SCM 3301 Exam 2 (ch.6) UH

Dependent demand

component parts & subassemblies (no need to forecast)

"Master Production scheduling"

what does MPS stand for?

"rough-cut capacity planning"

what does RCCP stand for?

CPFR definition

"a set of business processes that entities in a supply chain can use for collaboration on a number of retailer/manufacturer functions toward overall efficiency in the supply chain"

Medium range

(6-8 months) end-items/level 0 include: -RCCP -MPS -DRP

Short Range

(days/weeks) components/subassemblies includes: -CRP -MRP -Bill of materials + inventory status -production activity control -purchase planning & control

Long range

(more than 1 year) product groups/families. Include: -RRP -APP -Demand management

Some implementation challenges of an ERP System are:

-ERP processes are specific -ERP processes are stable -ERP implementation are expensive $50-$500M -ERP systems centralize control

The 3 major ERP providers

-SAP -Oracle -Microsoft

Disadvantages of ERP systems

-high cost and time to implement the new system -the change in the adopting firm is complex

Advantages of the ERP system are that:

-it uses a single database and a common software infrastructure to provide a broader scope and up-to-date information, enabling better decision making throughout the supply chain by management. -it provides real time info and swiftly communicates info to supply chain members -it reduces supply chain inventories due to the added visibility throughout the entire supply chain. -it helps organizations to standardize manufacturing processes. -Also enables an organization to efficiently track employees' time and performance and to communicate with them via a standardized method.

Common mistakes ERP systems implement

-lack of top management commitment -lack of adequate resources -Lack of proper training -lack of communication (mentioned in the book) -Viewing the implementation as only a technological challenge *biggest problem* -And giving consultants total control of an implementation.

Primary elements of CPFR

-strategy & planning -demand & supply management -execution -analysis

The benefits of CPFR

-strengthens partner relationships -provides analysis of sales and order forecasts -use point-of-sale data, seasonal activity, promotions, new product introductions and store openings or closing to improve forecast accuracy. -Manages the demand chain and proactively eliminates problems before they appear. -Allows collaboration on future requirements and plans -uses joint planning and promotions management -integrates planning, forecasting and logistics activities -provides efficient category management and understanding of consumer purchasing patterns. -provides analysis of key performance metrics (e.g. forecast accuracy, forecast exceptions, product lead times, inventory turnover, percentage Stockouts) to reduce supply chain inefficiencies, improve customer service and increase revenues and profitability.

MAD formula

=(the Sum)|e| / (n)

The real value of CPFR

Comes from an exchange of forecasting info rather than from more sophisticated forecasting algorithms to improve forecasting accuracy. The fact is that forecasts developed solely by the firm tend to be inaccurate. When both the buyer and seller collaborate to develop a single forecast, incorporating knowledge of base sales, promotions, store openings or closings and new product introductions, it is possible to synchronize buyer needs with supplier production plans, thus ensuring efficient replenishment. The jointly managed forecasts can be adjusted in the event that demand or promotions have changed, thus avoiding costly corrections after the fact.

Independent demand

End-item (needs to be forcasted)

Materials plan

Includes: -APP -MPS -MRP

Capacity plan

Includes: -RRP -RCCP -CRP

Net requirement

The unsatisfied item requirement for a specific time period.

"Aggregate production planning"

What does APP stand for?

"Bill of Materials"

What does BOM stand for?

Collaborative planning, forecasting and replenishment

What does CPFR stand for?

"Capacity Requirments planning"

What does CRP stand for?

"Distribution requirements planning"

What does DRP stand for?

Mean Absolute Deviation

What does MAD stand for? ____

"material requirements planning"

What does MRP stand for?

"Resource Requirements planning"

What does RRP stand for?

Microsoft

Which Major ERP provider has 10% of the market share

Oracle

Which Major ERP provider has 15% of the market share

SAP

Which Major ERP provider has 22% of the market share

mixed production strategy

Workforce remains constant, and capacity is adjusted in other ways such as overtime, additional shifts, subcontracting, and contract workers.

kaizen

___-means continuos improvement, strong incremental improvement.

Production strategies

___: includes -chased production strategy -level production strategy -mixed production strategy

Implement challenges

_____: include -ERP systems impose implied process logic on real processes -They also encourage companies to accept total integration throughout their enterprise. -path of least resistance: implementing "out-of-the-box" ERP processes.

The purpose of ERP system

______: include ERP systems are designed to minimize the silo effect -Most organizations are organized functionally. -Business processes are performed across functions -ERP systems are designed to integrate business functions.

Operations planning

_______- is usually hierarchical and can be divided into 3 broad categories: 1 long-range 2 intermediate / or medium range 3 short-range planning horizons

Gross requirements

a time-phased requirement prior to considering on-hand inventory and lead-time.

Planned order release

a time-phased, specific order to be released to the shop or supplier.

chased production strategy

adjusts capacity to match demand, and inventory remains constant. The workforce fluctuates from month-month.

level production strategy

adjusts inventory to react to demand, and capacity remains constant. Suited for firms that require highly skilled labor.

Safety stock

amount of extra inventory to protect against uncertainties in demand, supply quality and lead time.

MAD definition

an indicator of forecast accuracy based on an average of the absolute value of the forecast errors over a given period of time. The measure indicates, on average, how many units the forecast is off from the actual data.

Forecast Error formula

e(t)=(At-Ft)

Bill of materials

engineering document that shows all component parts and subassemblies making up an end item.

Capacity planning

excess or insufficient capacity: machines and labor. resource requirements planning: APP level. Rough-cut capacity plan: MPS level. Capacity requirements planning: MRP level.

The Primary modules of an ERP system

include: -accounting -finance -customer relationship management (CRM) -Human resource management -manufacturing -supplier relationship management -supply chain management

The Objective of CPFR

is to optimize the supply chain by improving demand forecast accuracy, delivering the right product at the right time to the right location, reducing inventories across the supply chain, avoiding stockouts and improving customer service.

Manufacturing resource planning

linking supply chain functions with financial functions.

Strategy & Planning

one of the Primary elements of CPFR that: -Establishes the ground rules for the collaborative relationship -determines product mix and placement -develops event plans for the period

Analysis

one of the Primary elements of CPFR that: -Monitors planning and execution activities for exception conditions -Aggregates the results and calculates key performance metrics (KPI-Key performance indicator) -shares insights and adjusts plans for continuously improved results.

Demand & supply management

one of the Primary elements of CPFR that: -forecasts the consumer (point-of-sale) demand for the retailer as well as order and shipment requirements for the manufacturer over the planning horizon.

Execution

one of the Primary elements of CPFR that: -places orders, prepares and delivers shipments -receives and stock products on retail shelves -records sales transactions and making payments

Time fence

separates planning horizon into firm and tentative segments.

System nervousness

small change in upper level production plan leads to a large change in the lower level production plan.

Material Requirments planning

software-based production planning and inventory management system used for computing dependent demand and timing. Is the detailed planning process for component parts to support the master production schedule. It is a system converting the end items from the master production schedule into a set of time-phased component part requirements.

Parent

the item generating the demand for lower level components (end item)

lot size

the order size for each component or subassembly; maybe determined by supplier (FOQ-fixed order quantity), (LFL-lot for lot), or the firm (EOQ-economic order quantity).

Components

the parts demanded by a parent.

Explosion

the process of converting a parent item's planned order release into component gross requirements.

Available to promise

the uncommitted portion of the firm's planned production (or scheduled MPS). calculation: difference b/w confirmed customer orders and planned production (MPS)

Distribution Requirments planning

time-phased finished goods inventory replenishment plan in a distribution network.