IE 659- Supply Chain Management

Order Fill/Service Rate=

(orders filled & delivered on time)/(number of customer per year)

regression analysis - linear

- devices the relationship between 1 independent variable X and dependent variable Y X is Time Y is the Demand

What supply chain costs are affected by network structure?

- inventories - transportation - facilities & handling - information

What elements of customer service is influenced by a network structure?

- response time - product variety - product availability - customer experience - order visibility - return-ability

ITR= 12 and ITR=4 what do these ITR numbers mean?

-ITR=12 means that on average the facility has 1 month worth of inventory -ITR=4 means the on average the part spends 3 months at the facility

Cross docking operations

-inbound flows (from suppliers) directly transferred to outbound flows (to customers) -mainly dependent on efficient trucking operations

Cross docking operations applications:

-manufacturing -distribution -transportation -retail

What qualities does the next generation of supply chains need?

-maximum delivery performance - minimized costs -maximum volume flexibility & responsiveness -minimized risked -complexity management

What is the main roles of transportation in the supply chain?

-moves the product between stages in the supply chain -impacts responsiveness & efficiency

Facilities

-places where inventory is stored, assembled, or fabricated -production & storage sites

what is a demand forecast?

-statistical or expert opinion based prediction of demand in a future period -always uncertain and should thus include both expected value of the forecast & measure of forecast error (standard deviation)

Time serious forecasting

-time ordered sequence of observations taken at regular intervals over a period of time - future values of the series can be estimated from past values

3 A's of supply chain

1. Agility 2. Adaptability 3. Alignment

6 drives of supply chain performance

1. Facilities 2. Inventory 3. Transportation 4. Information 5. Sourcing 6. Pricing

What are 2 network design problems?

1. Given a set of candidate locations, select the best location for new distribution warehouse 2. given facility locations find the best network flow strategy from plants to warehouses to markets

What are 2 network design solution approaches?

1. Heuristics - sub optimal & usually no guarantee of performance 2. Exact algorithms - optimization techniques: linear programming (LP) & integer programming (IP)

What are the 4 parts a supply chain structure?

1. Inventory 2. Transportation 3. Facilities 4. Information

3 supply chain performance metrics

1. Inventory- inventory turnover ratio 2. Service- stockouts (orders fulfillment or service rate), responsiveness (speed to change), replenishment cycle, minimum order quantity 3. Costs- unit warehouse cost, unit distribution & transportation costs, efficient- cost of the supply chain

5 main responsibilities of supply chain management so as to meet the supply chain objectives and optimize the performance metrics:

1. Procurement 2. Production 3. Warehousing 4. Distribution logistics 5. Retail Sales

4 possible outcomes for stockout

1. customer wait 2. back orders 3. lost sales 4. lost customers

How are products grouped?

1. distribution 2. product type 3. shipment size 4. transport class of merchandise *no more than 20 product groups

Forecasting Common qualitative techniques:

1. expert opinion 2. delphi technique 3. market survey

4 key transport players:

1. in-house trucking 2. 3rd party logistics 3. LTL delivery 4. Box delivery

7 Key elements in a logistics network

1. inventory 2. warehousing 3. materials handling 4. freight transport 5. information collection 6. transmission 7. processing & packaging

6 factors affecting the number of warehouses:

1. inventory costs 2. warehousing costs 3. transportation costs 4. cost of lost sales 5. maintenance of customer service levels 6. Service small quantity buyers

Data for logistics network design (9)

1. listing of all products 2. location of customers and stocking points 3. demand for each product by customer location 4. Transportation rate 5. Warehousing costs 6. Shipment sizes by product 7. Order patterns by frequency, size, season, content 8. Order processing costs 9. customer service goals

3 warehouse location analysis techniques

1. location rating factor: method for identifying & weighting important location factors 2. center of gravity: center of movement in a geographic area based on transport weight & distance 3. Load- distance: method based on the load being transported and the distance

what are 4 strategic supply chain decision?

1. locations and capacities of facilities 2. Products to be made or stored at various locations 2. Modes of transportation 4. Information systems

6 factors that influence demand & are key data in a forecasting model include:

1. past demand 2. lead time of product replenishment 3. planned advertising or marketing efforts 4. planned price discounts 5. state of the economy 6. actions that competitors have taken

2 types of cross docking applications

1. pre-distribution - customer is assigned before the shipment leaves the vendor, so it arrives to the cross- dock bagged and tagged for transfer 2. post-distribution- cross- dock allocates materials to stores

Forecasting common quantitative technique:

1. regression analysis 2. moving average 3. exponential smoothing 4. bayesian analysis 5. box-jenkins

2 challenges in moving goods

1. speed 2. efficiency from production points to consumption points

Types of variations in time series data (5)

1. trend- long term movement in data 2. seasonality- short term regular variation in data 3. cycles- wavelike variations of long-term 4. irregular variations- caused by unusual circumstances 5. random variations- caused by chance

What is a supply chain?

A network of facilities and distribution options created to fulfill a customer request.

What is supply chain management?

A total system approach to efficiently managing the entire flow of information, materials, and services from raw-materials supplies through factories and warehouses to the end customer so as to minimize cost and maximize service.

How is SCM scope determined?

By what you can control and what you need to control.

what is customer clustering?

Customers located in close proximity are aggregated using a grid network or clustering technique

How does fast transportation affect responsiveness & efficiency?

Faster transportation allows for greater responsiveness but lower efficiency

what is the supply chain cost objective?

Low Transport Costs Low Facility Costs Low Transaction Costs

what is the supply chain objective?

Low inventory High Product Variety High Service Rate

Main objective of logistics network?

Minimize the cost without compromising your service levels

Time series forecasting methods 1. moving averages (MA) 2. exponential smoothing 3. regression analysis - linear & non-linear

Notation: F(t) - forecaster demand at time t A(t)- actual demand @ time t E(t) Forecast error: E(t)= |F(t)-A(t)|

POCKETS

P=Price O=Operations C= Culture K= key item promotion/products E= expense control T=talent S=services Walmart- operations efficiency though supply chain

Pricing

Price associated with goods & services provided by a firm to the chain

If a supply chain has many SKUs what can we conclude about the companies supply chain?

The number of SKUs is an indicator of the supply chain complexity

What is supply velocity?

The speed at which goods travel between these points. Function of inventory turnover

What is the main goal of a supply chain?

To fulfill a customers request

Linear Equation Form:

Y=a+bX F(t)= a+ bt Y= dependent variable X= independent variable a= y-axis intercept b= slope of regression line

Agility

act rapid in response to dramatic changes in supply & demand

Are forecasts always right or wrong?

always wrong

what is a logistics network?

connects the different facilities that constitute the supply chain

Alignment

consistency in the interests of all participants

What does distribution directly affect?

cost & the customer experience & therefore drives profitability

Information

data and analysis regarding inventory, transportation, facilities, throughout the supply chain **biggest driver of supply chain performance**

Why are SKUs useful for a company?

date management! allows the company to systematically track its inventory.

Competitive strategy

defines the set of customer needs a firm seeks to satisfy through its products & services

Supply chain strategy

determines the nature of the materials procurement, transportation of materials, manufacture of product or creation of service, distribution of product

forecast error-

difference between forecast & actual demand. indicative of the quality of the forecasting method

Center of gravity method:

finds location of single distribution center serving several destinations XY= x,y coordinate of location n F= unit shipping cost to location n per ton-mile D= annual ship volume to location n d= distance to location n from DC steps: 1. calculate X,Y coordinate for 'center of gravity' 2. Calculate d 3. calculate shipping cost

What is demand management?

focused efforts to estimate and manage customer demand

Sourcing

functions a firm performs and functions that are outsourced

Inventory turnover ratio

inventory turnovers (ITR)= (annual cost of goods sold)/ (average daily inventory value) -provides insight on the inventory behavior in a supply chain

Name the 6 parts of a typical supply chain?

manufactures, supplies, transported, warehouses, retailers, and customers

What is the supply chain demand management role & objective?

minimize stock out and analyze knowledge about customer buying behavior

Transportation

moving inventory from point to point in a supply chain

Product replenishment time > 0 implies..

need to plan supply to meet customer demand

timer series forecasting formula

observed demand= systematic component + random component

random component-

part of forecast the deviates from systematic component

Slow transportation models can be used for customers whose priority is

price/cost

Inventory

raw materials, WIP, finished goods within a supply chain

Adaptability

reshape supply chains when necessary

Marketing and sales strategy

specifies how the market will be segmented and product positioned, priced, and promoted

Product development strategy

specifies the portfolio of the new products that the company will try and develop

What is distribution ?

steps taken to move & store a product from the supplies stage to the customer stage in the supply chain

supply demand imbalance =>

stockout or excess inventory

What is the most commonly used to forecast product demand?

time series

Stock Keeping Unit (SKU)

unique identifier for each product that moves in the supply chain

What does a supply chain begin with?

with the customer