SCHM 2150 Test 1 Auburn
design capacity
(best operating level) theoretical or maximum output rate or service capacity an operation, process, or facility is designed for
effective capacity
(normal operating level) logical or reasonable expectation of capacity use, design capacity minus typical allowances such as personal time, maintenance, and scrap
the USA Today article by Meyer and Sandler discuss
- Amazon hiring 1,500 in Orlando, part of 100,000 hiring plan - provides customers the convenience of online shopping with the immediacy of going to a physical store - 43% of all online commerce is through Amazon
Your boss asks: "how can a company use SCM to achieve value?" Your response should focus on...
- Efficiently using resources in the conversion of inputs into finished goods (cheaper) - Producing a quality product that customers will want to purchase (better) - Being adaptable to changing customer requirements (faster)
what are the goals of scm?
- customer care - competitiveness - efficiency - responsiveness and resilience to make a better, faster, cheaper, and more responsive supply chain
Historic pattern to be forecasted:
- level (data fluctuates around a mean) - trend (data exhibits an increasing or decreasing pattern) - seasonality (any pattern that regularly repeats itself or is of a constant length) - cycle (patterns created by economic fluctuations)
how do companies match capacity to demand
- make staffing changes - adjust equipment levels - improve processes, make them flexible - redesign products for ease of production - add/close facilities
centralized network
- national distribution - lower inventory investment - lower safety stock - lower inbound transportation cost - higher outbound transportation cost - effective service
what are the challenges of scm?
- product life cycles are shrinking - customers are demanding customized products - competition is intensifying - companies need to be much more efficient
supply chain management is important because
- provides valuable opportunities to create competitive advantage - develop collaborative, trusting relationships - improve customer satisfaction - rationalize product touch points - drive out costs and achieve efficiencies
decentralized network
- regional distribution - higher inventory investment - higher safety stock - higher inbound transportation cost - lower outbound transportation cost - highly effective service
what are the seven rights of fulfillment accuracy?
- right product - right customer - right time - right place - right condition - right quantity - right cost
according to Desment, a 5 step approach to effective demand planning implementation is
- start with demand analysis - rely on a quantitative baseline forecast - strive for a collaborative demand planning implementation process - invest in performance management - hold a demand review meeting
supply chain planning for 4th of July (Canitz)
- supply chain professionals consider past demand trends to predict demand for the upcoming holiday - it's a complex process - many factors are considered: day of the week, regional item preferences, weather patterns - multi-echelon inventory optimization is a capability used to determine optimal inventory buffer locations and the quantities of each item to deploy at each location
according to Bolstorff, the seven principles to effective supply chain planning are
- systematic management of "master data" - synchronized long-term, tactical, and execution planning processes - mature collaborative processes for both key customers and suppliers - data-oriented understanding of the inputs to the forecast - focus on "point-of-sale" data - disciplined product lifecycle management process - continuous improvement approach
Sales and Operations Planning (S&OP)
- the heart of balancing supply and demand, and aligning the company around a common financial, demand and supply plan - a single operating plan is created that identifies the allocation of company resources, including time, money, and employees
main questions to ask when using MRP
- what do we need? - what do we already have? - how many of each component do we need? - when do we need the components?
what are the 7 principles of scm?
-Principle 1: Segment customers based on the service needs of distinct groups and adapt the supply chain to serve these segments profitably. -Principle 2: Customize the logistics network to the service requirements and profitability of customer segments. -Principle 3: Listen to market signals and align demand planning accordingly across the supply chain, ensuring consistent forecasts and optimal resource allocation. -Principle 4: Differentiate product closer to the customer and speed conversion across the supply chain. -Principle 5: Manage sources of supply strategically to reduce the total cost of owning materials and services. -Principle 6: Develop a supply chain-wide technology strategy that supports multiple levels of decision making and gives a clear view of the flow of products, services, and information. -Principle 7: Adopt channel-spanning performance measures to gauge collective success in reaching the end-user effectively and efficiently.
why is scm important to customers?
-Product Availability -Fulfillment Accuracy
Steps in a network configuration process
1. determine problem and model 2. collect and validate data 3. develop and model scenarios 4. evaluate scenario results 5. take strategic action
7 keys to facility location (Mentzer)
1. land 2. labor 3. capital 4. sources of supply 5. production 6. markets 7. logistics
• The Cycle Shop should be able to build 30 bikes per day according to the assembly equipment manufacturer • Over its first six months of operation, they produce 23 bikes per day. • What was the capacity utilization?
23/30 x 100%
According to the Episode 3 articles, what benefit can be gained by adopting best practices in supply chain planning?
25 percent reduction in excess and obsolete inventory
top down planning
An approach to S&OP in which a single, aggregated sales forecast drives the planning process.
exponential smoothing example: if week 3 has a demand of 720 and a forecast of 680, what is the exponential smoothing forecast for week 4 using a α= 0.5?
F= 680+ .5(720-680) = 700
T/F Capacity planning provides the ability to be proactive rather than reactive in the management of inventory levels, material flow, and production scheduling
False
T/F Companies should plan supply chain activities based on their design capacity and set the effective capacity as a stretch goal to pursue
False
What value-adding processes takes place at supply chain nodes?
Incoming materials are converted into a more valuable state (quantity, assortment form) to meet downstream customer needs
The Episode 1 supply chain in action video focuses on what product?
McDonald's French Fries
weighted moving averages
Similar to the moving average method - Allows weights (percentages) be put on each observation - Useful when the most recent periods have the most influence on the forecast - More responsive to trends *place more emphasis on t-1, which is the most recent data*
According to the Episode 3 articles, which demand planning step does the organization evaluate the accuracy of the forecast and assess the forecast error level?
Step 4 Invest in performance management
materials requirements planning
The process of planning production by ensuring that raw materials get to the factory floor on time and finished products get to customers in a timely manner.
T/F Normally, design capacity is greater than effective capacity
True
T/F the primary benefit of a decentralized supply chain network is customer proximity and the main drawback is a need for larger inventory safety stock
True
a higher alpha smoothing constant in exponential smoothing means
a more accurate forecast
exponential smoothing
a weighted averaging method based on previous forecast plus a percentage of the forecast error
how to calculate capacity utilization levels
actual output/capacity multiplied by 100%
what does scheduling involve?
allocation of resources to activities over time so that demands are met in a timely and cost effective manner
According to the week 4's readings, what is a primary benefit of sales and operations planning?
allows the organization to anticipate and adapt to changes in supply or demand
capacity cushion
an additional amount of capacity added onto the expected demand to allow for greater than expected demand and demand during peak demand seasons. creates flexibility
the simplest methods for forecasting work _____ with stable demand, they tend to lag trends
best
what is the benefit of an effective forecasting process?
better matches supply with demand
what benefits does effective sequencing create?
boosts throughput
how are nodes in a supply chain physically connected?
by transportation links
which of the following is the planned-order release using an MRP program if the gross requirement is 5,000 and the inventory on hand is 1,200? a. 5000 b. 4500 c. 3800 d. 1200
c
What type of supply chain configuration is most appropriate if your organization needs to minimize inbound transportation costs, has limited need for safety stock, and wants to reduce inventory investment?
centralized supply chain
which product flow should raw chicken use and why?
cross dock - perishable - need rapid flow-through - direct may be too expensive - break bulk based on demand
capacity example-- 2 liter coke bottle
description: how much soda will fit in the bottle design: 2.05 liters effective: 2 liters
types of capacity planning
design and effective
components of supply chain success
develop supply chain strategy, create greater utility for customers, pursue cross-chain alignment
how do organizations like Amazon build competitive advantage via scm and consistently rank among the Gartner Supply Chain Top 25?
digitalization of supply chain, adaptive capabilities, developing and fostering healthy ecosystems
which product flow should a newspaper use and why?
direct delivery - highly perishable - local production - narrow demand - no storage requirement
which product flow should dog food use and why?
distribution center - shelf stable - steady demand - ship in bulk, distribute small quantity - high variety
In terms of planning factory capacity, which type of capacity identifies what is truly feasible from a production standpoint?
effective capacity
what does capacity utilization measure?
effectiveness of operation
Which group is NOT normally involved in the Sales and Operations Planning process?
end consumers
if capacity > demand, then risk =
excess inventory
what does Tim Cook (Apple), Mary Barra (GM), Brian Krzanich (Intel), and Doug McMillon (Walmart) all have in common?
former SCM executives
steps in the MRP process
gross requirements scheduled receipts projected on hand net requirements planned order release
forecaster looks for data patterns as data =
historic pattern plus random variation
Which Materials Requirements Planning element tells us what we have on hand and what we have on order, reflecting our net materials available for production?
inventory master file
if capacity < demand, then risk =
inventory shortage
bottom up planning
involves lower levels in the company developing performance objectives that are aggregated up to develop overall company objectives
network design is a ______________ activity
long-term
According to Week 4's readings, the _____ is the plan that a company develops for production, staffing, or inventory.
master production schedule
According to this week 4's readings, _____ converts the master schedule of production into a detailed schedule, so that you can purchase raw materials and components.
material requirements planning
what is driving greater company interest in supply chain management?
more intense competition
over forecasts are ______________ errors, while under forecasts are ______________ errors
negative positive
what are links and nodes in a supply chain?
node: a fixed point in a supply chain where valued added processes take place. goods are processed, transformed, mixed, held, or sold link: the transportation method to connect the nodes
according to the first episode 1 reading, what benefit is achieved by supply chain integration?
optimized total cost of ownership
what is sequencing?
order of occurrence; process of following a specific order to ensure quality
essential processes
plan buy make move service
direct delivery
point-to-point service - higher transportation cost - minimal inventory - no backup for safety stock - very low handling costs - no facility investment
what is capacity planning and why do companies engage in it?
process of establishing the output rate that can be achieved (throughput), goal is to match capacity and demand
cross docks
product mixing service - lower transportation costs - moderate inventory - no backup for safety stock - low handling costs - low facility investment
key flows in the supply chain
product, information, money
which supply chain process focuses on the transformation of inputs into outputs?
production
what role does technology play in supply chain planning?
provides modeling tools and decision support capabilities
What type of forecasting methods use experts, market analysis, and opinions to predict demand?
qualitative forecasting
two categories of forecasting
qualitative: based on human judgment, can incorporate latest changes in environment and inside information, can bias the forecast quantitative: based on math, consistent and objective and can consider much information and data at one time, often not available only as good as the data one which they are based
Distribution centers provide what benefit that is not readily available with cross-docking or direct delivery?
safety stock to quickly handle customer demand spikes
key supply chain planning elements
sales and operations planning demand planning supply planning
mean absolute deviation
seek to find the difference between our forecast value and what actually occured
according to week 1's reading about facility location, what factors tend to pull facilities away from its main markets?
severe traffic congestion in the markets
distribution centers
storage and fulfillment service - lower transport cost - maximum inventory - protected safety stock - high handling costs - very high facility investment
simple moving averages
sum of demand of previous periods/ n
who are the key participants and primary processes in scm?
suppliers, manufacturers, distributors, retailers, consumers. each way participants give products, information and financial resources
the forward-looking process of coordinating assets to optimize the delivery of goods, services, and information from supplier to customer, balancing supply and demand is called
supply chain planning
what is scm and why is it important?
the art of managing the flow of materials and products, information, and financial resources from source to user
who is the most important participant in the supply chain?
the consumer. consumer demand drives everything we do
forecast error
the difference between a forecast and the actual demand
quantitative forecasting uses
time series models
two parts of product availability
time utility and place utility
what is the goal of forecasting?
to understand customer demand
what is the role of supply chain managers in Sales and Operations Planning?
translating the sales forecast into resource requirements
T/F Auburn has a radio-frequency identification lab that works on supply chain solutions like product tracking and visibility
true
what makes supply chain planning difficult to do well?
variation in customer demand
the ideal MAD is ________, for the larger the MAD the ________ accurate the resulting model
zero less
