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33 Cards in this Set
- Front
- Back
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Supply Chain |
A supplychainconsists of the flow of products and services from: –Raw materials manufacturers –Component and intermediate manufacturers –Final product manufacturers –Wholesalers and distributors and –Retailers Connectedby transportationand integratedthrough information,planning, andother coordinationactivities. |
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Supply Chain Flow |
1. 2nd tier suppliers: raw material 2. 1st tier suppliers: component manufacturers 3. End Product Manufacturer 4. 1st tier customers: wholesalers, distributors 5. 2nd tier customers: retailers 6. Final customers |
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Upstream/Backward |
Flow from final customer to 2nd tier supplier: orders, cash, recycling, and returns |
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Downstream/Forward |
Flow from 2nd tier supplier to final customer: product, service, and credit |
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Integration |
Supply management, operations management, and distribution are all integrated in firm relationships |
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Bullwhip Effect |
Orders to suppliers have larger variance than sales to a buyer. These distortions amplify as they move upstream. Collaborative planning/forecasting/replenishment (CPFR) can lead to reduced bullwhip effect. |
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Bullwhip Effect Causes |
1. Production being based on wholesaler forecasts rather than actual customer demand 2. Price fluctuations 3. Infrequent/periodic order policies 4. Rationing/shortage gaming |
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Current Trends |
1. Expanding the supply chain: breadth (foreign resources) and depth (second and third tier suppliers and customers) 2. Increasing supply chain responsiveness 3. More "green" supply chain 4. Reducing costs benchmarking |
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Foundations of SCM |
1. Supply management 2. Operations 3. Distribution 4. Integration |
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e-Procurement Process |
1. Material user inputs a materials requisition including quantity/date needed. 2. Materials requisition submitted to buyer 3. Buyer assigns qualified supplier to bid 4. Buyer reviews closed bids and selects a supplier |
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Make-or-Buy Decision |
Outsourcing: buying materials/components from suppliers instead of making them in house. Backward vertical integration: refers to acquiring sources of supply Forward vertical integration: refers to acquiring customers operations. |
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Reasons for Buying |
Cost advantage Insufficient capacity Lack of expertise/tech Quality Less risk, less capital investment Greater flexibility |
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Reasons for Making |
Protect proprietary technology No competent supplier Better quality control Use existing idle capacity Control of lead-time, transport, and warehousing costs Lower cost |
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Make-or-Buy Analysis |
Fixed Cost + Variable Cost = Fixed Cost + Variable Cost. If break even quantity is larger than annual demand, then buy |
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SCM Trends |
-outsourcing of non-core activities to suppliers -reduction in supply base as companies shift from multiple to single sourcing -long-term buyer-supplier relationships -partnerships rather than adversarial trading |
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Total Cost of Ownership |
Total Engine Cost: Forecast*Cost per unit Tooling Cost: given Transportation: next card Ordering cost: (Forecast/Order size)*cost per order Carrying cost: (Order size/2)*cost per unit*given % Quality cost: Total engine cost*given % |
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Transportation cost |
Calculate weight of load (Order size*lbs per unit) Find cost per mile ton based on this (Distance to be traveled * weight of load)/1 ton mile take that times cost per mile |
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Supplier Scorecard |
Rating * Weight = Final Value |
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Centralized Purchasing |
Purchasing department located at the firm's corporate office makes all the purchasing decisions. |
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Decentralized Purchasing |
individual, local purchasing departments, such as plant level, make their own purchasing decisions. |
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Third-party Logistics (3PL) |
An external supplier that performs all or part of a company's logistics functions May include transportation, warehousing, distribution, finances, vendor managed inventory, etc. |
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Independent Demand vs. Dependent Demand |
Independent: finished goods Dependent: raw materials, component parts, sub-assemblies, etc. |
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Qualitative forecasting |
Based on opinion and intuition. Used with data limited, unavailable, or not relevant. Delphi method |
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Quantitative Forecasting |
uses mathematical models and historical data to predict future demand -time series analysis -causal relationships -simulation |
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Components of Demand |
-Average -Trend (increasing/decreasing) -Cyclical variation (wavelike movements longer than a year) -Seasonal element (peaks/valleys, repeat over consistent interval) -Random variation |
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Time Series Models |
Simple/Weighted Moving Average Exponential Smoothing Trend Projection Naive Forcasting-forecast is equal to demand of last period |
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RSFE |
Running sum of forecast error: sum of error (Actual demand-Forecast) |
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MAD |
Mean Absolute Deviation: Sum of absolut errors/number of periods |
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MAPE |
Mean absolute percentage error the sum of (absolute errors/actual demand)*100 divided by N |
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Exponential Smoothing |
Forecast for prev. period + alpha(actual demand for prev period - forecast for prev. period) |
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MSE |
Sum of the each individually squared errors/N |
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TS |
Tracking signal= RSFE/MAD Good TS between -4 & +4 |
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CPFR |
Collaborative Planning, Forecasting, and Replenishment is a toold used to coordinate demand forecastiong, production and purchase planning, and inventory replenishment |
