Supply Chain Management: Final Exam
Know the different types of supplier relationships.
- Adversarial Relationships: Relationships characterized by distrust and limited communications. - Arm's-length Relationships: Relationships limited to simple purchasing transactions. - Acceptance of Mutual Goals: A collaborative relationship that lacks the commitment of a full partnership. - Full partnerships: Relationships that have close working relations, trust, mutual respect, and highly integrated operations.
Why do we use S&OP?
- Availability - Decision Making - Visibility: Gives a complete picture - Financial Integration - New Product Introduction - Increase Agility and Communication
What are the principles of TQM? (Total Quality Management)
- Customer focus - Leadership - Involvement of people - Continual improvement - Process approach - System approach to management - Factual approach to decision making - Mutually beneficial supplier relationships
What is a bottleneck?
A process in a chain of processes such that its limited capacity reduces the capacity of the whole chain. They are limitations that have lower output than other workstations on the line, slow the process, and reduce efficiency. To improve efficiency, reduce time at the bottleneck workstation.
What makes a forecast more/less accurate?
- Forecasts are not perfect - Accuracy decreases as time horizon increases - More accurate for groups than individuals
Risk of applying lean to supply chain.
- Increased stress on workers - Fewer resources available if problems occur - Supply chain disruptions can halt operations
Know Customer Satisfaction Model GAPS and their definition.
- Knowledge: Understand customer needs. - Standards: Internal performance and customer expectations. - Performance: Standard/actual. - Communication: Actual performance/communication about performance. - Perception: Customer's view of performance/actual performance. - Satisfaction: Customer's perceptions and expectations of performance.
Know the various forms of intermodal transportation.
- Piggyback services (truck and rail) - Trailer on flatcar (TOFC) - Container on flatcar (COFC)
What is the use of Cp and Cpk? What do they measure?
Cp is a measure of capability that compares the specification width with the process width- not adjusted for lack of process centering. Cpk is a measure of capability that compares the specification width with the process width- adjusted for lack of process centering.
What are the 3 P's?
- Profit - People - Planet
According to ISM, what is the operational importance of SCM?
- Provide an interrupted flow of materials and services to operating systems - Keep inventory investment at a minimum - Maximize quality - Find and develop competent sources of supply - Standardize requirements for products/services - Purchase materials and services at the lowest total cost of ownership - Foster cross-functional relationships
What are the various types of inventory found in the supply chain?
- Raw materials - Work-in-process (WPI) - Finished goods inventories/merchandise - Tools and supplies - Maintenance and repairs (MRO) inventory - Goods-in-transit to warehouses or customers 0
Know the factors of customer satisfaction.
- Reliability - Responsiveness - Access - Communication - Credibility - Courtesy - Competence - Tangibles - Knowing the customer
Types of Quantitative Forecasting.
- Time series analysis models: forecasting models that compute forecasts using historical data arranged in the order of occurrence. (Past history is best predictor of the future) - Naïve model: a simple forecasting approach that assumes that recent history is a good predictor of the near future. - Moving average: a forecasting model that computes a forecast as the average of demands over a number of immediate past periods.
The goal of trade agreements.
- To reduce barriers to U.S. exports - To protect U.S interests competing abroad - Enhance the rule of law in the FTA partner country or countries
Drivers of SCM
- Visibility - Consumer Behavior - Speed - Competition - Information Technology
What are characteristics commonly found in lean systems?
- Waste reduction - Continuous improvement - Use of teams - Work cells - Visual controls - High quality - Minimal inventory - Output only to match demand - Quick changeovers - Small lot sizes - Lean culture
What is lean? What is the ultimate goal of lean?
-The lean systems approach is a philosophy that emphasizes the minimization of the amount of all resources used in the various activities of the enterprise. It tends to achieve: - Greater productivity - Lower costs - Shorter cycle times - Higher quality Its ultimate goal is to achieve a balanced system- one that achieves a smooth, rapid flow of materials and/or work through the system.
Types of operational layouts and when they are used.
Fixed-Position layout: A layout used when the product cannot be moved during production. Functional layout: A layout that groups together similar resources. Product layout: A layout where resources are arranged according to a regularly occurring sequence of activities. Cellular layout: A layout where resources are arranged to facilitate small lot, continuous flow production.
Product-Process Matrix
1. A project is a one-time or infrequently occurring set of activities that create outputs within pre-specified time and cost schedules. - Building a custom home - Designing a video game - Planning a wedding 2. A job shop is a flexible process structure for products that require different inputs and have different flows through the process. - Automobile dealers' service shops - Beauty salons - Department stores 3. A batch process is a process in which goods or services are produced in groups (batches) and not in a continuous stream. - Local bakery - Cinemas 4. A repetitive process is a process in which discrete products flow through the same sequence of activities. When many customers want a similar product. - Cellphone assembly - Lunch at a buffet restaurant 5. A continuous process is a single-flow process used for high-volume, non-discrete, standardized products. - Check and mail - Oil Refinery
Know the steps of a make/buy analysis.
1. Assess Fit with the Firm's Core Competencies 2. Evaluate the Suitability for Outsourcing 3. Evaluate the Reasons for Outsourcing 4. Assess all Relevant Quantitative Costs 5. Assess all Qualitative Factors 6. Review the Capabilities of Suppliers 7. Make and Implement a Decision 8. Monitor the Decision and Revise it as Necessary
What are the 5 principles of lean?
1. Identify customer values 2. Focus on processes that create value 3. Eliminate waste to create "flow" 4. Produce only according to customer demands 5. Strive for perfection
8 forms of waste.
1. Overproduction- processing more units than needed. 2. Waiting- resources wasted waiting for work. 3. Transportation- units being unnecessarily moved. 4. Processing- excessive or unnecessary operations. 5. Inventory- units waiting to be processed or delivered 6. Motion- unnecessary or excessive resource activity. 7. Product defects- waste due to unnecessary scrap, rework, or correction. 8 Underused people- waste of human potential, non-utilized people's talents, skills and knowledge.
Know the four types of cost of quality and examples of each.
1. Prevention Costs: Costs associated with efforts to prevent product defects and associated failure and appraisal costs. - Planning - New-product reviews - Investments in more capable processing equipment - Training - Process control - Quality improvement projects 2. Appraisal costs: Costs resulting from inspections used to assess quality levels. - Incoming material inspections - Product and process inspections - Inspection of staff - Tools - Test equipment - Development of test procedures 3. Internal failure costs: Costs associated with quality failures uncovered before products are delivered to customers. - Scrapped materials - Rework and salvage - Excess material inventories - Costs of correction 4. External failure costs: Costs associated with quality failures uncovered after products reach customers. - Complaint settlements - Loss of customer goodwill and future sales - Returned materials - Warranty - Field service or repairs
Types of demand management.
1. Pricing/Promotion/Incentives - Influence timing or quantity of demand 2. Order Scheduling - Manage timing of order delivery/fulfillment 3. Encourage shifting to alternate products 4. Revenue/Yield Management
What is ISO14000?
A family of standards related to environmental management. (EMS) It identifies and controls the impact of activities, products, and services. It improves environmental performance continuously. It implements a systematic approach to setting and achieving goals.
What is demand management?
A proactive approach in which managers attempt to influence the pattern of demand.
What does sustainability mean from an operational standpoint?
It focuses attention on people. The operations of a business directly or indirectly affect: - Customers - Workers - Suppliers - Investors
What is a process? What is Juran's Law? What is process think?
A process is a system of activities that transforms inputs into valuable outputs. - It uses resources to turn inputs into valuable outputs. - Each process has a structure that defines, orders, and links the activities included in the operation. Juran's law says that a key premise of process thinking: - 15% of operational problems are the result of human errors. - The other 85% are due to systemic process errors. - We should focus our attention on processes first. Process thinking is a way of viewing activities in an organization as processes rather than as departments or functions. - This way of thinking focuses one's attention not only on an operation's outputs, but also on the processes responsible for these outputs.
What is sales and operation planning? (S&OP)
A process to develop tactical plans by integrating customer-focused marketing plans for new and existing products with the operational management of the supply chain. Ensures that the tactical plans in all business functions are aligned and in support of the company strategy.
What is the bullwhip effect?
A small disturbance generated by a customer produces successively larger disturbances at each upstream stage in the supply chain.
Know the purpose of a CRM.
A software and information technology-based approach used to collect and analyze customer data from numerous sources for the purpose of developing strategically appropriate relationships with customers. Improve relationships with customers!
What is a supplier scorecard and what is its purpose?
A supplier scorecard is used to report and track a supplier's performance on key performance indicators (KPI). They are used in several ways: - Some firms categorize suppliers based on overall score. - Firms give preferred suppliers the opportunity to participate in product development and to win new business.
What is a supply chain and its components? (Upstream, downstream, tier suppliers). Be able to identify the position in the supply chain.
A supply chain is the global network of organizations and activities involved in designing, transforming, consuming, and disposing of goods and services. The supply chain flows downstream (to consumer) and upstream (to suppliers). Tier 3 supplier --> Tier 2 supplier --> Supplier --> Manufacturer --> Distributor --> Retailer --> Consumer
Know the difference between a variable data and an attribute data.
A variable data is data that measure quantifiable or numerical conditions. (measures) An attribute data is data that measure qualitative dimensions or conditions. (describes) - All variable data can be transformed into attribute data.
Understand the ABC analysis, its purpose and what it represents. How much should go in each category?
ABC analysis is the raking of all items of inventory according to importance. Its purpose is to focus on the most important terms, as opposed to the less important ones. A items (very important) - 10 to 20 percent of the number of items in inventory and about 60 and 70 percent of the annual dollar value. B items (moderately important) C items (least important) - 50 to 60 percent of the number of items in inventory but only about 10 to 15 percent of the annual dollar value.
What is the total cost of ownership?
All the costs incurred before, during, and after a purchase.
Know the dimensions of the Dow Jones Sustainability Index.
An 100% is divided into 57% of industry specific criteria and 43% of general criteria. That is also subdivided in: 33% economic dimension, which includes: - Corporate governance - Code of conduct, compliance - Risks and crisis management - CRM - Innovation management 33% environmental dimension, which includes: - Environmental management system - Environmental performance - Climate strategy - Product stewardship - Biodiversity 33% of social dimension, which includes: - Human capital development - Talent attraction and retention - Occupational health and safety - Stakeholder engagement - Social reporting
What is the triple bottom line?
An approach to corporate performance measurement that focuses on a company's total impact measured in terms of profit, people (social responsibility) and planet (environmental responsibility). Instead of only seeking profits, managers today are developing balanced sustainable strategic visions.
Why do companies use warehouses?
Because sometimes, warehouses located near customers enable quicker product fulfillment than remote manufacturing plants or stocking locations. Warehouses are often the most cost-effective means to provide an assortment of products to geographically dispersed customers because of the transportation economies associated with consolidation.
Know the benefits and problems with ERP systems.
Benefits: - Replaced old legacy systems - Has multi-function capabilities - Facilitates cross-functional coordination - Saves time - Reduces errors - Enables better business decisions Ability to take the many different forms of data from across the different organizational systems and correlate, aggregate, and provide an enterprise-wide view of organizational information. Problems: - How long will an ERP implementation project take? - How will ERP affect current business processes? - What is the ERP total cost of ownership? - What are the hidden costs of ERP ownership?
What is corporate strategic planning?
Corporate strategic planning addresses the portfolio of businesses owned by a firm. Of the three levels of strategic planning, corporate strategic planning is the broadest in scope and the least constrained. Addresses the overall mission and targets business long term, overall values, direction and goals.
Understand customer value and the value proposition. How is value created and captured?
Customer Value: The difference between what a customer gets from a product, and what he or she has to give in order to get it. Value Proposition: A set of benefits or values a company promises to deliver to customers to satisfy their needs. The goal of supply chain is to create and capture value. The more value an organization creates, the more profitable it will be. A company has to be attractive to its customers and has to offer different things from what is offered by competitors. 1. Understand value 2. Create value 3. Communicate value 4. Capture value
What is the difference between customer satisfaction and perceived customer value?
Customer satisfaction: The extent to which a product's perceived performance matches a buyer's expectations. It is meeting or exceeding customer expectations. Customer perceived value: The difference between total customer value and total customer cost.
Know the difference between customer success, customer satisfaction and basic services.
Customer success: Assists customers in meeting their objectives. Customer satisfaction: Meet or exceed customer expectations. Basic services: Product availability, lead time performance, and service reliability.
Know the 4 stakeholders and their expectations.
Customers - "Value" for money - Products safety - Privacy protection - Honesty and integrity in fulfilling - Quick response - System transparency Workers - Fair labor practices - Safe working conditions - Equal opportunities - Development support Suppliers - Shared values - Development opportunities and support - Shared success - Consistency and fairness Investors - Competitive returns - Sustainable business models - Integrity in reporting - Reduction of unreasonable risks
Calculate fill rate for order, line items and units.
DELIVERED/TOTAL Unit fill rate = Total units delivered / Total units ordered Line fill rate = Number of order lines delivered complete / Total order lines Order fill rate = Total complete orders delivered / Total orders
DMAIC (Define, Measure, Analyze, Improve, Control)
DMAIC is a data-driven quality strategy for improving processes. It is an acronym for the five steps at the heart of the Six Sigma process: 1. Define: Set the context and objectives for improvement. 2. Measure: Determine the baseline performance and capability of the process. 3. Analyze: Use data and tools to understand the cause-and-effect relationships of the process. 4. Improve: Develop the modifications that lead to a validated improvement of the process. 5. Control: Establish plans and procedures to ensure that improvements are sustained.
Be able to calculate Cp and Cpk.
DONE.
Calculate MAD, MAPE, MPE and MFE.
DONE.
Calculate supplier weighted scores.
DONE.
Calculate the cost of insourcing VS outsourcing.
DONE.
Calculate the cost of shipping a product individually VS consolidated.
DONE.
Calculate the cost of various options of transportation.
DONE.
Calculate: - Moving average - Weighted moving average - Exponential smoothing - Linear regression forecast
DONE.
Determine MPS. Greater of forecast and actual orders - projected on hand
DONE.
Determine available to promise (ATP) quantity based on forecast, actual and on hand quantities. ATP = Forecast + On hand - Actual orders
DONE.
For X bars and R charts be able to calculate the sample mean and the upper and lower control.
DONE.
Perform process capability analysis (Cp and Cpk). Understand the process implications of the various values.
DONE.
Know the components of the SCOR Model.
Delivery reliability: Right product, in the right place at the right time. Responsiveness: Supply chain velocity. Flexibility: Agility to respond to change. Costs: Operational costs of the supply chain. Asset management: The effectiveness of assets in supporting demand satisfaction.
Primary difference between demand management and demand forecasting.
Demand management - Influencing either pattern or consistency of demand - A proactive approach in which managers attempt to influence the pattern of demand Demand forecasting - A decision process in which managers predict demand patterns.
Known the lean tools and techniques.
Development of Facilities and Resources - Total productive maintenance - Group technology - Focused factories Operational Scheduling and Control - TAKT time flow balancing - Kanban (pull) scheduling - Mixed model scheduling - Setup reduction - Statistical process control - Visual control Continuous Process Improvement - Quality at the source - Kaizen events - Process analysis/Value stream mapping - Poka-yoke - 5-S program
What are the important aspects of forecasting?
Expected level of demand - The level of demand may be a function of some structural variation such as a trend or seasonal variation. Accuracy - Related to the potential size of a forecast error. Forecasts making a major impact (positive and negative) - Revenue, Market share, Cost, Inventory, Profit.
What are the balancing objectives of S&OP?
Finance: - High ROI - Maximize return - Minimize risk - High contribution customers Operations: - Detail planning - Fewer products - Long, stable production runs - Maximize output, minimize cost - Reduce variance, maintain "up-time" - Efficient grouping of supply and demand Marketing/Sales: - Aggregate planning - Many product variations - Fast response, high service - Maximize revenue
What is difference between goods and services?
Goods: - Tangible - Can be inventoried - Little customer contact - Long lead times - Capital-intensive - Quality is easy to assess - Material is being transformed Services: - Intangible - Can't be inventoried - Extensive customer contact - Short lead times - Labor-intensive - Quality is difficult to asses - Information or customer are being transformed
Types of Qualitative Forecasting.
Grassroots forecasting: Seeks input from people who are in close contact with customers and products. Executive judgement: Uses input from high-level, experienced managers. Historical analogy: Uses data and experience from similar products to forecast the demand for a new product. Marketing research: Bases forecasts on the purchasing patterns and attitudes of current or potential customers. Delphi method/Panel Consensus: Asks a panel of experts to individually and repeatedly respond to a series of questions.
Understand the customer relationship strategy. Based on revenue and profit, what would a company do?
High Revenue/Low Profit - High service or customer satisfaction High Revenue/High Profit - Commitment to customer success Low Revenue/Low Profit - Review reason for doing business Low Revenue/High Profit - High basic service or customer satisfaction
Know the most common quality improvement tools and when they are used.
Histogram: Uncovers underlying patterns (range and frequency) in data variability. Cause-and-effect analysis: Uncover possible contributors to an observed problem; to facilitate group brainstorming. Check sheet: Identifies the frequency and location of problem causes. Pareto Analysis: Identifies the most critical (relatively frequent) causes of problems. Scatter diagrams: Determines if two variables are related to each other (whether two variables move together in some predictable manner). Process flow analysis: Graphically displays and analyzes the steps in a process. Process capability analysis: Predicts the conformance quality of a product by comparing its specification range to the range of its process ability. Process control charts: Monitors process outputs and determine whether a process is operating according to normally expected limits. Taguchi method/design of experiments: Evaluates and understand the effects of different factors on process outputs.
Know the following about MRP systems: - Required input - Expected output - Benefits - When it is used
INPUTS 1. The MPS (master production schedule): Schedule for building finished products. - Time Bucket: Time periods for planning. - Planning Horizon: Entire time period covered by the MPS. - Available to Promise (ATP): Planned production not already committed to a customer - Rough-cut Capacity Planning: Estimates the critical resources needed to build MPS. 1. 2. The BOM (bill of materials): Lists all assemblies, subassemblies, parts, and raw materials needed to produce one unit of a product. 3. Inventory records: Contains information about inventory including amount on hand. - Inventory status file: File that contains detailed inventory and procurement records - Lot-for-lot: an order for the exact amount needed. - Fixed order quantity (FOQ): An order for the same amount each time. - Periodic order quantity (POQ): An order for an amount that covers a fixed order period of time. Outputs: - Planned orders: A schedule indicating the amount and timing of future orders. - Order releases: Authorizing the execution of planned orders. - Changes: Revisions of the dates or quantities, or the cancellation of orders. Benefits/When it is used: Helps companies answer: What is needed?, How much is needed?. When is it needed?
What is the purpose of ISO?
ISO stands for International Standards Organization. It is a set of internationally accepted standards for business quality management systems. It ensures that products and services are safe, reliable, and of good quality.
What is ISP and 3PL?
ISP- a company that provides a range of logistic services. 3PL- a common term used in the industry to describe ISPs.
How would changing the various costs associated with the EOQ model impact order quantity and frequency?
If you change costs, the quantity and frequency will change.
What are benefits of set up reduction (single minute exchange of dies)?
In general, setup reduction is the processes used to reduce setup and change-over times with the goal of making output of smaller batches more efficient. It lowers changeover times and costs and makes it possible to produce outputs in smaller batch sizes more efficiently.
Know the different types of sourcing and when and why they are used.
Insourcing: Acquiring inputs from operational processes provided within the firm. Outsourcing: Acquiring inputs from operational processes provided by suppliers. There are different types of sourcing: 1. Strategic purchases- represent a high spend level and are high risk. Typically, these purchases are unique and core to the firm's performance. 2. Bottleneck purchases- high risk and low spend and typically are not core to the firm's performance, but lack of availability can cause delays. 3. Leverage purchases- low risk but represent a high level of spend. They typically involve standard goods or services where many possible suppliers are available. 4. Noncritical items- typically are a low percentage of overall spend and have little impact on performance.
What is the purpose of inventory?
Inventory is a stock or store of goods. It is necessary for operations and they contribute to customer satisfaction. Its purpose is: 1. Level of customer service: - Having the right goods available in the right quantity in the right place and at the right time. 2. Costs of ordering and carrying inventories - The overall objective of inventory management is to achieve satisfactory levels of customer service while keeping inventory costs within reasonable bounds.
Service-Process Matrix
It categorizes services processes based upon the degree of customization/customer interaction and labor/capital intensity. 1. Professional services (High customer interaction, High labor intensity) - Lawyers - Doctors - Consultants - Accountants 2. Service factory (Low customer interaction, Low labor intensity) - Airlines - Hotels 3. Service shops (High customer interaction, Low labor intensity) - Automobile repair shops - Hospitals 4. Mass service (Low customer interaction, High labor intensity) - Retail banks - Gas stations - Schools
What brought about the quality revolution?
Japan had a widely held reputation for shoddy (poor-quality) exports and their goods were shunned (avoided) by international markets. Edward Deming and Joseph Juran practiced the quality of Japanese goods would overtake the quality of goods produced in the US by the mid 1970's because of Japan's revolutionary rate of quality improvement. At first, the US did nothing. Japanese success was price-related. By the 1970's, US Industrial sectors such as automobiles and electronics had been broadsided (criticized or attacked) by Japan's high quality competition. By the end of the 1970's, the American quality crisis reached major proportion.
Be able to define a critical customer and the customer needs assessment of order winners, losers and qualifiers. Be able to determine order winner, loser and qualifier characteristics.
Key/critical customers: A customer that the firm has targeted as being important to its future success. It is important for operations managers to know what product features and delivery terms key customers consider important, what they are willing to pay, and what they consider acceptable. These product-specific traits can be classified into one of three categories: Order winners- Why customers choose your firm? Ex: Better performance or lower price. Order qualifiers- Minimum standards to be met. Ex: Availability, price, or conformance quality. Order losers- Why customers avoid your firm? Poor performance can cause the loss of current or future customers. Ex: When an online retailer fails to deliver an order in a timely manner, a customer might cancel the order and refuse to place orders in the future.
Understand lead times and what is most important to the customer
Lead time is the amount of time that passes between the beginning and ending of a set of activities. Order-to-delivery (OTD) lead time: The time that passes from the instant the customer places an order until the instant that the customer receives the product. Product design lead time: The time interval needed to conceptualize, design, and test a new product. Order lead time: The time required to place an order for a product plus the time to schedule the order so that operations can begin working on it. Procurement lead time: Time associated with obtaining (through purchases) the inputs required for processing the order. Production lead time: Begins at the moment the production or service system begins working on an order. Delivery lead time: Measures the time consumed by the distribution system, including warehousing and transportation.
What is Little's Law?
Little's Law is an empirically proven relationship that exists between: - Flow time (F) - Inventory level (I) - Throughput rate (TH)
Know the different types of systems: MRP, MPS, DRP, CRP, when each is used and what their purpose is in the planning process.
MRP- Materials Requirement Planning - System used to ensure the right quantities of materials are available when needed. MPS- Master Production Schedule - The quantities of each finished product to be completed each period. DRP- Distribution Requirements Planning - Determination of replenishment and positioning of finished goods in the distribution network. CRP- Capacity Requirements Planning - Determination of short-range capacity requirements. - Capacity needed at work centers.
How to calculate maximum (IDEAL) and effective (NORMAL) capacity. What does it tell you?
Maximum Capacity = Actual orders/Ideal Effective Capacity = Actual orders/Normal
Calculate perfect order performance. (reliability)
Multiply everything out, and then what you get is how an order will be "perfect", and then the difference from 100 is how many percent will have some kind of problem.
Know the 2 types of inventory cost (order and carrying) and what makes up these costs.
Order Costs: Expenses incurred in placing and receiving orders from suppliers. Carrying Costs: Expenses that are incurred due to the fact that inventory is held.
Understand PDCA. (Plan, Do, Check, Act)
PDCA is a popular methodology used to guide problem identification and solution is the plan-do-check-act cycle (PDCA). It is also known as the "Deming Wheel" or "Deming Cycle". It consists of the following separate but linked activities: 1. Plan: Identify a problem by studying the current situation to detect a gap between it and the desired future situation. 2. Do: Having formulated a plan, do it. 3. Check: Use performance metrics to monitor and inspect the results. Identify unplanned problems elsewhere in the system or previously hidden problems uncovered by the changes. 4. Act: Review information collected in the check step and take corrective actions to prevent reoccurrence of problems.
Understand quality at the source.
Philosophy of making each worker responsible for the quality of his or her work- "Do it right" and "If it isn't right, fix it" A lean manufacturing principle which defines that quality output is not only measured at the end of the production line but at every step of the productive process. It is the practice of eliminating defects at their root cause origination points.
What is Poka-Yoke? What is Quality at the source?
Poka-Yoke: Redesign so mistakes are impossible or immediately detectable. Quality at the source: Eliminate defects at their origination points.
What are pooled delivery and scheduled delivery consolidations?
Pooled delivery consolidation: Combines small shipments from different shippers that are going to the same market area. Scheduled delivery consolidation: Establishing specific times when deliveries to customers will be made.
Know the types of Forecasting: - Pros and cons of each - When to use them
Qualitative Forecasting (Judgement-Based Forecasting): - Subjective (based on people's opinion) - Pros/Strength: Can incorporate expertise that is hard to codify - Cons/Weakness: Opinions can dominate and bias the forecast - When to use: New products, markets, and external conditions when there is no historical data available Quantitative Forecasting (Statistical-Model Based Forecasting): - Objective (based on numeric data) - Pros/Strengths: Consistency and can consider large amounts of data - Cons/Weakness: Must have data - When to use: Have historical data of same or very similar products under similar external conditions
Know the criteria for insourcing VS outsourcing (quantitative and qualitative factors).
Quantitative factors - Fixed costs per contract: Costs incurred at the start of production or the beginning of a new contract. - Fixed costs per order: Costs incurred each time an order is placed. - Variable costs: Costs that change in proportion to the quantity of units produced or service delivered. Qualitative factors: - Loss of control by releasing work to a supplier - Risk of dealing with a supplier - Importance assigned to a supplier's location and the convenience of site visits - Quality of the supplier's management team - Compatibility of organizational cultures and values - Supplier's willingness to remain flexible and accommodate changes - Supplier's labor-management climate - Supplier's warranty, repair, and support systems - Proprietary information and degree of secrecy required
What are the benefits of S&OP?
Quantitative: - Improved Forecast Accuracy - Higher Customer Service - More Stable Supply Rates - Better New Product Introduction Qualitative: - Enhanced Teamwork - Faster and Better Aligned Decision-Making - Greater Accountability for results - Better business visibility
Factors affecting reorder point calculations.
Reorder point When the quantity on hand of an item drops to this amount, the item is reorder. Factors that affect this: - The rate of demand - The lead time - The extent of demand and/or lead time variability - The degree of stockout risk acceptable to management
Know SWOT, SCOR, balanced scorecard and strategic profit models. Also know when you would apply these in business.
SWOT- Strengths, Weaknesses, Opportunities, Threats. - A strategic planning technique to help firms identify opportunities where they can develop a sustainable competitive advantage and areas where the firm is significantly at risk. SCOR- Supply Chain Operational Reference Model. - It is a model for assessing, charting, and describing supply chain processes and their performance. - It identifies basic management practices at different operational levels, for benchmarking and strategy deployment. - It addresses five basic dimensions of performance, which are: delivery reliability, responsiveness, flexibility, costs, and asset management. Balance scorecard - An integrative approach for developing strategic, organizational-level metrics. - Benefits: Well defined measures and clear objectives, identification of relative importance of performance targets, consistency and alignment. SPM- Strategic Profit Model - Shows how income and balance sheet data are interrelated, and how operational changes affect the overall performance of a business unit. - Useful for evaluating both operational and marketing-based plans and actions and answering "what if?" questions. - Focuses on ROA (Return on Assets)
Service blueprint- what is it and how is it used?
Service blueprinting is an approach similar to process mapping that analyzes the interface between customers and service processes. It is a tool that focuses on understanding the interfaces between customers and service providers, technology, and other key aspects of the process.
What is Six Sigma?
Six sigma is a management program that seeks to improve the quality of process outputs by identifying and removing/minimizing the causes of defects and variation in the various processes.
Understand the concept of spend analysis and make buy analysis and when they are used.
Spend analysis is a process that identifies what purchases are being made in an organization. - It is used to understand what purchases are being made, at what price, and from which specific suppliers. Make-Buy analysis is the choice between making a product internally or purchasing it from a supplier. - It considers insourcing or outsourcing the production of parts and components.
What is the process of S&OP?
Step 0: Create Functional Input - Review previous plans and results - Apply lessons learned Step 1: Unconstrained Marketing Plan -Sales - Marketing - Brand Management - New Product Step 2: Initial Resource Plan -Manufacturing, Supply Management, Logistics, Other. Step 3: Balanced Plan Step 4: Financial Review Step 5: Executive Meeting: Review of Alternatives, Decision-Making Step 6: Implementation and Follow-Up
Different levels of strategic planning in supply chain- strategic, tactical, operational, and the type of decision to apply to each.
Strategic Planning - Overall mission and target business long term - Overall values, directions and goals - Corporate Strategy - What business should we be in? What is our mission? Tactical Planning - Business Strategy/SBU - Shorter time horizon - How do we compete? Which customers will we target? What will we offer? Which supply chain/operations management capabilities will we employ? - Overall cost leader, differentiation, focus market segmentation, and quality focus Operational/Functional Planning - Operations Strategy - How do we best support the overall SBU (Business) strategy? - Structure/Infrastructure - Competitive priorities - Create capabilities that support a set of value propositions - How functions
What is Supplier Relationship Management and why is it important?
Supplier Relationship Management (SRM) is a comprehensive system, facilitated by software, that works on managing the firm's interactions with its supply base. The goal of SRM is to streamline the processes and interactions that exist between the firm and its various suppliers so they are more efficient and transparent. SRM helps the firm identify critical suppliers and to improve how the firm works with those suppliers on such activities as reducing costs, introducing new products, creating cash, mitigating supply and regulatory risks, and ensuring a secure supply of scarce materials.
Understand the concept of line balancing. - Calculate takt time - # of workstations - Efficiency - Precedence diagrams
Takt time = available production time per day/output needed per day # of workstations = total production time/takt time Efficiency = total production time/takt time * # of workstations
What are the 5 S's?
The 5-S program is a systematic program for effective housekeeping in operational processes. They are the following: 1. SORT- Clear out - Red tag suspected unnecessary items. After a monitoring period, throw out unnecessary items. 2. STRAIGHTEN- Configure/Order - Put everything in an orderly fashion so that it can be located- "a place for everything and everything in its place." - This is frequently done using "foot printing", which creates a painted outline for each item. 3. SCRUB- Clean and check - Clean everything and eliminate the sources of dirt. 4. SYSTEMATIZE- Conform 5. STANDARDIZE- Custom and practice - Standardize the previous four steps into one process and continuously improve it. - Use visual control through performance boards, checklists, and graphs.
Understand the theory of constraints.
The Theory of Constraints (TOC) is the overall management system that strives to improve system performance by identifying, focusing on, and managing constraints (limitation or restriction). The five principles are: - Every process has a constraint - Every process contains variance that consumes capacity - Every process must be managed as a system - Performance measures are crucial to a process's success - Every process must continually improve
What is supply chain management?
The design and execution of relationships and flows that connect the parties and processes across a supply chain.
What is digital darwinism?
The evolution of consumer behavior when society and technology evolve faster than the ability to adapt. Implies that organizations which cannot adapt to the new demands placed on them for surviving in the information age are doomed to extinction.
What is logistics management?
The management of the movement and storage of materials at lowest cost while still meeting customers' requirements.
What is the purpose of safety stock and what factors influence the amount of safety stock you carry?
The purpose of safety stock is to have an extra inventory held to guard against uncertainty in demand or supply. The amount of safety stock that is appropriate for a given situation depends on: - The average demand rate and average lead time - Demand and lead time variability - The desired service level
What does transportation cost depend on?
The transportation mode.
Understand the cost to service trade off in logistics.
This means that as service levels increase, typically so do costs.
On an exponential smoothing, what is the purpose of the smoothing coefficient?
To indicate the weight given to the most recent demand.
What is the purpose of a control chart?
To monitor process outputs and determine whether a process is operating according to normally expected limits. CONTROL!
Why do we use forecast?
To predict future customer demand. It helps plan the system, and plan the use of the system. - What products and services should we offer? - What is the best location? - How should we manage our inventory? - Purchase, production, budgeting and scheduling
What is total landed cost and how is it calculated?
Total landed cost is the sum of all product-related and logistics-related costs.
Know when you would use an X bar and when you would use a R chart.
X bar only averages values. R chart is used to evaluate the gap between the largest and smallest observations in each sample.
What is revenue/yield management?
Yield/Revenue Management: The process that adjusts prices as demand for a service occurs/in response to demand levels. The purpose of it is to shape demand in a way that yields greater revenues or profits. Its goal is to maximize revenue and profit. It also modifies prices to encourage customers to purchase for service at supplier desired times.
In what situations would you use yield/revenue management?
Yield/Revenue Management: The process that adjusts prices as demand for a service occurs/in response to demand levels. The purpose of it is to shape demand in a way that yields greater revenues or profits. Its goal is to maximize revenue and profit. It also modifies prices to encourage customers to purchase for service at supplier desired times. You would use it when you want to attract customers or when you see there is a shift in the amount of customers (charge higher prices when there is more demand).
On a moving average forecast, what happens when you increase the number of periods?
You get a lower forecast for the next period.
