing Sensitive Qualifiers
Order qualifiers that are more critical than other order qualifiers in terms of the outsourcer's requirments
OEM
Original Equipment Manufacturer (companies that produce the final branded products. last stage of assembling pieces already produced by CMs)
Intersectionist view
Overlap between parts of both logistics and SCM, but also parts that are separate
Which Seven Key Areas does TPS focus on eliminating waste?
Overproduction Waiting Transportation Inappropriate Processing Unneccessary Inventory Unnecessary Motion Defects
Derived Demand
People or Freight do not travel for sake of making a journey, travel for other reason
Decoupling point
Point at which the "base product" moves form the shared platform stage to the customised product stage.
5 Modes of Transport
Pipeline, Water, Road, Rail, Air
Logistics
Planning, implementing and controlling procedures for the efficient and effective transportation and storage of goods including services for the purpose of conforming to customer requirements Getting the Right product in the right way quantity quality destination customer price
Supply Base Rationalisation
Process of reducing or rationalising the number of suppliers in a supply network, typically to reduce complexity --> and cost
Lean Production
Pull-based value stream of activities with level production and just-in-time inventory management Manages base demand.
Deregulation
Reduction/removal of various government-imposed barriers that hinder competition in markets
Traditionalist View
Regards SCM as a subset of logistics
RDC
Regional Distribution Center
Collaboration
Relationship between supply chain partners developed over a period of time
Transport cost sensitivity
Relationship of transport costs to freight value. High sensitivity= minor changes in transport rates will have a major impact on transport choice decisions Value - to- volume has increased
Material Substitution
Replacement of physical product by virtual product
How is supply chain integration and collaboration linked?
SC Integration enables collaboration. Integration is product and process oriented whilst collaboration is focused on relationships.
SLA
Service Level Agreement (identifies performance)
SKU
Stock-Keeping unit (unique version in terms of size, packaging of a particular product type)
Upstream
Supplier end of supply chain
Silo
Teams or business functions operating in isolation to others
Outsourcing
The transfer of management and delivery process to a third party
Glocalisation
Thinking on a GLOBAL scale but adapting to LOCAL wants as appropriate
Ethnocentricity
Thinking only in terms of your home country environment
Offshoring
Transfer of specific processes to lower cost locations in other countries
Agile
To cope with volatility in demand
TPS
Toyota Production System (Production system designed by Toyota to eliminate waste in seven key areas)
Lean
Value is added at each stage of the process & steps that do NOT add value are eliminated
Manufactures have realised the benefits of producing products on shared and common platforms. What are these products called?
Vanilla Product Base Product Semi-Processed Products Core Products Grey Product Generic Product
Transport cost penalty
low value, high volume - high cost penalty high value, low volume- low cost penalty
