OPMT 303 1st Edition Lecture 5Previous Chapter Outline1. Process selection and facility layout2. Characteristics of various processes3. Layouts4. Product Layout Objectives5. Steps to Design an Assembly Line6. Mass Customizations7. Strategic capacity planning for products and servicesChapter Outline1. Supply Chain Management2. The Purchasing Cycle3. Ethics in Purchasing4. Creating an Effective Supply Chain5. Aggregate Production Plan6. StrategiesI. Supply Chain Managementa. Supply chain management- the strategic coordination of the supply chain for the purpose of integrating supply and demand managementb. Logistics- the movement of goods, services, cash, and information in a supply chainc. Supply chain- a sequence of activities and organizations involved in producing and delivering a good or servicei. 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 responsibilityi. Tactical1. Forecasting2. Sourcing3. Operations planning4. Managing inventory5. Transportation planning6. Collaboratingii. Operational1. Scheduling2. Receiving3. Transforming4. Order fulfilling5. Managing inventory6. Shipping 7. Information sharing8. Controllingiii. Vendor managed inventory- reduces bullwhip effect by shifting ownership, management, and replenishment to vendors.II. The purchasing cyclea. A series of steps that begin with a request for purchase and end with notification of shipment received in satisfactory conditioni. 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 purchaseii. 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 Purchasinga. Perceived Impropriety- prevent the intent and appearance of unethical or compromising conductin 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 Chaina. Trust, effective communicationb. Information velocity- the speed at which information is communicated in a supply chainc. Supply chain visibility- a major trading partner can connect to its supply chain to access data in real timed. Event management capability- detecting and responding to unexpected eventse. 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 plana. Objectives- to develop a production plan for aggregate demandb. Input- strategic and business plans, aggregate demand forecastc. Output- master production scheduled. Responsible- vice president for manufacturing/operationsi. Proactive- to smooth demand pattern through higher prices, coupons, ads, discountsii. Reactive- to adjust capacity to meet the demandVI. Strategiesa. Workforcei. Hiring- paperwork, interviews, trainingii. Firing- severance payment, unemployment fundiii. Part-time-hire/fire cost, lower skills, usually lower benefitsiv. Vacationb. Production Ratesi. Regular time- salaries and wages, fringe benefitvs, FICA, workers compensation.ii. Overtime- at least 150% of wages, FICAiii. Idle time- opportunity lossiv. subcontracting- additional overhead, markup, quality costsc. Inventoriesi. Holding to meet future demand is holding costii. Stockouts and backorders1. Opportunity loss, penalty for late deliveries, expediting costs.iii. Two extreme pure plans1. Chase demand- produce exactly what is needed. Hire/fire to meet the variable demand2. Late capacity- produce the same amount every period. Use OT, IT, SU, and inventories to meet the variable