Supply Chain

Transportation Advantage

Add inbound and outbound costs, whoever has the lowest amount has the transportation advantage

Customer Order Cycle Time

Date it is delivered - Date of order received = days

Order to Cash Cycle Time

How many days from date of order received to when you receive payment

Perfect Order Index

(Total Orders - Orders with Errors) / Total orders received * 100

On Time % Delivery

Orders delivered on time / Total orders received * 100

In-Full % Delivery

(Total Orders Delivered - Incorrect or incomplete orders) / Total Orders Received *100

Naïve Forecasting Method

Equal to the actual value observed during the last period

Simple Mean Forecasting Method

The average of all available data

Moving Average Forecasting Method

The average value over a set time period

Weighted Moving Average Forecasting Method

Use the weights and multiple it by its corresponding actual demand for the amount of periods stated.

Exponential Smoothing Formula

Ft+1 = aAt + (1-a)Ft

Exponential Smoothing data meaning

-Last periods forecast (Ft)
-Last periods actual value (At)
-Select value of smoothing coefficient, a, between 0 and 1.0

Economic Order Quantity Goal

Minimize the total cost when considering ordering costs and holding costs

Economic Order Quantity Formula

EOQ = the square root of 2(annual usage in units) (Order cost)/(Annual carrying cost per unit)

Q = √2RA/VW

What are supply chains

They encompass the group of companies needed to design, make, deliver, and use a product or service

6 things that make up the Score Model

Source, Plan, Make, Deliver, Return, and Enable

Effectiveness deals with

Customers

Efficiency deals with

Cost

What is the goal of supply chain management

Achieve both efficiency and effectiveness

What is the objective of supply chain management

Supply Chain strategy and design must focus on reducing costs while improving customer service

What is the intended outcome of supply chain management

Good supply chain management can lead to firm competitive advantage

Higher Service Levels characterstics

-More product means higher carrying cost
-More warehouses mean higher carrying costs + operating cost
-More stores mean higher carrying costs + operating costs

Improved Operations characteristics

-Less product means lower carrying costs (customer)
-Less warehouses means lower carrying costs and operating costs
-Less stores means lower carrying costs and operating costs

What are the 5 supply chain drivers

Production, Inventory, Transportation, Location, and Information

How can a company the 5 supply chain drivers to operate a responsive versus efficient supply chain?

The right combination of responsiveness and efficiency in each of these drivers allows a supply chain to "increase throughput while simultaneously reducing inventory and operating expense."

Three logistics strategies

-Cost Reduction
-Capital Reduction
- Service Improvement

There are spatial relationships because

-Places are separated by distance
-Transportation costs increase with distance
-Distance could impact the amount of warehouses/inventory

Cost Reduction description and sample issues

-Minimizing the variable costs associated with movement and storage

-Choosing among different warehouse locations or evaluating alternative transport modes

Capital Reduction description and sample issues

-Minimizing the level of investment in the logistics system and maximizing the return on logistics assets

-Shipping direct to customers to avoid warehousing
-Choosing public warehouses over privately owned
-Selecting a just-in-time supply approach rather than stocking inventory

Service improvement description and Sample issues

-Recognizing that revenues depend on the level of logistics services provided

-Provide different and better services than the competition

Demand planning

the process of forecasting demand for a product (or service) and executing an operational plan to serve that demand

Demand forecasting

The process of predicting consumer demand or predicting sales

4 Variables in Forecasting

-Supply
-Demand
-Product Characteristics
-Competitive Environment

What is the relationship between number of suppliers, lead times and supply predictability?

-More producers of a product, shorter lead times and more predictable supply is
-Fewer suppliers means longer lead time and increased potential for uncertainty

What is the relationship between supply chain forecasts’ coverage and lead times?

Supply Chain forecasts must cover a time period that encompasses the combined lead times of all components that go into the creation of the final product

What is the relationship between forecast difficulty and product historical data?

Products and markets for which there is little historical data and lots of variability are the most difficult to forecast for

What is the relationship between forecast periods and product maturity?

Forecasts for mature products can cover longer timeframes than forecasts for products that are developing quickly

What are the forecasting implications for competing or complementary products?

Products that compete with or complement each other should be forecasted together

What are the forecasting implications for both companies and their competitors when products are planned to be included in future promotional or sales events?

Forecasts should consider events that are planned for in the upcoming period like promotions and sales specials for both an organization and its competitors

Qualitative forecasting method

-Primarily subjective
-rely on judgement

Time Series Forecasting Method

-Use historical demand only
-best with stable demand

Causal Forecasting Method

Relationship between demand and some other factor

Simulation Forecasting Method

Imitate consumer choices that give rise to demand

Order Cost Definition

Cost of placing order which may have both fixed and variable components

Setup Costs Definition

Expenses incurred each time an organization modifies a production or assembly line to produce a different item for inventory