OPMT 303 1st Edition Lecture 5 Previous Chapter Outline 1 Process selection and facility layout 2 Characteristics of various processes 3 Layouts 4 Product Layout Objectives 5 Steps to Design an Assembly Line 6 Mass Customizations 7 Strategic capacity planning for products and services Chapter Outline 1 Supply Chain Management 2 The Purchasing Cycle 3 Ethics in Purchasing 4 Creating an Effective Supply Chain 5 Aggregate Production Plan 6 Strategies I Supply Chain Management a Supply chain management the strategic coordination of the supply chain for the purpose of integrating supply and demand management b Logistics the movement of goods services cash and information in a supply chain c Supply chain a sequence of activities and organizations involved in producing and delivering a good or service i Simple supply chain suppliers to storage storage to producer producer to storage storage to distributor distributor to retailer retailer to final consumer These notes represent a detailed interpretation of the professor s lecture GradeBuddy is best used as a supplement to your own notes not as a substitute d Management responsibility i Tactical 1 Forecasting 2 Sourcing 3 Operations planning 4 Managing inventory 5 Transportation planning 6 Collaborating ii Operational 1 Scheduling 2 Receiving 3 Transforming 4 Order fulfilling 5 Managing inventory 6 Shipping 7 Information sharing 8 Controlling iii Vendor managed inventory reduces bullwhip effect by shifting ownership management and replenishment to vendors II The purchasing cycle a A series of steps that begin with a request for purchase and end with notification of shipment received in satisfactory condition i Purchasing receives the requisition the requisition includes a description of the item desired the quantity and quality necessary desired delivery dates and who is requesting the purchase ii Purchasing selects the supplier the purchasing department must identify suppliers who have the capability of supplying the desired goods iii Purchasing places the order with a vendor if the order involves a large expenditure the vendors will be asked to bid on the job and the operating and design personnel are asked to assist in negotiation with the vendor iv Monitoring orders routine follow up on orders allows the purchasing department to project potential delays and relay that information to the operating units v Receiving orders must check incoming shipments for quality and quantity and it must notify purchasing accounting and the operating unit that requested the goods III Ethics in Purchasing a Perceived Impropriety prevent the intent and appearance of unethical or compromising conduct in relationships actions and communication b Conflict of Interest Ensure that any personal business or other activity does not conflict with the lawful interest of your employer c Issue of Influence avoid behavior or actions that may negatively influence or appear to influence supply management decisions d Responsibility to your employers uphold fiduciary and other responsibilities using reasonable care and granted authority to deliver value to your employer e Supplier and customer relationships promote positive supplier and customer relationships f Sustainability and Social Responsibility champion social responsibility and sustainability practices in supply management g Confidential and Proprietary Information protect credential and proprietary information h Reciprocity Avoid improper reciprocal agreements i Applicable laws regulations and trade agreements know and obey the letter and spirits of laws regulations and trade agreements applicable to supply management j Professional Competence Develop skills expand knowledge and conduct business that demonstrates competence and promotes the supply management profession IV Creating an Effective Supply Chain a Trust effective communication b Information velocity the speed at which information is communicated in a supply chain c Supply chain visibility a major trading partner can connect to its supply chain to access data in real time d Event management capability detecting and responding to unexpected events e Performance metrics late deliveries fill rates response time inventory turnovers and quality issues f Enterprise resource planning ERP i A large integrated information system that supports many enterprise processes and data storage across functional areas business units geographic regions and product lines ii Supports all enterprise processes that are activated as a result of sale V Aggregate production plan a Objectives to develop a production plan for aggregate demand b Input strategic and business plans aggregate demand forecast c Output master production schedule d Responsible vice president for manufacturing operations i Proactive to smooth demand pattern through higher prices coupons ads discounts ii Reactive to adjust capacity to meet the demand VI Strategies a Workforce i Hiring paperwork interviews training ii Firing severance payment unemployment fund iii Part time hire fire cost lower skills usually lower benefits iv Vacation b Production Rates i Regular time salaries and wages fringe benefitvs FICA workers compensation ii Overtime at least 150 of wages FICA iii Idle time opportunity loss iv subcontracting additional overhead markup quality costs c Inventories i Holding to meet future demand is holding cost ii Stockouts and backorders 1 Opportunity loss penalty for late deliveries expediting costs iii Two extreme pure plans 1 Chase demand produce exactly what is needed Hire fire to meet the variable demand 2 Late capacity produce the same amount every period Use OT IT SU and inventories to meet the variable demand