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COMM 225: Operations management > chapter 11: supply chain management > Flashcards

chapter 11: supply chain management Flashcards

1
Q

A supply chain

A

the sequence of organizations that are involved in producing and delivering a product

the lifeblood of any organization

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2
Q

two kinds of movements in a supply chain

A

the physical movement of material

the exchange of information and money

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3
Q

value chαins

A

another name for supply chains

value is added as goods progress through the chain

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4
Q

Supply chain management

A

collaboration of supply chain companies

coordination of their activities so that market demand is met as efficiently and effectively as possible

the process of planning, implementing, and controlling supply chain operations

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5
Q

key purchasing criteria in supply chain management

A

price

timeliness

quality

variety

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6
Q

The goal of supply chain management

A

to match supply to demand as effectively and efficiently as possible

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7
Q

Key aspects of supply chain management

A
  1. Determining the appropriate level of outsourcing
  2. Managing procurement
  3. Managing suppliers
  4. Managing customer relationships
  5. Being able to quickly identify problems and respond to them
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8
Q

The three types of flow that need to be managed in flow management

A

goods and services flow (product flow)

information flow

financial flow

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9
Q

goods and services flow (product flow)

A

involves the movement of goods and services from suppliers to customers

handling customer service needs and product returns

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10
Q

information flow

A

sharing forecast and sales data

transmitting orders

tracking shipments

updating order status

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11
Q

financial flow

A

credit terms

payments

consignment and title ownership arrangements

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12
Q

major factors that have made it desirable for organizations to actively manage their supply chain

A

Increasing competition

Increasing outsourcing

increasing globalization

Increasing e-commerce

The need to mαnαge orders αnd inventories across the supply chain

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13
Q

The bullwhip effect or demand/order amplification

A

the phenomenon in which the demand/
order variability gets progressively larger the further up in the supply chain the company is

While the demand at a retail store for a particular product is usually fairly stable, the orders of the retailer from wholesaler/distributor are more variable

causes inefficiencies at the wholesaler/distributor and manufacturer

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14
Q

cause of the bullwhip effect

A

slow and/or erratic reaction to a change in demand/ order

caused by:

lack of end-of-line demand visibility

long lead times

inexperience

lack of understanding of the impact of one’s action on the supplier

manufacturer price discounts that lead to surges in demand,

gaming by retailers when there is a shortage by inflating their orders in anticipation of receiving only a portion of them

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15
Q

Supply Chain Management Activities

A

Strategic (Design) Activities

Tactical (Planning)/Operational Activities

Inventory in a Supply Chain

Warehousing/Transportation in a Supply Chain

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16
Q

Strategic (Design) Activities

A

Strategic decisions have long-term impacts on a supply chain

  1. goals and competitive characteristics should be agreed upon by the members of the supply chain
  2. products are designed/redesigned with these competitive characteristics in mind
  3. supply chains are designed/redesigned for these products, goals, and competitive characteristics
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17
Q

Tactical (Planning)/Operational Activities

A

relate to production planning and control

include forecasting, purchasing/ordering, transportation of material, inventory control/warehousing, scheduling of production and distribution deliveries, and customer service

Questions such as, “Should a product be manufactured at this plant, today or later, or shipped from another location, today or later?” should be answered

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18
Q

Inventory in a Supply Chain

A

where in a supply chain the inventory should be held

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19
Q

Two general rule to find where in a supply chain should the inventory be held

A
  1. The value of inventory increases as materials move down the supply chain toward the consumers, but the response (or lead) time to consumer demand decreases

–> Management must strike a
balance between additional carrying cost (due to increased value) and better customer service (shorter lead time) to determine the location of inventory in the supply chain

  1. The nature of inventory becomes more specific (thus it loses flexibility of use) as inventory moves down the supply chain

–> reduces risk pooling

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20
Q

risk pooling

A

holding (safety) stocks in one central location rather than in multiple regional locations closer to customers

can provide better availability to customers, because the variations in demands in various regional locations typically cancel each other out for the centrallocation

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21
Q

delayed differentiation/postponement

A

possible to achieve risk pooling and hold inventory closer to customers with this

waiting until late in the process to add differentiating features to standard components and products

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22
Q

when does a facility in the supply chain not have to hold any inventory?

A

when can replenish its own inventory and produce within the agreed-upon lead time

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23
Q

Warehousing/Transportation in a Supply Chain

A

storage of goods

consolidating (combining) shipments of customers’ order,

deconsolidating (breaking bulk) shipments of suppliers’ products

cross-docking

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24
Q

consolidating (combining) shipments

A

collecting the incoming shipments from various geographic areas headed toward another geographic area and combining them into a larger shipment in order to take advantage of economies of scale in transportation

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25
Q

deconsolidating (breaking bulk) shipments

A

splitting a large incoming shipment into smaller shipments that are headed to different customers

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26
Q

cross-docking

A

goods arriving at a warehouse/Distribution Centers from a supplier are directly loaded onto outbound trucks, thereby avoiding warehouse/Distribution Centers

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27
Q

Efficient Replenishment Methods

A

Quick response (QR)

Efficient consumer response (ECR)

Vendor-managed inventory (VMI)

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28
Q

Quick response (QR)

A

involves making sales information available to vendors

The purpose is to create a JIT replenishment system that is automated and keyed to consumer buying patterns, as opposed to periodic orders by retailers

results in frequent small-lot shipments

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29
Q

Efficient consumer response (ECR)

A

an expanded version of quick response, used in the grocery industry

In addition to continuous product replenishment, ECR includes further collaboration on forecasting, planning of store assortments, promotions, and product introductions

continued by collaborative planning, forecasting, and replenishment (CPFR)

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30
Q

Who Initiated Efficient consumer response (ECR)

A

Procter & Gamble

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31
Q

Vendor-managed inventory (VMI)

A

not necessarily fast

replenishment method where the vendor’s sales/account manager periodically visits the buyer’s premises, counts the inventories of her company on the buyer’s shelves, and has them replenished to the previously agreed-upon levels

has been used by soft drink companies supplying convenience stores, electrical distributors supplying small maintenance warehouses, etc

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32
Q

Distribution requirements planning (DRP)

A

a system for synchronizing replenishment schedules across the supply chain

especially useful in multi-echelon distribution networks

Starting with forecast demand at the end of the distribution network (retail stores), DRP works backward through the network to obtain time-phased replenishment schedules for moving goods from the factory through each level of the distribution network

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33
Q

a push system

A

produces and ships based on demand forecasts and plans

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34
Q

a pull system

A

produces and ships based on actual demand

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35
Q

DRP is a push or a pull system?

A

a push system

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36
Q

quick response is a push or pull system?

A

pull system

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37
Q

how can size be a competitive advantage for small businesses

A

because they often are more agile than larger companies, enabling them to make decisions and changes more quickly when the need arises

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38
Q

Three aspects of supply chain management that are often of concern to small businesses

A

Inventory management

Reducing risks

International trade

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39
Q

Important steps in reducing risks by managing suppliers

A

Use only reliable suppliers.

Determine which suppliers are critical; get to know them, and any challenges they have.

Measure supplier performance (e.g., quality, reliability, flexibility).

Recognize warning signs of supplier issues (e.g., late deliveries, incomplete orders, quality problems).

Have plans in place to manage supply chain problems.

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40
Q

how can information replace inventory?

A

an organization can reduce the inventory it carries if it has relevant, accurate, and timely information

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41
Q

how to make an IS cost effective?

A

should be based on an open systems concept

use the Internet (for communication)

Relevant accurate data should be collected and data should be synchronized

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42
Q

when is data and information used

A

used in supply chains for transaction processing (execution)

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43
Q

Information technology (IT)

A

comprises tools that are used to gather, access, analyze, and share information

enables supply chain processes/activities to be performed cheaper, faster, and more accurately

automates flow of information

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44
Q

how can supply chain planning software be classified?

A

strategic

tactical

operational

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45
Q

Supply chain execution software

A

order taking

purchasing/replenishment/order fulfillment

warehouse management system

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46
Q

enterprise resource planning (ERP) or enterprise software

A

A more general type of software

was originally focused on managing and coordinating all the resources and functions of an organization from a shared database

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47
Q

software as a service (SaaS)

A

A recent trend in software purchase option

involves using the Internet to access the computer of an application service provider that maintains the customer’s data

it requires no initial investment and the service can usually be terminated with a month’s notic

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48
Q

data standardization

A

One technical difficulty in supply chain information systems

allows easier interconnectivity and economies of scale

49
Q

Electronic data interchange (EDI)

A

direct, computer-to-com­puter transmission of inter-organizational transactions and information

–> includes purchase orders,
sales data, advance shipping notices, invoices, engineering drawings, and more

50
Q

Why Do Companies Use Electronic data interchange (EDI)

A

Reduction in clerical labour (no need for receiving and entering data manually).

Reduction of paperwork.

Increased accuracy (avoids re-entry of data, thus reducing errors).

Increased speed.

51
Q

Radio frequency identification (RFID)

A

a technology that uses radio waves to identify objects such as goods in a supply chain

–> done through the use of an RFID tag that is attached to an object

52
Q

two kinds of RFID tags

A

(1) Active tags

(2) passive tags

53
Q

Active RFID tags

A

have a battery and emit radio waves by themselves

they have a longer range but are more expensive

54
Q

Passive RFID tags

A

do not have a battery

work by responding to electromagnetic waves emitted by the RFID reader

they have a shorter range

55
Q

RFID tags

A

provide unique identification, enabling businesses to identify, track, monitor, or locate practically any object in the supply chain that is within the range of a tag reader

similar to bar codes

56
Q

advantages of RFID tags over bar codes

A

conveying much more information

they do not require the line-of-sight reading that bar codes require

multiple RFID tags can be read simultaneously and automatically

provide more precise information than a bar code

elirninates the need for manual counting

57
Q

the downside of RFIDs

A

the radio waves are affected by the nature of some objects

58
Q

Creating an Effective Supply Chain

what do we ned?

A

Forming Close Relationships

Effective Communication and Coordination of Activities

Supply Chain Visibility and Information Sharing

Event Management Capability

Performance Metrics

59
Q

Supply chain visibility

A

means that a member can connect to any part of the supply chain to access data in real time

sharing data on end-customer sales on a real time basis so that each organization in the supply chain can develop plans that contribute to synchronization across the supply chain

60
Q

Event management

A

the ability to detect and respond to unplanned events

61
Q

Risk management

A

identifying risks

assessing their likelihood of occurring and their potential impact

developing strategies for addressing those risk

62
Q

Risk avoidance

A

avoiding suppliers in a certain area

63
Q

risk reduction

A

includes replacing unreliable suppliers

64
Q

risk sharing

A

includes contractual arrangements with supply chain partners that spread the risk

65
Q

Resiliency

A

s the ability of a business to recover from an event that negatively impacts the supply chain

66
Q

how can organizations reduce, but not eliminate, the need for resiliency?

A

by managing risks

67
Q

The first step in risk management

A

to identify potential risks

68
Q

Steps in Creating an Effective Supply Chain

A
  1. Develop strategic objectives
  2. Integrate and coordinate activities inside the organization
  3. Coordinate activities with suppliers and with customers
  4. Coordinate planning and execution across the supply chain
  5. Consider the possibility of forming strategic supplier/customer partnerships
69
Q

strategic supplier/customer partnership

A

occurs when a buyer and a supplier agree to collaborate so that each may realize a strategic benefit

70
Q

Collaborative planning, forecasting, and replenishment (CPFR)

A

the latest effort to increase the effectiveness and efficiency of supply chains

establishes a process for communicating and agreeing on forecasts and orders between the manufacturer and the customer

–>

71
Q

the latest effort to increase the effectiveness and efficiency of supply chains

A

Collaborative planning, forecasting, and replenishment (CPFR)

72
Q

attributes/metrics commonly used to measure performance of a supply chain

A
  1. Cost (unit cost, inventory turnover, logistics costs).
  2. Variety/flexibility (speed of production and product changes).
  3. Delivery (lead time, percentage of on-time delivery).
  4. Customer service (item fill rate).
73
Q

Inventory turnover

A

the rate at which inventory (material) goes through the supply chain

Faster is better

The quicker that materials pass through the supply chain, the lower inventory costs will be, and the quicker that products will be delivered to the customer

74
Q

Item fill rate

A

percentage of demand for an item filled from stocks on hand

75
Q

who is responsible for buying the raw materials, manufacturing parts, supplies and spare parts, machines and equipment, and services needed to produce a good or provide a service?

A

The purchasing department

76
Q

The basic goal of purchasing

A

to develop and implement purchasing plans for goods and services that support the business plan

77
Q

risks of outsourcing

A

reduction in control and expertise

78
Q

when should a company produce their own shit?

A

when they are or should be their core competencies (long-term organizational capabilities that help the organization to compete)

79
Q

The purchasing cycle

A

a series of steps that begins with a purchase requisition from within the organization and ends with paying the supplier

80
Q

The main steps in the purchasing cycle

A
  1. Purchasing receives a purchase requisition
  2. Purchasing selects a product/supplier
  3. Purchasing decides how the good or service is purchased
  4. Monitoring orders (αnd expediting)
  5. Receiving shipments
  6. Paying the supplier
81
Q

what does a a purchase requisition include

A

(a) a general description of the item desired
(b) the quantity and quality necessary
(c) the desired delivery date.

82
Q

Value analysis

A

the examination of the function and design of a product in an effort to reduce its cost

83
Q

who works on value analysis?

A

a team formed with representatives from design engineering, manufacturing, and cost accounting

84
Q

one of three ways prices can be determined

A

published price list

competitive bidding

negotiation

85
Q

which items are purchased at a published price list?

A

Standard items that are bought infrequently and/or in small quantities

86
Q

which items can be purchased with competitive bidding?

A

Large orders of standard items

87
Q

when is price negotiation used?

A

used for customized goods or services or when only a few potential sources exist

88
Q

Centralized purchasing

A

purchasing is handled by a central purchasing department

89
Q

Decentralized purchasing

A

individual departments or separate locations handle their own purchasing requirements

90
Q

how can centralized purchasing be more cost effective than decentralized purchasing?

A

if the higher volume created by combining orders enables the company to take advantage of quantity
discounts offered on large orders

could also be able to obtain better service and closer attention from suppliers

enables companies to assign certain categories of items to specialist buyers who tend to become more efficient and skilled

91
Q

advantages of decentralized purchasing

A

awareness of differing “local” needs

–> being better able to respond to those need

Where locations are widely scattered, decentralized purchasing may be able to save on transportation costs by buying locally

92
Q

why do organizations fail to collect accurate and useful purchasing data?

how can we prevent these?

A

(1) different codes may be used to describe the same supplier or item in different plant
(2) there may not be an easy way to relate and aggregate similar items using their stock codes and description (no product classes or types are defined)
(3) relationships between suppliers may have been missed

we can prevent these with the spend analysis

93
Q

spend analysis

A

collecting, cleansing, classifying, and analyzing expenditure data

purpose is to reduce procurement costs, improve efficiency, and monitor compliance with purchasing policies

can provide answers to questions such as, “What was bought? From which suppliers? What is the total expenditure on a part? How much is the total expenditure with a supplier?”

94
Q

maverick buying

A

users buying from non-approved suppliers

95
Q

how much have companies reduced in their total expenditure by performing spend analysis?

A

up to 5%

96
Q

Ecommerce

A

the use of computers and the Internet to conduct buying and selling

involves business-to-business (B2B) and business-to-consumer (B2C) commerce

97
Q

two essential features of ecommerce businesses

A

the website, and order fulfillment

98
Q

Order fulfillment

A

order processing

scheduling

inventory management

warehousing

packaging

billing

delivery

99
Q

make to stock

A

items made ahead and kept in stock

100
Q

make-to-order

A

the order has to be scheduled for production frrst

101
Q

assemble-to-order items

A

components have already been made and only full assembly has to be scheduled

102
Q

engineer to order items

A

item needs to be designed frrst according to the customer’s specifications

103
Q

supplier analysis

A

Evaluating a supplier in terms of factors such as price, quality, delivery, and service.

104
Q

eαrly supplier involvement

A

suppliers involved in the design of new products

105
Q

professor D.M. lambert’s partnership model

A
  1. After the number of suppliers is reduced, those that
    provide key materials/services and with whom a company does a lot of business are approached for partnership discussion
  2. Top executives and managers from functional areas from each company are invited to a retreat, facilitated by a third-party consultant
  3. During 1.5 days, each company’s managers first determine the key reasons they should get into partnership, rovide a metric and target for each reason, and then share these with the other company’s managers
  4. if both sides agree that partnership willlikely meet their expectations, they proceed to identify the so-called facilitator
  5. if coordination appears to be reasonably easy, based on the level of expectation of benefits of partnership
  6. based on the type of intended partnership, both sides have to identify the extent of cooperation in planning, control, communication, and risklreward sharing, and implement activities to achieve this
106
Q

possible levels of partnerships

A

Type 1 (low benefits)

Type 2 (moderate benefits)

Type 3 (high benefits)

107
Q

Supplier certification

A

a detailed examination of the policies and capabilities of a supplier

108
Q

how are certified suppliers referred as?

A

referred to as world class suppliers

109
Q

advantage of using certified suppliers

A

the buyer can eliminate much or all of the inspection and testing of delivered goods

although problems with supplier goods or services might not be totally eliminated, there is much less risk than with non-certified suppliers

110
Q

Logistics

A

the transport and warehousing of incoming materials/parts and outgoing distribution of products

includes the use of information to control the activities

111
Q

Traffic management

A

involved in transport planning and overseeing transport execution and control (the delivery of incoming and outgoing goods)

handles schedules and decisions on delivery methods and times

112
Q

Third-Party Logistics (3PL

A

a logistics service management company

a third-party logistics company can employ a transport company (the second party)

113
Q

Modes of transportation used for delivery

A

pipelines

ships

trains

trucks

airplane

least costly to most costly

slowest to fastest

114
Q

The most common delivery method inland

A

trucking

115
Q

factors affecting the rate for LTL

A

Density

Stowability

Difficulty of handling

Liability

116
Q

Reverse logistics

A

the backward flow of goods returned by consumers or retailers

117
Q

Two key elements of reverse logistics

A

gate keeping and avoidance

118
Q

gate keeping in reverse logistics

A

oversees the acceptance of returned goods with the intent of reducing the cost of returns by screening returns at the point of entry into the system and refusing to accept goods that should not be returned or goods that are returned to the wrong destination

119
Q

avoidance in reverse logistics

A

preventing returns by dealing with their causes

COMM 225: Operations management (17 decks)

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