BUS M 200 Final Exam

Transactional relationships (7)

"Arm's length," short-term, no critical items or information sharing, low importance of technology, supply risk, and switching costs.

Fundamental logistics trade-offs (11)

1. Cost-to-cost: trading off speed of delivery with saving fuel. (math problem for this) 2. Modal trade-offs: trade off between various modes of transportation. 3. Cost-to-service: The cost of improving service, based on the law of diminishing returns. Basically as you increase service/quality, its more expensive.

Five logistics processes (11)

1. Demand processing 2. Inventory management 3. Transportation 4. Warehousing 5. Configuring logistics

Steps in the Supplier Management Process (7)

1. Identify need 2. Select Supplier 3. Develop Supplier 4. Provide Feedback

7 basic quality tools (13)

1. Process map 2. Check sheet 3. Histogram 4. Scatter plot 5. Run Chart 6. Fishbone Diagram 7. Pareto Diagram

Different types of relationships (2)

1. Transactional 2. Complementary 3. Synergistic

Garvin's eight dimensions of quality (13)

1. performance: how efficiently a product achieves its intended purpose. 2. features: product "extras" that go beyond the basic function (heated seats) 3. reliability: functioning for its useful life 4. conformance: the product meets specifications 5. durability: duh 6. serviceability: how easy it is to repair the product. 7. aesthetics: sensory attributes of a product (silk clothing, gold plated faucets, etc) 8. perceived quality: based on customer opinions.

Identify the requirements for the future supplier (7)

1s step in supplier selection. Use weighted factor analysis for this (WFA). Know this math for WFA.

Routine items (6)

A basic item (low profit impact and low supply risk). Little purchasing skill needed. The strategy for these items is to simplify the acquisition process. Can do this by automating it. Ex: Toilet paper, office supplies, etc.

Square root law (11)

A calculation for calculating safety stock inventory in warehouses, given the number of warehouses. MATH: X(2) = X(1) x {Squareroot [N(2) / N(1)]} -N(1)= number of existing facilities -N(2)= number of future facilities -X(1)= Total safety stock inventory of present facilities -X(2)= Total safety stock inventory in future facilities

Benchmarking

A comparison between your firm and an exemplar firm within your own industry. 6 different types: 1. Process 2. Financial 3. Performance 4. Product 5. Strategic 6. Functional (table 13.7 in the book)

Process map (13)

A flowchart, or "picture" of a process, used to improve.

Managerial implications (6)

A framework for making purchasing related strategic management decisions.

Histogram (13)

A frequency chart that presents data using bar charts.

Hub and spoke system (11)

A method used to reduce the number of trucks or other carriers needed for shipping when networks of cities are involved in the delivery.

Malcom Baldridge national quality award (13)

A prestigious award created by the US government for quality. Applicant companies (large and small) are assessed in 7 categories (don't stress the 7 specific categories). It's also an easy way for companies to get free consulting.

Critical items (6)

A purchased good that has a high profit impact and a high supply risk. It only has a few qualified suppliers, so the firms strategy is to form alliances with the suppliers.

Bottleneck items (6)

A purchased item with a high supply risk. Doesn't have a high profit impact, but will affect operations. The strategy is to ensure supply continuity, search for alternatives, and work to move the item to another quadrant in the matrix. This can be done by widening specs to get more products, increase the competition by encouraging other suppliers to offer the product, or develop new suppliers.

ISO 9000 (13)

A quality standard in Europe. It's not a competition, any company can get it if they meet certain requirements.

Complementary (2)

A relationship that occurs when companies understand that their core competencies need each other to maintain world-class service.

Spend analysis (6)

A review of the firms entire set of purchases. used to answer the question "what is the firm spending money on?" also used to categorize spending.

Service needs (7)

A specification for a service need is called a "scope of work."

Portfolio model (6)

A strategic management model that categorizes items into 4 different categories: 1. Leverage 2. Routine 3. Critical 4. Botleneck

Cross docking (11)

A warehousing approach where large shipments (of different items) come in and are broken into smaller shipments to several locations.

Fishbone diagram (13)

Aka a cause and effect diagram. Used to identify underlying causes/problems. "5 whys" are a helpful tool. BEST ONE

Transactional (2)

An arm's length relationship with supply chain partners that is managed by scripted interactions. Firms use this if they pursue cost advantage, and use reverse auctions.

Leverage items (6)

An item with high profit impact and low supply risk. (its used a lot and has many qualified sources). The firm's strategy is to maximize commercial advantage by demanding competitive bidding between suppliers.

Total cost of ownership analysis (6)

Analysis of all costs of a purchase, and is applicable across all quadrants of the profit impact/supply risk model. Includes all costs, not just the purchase price, but also the acquisition costs and post ownership costs.

Pareto diagram (13)

Based on the 80/20 rule. A small population makes a big difference for the company. Fixing a few major problems that can have a large impact. Looks similar to a histograph, but starts with the biggest bar up front

Search for potential suppliers (7)

Can do this through current suppliers, the internet, trade shows, professional organizations, etc. Once you have a list of potentials, send out a "Request for Quote" or "Request for Proposal" (RfQ/RfP)

Synergistic (2)

Companies who are committed to work together in a way so that their results are greater than if they'd done it by themselves.

Financial benchmarking (13)

Comparing business results and accounting information.

Performance benchmarking (13)

Comparing costs structures, speed, quality levels, etc.

Strategic benchmarking (13)

Comparing firm competitiveness along several dimensions

Functional benchmarking (13)

Comparing or learning about how another firm performs a particular function such as a call center.

Process benchmarking (13)

Comparing processes such as how another company performs receiving or purchasing

Product benchmarking (13)

Comparing product attributes and functionalities

Configuring logistics (11)

Consolidation warehousing, cross docking, break bulk facilities, hub and spoke system

Kauro Ishikawa (13)

Created the 7 basic tools for quality, democratized statistics (anyone can/should use them), and company-wide quality control (quality should be on everyone's radar).

W. Edwards Deming (13)

Deming invented the PDCA cycle. Best known for statistical thinking, or being data-driven.

Relationship needs (7)

Different relationship needs. Important ones are transactional and collaborative

Providing feedback (7)

Do this using a supplier scorecard.

Focus strategies (2)

Emphasizes select customers or markets and provides a narrow range of unique products and services (Amazon).

Transportation Modes (11)

Five modes of transportation: 1. Maritime shipping: cheapest per tonnage (aside from Pipelines) Also highest capacity (besides pipelines) 2. Rail: carries the most weight (in tons) in the US 3. Trucks and Cargo Vans: used for door to door. 4. Air: most expensive way to ship, works best with lightweight things. Highest carbon footprint and fixed costs but fastest speeds. 5. Pipelines: used for fluids. haul the most tonnage and are the most cost effective, but environmentally controversial. (See table 11.1)

Cost strategies (2)

Focusing on reducing costs and beating competitors prices (Walmart).

Lean (11)

Holding less inventory (reducing holding costs) and shipping more frequently (higher transportation costs)

Supply chain globalization (1)

Increasing global presence by establishing operations in other parts of the world.

Cost analysis (6)

Knowing what an item should cost after accounting for everything will help you determine what a fair price should be for negotiating with suppliers. useful when price analysis is impractical (when dealing with bottleneck or critical items). Strategic costs structures.

Joseph Juran (13)

Known for strategic approach, the trilogy (planning, control, improvement), big Q quality (strategic issues, ie getting to the Celestial kingdom), and little q quality (tactical issues, day to day actions, ie reading our scriptures every day, etc.)

Collaborative relationships (7)

Long relationships, dealing with critical items. Supplier and firm work together, because the switching cost and supply risk is high. There's information sharing and teamwork.

Parts per million (PPM) defect rate (7)

Performance measurement = [number of defects / total opportunities for defects] x 1,000,000

Break bulk facilities (11)

Places where large shipments of the SAME items are broken out and separated to go to separate locations.

Three main strategies (2)

Porter's Generic Strategies: 1. Cost 2. Focus 3. Differentiation

Sustainability (1)

Proactively managing to save resources and to "green" production.

Differentiation strategy (2)

Providing special value to customers in a way that is difficult for competitors to replicate (apple, tesla).

Philip Crosby (13)

Said "Quality is free". Also known for the DRIFT principle, "Do it right the first time" (zero defects, fatalities, etc). Also Crosby's 14 steps for quality improvement (don't need to know all 14 steps, but know the number 14 is related to him)

Customer created variances (1)

Service supply chain complexity. It's more complex because the customers are also the suppliers. It's bi-directional and has customer created variances.

Material needs (7)

Specification for materials can be simple or complex. A general guide vs a recipe.

SC&O differences (1)

Supply chains: firms cooperating to create value for customers (multiple firms). Operations: managing transformation processes to convert inputs into products and services (one firm).

Consolidation warehousing (11)

Taking small shipments and combining them into more economical larger shipments.

Identify need (7)

The 1st step in the supplier management process. Identifying what is needed is called specification. There's Material, Service, and Relationship needs

Supplier selection (7)

The 2nd step in the supplier management process: 1. Identify the requirements for the future supplier 2. Search for potential suppliers 3. Evaluate potentials 4. Choose a supplier through a negotiation process.

PDCA Cycle (13)

The PDCA cycle stands for plan (development), do (implementation), check (quality assurance), and act (process enhancement). Created by Deming, it is an improvement cycle based on the scientific method.

Quality (13)

The characteristics of a product or service that bear on its ability to satisfy stated or implied needs. A product or service free of deficiencies.

Price analysis (6)

The process of comparing supplier prices against one another or against external benchmarks. most useful when there are many suppliers available in the marketplace (leveraged and routine items).

Supplier development (7)

The process of helping your supplier improve their performance in areas such as cost, delivery, and quality. (7 specific steps but I'm not sure we have to know them).

Percent PPM improvement (7)

The simplest way to think about it is: [(old - new)/old] x 100

Landed cost (11)

The total cost to get the product to the customer. Firms want this cost as low as possible.

Logistics (11)

The transportation and storage of goods and materials

Negotiating the agreement (7)

Three steps to a negotiation: 1. Prepare (90% of time doing this) 2. The face-to-face negotiation (you want a win-win here, think the tanks and doves simulation) 3. Debrief (assess how it went)

Evaluate potential suppliers (7)

Use a supplier self assessment to gauge their company's fit with your unique needs. Can also conduct financial analysis, visit their plant, and perform a WFA (know the math again).

Run chart (13)

Used to plot time series, and useful for identifying trends (think of our table top group activity).

Scatter plot (13)

Used to study relationships between variables, either historical trends or future trends (forecasting)

Check sheet (13)

Used to tally defects/problems by how many times they occur. Serves as a data source for histograms and Pareto analysis. A "frequency" chart

Weighted center of gravity (11)

a model to determine a warehouse location. Identifies a good, but not necessarily optimal location. MATH: the equation is huge, but essentially it's just a weighted average of the x/y coordinates. See book or study guide for technical formula. Simple formula attempt: shipment number times by x coordinate + other shipment number times by x coordinate, etc, etc, etc... All divided by the total number of shipments. This gives you the X coordinate, then do the same general thing with the y coordinates to find the exact Y coordinate.

Supplier scorecard (7)

identifies what metrics are most important to your company, and evaluates your suppliers with the metrics. This helps you figure out areas where your supplier could improve. (know how to calculate this)

Upstream & downstream process (1)

product flows - products go downstream (from suppliers to customers). monetary flows - money goes upstream from the customers to the suppliers. information flows - bidirectional (flows both ways). upstream - working with and collaborating with suppliers downstream - moving towards customers.