SCM 300 Final Exam
Order Batching:
- placing large and infrequent orders to take advantage of quality discounts
1st and 2nd Tier Suppliers:
-1st tier: a company's direct suppliers, directly providing goods and services to the company -2nd tier: a firm that provides goods/services to a company's first tier supplier
Deming Prize:
-A Japanese quality award given to companies or individuals that have contributed to the field of quality.
Control Charts:
-A chart that plots sample data over a period of time. The chart has a center line (goal), an upper control limit, and a lower control limit. If a data point lands outside of the control limits the process is deemed to be out of control and thus the process requires attention. In some cases, managers may preemptively stop the process before it goes out of control should a negative pattern become apparent.
Contract Manufacturers:
-A company that produces goods on behalf of another organization (Apple outsources to companies like Foxconn and Pegatron)
Established Supplier Base:
-A company's supplier base is the collection of companies from which an organization presently purchases products and/or services. Established implies a certain level of comfort and familiarity.
Customs House Broker:
-A contractor (company or person) that helps a client's goods clear customs in a foreign country, before goods reach the border. helps in preparing documents, issues relating to import fees and taxes, answering custom agents' questions
Freight Forwarders:
-A contractor (company or person) that helps companies organize the efficient and effective shipment of goods from one point in the supply chain to another, don't actually transport goods, instead negotiate and arrange for one or more logistic companies to handle the cargo.
Third Party Logistics Company (3PL):
-A contractor that performs one or more logistics functions for their client in an effort to facilitate effective and efficient movement in the supply chain, neither the buyer or the seller of the items being moved.
Flowcharts (Process Maps):
-A diagram made up of a series of symbols that maps a process. Each symbol represents a different step or activity in the process. The chart aids in building a quality process and identifying points of concern in terms of managing and delivering quality
Cause and Effect Diagrams (Fishbone Charts):
-A diagram used to identify possible causes to quality problems. The chart begins as a single horizontal arrow that points to the right. The arrow points to the quality problem. Into that arrow point four other "cause" arrows. Each of the four arrows is a category of issues that may be causing the problem. The four categories are usually: Labor, Process, Machine, and Material.
Differences between low and high six sigma curve
-A low curve may mean that it has more spaces at the edges that are out of the defect - free zone? A high is vice versa.
Flexible Flow:
-A manufacturing strategy and layout that typically works well for producing end items (or services) that have relatively low demand levels and that may require a high level of customization. The work centers focus on a particular type of function like drilling, sanding, welding, painting, assembly, etc. While each work center performs a single function, a large degree of variation is possible at each workstation (painting work center) -a physical therapy facility
Shared metrics:
-A metric that is impacted by two related parties
Capacity Utilization:
-A ratio of the amount of product produced by a manufacturing process versus the maximum capacity of that facility
Bottleneck:
-A section of a supply chain that limits the overall output of the assembly line, usually the slowest and/or weakest workstation in the assembly line. -relates to capacity because ...
Performance Metric:
-A single performance measurement used to evaluate, motivate and improve performance; many of the decisions we make are influenced by numbers (temp, weight, time, speed, etc)
Metric:
-A single performance measurement used to evaluate, motivate, improve, etc -Basketball: points per game Academics: GPA
Managerial Paralysis:
-A situation where managers are inundated with data, this overflow of data actually slows decision-making and may result in managers stalling or avoiding decision-making
Offshoring:
-A strategy where a company moves manufacturing out of it's "home" country to another country (Ford)
Push System:
-A system in which consumer demand is known and expected, so the supply chain will preemptively buy materials, manufacture finished goods and deliver them to a store, inventory is "pushed" toward the consumer
Nearsourcing:
-A type of offshoring or offshoring and outsourcing where the location of the manufacturing facilities relatively close to the location of the consumer, usually moves the manufacturing "closer to home"
Process:
-An activity or group of activities that takes an input, adds value to it, and provides an output to an external customer. They use an organization's resources to provide definitive results.
Vendor Managed Inventory (VMI):
-An arrangement where retailers allow vendors to monitor in-store inventories, initiate orders/shipments to the store when inventories are low, and also bring the items into the store and onto the shelf, vendor can ensure their products are appropriately displayed and they can gain a better understanding of the store environment and the customers they serve.
Project:
-An endeavor in which human, material, and financial resources are organized, in a novel way, to undertake a unique scope of work, or a given specification without the constraints of cost and time, so as to achieve a beneficial change defined by quantitive and qualitative objectives.
Examples of Metrics:
-Baseball -Enron -Wells Fargo
Reefer:
-Controlled Atmosphere container" -they are refrigerated and can also control humidity, composition of the air, and pressure -because of the space that is taken up for ventilation or cooling, less product than what would normally fit can be transported. eliminates insects.
Activity on Node (AON) Diagram:
-Critical path, slack, crashing the project
Scope:
-Define process requirements and boundaries; processes are typically connected to other processes; where does your process begin and end?
Scatter Diagrams:
-Diagrams that attempt to show a possible relationship and/or correlation between two sets of data. Just because a correlation seems likely, it does not prove it exists
Crossdocking:
-Distribution of goods from an upstream supplier to a downstream customer through a distribution center with minimal handling and storage times typically less than 24 hours.
Three Key Measurement System Attributes:
-Effective -Efficient -Adaptable
Supply Chain Management:
-Efficient integration of suppliers and manufacturers, transporters, DC and warehouses, retailers and all other parties tasked with the successful delivery of the final product or service
Certification Programs:
-Evidence of meeting minimal acceptable scores/specifications -Communication and motivation tool for partners -Internally motivates change -Piece of mind
Bulk Cargo:
-Free flowing cargo, stored loose -loaded by shovel, pump, bucket, or scoop -coal, rice, grain, raw sugar, oil, sulfur
Awards Program:
-Helps increase morale -Recognition of top performers -Opportunity to increase competition and publicize top programs -Criteria help up and coming organizations
Less than Truckload Shippers (LTL):
-If a company has a reasonable amount of goods going to a single location, but not enough goods to fill an entire truck or container they have an LTL shipment
Consulting Examples:
-Life coach -Real estate agent
Malcolm Baldrige National Quality Award (MBNQA):
-Once companies learn about the world of quality certification and quality improvement programs, some will endeavor to reach new quality heights. In the United States, the MBNQA is awarded to companies based in the US that are deemed to demonstrate the very best in the area of performance excellence.
Primary Reasons People Utilize Metrics:
-Part of daily lives: resource utilizations, decisions, learning, understanding and predicting, ranking, identifying changes -In business: helping manage from afar, managing large numbers of resources and outcomes, motivating good behavior and good decisions, identifying and establishing standards, may point to required corrective actions
Project Priorities Triangle:
-Performance, Cost Time, Quality
Benefits of RFID:
-Planning thanks to more accurate and up-to-date information, inventory management, tighter security, retail checkouts
Whirlpool Example:
-Practiced Supply Chain Compression and implemented an IT upgrade -mapped all related processes, steps, responsibilities, and relationships to create more system coordination and liquidity -balanced scorecard and SCOR capability
Quality Examples:
-Quality is in the eye of the beholder (Samsung vs Apple, PC vs Mac, Tesla vs Porsche, preferred cellphone provider, Rotten Tomatoes, TripAdvisor, Yelp) -Delivering the quality message (Ford - Quality is job one, Goodyear - The best tires in the world have Goodyear written all over them, Hallmark - When you care enough to send the very best, General Electric-We bring good things to life, BOSE - Better sound through research, CNN - The most trusted name in news, Fedex - When it absolutely, positively has to be there overnight, John Deere - Nothing runs like a Deere, New York Times - All the news that's fit to print -Diagnostics: few diagnostic tools and tests that help doctors see what, if anything, may ail a patient like CAT scan, blood tests, x-rays, etc. Sometimes doctors are trying to find a root cause to a problem, other times they simply want to collect baseline measures of a healthy patient so they can compare those tests against the same patient as they age or if that patient ever develops bothersome symptoms. Just like doctors, companies use diagnostic tools to find quality issues and create solutions. -Automobiles-what you consider a high quality car is different than what your parents consider high quality -White t-shirt-people may pay different amounts for a white t-shirt depending on how much they value the shirt, maybe you paid more but you know the company treats their employees well -Extra credit in the class -News outlet- the same facts but people like it from their favorite outlet because it fits better, it's comfortable for them (Fox news, CNN, etc.). Fox recognized that certain people wanted to hear the stories being told by everyone but in a way that was relatable to them, CNN and other outlets found a way to market to specific groups as well
Flow Chart Symbols:
-Rectangle: task, operation, data collection -Diamond: decision point where multiple flow paths are possible -Oval: start/end or entrances/exits to process -Arrow: depicts flow of customer/material within the process -Square inside square: prices-depicts an entire process -Fat arrow: movement transportation -Circle: inspection requirement -Bullet: delay in process -Arrow touches circle: connector-output leads to another flow chart or into another flow chart
Established Channels of Distribution:
-Represent the chain of organizations that help bring a product into the hands of the end user, implies a certain chain of organizations have an established history of working together and perhaps coordinating supply chain actions. transactions should occur regularly and perhaps more fluidly.
Procurement:
-Responsible for acquiring materials, equipment, products and services, finding suppliers that offer the best value, purchasing negotiations, managing supplier relationships and developing long-term relationships with suppliers so consistent and improved quality can be expected in the long run
Logistics:
-Responsible for developing the transportation itinerary and finding the appropriate transportation and storage partners to successfully navigate the flow of materials from the point of origin to the destination -Distribution/Warehousing, Infrastructure Mgmt. Packaging, containerization, transportation, documentation, third party management and communication
Omni-channel Retailing:
-Retailers that commit to engage customers via catalogs, phone calls, websites, email, internet chatrooms, social media sites or mobile apps, and in stores; requires companies to have a very strong presence in the many channels they choose to meet customers (Nordstrom)
Planogram:
-Shows where each product goes in the store, how much of each item will fit on the shelf, stores can make decisions about whether to carry certain products based on if the product and its design fit the planogram. -planogram designer must consider product and packaging design and dimensions, store variety, store demographics, production location on shelf, variety, etc.
Histograms:
-Similar to the Pareto charts, a histogram attempts to categorize output. The difference here is that data falls into quantitative categories (versus qualitative categories used in Pareto charts)
SMART Metrics:
-Specific, Measurable, Attainable, Relevant, and Timely -a device that can guide metrics int the development of useful managerial metrics
Relationship between Business Processes and the Supply Chain:
-Supply chains are a series of interconnected and interdependent processes, each process is a mini-supply chain that manages inputs and outputs at a smaller scale
Process Example:
-Taking "catalog" orders at a call center or online -Processing returns of a defective Samsung phone at Verizon -Packaging all Sony television components for shipment -Making pizzas at restaurant
Downstream:
-The direction that points towards the end consumer
Differences between flat curve and tall curve
-The main difference between a flat curve and a tall curve is variability. A flat curve means that the curve has high variability. A tall curve is has low variability.
Reverse Logistics:
-The management of products that flow backward in the supply chain, away from the consumer and back in the direction of manufacturers (management of materials moving upstream)
Business Process Outsourcing:
-The outsourcing of office activities like accounting, HR, customer service, etc.
Perfect Order Fulfillment:
-The percentage of orders that are full, arrive on time, and are damage free
Last Mile:
-The portion of the supply chain between the final inventory holding facility and the end customer, the challenge of last mile is there is so much variation in order size, location, consumer expectations, etc.
Truckload Shippers (TL):
-These types of shippers specialize in moving large amounts of goods, enough to fill an entire truck
Warehouses vs Distribution Centers:
-Warehouses: provides storage, safety stock, anticipation inventory, large and/or expensive inventory and location advantages (closer to retailers, customers, shorter lead times) -DC: facilitates movement, breaks up large shipments to create assorted full trucks, LTL to TL-consolidation, lower cost
Outsourcing:
-When a company contracts an outside firm to perform services, operations, or business processes that could be or were previously performed in-house
Balking:
-When a potential customer sees the line, but never joins the line because they think it looks too long and/or too slow
Intermodal:
-When cargo is moved from one vehicle or vessel to another vehicle or vessel without directly handling the cargo. Typically the cargo would be stored inside of a standardized container or a truck trailer. The standardized container can swiftly and securely be moved from a ship to a rail car, from a rail car to a truck chassis, etc. -have become commonplace in shipping breakbulk cargo throughout the world. It is fast and secure. The ability to stack standardized containers also makes shipments rather efficient
Relationship Between Accuracy and Speed
-When companies start panicking, they start collecting every statistic possible, - having too much data creates a battle between accuracy and speed. -All the data in the world gives you the power to be accurate but it also slows you down to look at that amount of data. The more data you give people, the more scared they are to make decisions (managerial paralysis)
Scope Inflation:
-When the scope goes out of control; boundaries and stated assumptions are important so scope doesn't get out of hand and you can control size of project/scope
System of Metrics:
-a collection of measurements used to evaluate a process, person, company, etc from multiple perspectives -Basketball: points/game, rebounds/game, turnovers/game, turnovers caused/game -Academics: GPA, SAT scores, years to complete degree
Executive Dashboards:
-a computer-generated visual representation of a company's performance that is often available to executives on nearly any of their digital device; provides real-time data and historical data as well as color-coded performance centers that help managers quickly spot positive, negative, or neutral output. -give executives a "snapshot" of key organizational process and system metrics to help isolate problem areas and causes
Process Map:
-a depiction of the flow of materials through a process, including any rework or repair operations.
Free Trade Zone (FTZ):
-a geographic area sanctioned by the government where items are not under the control of customs authorities.
Line Flow:
-a manufacturing strategy and layout that typically works well in producing end items (or services) that have relatively high demand and that require very little (if any) customization. - The work centers are located in a linear path. Items begin on one end of the line and continue in a linear path to the last work center. Each work center performs the exact same work to every unit that passes through that work center. -assembly line system: can typically be stopped at any time without compromising the inventory flowing through the system. -continuous flow system: must run to completion once the process has been started ( baking bread)
Process Velocity:
-a measure of how long a unit sits in a process versus the amount of work time that is expended on the unit
Cash-to-Cash Cycle:
-a measure of the number days between the time a company pays their supplier for inventory and the time that same company is paid for the same inventory by their customer
Balanced Scorecard:
-a performance management tool that focuses on strategic activity and strategic outcome, tracks output in four different areas: financial results, customer-related results, internal business process results, and learning and growth results -aligns vision, mission, customer expectations, day-to-day operations management that allows communication of corporate progress. E
Block Diagram:
-a pictorial model of a process that outlines all the steps before and after your process as well. -it's aimed at understanding overall system so it's less detailed about the individual process you're studying. -Call center example
Benchmarking:
-a process whereby companies compare their practices and performance measurements to those of other companies, sometimes with companies that are very similar or within the same industry, but other companies will benchmark against very different companies
Customs-Trade Partnership Against Terrorism (CTPAT):
-a voluntary program developed by US customs and Border Protection for companies importing goods into the US, requires member organizations to report a significant level of detail related to supply chain partners and actions for each imported shipment, in exchange are guaranteed speedier and more hassle free customs clearance.
Pull System:
-activated by consumer demand so the supply chain will not make or store finished goods inventory but wait for a customer to place a specific order, inventory is "pulled" by the consumer -high raw materials inventory readily available to produce a specific consumer order
ISO 9000:
-an international quality certification that helps organizations understand the basics of quality management, to measure their present state of quality, and also to identify areas for improvement. -can signal a commitment to quality to an organization's supply chain partners as well as their customers. -compliance does not ensure high quality
Six Sigma:
-are methodologies designed to identify and eliminate process variations that cause defects.
Call Center Example:
-block diagram -clothing purchased and priced, design catalog, distribute catalog, customer places order, pick and package order, deliver order, support and returns
BreakBulk Cargo:
-cargo that is packaged and/or secured on a palette. can be placed inside of a standardized container or a truck trailer. -often containerized and measured in TEU's -box, bottles, cans
Neo-Bulk Cargo:
-characteristics of both bulk and break bulk -automobiles, logs, steel, cattle
Hybrid System:
-combines elements of both line flow and flexible flow layouts. In this layout, products may pass through a layout in a linear fashion, but each workstation would have the ability to allow for some level of customization. -Items requiring low degrees of customization may be created in hybrid systems that very much resemble line flow systems except for one or two areas while items requiring higher degrees of customization may only utilize line flow elements in a few parts of their facility.
Postponement:
-combines push and pull by pushing product elements that are considered standard and then allowing customers to pull product elements that can be customized -standard product elements will be produced in advance and then final production will be postponed until the customer places an order that specifies the customized elements (Subway)
Value:
-customer perspective -What do I get? (quantity, quality, size)/ What is the price? (money, waiting time, warranty)
Motorola's Six Sigma Program:
-defect elimination by finding root causes -Black belt program -training: methodologies, statistics, quality tools -incentives -uses DMAIC for existing processes (Define, Measure, Analyze, Improve, Control) -uses DMADV for designing new processes (Define, Measure, Analyze, Design, Verify) -The Motorola Six Sigma is not truly a Six Sigma. It's more like a 4.5 sigma with allowed drift. It's difficult to achieve, with a curve tall enough with low enough of a defect rate. The primary difference between the two is that Six Sigma is much more mathematically intensive in the pursuit of process performance improvement. The differences arise mostly from Six Sigma's emphasis on statistical techniques to isolate and quantify undesirable variations in process and product performance.
Importance of Goals and Stakeholders:
-developing metrics that meet stakeholder goals is first recognizing all the stakeholders and then understanding their individual goals.
Bullwhip Effect:
-fairly stable demand results in a proliferation in the amount of inventory that is carried as one travels upstream in the supply chain, start carrying too much safety stock so actual demand remains unknown -caused by: order batching, forward buying, rationing, shortage gaming
Enterprise Resource Planning (ERP):
-focus on integration of data -collects and stores data for analysis, forecasts, all business functions see/share same data, fast immediate -primary reasons for ER
Queuing Systems:
-goals: Increase efficiency, decrease waiting time for customers -Can lead to higher fixed costs in labor or manufacturing
Twenty-Foot Equivalent Unit (TEU):
-how containerized cargo is measured -One 20 foot container= 1 TEU -One 40 foot container= 2 TEU -used to measure: amount of break bulk cargo imported or exported into or out of a country, size of a container ship, the amount of cargo that enters or leaves a shipping port
Swimlane (Functional) Flow Charts:
-indicates everyone's job, who they are counting on and who's counting on them to get the job right. Each section of flow chart showed how each process will affect the next person's job. -different from a basic flow chart just shows the chain of processes and where a particular process is.
Key Performance Indicators (KPI):
-individual performance metrics identified by the company as being imperative to achieving the organization's most important goals -5 to 7 most important pieces of data that are shown on the executive dashboard -Example: a light on your car dashboard doesn't indicate exactly what's wrong with car but tells you where to start looking, KPI shows the department to start looking in -Saffron: trying to develop a dashboard that is on your computer but can also be accessed on your phone and tablet so you can work from anywhere -DOMO, Tableau: creating your own dashboards -Dataclysm (Christian Rudder): a book written by the founder of OkCupid, talked about how data helped him develop an algorithm for advertising, matching up people, etc. but at the end of the day, they had so much extra data that it wasn't helpful in business but helpful for learning about humans; women are more harsh in rating men than men are in rating women.
Supply Chains Operations Reference Model (SCOR):
-integrates supply chain members, links sourcing needs of buyer with delivery operations of the seller, complex system/software package, five categories: 1. Plan: demand and supply chain planning 2. Source: purchasing process 3. Make: manufacturing process 4. Deliver: logistics and transportation 5. Return: reverse logistics
Pipeline Inventory:
-inventory in transit between two points. Those two points establish the pipeline. So the inventory does not necessarily need to be on a truck or train, orders that have been placed but not yet received nor paid by the customer, inventory on its way to the customer -should have enough inventory to account for the demand for the period of time it takes a product to move from point A to point B - lead time.
Safety Stock:
-inventory that the company doesn't ever plan to use but is there for insurance, protects against uncertainty in demand, lead time, and supply.
Operations Management:
-management responsible for making business processes effective and efficient, help the organization create high quality products/services using the fewest resource possible (maximizing productivity)
Performance Measurement:
-measuring employee performance for the purpose of motivation, improvement, statistical reference, promotion, termination, etc.
Leaders:
-need to be able to sell the project, recruit talented team members, recruit diverse team and stay organized -leverage: motivate and get the most of your team -corporate politics: lead successful project, don't take advantage of team, share accolades and responsibility for shortcomings, word of mouth
Total Quality Management:
-seeks to address the management of quality at all levels of an organization and/or supply chain. Methods: 1. Customer Focus: The customer defines quality, so all attention should be focused on the customer and their evolving definition of quality. The customer is the guide for employees, management, supply chain partners, and all continuous improvement efforts. 2. Involvement: A supply chain must work to involve all those within the supply chain to design, produce, and deliver quality to the customer. This means management must work to keep employees engaged in the quest for quality. Managers must also develop relationships with supply chain partners to collaborate and share in an effort to maintain their customer focus. 3. Continuous Improvement: Quality evolution is never ending. Companies need to preach continuous improvement to all members of the supply chain. More than that though, managers must reward continuous improvement efforts and achievements. Only by rewarding supply chain members for continuous improvement efforts can companies be sure that a customer focus is maintained.
Crashing the Project:
-shortening the time of the project by increasing the number of resources usually in the most cost effective manner. always choose the cheapest solution to crash.
Keys to Designing a System of Metrics:
-stakeholders and goals -good metrics -simplicity -completeness -redundancy -continuous improvements -leadership
Lean Manufacturing:
-strives to meet consumer demand and desires but with minimal inventory levels and minimal supply chain wastes; JIT
Forward Buying:
-taking advantage of sales
Quality:
-the ability of a product or service to meet a consumer's expectations
Vertical Integration:
-the act of a company taking on additional supply chain responsibilities that were formerly done by outside parties. There are two classes of vertical integration: -Forward integration: Taking over supply chain responsibilities formerly performed by downstream supply chain partners. (Example: A bakery decides to open up a sandwich shop and use their own bread) -Backward integration - Taking over supply chain responsibilities formerly performed by upstream supply chain partners. (Ex: A bakery decides to purchase a flour company)
Slack:
-the amount of time an activity or path can be delayed with impacting the length of the critical path
Total SCM Costs:
-the costs of every process, material, fee, defect, etc that runs through the supply chain.
Upstream:
-the direction that points towards the supplier
Critical Path:
-the longest path in terms of time in the AON network diagram, path dictates the expected completion time of the project, items on this path must be completed in time in order for project to be completed on schedule
Economic Ordering Quantity (EOQ):
-the lot size (Q) that will minimize total annual inventory cost (TC), the optimal lot size -annual holding cost= annual ordering cost -if AHC is greater than AOC, holding costs are too high so decrease lot size to reduce TC (you are to the right of EOQ on the graph) -if AOC is greater than AHC, holding costs are too low, so increase lot size to reduce TC (to the left of EOQ on the graph)
Productivity:
-the organizational perspective -What did I make? (outputs)/What was the cost? (inputs)
Cycle Time:
-the pace at which product must move through the assembly line in order for the assembly line to keep pace with demand, the max amount of time allowed for work on one unit at each station -if cycle time is 30 seconds, then one unit comes off the production line every 30 seconds. You could make 120 items/hour.
Valuable Team Members:
-understand your own duties, required deliverables, time frame, -be your own leader- follow rules outlined for leadership while managing own progress, don't complain, don't constantly ask what to do next -understand organizational politics-watch managers to see how people fail/succeed, understand how your actions impact your career, what does it take to get chosen for future high profile projects -growth- getting better -no ego-be known for right reasons
Dunnage:
-used to fill the empty spaces inside the packaging of a product -Materials: Plastic, Wood, Styrofoam, Steel -Types: inflatable, Void Fillers, Bubble wrap
Types of Benchmarking:
1. Competitive Benchmarking - This type of benchmarking is used when companies want to measure their processes, programs, and outcomes versus those of their direct competitors. Examples: Honda benchmarking Toyota, Dell benchmarking Apple 2. Functional Benchmarking - When a company benchmarks an organization that is successful in an area where their processes reflect similar inputs, outputs, or values. Examples: A Ford dealership benchmarking customer service programs at Southwest Airlines. Boeing benchmarking quality control techniques at Toyota. A restaurant benchmarking a hospital for cleaning/sanitation techniques. 3. Internal Benchmarking - Some organizations are so big that they can benchmark one department versus another. In reality, even smaller organizations can do some kinds of internal benchmarking. (General Electric's energy group benchmarking hiring practices from General Electric's healthcare group)
Additional Process Considerations:
1. Corporate Considerations- culture, corporate image, employees (how will it impact hiring, training, etc?) 2. Operational Concerns- service and arrival rates, training and continuous improvement
Competitive Priorities:
1. Cost-material costs, production costs, packaging costs, all costs throughout the supply chain 2. Quality-design, material and production, level of quality, consistent, service quality 3. Flexibility-product or customization flexibility, volume flexibility, mass customization, facility, employee, service flexibility 4. Speed-lead time, on time delivery
Considerations in Choosing Suppliers:
1. Cost/Price-delivery, shrinkage, insurance, financing, taxes, other industry specific charges 2. Quality-commitment to improvement, consistency 3. Time-reliability, lead time, on-time delivery 4. Flexibility-order sizes, lot sizes, frequency of delivery/orders, specifications, customizations, services
TQM Principles:
1. Customer-needs of today, desires for tomorrow, dimensions of quality 2. SC Involvement: Internal/External- communication, learning, teams, training, mentoring, rewards, incentives 3. Continuous Improvement Culture-across the supply chain, improvement programs, knowledge management, benchmarking
Four Steps in Project Management:
1. Define the project-clarity of objectives and eliminate ambiguities 2. establish product priorities- choose two types of quality: cost, time, performance 3. work breakdown structure- break work items into smallest units 4. track project progress- on-time, ahead of schedule, behind?
Phases of Business Process Improvement:
1. Desired State-interview the client to find what they want, identify goals, objectives and metrics. goals must be quantifiable , restate what you've heard 2. Present State-interview, observe and collect data. process maps and data inspection, utilize the metrics from step 1. 3. Gap Analysis- illustrate the gap between present and desired state, discuss with clients about why it exists, don't come up with solutions 4. Develop Project Scope- what GAPS will be addressed? establish goals and desired outcomes, what will be investigated and developed? 5. Collect data, share data, analyze- deep internal investigation, external investigation, get feedback, consider possible elements of solution 6. develop solutions and recommendations-start with two options: change nothing or eliminate process, get innovative (embrace the repugnant) 7. develop an implementation plan- be specific, create timeline, training and development considerations outlined, anticipated problems and anticipated benefits
What Does Systems of Metrics Measure?
1. Effectiveness: having the right output at the right place at the right time, meeting your customers' expectations 2. Efficiency: In the pursuit of effectiveness, minimizing resources and eliminating waste. 3. Adaptability: flexibility of the process to handle special requests and changing customer expectations. Often it is not the problem that matters; it is how the company handles the problem
Three Requirements of a Good Process:
1. Good intentions- goal-oriented, stakeholders considered, effective and efficient, outputs are desired 2. Reproducible results- documentation, easily understood, training and hiring results, scale and capacity issues, adaptable 3. Measurable and Manageable: entire system considered accountability, good metrics, easy to identify problems
Steps for Benchmarking:
1. Identify area to benchmark - Benchmarking is not a wide scale effort to compare a company as a whole, rather it identifies processes or programs that can be easier to compare. 2. Identify Leaders - Once a process or program is set to be benchmarked, find those organizations that have been identified as leaders in those categories. 3. Contact Leaders, Gather Data - Investigate how leaders act and perform. How does your process measure up? Identify areas that require improvement. 4. Analyze, Act, Follow-up - Plan, initiate change, measure, assess progress.
Costs of Quality:
1. Internal Failure Costs: don't reach the customer, Problems found and fixed within the supply chain identified within the supply. 2. External Failure Costs: problems that reach the consumer, anything that impacts a customer's perception of the company's reliability; costs represent the worst-case scenario and have the highest potential for losses; associated with "repairing" damage caused from delivering substandard items or services. Examples: reverse logistics, warranty, late shipment, loss of future business costs, damaged brand, etc. 3. Appraisal Costs (Assurance costs)- Where are the problems? Costs of monitoring quality in stable systems or systems producing sub-standard quality, costs associated with finding root causes of quality deficiencies, such as the costs of measuring, evaluating, auditing. Examples: Process Inspections, Inspector and consultant fees, Labs time/fees, System interruptions, Costs associated with interviewing employees about the process 4. Prevention Costs: Fix present problems, prevent future problems - costs associated with efforts to eliminate any identified quality related problems or costs related to reducing the potential for quality problems in the future. Examples: HR increasing/improving employee training. Changing hiring policies to attract better employees. Materials related efforts: Choosing better suppliers, purchasing premium raw materials, parts, and components. Machines: maintenance, upgrades. Improved packaging. Corporate quality programs. Better management of 3rd parties and efforts to improve buyer-supplier relationships.
Three Parts of Social Responsibility:
1. Legal and Ethical Behavior 2. Sustainability 3. Commitment to the community
Six Step Evaluation of a System of Metrics:
1. Make the List - Stakeholder desires, KPIs 2. Identify metrics that create discord 3. Look for Redundancy in KPIs 4. How is data collected? 5. Analytics Strategy among corporate leadership 6. Data visualization
Requirements of Good Metrics:
1. Measurable-require a reliable scale 2. Easily understood- metrics can help people make good decisions. Do the stakeholders see the connection between the metric, outcomes, desired behaviors, etc. ? If not, how will the metric provide guidance? 3. Attainable-do the stakeholders feel they can achieve the goals/be successful? 4. Strategically oriented- align goals/objectives with desired actions 5. ease of measurement-easy to implement/capture, low effort level 6. provides value-what can be learned from the metric? 7. provides guidance- does it point to corrective action? 8. cheater proof
Common Reasons for Bad Processes:
1. Never was good-ambiguity, misalignment, miscommunication 2. Used to be good-market evolution, miscommunication 3. Limitations- development of poor or limited processes, lack of appropriate tools and tech
Primary Steps to Consider When Selling Consulting Recommendations:
1. Present a valuable idea-list values, objectives, and goals, recommend basic solutions and anticipated benefits 2. Convince on all fronts-cost-benefit analysis, value to work ratio, organizational fit 3. How will success be measured? -explain the GAP and the path to success with metrics 4. Implementation-making the idea happen
Results of Utilizing Poor Metrics:
1. Primary business processes not being manageable 2. poor outcomes 3. lower morale 4. need for increased external regulation 5. high costs and low efficiency when employees push for perfection
How can supply chains be more sustainable?
1. Procurement-purchasing better materials, fewer materials, safer materials 2. Logistics-transportation efficiencies, reduce fuel consumption 3. Manufacturing and Operations, Facilities-energy consumption, defect reduction, minimize emissions 4. Reverse Logistics 5. Supply chain sustainability catalysts- large powerful companies can become motivators for others to be sustainable 6. Rethink design 7. Sustainability Accounting- companies can't fix a problem until they find the source 8. Develop sustainability metrics-help companies find problems, track improvements, motivate employees 9. Life Cycle Analysis-attempts to quantify the environmental impact of every step in the supply chain, helps companies identify different types of problems in different parts of the supply chain.
Dimensions of Quality:
1. Product (tangible)-cars, cellphones, clothing, etc, looks at performability, reliability, durability, features, aesthetics, reputation/brand, serviceability, service response 2. Service (intangible)-Restaurants, medical, retail, entertainment, services cannot be inventoried, location and hours of operation can be very important, services are usually produced and received simultaneously, highly visible, some services have very low barriers to entry/exit
Key Things to Consider When Making an IT Investment:
1. The purchase- knowing your company and supply chain, knowing your needs, purchase/lease? 2. The implementation- technical considerations, people, business processes, testing of system 3. The future- upgrades, constant changes and upgrades in technology, evolving businesses and supply chains
Value of Process Improvement and Project Management on Careers:
1. Vital to corporate careers-no matter what major 2. resume builder- little stories about your career; grades and degrees are useless 3. corporate career- successful leaders get more money, responsibility, power, and have the ability to choose projects and teams.
Gurus of Quality:
1. W. Edwards Deming: helped organizations foster a culture of continuous improvement by developing a list of quality recommendations that are often just referred to as Deming's Fourteen Points. 2. Joseph Juran: emphasized the Quality Trilogy-quality planning, quality improvement, and quality control. 3. Phillip Crosby: "Quality is Free"-argued a lack of quality may have lower costs, but it would eliminate any value. The more that's invested in quality, the greater the value of the product or service
Developing a Single Metric:
1. Who are the stakeholders? 2. Goals and desired outcomes, behaviors 3. Which decisions will be made based upon this metric? 4. How will data be captured? 5. How will data be consumed/viewed? 6. Must be a visionary, predict the future with this new metric
Attributes of a Good Consultant:
1. data skills-data collection and analysis 2. values feedback-seeks and uses it 3. understands people-solutions work for humans 4. change agent-anticipate learning curve and resistance to change 5. desire to help people 6. creativity 7. values simplicity-solutions easy to understand
What a Good Consultant Shouldn't Do:
1. making assumptions 2. developing solutions too soon 3. listening to client's pre-fabricated solutions 4. scope inflation 5. sticking to a dead-end scope-knowing when time to quit 6. maintaining happiness-change is difficult
Consequences of Utilizing Poor Metrics:
1. primary business processes not being manageable 2. poor outcomes 3. lower morale 4. need for increased external regulation 5. high costs and low efficiency when employees push for perfection
Value of Flowcharts for the Organization:
1. quality control tool 2. information technology -What type of software will be used to facilitate the process? -Where will data be collected? - Data needs for Marketing, Finance/Accounting, SCM, Database development and IT infrastructure requirements 3. Required Resources, Quality of those Resources -Employees and Managers (Skills, Training, Staffing requirements to meet demand) -Materials and Capital Equipment -Money 4. Operational Considerations -What can be learned through Testing? -Potential failure points in process -Average service encounter time, Variability concerns -System Capacity: Operational difficulties, Bottlenecks, Process flexibility -Waiting Line Management: Customer Service, Facility, Infrastructure, and Staffing Requirements *Marketing -Customer, Suppliers, Product Line, Forecasting, Branding *Finance -Project Feasibility, Return on Investment *Accounting and IT -Costs and Data Management
Primary Stages and Steps in Designing a Business Process:
Define Goals and Parameters: 1. goals, values, and stakeholders 2. block diagram 3. establish the scope (the parameters) Define Success: 4. define the service 5. measurement and management considerations (metrics and data) Build it, Test it, Improve it: 6. primary steps detailed 7. develop a process map 8. evaluate the process before rolling out
Ocean/Waterway Transport:
Pros: -Low Cost (vs. Air Transport) -High Cube cargo (Savings of money per mile) -High Weight cargo (Savings of money per cargo ton) -Transport almost any form of Cargo Cons: -Much Slower than Air - Increase in time, theft, damage, required insurance -Port Capabilities - Safety, Handling, Warehousing Channel Depth Challenges - Summer, Winter
Air Transport:
Pros: -Speed -Fastest growing transport mode - Becoming more affordable -shorter lead time -lower inventory levels required -prevent downtime -increased shelf life Cons: -Extremely expensive -Incompatible containers - Intermodal challenges Types: -Overnight -Freight
Railcar Transport:
Pros: Total Cost - More affordable than road transport Fuel Cost - Not as susceptible to increases in energy/fuel costs Load - Ability to carry heavier loads than trucks (road weight limits) Fewer in-transit regulations - Better for long distances More capable in poor weather conditions Cons: -Damage - Susceptible to loss/damage due to in-transit vibrations (about 3%) -On-time reliability - Very poor, 70% in a good year -Speed of shipment - Total trip's average speed typically less than 30mph -Access to infrastructure required - tracks, loading equipment
Shortage Gaming:
result of rationing; customers order more than they actually need to get the required amount of inventory
Cow Path Theory:
-illustrates that just because a process is effective in providing expected results, it does not mean the process is efficient
Reneging:
-When a customer joins the line, but gets frustrated and leaves the line
Requirements of a Good Metric:
1. Measurable 2. Easily understood 3. Attainable 4. Strategically oriented- aligned goals with desired actions 5. Easy to measure 6. Provides value 7. Provides guidance 8. Cheater proof
Benefits of High and Low Inventory Levels
PROS for High Inventory (Cons for Low): -buying the Inventory - Cost to purchase (consider quantity discounts) -stocking out- Poor customer service levels -paying the purchasing people- Costs to order inventory -transportation: Ease, Cost CONS for High Inventory (Pros for Low) -Cost of holding ixnventory -Materials handling - cost to handle inventory -LOSS of Inventory - shrinkage/obsolescence -ties up your cash-capital investment options
Road Transport:
Pros: -Accessibility, Flexible(Any Product), -Versatile(Any Place w/ roads) -Reliable (On-Time Reliability Very High - 95%) -Speed - 2nd fastest mode of transport -Much Cheaper than Air -Vital to Intermodalism Cons: -Vulnerable to increases in fuel prices, tolls, taxes, fees -Long Trips usually mean excessive regulations - -Multiple states; Multiple weight limits, driver and truck regulations -One driver, one truck, insurance -LTL's and LCL's will usually make many stops
Rationing:
suppliers don't have enough inventory to satisfy demand so they give a percentage of what was ordered
