Supply Chain Management
Fluctuating operations lead to
1. Backlog 2. Customer Satisfaction 3.System Buffering
Why do firms care about tiers of suppliers?
1. Costs 2. Quality of good 3. Reliability 4. Innovation 5. Evolution
Why do firms care about tiers of customers?
1. Derived demand 2. quality of chain 3.Market Orientation 4. Reverse logistics 5. evolution
Current Issues in Logistics
1. Empowered Customer 2. Technology 3. Globaliztion 4. Increased Competition from deregulation
Improving Demand Planning (4)
1. Improving Information 2.Reducing Lead time 3.Redesigning the product 4. Sharing Information
Three types of inventory
1. Raw Materials 2.Work-In-Progress 3.Finished Goods
Forecast Quality
1. Short term forecasts are more accurate than long term forecasts 2. Aggregate forecasts are more accurate than detailed forecasts 3. Information from more sources yields a more accurate forecast
Reasons for carrying inventory
1. Uncertainty 2. Economies of Scale
Customer Service is used to
1.Differentiate product in the market 2.Charge a premium price 3.Improve customer satisfaction and loyalty
Total logistics cost components are
1.Place/customer service costs 2.Transportation costs 3.Warehousing costs 4.Order processing/information systems costs 5.Lot quantity costs 6.Inventory carrying costs
Competitive advantage
A business is profitable if the value it creates exceeds the cost of performing the value activities. To gain competitive advantage over its rivals, a company must either perform these activities at a lower cost or perform them in a way that leads to differentiation and a premium price
What is the goal of logistics?
Achieve customer service level while minimizing the total logistics cost
Assemble to Order (ATO)
Assemble a product (from WIP inventory) when a customer places an order
Uncertainty in Supply
Availability and prices
Demand Planning
Both forecasting and managing customer demand to reach operational and financial goals
Customer vs. Consumer
Consumer uses product, customers are businesses
Derived demand
Demand derived from consumer demand that creates the supply chain from consumers to suppliers ( right to left )
Engineer to Order (ETO)
Design and make a product to customer specifications
Order Cycle
Determines Customer Experience Determines cashflow
Inventory models are
Deterministic Stochastic
Tier/Echelon
Different layers of customers/suppliers
Focal Firm
Firm at the center of the supply chain
Customers
Firms on the right of focal firm
Suppliers
Firms that are on the left of the focal firm
Seasonal Stock
For specific seasons
Demand Management
Influencing either pattern or consistency of demand
In-transit Stock
Inventory that is on its way
Downstream
Left to right, consumers
Make to Order (MTO)
Make a product (from raw materials) when a customer places an order
Make to Stock (MTS)
Make and stock products in anticipation of customer demand
Minimize cost or maximize revenue?
Maximize revenue
Products are defined by
Physical and Intangible aspects
Which P of marketing does logistic affect?
Place: where to sell, how to deliver, when to deliver
two types of forecasts
Point and range forecasts
Demand Forecasting
Predicting Future Demand
Determining customer service levels based on
Product availability Cost/Revenue Trade-offs Customer Classification Service Audits
Upstream
Right to left, finished product to raw material, suppliers
CPFR
Sharing Info with suppliers and customers to improve coordination
Uncertainty in demand
Stock out cost vs. inventory carrying cost
Consumer Demand
The origin of the supply chain
Lead Time
The time between ordering a good or service and receiving it.
Value Chain
This concept divides a company's activities into the technologically and economically distinct activities it performs to do business. We call these the 'value activities.' The value a company creates is measured by the amount that the buyers are willing to pay for a product or service
What utilities do logistics provide
Time and Place Utility
Uncertainty in Production
To have a smooth flow of production
Uncertainty in Transportation
Transportation could be unreliable
Third party entities
Unrelated entities that contribute to supply chain (gov't, warehousing, consulting)
Inbound
What the company receives
Outbound
What the company ships
Safety Stock
What you don't expect to sell
Cycle Stock
What you expect to sell
Logistic Management
is that part of supply chain management that plans, implements, and controls the efficient, effective forward and reverse flow and storage of goods, services and related information between the point of origin and the point of consumption in order to meet customers' requirements.
Supply Chain Management
is the integration of key business processes from end user through original suppliers that provides products, services and information that add value for customers and other stakeholders.
