Intro to Global Supply Chain - Second Half

Process Chain

A sequence of steps that accomplishes an identifiable purpose such as building a home.

7 Laws of Collaborative Logistics

1. Benefits to all members 2. Creation, Measurement, and Evolution 3. Co-Buyer and Co-Supplier Relationships 4. Flexibility and Security 5. Collaboration across all stages 6. Open Integration with other services. 7. Collaboration around essential logistic flows.

Phases of Supply Chain Management

1. Classification 2. Market Analysis 3. Strategic Positioning 4. Action Plans

Process Domain

The set of activities that the entity has control over.

Network

The set of entities that are involved in a particular process chain, making decisions about parts of the process.

Flow/Process Production System

The production process in which the items are made to flow through the sequence of operations by various devices right from the first operation to the finished product stage is called a flow or process production system.

Reliability

This dimension reflects the probability of a product malfunctioning or failing within a specified time period. Among the most common measures of reliability are the mean time to first failure, the mean time between failures, and the failure rate per unit time.

Surrogate Interaction

This region includes steps in which one process entity is acting on another entity's resources such as their belongings, information, or technologies.

Independent Processing

This region includes steps in which the entity is acting on resources owned and controlled by that same entity. A lot of make-to-stock manufacturing fits in this region.

Direct Integration

This region includes steps that involve person-to-person interaction between entities.

A company's need for a supply strategy depends on two factors:

(1) the strategic importance of purchasing in terms of the value added by product line, the percentage of raw materials in total costs and their impact on profitability, and so on; and (2) the complexity of the supply market gauged by supply scarcity, pace of technology and/or materials substitution, entry barriers, logistics cost or complexity, and monopoly or oligopoly conditions

Supply risk is assessed in terms of...

- Availability - Number of suppliers, - Competitive demand make-or-buy opportunities - Storage risks - Substitution possibilities.

Seven Basic Tools of Quality Management

- Flowcharts - Check Sheets - Pareto Diagrams - Cause and Effect Diagrams - Histograms - Scatter Diagrams - Control Charts

Purchased items are sorted into the following categories:

- Strategic (high profit impact, high supply risk) -Bottleneck (low profit impact, high supply risk) - Leverage (high profit impact, low supply risk), - Noncritical (low profit impact, low supply risk).

The profit impact of a given supply item can be defined in terms of...

- The volume purchased -Percentage of total purchase cost - Impact on product quality or business growth.

Reliability (Service)

Ability to perform the promised service dependably and accurately

Steps of Forming a Supply Chain Process

1. Perform a Strategic Assessment 2. Decision to Form Relationship 3. Evaluate Alternatives 4. Select Partners 5. Structure Operating Model 6. Implementation and Continuous Improvement

Quality Framework

1. Performance 2. Features 3. Reliability 4. Conformance 5. Durability 6. Serviceability 7. Aesthetics

What are the steps of Supplier Relationship Management?

1. Supplier segmentation. Map suppliers against profitability and risk exposure. 2. Supplier strategy development. Distribute internal resources and plans to meet business needs. 3. Supplier strategy execution.

Criteria of Supplier and Company Strength

1. Suppliers' Capacity Utilization 2. Supplier's Break-Even Stability 3. Uniqueness of suppliers' product 4. Annual volume purchased and expected growth in demand 5. Past variations in capacity utilization of main production units 6. Potential costs in the event of nondelivery or inadequate quality

Five Broad Dimensions of Service Quality

1. Tangible 2. Reliability 3. Responsiveness 4. Assurance 5. Empathy

Steps in Interaction Regions are...

The least efficient but can deliver customized employee expertise

Durability

A measure of product life, durability has both economic and technical dimensions. Technically, durability can be defined as the amount of use one gets from a product before it deteriorates. Alternatively, it may be defined as the amount of use one gets from a product before it breaks down and replacement is preferable to continued repair.

ISO 9000

A set of international standards on quality management and quality assurance developed to help companies effectively document the quality system elements needed to maintain an efficient quality system. T hey are not specific to any one industry and can be applied to organizations of any size. ISO 9000 can help a company satisfy its customers, meet regulatory requirements, and achieve continual improvement. It should be considered to be a first step or the base level of a quality system.

Strategic Process Positioning

A valuable aspect of PCN Analysis wherein a process is designed to achieve strategic operating objectives. A firm's operations are strategic in that they can define what type of business the firm is in and what value proposition they desire to provide to customers. For example, some firms assume a low-cost strategy and some firms assume a differentiation strategy.

Aesthetics

Aesthetics is a subjective dimension of quality. How a product looks, feels, sounds, tastes, or smells is a matter of personal judgement and a reflection of individual preference

Enabling Innovation

An innovation that allows the customer to meet their needs.

Relieving Innovation

An innovation that relives customers of the step by moving it to the provider's process domain.

Tangible

Appearance of physical facilities, equipment, personnel, and communication materials.

Takt Time

Calculated value that describes the theoretical demand rate of your customer. Available Production Time / # of units customer needs

Process Entity

Can be a manufacturer, a service provider, a customer, an agent of a customer, and so forth.

Empathy

Caring and individual attention provided by employees to its customer.

Job Shop Production Process

Characterized by manufacturing of one or few quantity of products designed and produced as per the specification of the customer within prefixed time and cost.

Conformance

Conformance is the degree to which a product's design and operating characteristics meet established standards. The two most common measures of failure in conformance are defect rates in the factory and, once a product is in the hands of the customer, the incidence of service calls.

Perceived Quality

Consumers do not always have complete information about a product's or service's attributes; indirect measures may be their only basis for comparing brands. A product's durability for example can seldom be observed directly; it must usually be inferred from various tangible and intangible aspects of the product. In such circumstances, images, advertising, and brand names - inferences about quality rather than the reality itself - can be critical.

Features

Features are usually the secondary aspects of performance, the "bells and whistles" of products and services, those characteristics that supplement their basic functioning.

Balance Strategy

For supply items with neither major visible risks nor major benefits, a defensive posture would be over-conservative and costly. On the other hand, undue aggressiveness could damage supplier relations and lead to retaliation.

Batch Production Process

Form of manufacturing in which the job passes through the functional departments in lots of batches and each lot may have a different routing.

Positioning steps toward provider's process domain...

Gives better economies of scale

Positioning toward customer's process domain...

Gives greater opportunity for customization

What is Supplier Relationship Management (SRM)?

The process for organizations determining the supply categories that are important and creating the strategies that manage these items in an intelligent fashion.

Strategic Items

High Profit Impact, High Supply Risk - Development of Long-Term Relationships - Collaboration and Innovation - Natural Scarcity

Leverage Items

High Profit Impact, Low Supply Risk - Exploitation of full purchasing power - Targeted pricing strategies/negotiations - Abundant supply

Intermitted Production System

High Variety, Low Volume From High Volume to High Variety - Batch Production Processes - Job Shop Production Processes - Project

Continuous Production System

High Volume, Low Variety From High Volume - Low: - Flow Production Processes - Mass Production Processes

Lead Time

How long it takes one unit to make its way through operation.

How did Supplier Relationship Management (SRM) come to life?

IN 1983 when McKinsey consultant Peter Kraljic called for corporate buyers to grow more proactive in supply management.

Bottleneck Items

Low Profit Impact, High Supply Risk - Low control of suppliers - Innovation and Product Substitution and Replacement - Production-based scarcity

Non-Critical Items

Low Profit Impact, Low Supply Risk - Product Standardization - Process efficiency (ex. Automated Purchasing) - Abundant Supply

Mass Production Process

Manufacture of Discrete Parts or assemblies using a continuous process

Exploit Strategy

On items where the company plays a dominant market role and suppliers' strength is rated medium or low, a reasonably aggressive strategy

Diversify Strategy

On items where the company's role in the supply market is secondary and suppliers are strong, the company must go on the defensive and start looking for material substitutes or new suppliers

PROFIT Model - Quality Improvement

P = Problem definition. R = Root cause identification and analysis. O = Optimal solution based on root cause(s). F = Finalize how the corrective action will be implemented. I = Implement the plan. T = Track the effectiveness of the implementation and verify that the desired results are met.

Performance

Performance refers to a product's primary operating characteristics.

PCN stands for

Process-Chain-Network

Cycle Time

Rate at which units are actually produced.

Serviceability

Serviceability is the speed, courtesy, competence, and ease of repair. Consumers are concerned not only about a product breaking down but also about the time before service is restored, the timeliness with which service appointments are kept, the nature of dealings with service personnel, and the frequency with which service calls or repairs fail to correct outstanding problems.

Supply management becomes more important as..

The greater the uncertainty of supplier relationships, technological developments, and/or physical availability of those items

Assurance

The knowledge of and courtesy by employees and their ability to convey trust and confidence in service provider.

Responsiveness

Willingness to help customers and provide prompt service