SCM 301 : EXAM 1
112 Cards in this Set
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Make up the Supply Chain Management
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Logistics
Purchasing
Production
Product Management
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Why study Supply Chain
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Manufacturing impacts everyone
Links business departments
Every industry has it
It is a broad area of study
Gives a company a competitive edge
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SCOR - Supply Chain Operations Reference Model
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1.Source
2. Make (doesn't have to be a physical product)
3. Deliver (logistics)
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Operations Management
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the planning, scheduling, and control of the activities that transform inputs into finished goods and services
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Supply Chain Management
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the active management of supply chain activities and relationships in order to maximise customer value and achieve a sustainable competitive advantage
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Supply Chain
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a network of manufacturers and service providers that work together to create products or services needed by end users. These manufacturers are linked together through physical flows, information flows, and monetary flows
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Upstream
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activities or firms positioned earlier in the supply chain
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Downstream
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activities or firms positioned later in the supply chain
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First-tier supplier
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a supplier that provides products or services directly to a firm
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Second-tier supplier
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a supplier that provides products or services to a firm's first-tier supplier
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Charlie and the Chocolate Factory example
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Shows make and deliver aspects of SCOR Model
The had raw materials so sourcing already happened
Its not as simple as making chocolate and delivering it
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Supply Chain Input and Output Chart
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Input --> Transformation or Value Added --> Output
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Product
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a need satisfying offering of an organization
may be a good or a service
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Customers
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buy satisfaction, not parts
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Characteristics of a good
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Tangible product
Consistent product definition
Product usually separate from consumption
Can be inventoried
Low customer interaction
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Characteristics of a service
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Intangible product
Produced and consumed at the same time
Often unique
High customer interaction
Inconsistent product definition
Often knowledge-based
Frequently dispersed
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Goods vs. Services
(Any product lies somewhere between these)
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Can be sold vs. reselling unusual
selling distinct from production vs selling part of service
site of facility-cost vs. site of facility-customer contact
often easy to automate vs. often difficult to automate
product is transportable vs. provider is transportable
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Reasons to Develop New products and services
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Can give firms a competitive advantage in market
Provide benefits for the firm
Can help exploit existing capabilities
Can help block out competitors
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Examples of new products
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Betamax vs. VHS- competition for a platform
New Coke
Pepsi Kona
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Dimensions of Product Design
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1. Repeatability
2. Testability
3. Serviceability
4. Production Volumes
5. Product Costs
6. Match with Existing Capabilities
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1.Repeatability
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is the design of products to be less sensitive to variations, including manufacturing variation and misuse, increasing the probability that they will perform as intended
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2.Testability
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is the ease with which critical components or functions can be tested during production
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3.Serviceability
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is the ease with which parts can be replaced, serviced or evaluated
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4.Production Volumes
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increased volumes due to developing a new product or service can be handled by expanding a firm's own operations by building new facilities, hiring additional workers, buying new equipment, or joint planning with key supplier
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5.Product Costs
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a. Obvious costs- costs that are the easiest to see and manage
b. Hidden costs- costs that are not as easy to track but can have a major impact
-the number of parts in a product
-Engineering changes
-Transportation costs
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6.Match with Existing Capabilities
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a. A new product or service that allows a manufacturer to use existing parts and manufacturing facilities is usually easier to support than one that requires new ones.
b. Services that exploit existing capabilities are especially attractive
c. Companies should consider such factors as p…
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Phases of Product and Service Development
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1. Concept development
2. Planning
3. Design and development
4. Commercial preparation
5. Launch
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Sequential Development
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must finish each step before starting the next
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Concurrent Engineering
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overlapping development phases, requires tight coordination but shrinks development time
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Organization Roles
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Engineering- provide the expertise
Marketing- understand the marketplace
Accounting- play the role of "scorekeeper"
Finance- judge the financial impact and raise capital
Designers-handle product design and create "identities"
Purchasing- identify the best suppliers and consult
Suppl…
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Approaches to Improving Product Designs
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1. DMADV (Define-Measure-Analyze-Design-Verify)
2. Quality Function Deployment (QFD)
3. Design for Manufacturability (DFM)
4. Value Analysis/Value Engineering
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DMADV
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1.Define the project goals and customer deliverables
2.Measure and determine customer needs
3.Analyze the product or process options to meet needs
4.Design the product or process
5.Verify the new product or process
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Quality Function Deployment (QFD)
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A graphical tool used to help organizations move from vague notions of what customers want to specific engineering and operational requirements. Also called the House of Quality
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Design for Manufacturability (DFM)
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the systematic consideration of manufacturing issues in the design and development process, facilitating the fabrication of the product's components and their assembly into the overall product.
1. Parts Standardization
2. Modular Architecture
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Value Analysis/Value Engineering
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achieve equivalent or better performance at a lower cost while maintaining all functional requirements defined by the customer.
1. Does the item have any design features that are not necessary?
2. Can two or more parts be combined into one?
3. How can we cut down the weight?
4. Are th…
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Project
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a series of related jobs usually directed toward some major output and requiring a significant period of time to perform
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Project Management
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planning, directing, and controlling resources (people, equipment, material) to meet the technical, cost, and time constraints of the project
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other definition for project management
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the application of knowledge, skills, tools, and techniques to project activities to meet project requirements
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Project Phases
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1. Concept Phase
2. Project Definition Phase
3. Planning Phase
4. Performance Phase
5. Post Completion Phase
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1. Concept Phase
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project planners develop a broad definition of what the project is and what its scope will be.
Outputs- initial budget estimates, estimates of personnel needed and required completion dates
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2. Project Definition Phase
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Project planners identify how to accomplish the work, how to organise for the project, the key personnel and resources required to support the project, tentative schedules and tentative budget requirements
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3. Planning Phase
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Project planners prepare detailed plans that identify activities, time and budget targets, and the resources needed to complete each task, while also putting into place the organisation that will carry out the project
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4. Performance Phase
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The organisation starts to execute the plan
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5. Post completion Phase
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the project manager or team confirms the final outcome, conducts a post implementation meeting to critique the project and personnel, and reassigns project personnel.
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Work Breakdown Schedule
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defines the hierarchy of project tasks, subtasks and work packages
1. Lists projects and tasks
2. Details breakdown of each project or task
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Gantt charts
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a graphical tool used to show expected start and end times for project activities and to track actual progress against these time targets.
1. does not show relationship between activities
2. Shows the amount of time involved and the sequence in which activities can be performed
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Network Diagrams
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a graphical tool that shows the logical linkages between activities in a project.
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PERT & CPM
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PERT = Program evolution and review technique
CPM = Critical Path Method (AON = Activity on Node)
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Six basic steps for both PERT & CPM
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1. define project and WBS
2. develop relationships among activities
3. draw the network connecting activities
4. assign time and/or cost estimates to each activity
5. compute the longest path through the network
6. use the network to plan, schedule, monitor and control the project
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Forward Pass
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start at the beginning of network and work to end
a. early start = 0 for first activity, latest of early finish for predecessors for all other activities
b. Early finish = early start + duration of activity
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Backward Pass
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start at the end of the network and work to beginning
a. late finish = longest early finish for last activity, earliest of the late start for all other activity
b. Late start = late finish - duration of activity
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Slack
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the amount of leeway you have for starting an activity
a. slack time = difference between the late start time and the early start time (or between the late finish time and the early finish time)
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Critical Path
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sequence of all activities in a project that forms the longest chain in terms of their time to complete (contains zero slack time)
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Probability Assumptions
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1. Activity duration times are independent random variables
2. Allows us to use Central Limit Theorem to find the mean and variance of the sequence of activities that form the critical path.
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Central Limit Theorem
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the sum of a group of independent, identically distributed random variables approaches a normal distribution as the number of random variables increases
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Determining Probability
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1. Need to find out where the probability distribution falls
2. Use the z chart
3. Z measures the number of standard deviations either to the right or to the left of the zero in the distribution
4. Z value corresponds to G(z) which represents the area under the curve
5. For example, …
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Time-Cost Models
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project managers are concerned with the cost to complete a project as well as the time to complete the project
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Crashing a project
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1. Crashing a project is the process by which we shorten the duration of a project in the cheapest manner possible
2. We need Normal time/cost and crash time/cost (amount that we could shorten it to)
3. Compute crash cost per period
4. Find the critical activities based on your network…
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Process
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defined by APICS to be a "set of logistically related tasks or activities performed to achieve a defined business outcome.
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Process Maps
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identifies the specific activities that make up the information, physical, or monetary flow of a process
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Rules for creating a process map
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a. identify the entity that will serve as the focal point
b. identify clear boundaries and starting/ending points
c. keep it simple
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Common process mapping symbols
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a. rectangle with round edges = start or finish of project
b.rectangle with sharp edges =step or activity in process
c. diamond = decision point
d. trapezoid = input or output
e. semicircle = delay
f. circle = inspection
g. arrow = move activity
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Swim lane process map
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a process map that geographically arranges the process steps so that the user can see who is responsible for each step.
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Measuring Business Process Performance
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Quality- performance & conformance quality, reliability
Cost- labor, material, quality-related costs
Time- delivery speed and reliability
Flexibility- mix, changeover, volume flexibility
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Productivity
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a ratio measure of process performance, it can be based on a single factor or multiple factors
Productivity = Outputs / Inputs
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Single factor productivity
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a productivity score that measures output levels relative to a single product
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Multifactor productivity
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a productivity score that measures output levels relative to more than one input
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Efficiency
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a measure of process performance. it is the ratio of actual outputs to standard outputs, usually expressed in a percentage.
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Standard Outputs
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an estimate of what should be produced given a certain level of resources
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Benchmarking
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the process of identifying, understanding and adapting outstanding practices from within the same organisation or from other businesses to help improve performance
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Competitive Benchmarking
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the comparison of an organisation's process with those of competing organisations
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Process Benchmarking
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the comparison of an organisation's process with those of non-competitors that have been identified as having superior processes
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Six Sigma
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is a business improvement methodology that focuses an organisation on
1.understanding and managing customer requirements
2. aligning key business processes
3. using data analysis to understand and improve processes
4.driving rapid and sustainable improvement to the business process
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DMAIC
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Define the goals of the improvement activity
Measure the existing process
Analyze the process
Improve the process
Control the new process
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Root Cause Analysis ("Fish Bone Diagram")
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a. Cause-&-Effect Diagram
b. Five Whys (why is this the cause of the problem)
c. Scatter Plot
d. Check Sheet (how frequently an event occurs)
e. Pareto Chart (special form of bar chart)
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Capacity
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defined by APICS as the capability of a worker, a machine, a work centre, a plant, or an organisation to produce output in a time period.
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Common management decisions regarding capacity
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a. How is capacity measured?
b. Which factors affect capacity
c. Whats the impact of the supply chain on the organisation's affective capacity?
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Theoretical Capacity
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the maximum output capability, allowing for no adjustments for preventative maintenance, unplanned downtime or the like.
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Rated Capacity
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The long term, expected output capability of a resource or system
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Capacity Planning in Services
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a. Time- services cannot be stored, need capacity when customers show up
b. Location- located near the customers
c. Volatility on Demand- much higher than for manufacturing, influenced by customer behaviour, smaller time periods.
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Factors that Affect Capacity
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a. Number of lines used
b. Number of shifts operating
c. Number of temporary workers used
d. Number of public storage facilities used
e. Product variations on line
f. Conformance quality
g. Quality improvement
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Capacity Strategies
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Lead
Lag
Match
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Methods for evaluating capacity alternatives
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a. Total Cost
b. Demand Considerations
c. Expected Value
d. Break-Even Analysis
e. Learning Curves
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Break-even point
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the volume-level for a business at which total revenues cover total costs
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Four Laws of Forecasting
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Law 1: Forecast are almost always wrong
Law 2: Short-term forecasts tend to be more accurate
Law 3: Forecasts for groups of products or services tend to be more accurate
Law 4: Forecasts are no substitute for calculated values
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Independent Demand
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this is what we forecast. a firm can:
a. take an active role to influence demand
b. take a passive role and respond to demand
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Dependent Demand
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caused by the demand for another product or service
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Steps in Forecasting
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1. Determine the use of the forecast
2. Select the items to be forecasted
3. Determine the time horizon of the forecast
4. Select the forecasting models
5. Gather the data
6. Make the forecast
7. Validate and implement results
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Qualitative Forecasting
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subjective, based on opinions or estimates
used when data is scarce, not available, or irrelevant
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Qualitative Forecasting Techniques
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a. Historical analogy
b. Market surveys
c. Panel Consensus
d. Delphi Method
i. Interactive group process, goes til consensus
ii. decision makers, staff, respondents
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Naive approach
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a. Historical analogy
b. Market surveys
c. Panel Consensus
d. Delphi Method
i. Interactive group process, goes til consensus
ii. decision makers, staff, respondents
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Moving Average
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assumes an average is a good estimator of future behavior
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Weighted Moving Average
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permits an unequal weighting on prior time periods
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Exponential Smoothing
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form of weighted moving average where most recent data is weighted the most
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Forecast Accuracy
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Forecast Accuracy the objective is to obtain the most accurate forecast no matter the technique. se generally do this by selecting the model with the lowest forecast error.
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Sources of error
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Bias- consistent error is made
Random- cannot be explained by forecast model
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Mean Absolute Deviation
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the ideal MAD is zero which would mean that there is no forecast error. The larger the MAD, the less accurate the model resulted.
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Mean Absolute Percentage Error
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MAPE provides a perspective of the true magnitude of the forecast error
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Tracking Signal
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is a measure that indicates wether the forecast average is keeping pace with any genuine upward or downward changes in demand
if the TS falls out of the pre-set control limits, there is a bias problem with the forecasting method.
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Aggregate planning
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determining the quantity and timing of production for the immediate future to minimize cost over the planning period
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Top-down planning
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an approach to S&OP in which a single, aggregated sales forecast drives the planning process
a. develop the aggregate sales forecast
b. translate the sales forecast into resource requiremen
c. generate alternative production plans
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Bottom-up planning
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a approach to S&OP that is used when the product/service mix is unstable and resource requirements vary greatly across the offerings
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Planning values
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values that decision makers use to translate a sales forecast into resource requirements and to determine the feasibility and costs of alternative sales and operative plans
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Determining the Appropriate Approach
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are resource needs similar across the various products or services offered? OR is the mix of products or services the same from one period to the next?
YES --> Top-down planning
NO --> Bottom-up planning
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Level Production Plan
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a S&OP plan in which production is held constant and inventory is used to absorb difference between production and the sales forecast
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Chase Production Plan
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A S&OP plan in which production is changed in each time period to match the sales forecast
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Mixed production plan
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a S&OP plan that varies both production and inventory levels in an effort to develop the most effective plan
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Mixed Strategy
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a. produces at or close to full capacity for some part of the cycle
b. products at a lower rate (or does not produce) during the rest of the cycle
c. makes use of available capacity, yet limits inventory buildup and inventory carrying costs.a. produces at or close to full capacity for …
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Things to Consider when doing any Strategy
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a. The number of workers
b. Plant capacity (amount of production & overtime)
c. Starting and ending inventory level requirements
d. Costs (production, inventory holding, hire/fire)
e. Forecasted Demand
f. Planning for production (internal & external)
g. Choosing between alternative …
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Yield Management
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an approach that services commonly use with highly perishable "products" in which prices are regularly adjusted to maximize total profit. most effective when:
a. demand can be segmented by customer
b. fixed costs are high and variable costs are low
c. inventory is perishable
d. produc…
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Operation Yield Management Systems
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Pricing structures must appear logical to the customer
a. Rate fences (Physical & Non-Physical)
b. Handling variability in arrivals, duration and time between customers
c. Managing the service process
d. Training workers to deal with overbooking and price changes
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Linking S&OP throughout the Supply Chain
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The S&OP process should consider not only the impact on various parties within the firm, but also the impact on outside parties- the firm's supply chain partners.
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SCM 301: FINAL EXAM