What is OSCM
(operations and supply chain management)- the design, operation, and improvement of the systems that create and deliver the firms primary products and services
what does OSCM do
concerned with the management of the entire product production or service delivery system
OSCM processes
planning, sourcing, making, delivering, returning
planning
processes needed to operate an existing supply chain strategically
sourcing
selection of suppliers that will deliver the goods and services needed to create the firm's product. a set of pricing, delivery, payments, and partner relationship metrics needed
making
producing the major product or providing the service
delivery
logistics processes such as selecting carriers, coordinating the movement of goods and information, and collecting payments from customers
returning
processes for receiving worn-out, defective, and excess products back from customers
efficiency
doing something at the lowest possible cost
effective
doing the right things to create the most value for the customer
value
the attractiveness of a product relative to its price
benchmarking
a process in which one company studies the processes of another company to identify best practices
why is benchmarking important
from an OSCM perspective, the relative cost of providing a good service is closely related to earnings growth
evolution of OSCM
JIT inventory
Lean: eliminate waste (opposite of TQM)
business process reengineering- six sigma (dpmo)
e-commerce
business analytics
big issues with supply chain today
how you manage the entire chain and how you manage what you show people of the entire chain
how do you optimize the network
management of global supply chain since the pandemic
sustainability
the ability to meet current resource needs without compromising the ability of future generations to meet their needs
shareholders
individuals or companies that legally own one or more shares of stock in the company
stakeholders
individuals or organizations who are directly or indirectly influences by the actions of the firm
triple bottom line
economic prosperity
environmental stewardship
social responsibility
competitive dimensions
cost or price
quality
delivery speed
delivery reliability
coping with changes in demand
flexibility and new-product introduction speed
other product-specific criteria (technical assistance, meeting launch dates, after-sale support, environmental impact, etc.)
straddling
seeking to match a successful competitor by adding features, services, or technology to existing activities (often a risky strategy)
activity-system maps
diagrams that show how a company's strategy is delivered through a set of supporting activities
supply chain risk
the likelihood of a disruption that would impact the ability of a company to continuously supply products or services
supply coordinated risks are associated with
day to day management of the supply chain
disruption risks are
caused by natural or manmade disasters
risk management framework
identify the sources of potential disruption
highly situation-dependent
focus should be on highly unlikely events
assess the potential impact of the risk
goal is to quantify the probability and impact
develop plans to mitigate the risk
detailed strategy for minimizing the impact of the risk
supply chain risk matrix
different supply chain strategies are exposed to specific types of risk- the supply chain risk matrix shows the level and type of risk for various strategies
productivity
a common measure of how well resources are used = outputs/inputs relative metric
decoupling points
when inventory is positioned in the supply chain to allow processes or entities to operate independently-- forecasts of demand at these decoupling points allow inventory to be set to the proper level
types of forecasting
qualitative
quantitative
time series analysis
causal relationships
simulation
time series analysis
based on the idea that data relating to past demand can be used to predict future demand (using the past to predict the future)
short term forecasting
less than three months, used mainly for tactical decisions (ex. replenishing inventory)
medium term forecasting
three months to two years, used to develop a strategy which will be implemented over the next six to eighteen months
long term forecasting
greater than two years, useful for detecting general trends and identifying major turning points
choosing an appropriate forecasting model depends upon
time horizon to forecast
data availability
accuracy required
size of forecasting budget
availability of qualified personnel other factors that may also be considered:
degree of flexibility
consequence of a bad forecast
simple moving average
forecast is based on average demand over the most recent periods, useful when demand is not growing or declining rapidly and no seasonality is present, removes some of the random fluctuations from the data, selecting the period length is important (last three months of demand and dividing by three for example, but does not consider seasonality)
weighted moving average
allows unequal weighting of prior time periods, the weights must be equal to one
time series elements
trend, seasonal, cyclical, autocorrelation, and random
forecast errors
the difference between forecast value and what actually occurred, all forecasts contain some level of error
sources of error
bias- when a consistent mistake is made random- errors that are not explained by the model being used
measure of error
mean absolute deviation (MAD)
mean absolute percent error (MAPE)
tracking signal
causal relationship forecasting
uses independent variables other than time to predict future demand (this independent variable must be a leading indicator)
many apparently causal relationships...
are actually just correlated events- care must be taken when selecting causal variables
qualitative forecasting techniques
market research, panel consensus, historical analogy, delphi method
capacity
the ability to hold, receive, store, or accommodate. in business, viewed as the amount of output that a system is capable of achieving over a specific period of time
strategic capacity planning
finding the overall capacity level of capital-intensive resources to best support the firm's long-term strategy
economies of scale
the idea that as a plant gets larger and volume increases, the average cost per unit drops
diseconomies of scale
at some point, the plant becomes too large and average cost per unit begins to increase
best operating level
the level of capacity for which process was designed and defined as a volume of output at which average unit cost is minimized
decision tree
a schematic model of the sequence of steps in a problem- including the conditions and consequences of each step
decision tee components
decision nodes- represented with squares decision events- represented with circles branches- links between nodes, show the choices available to the decision maker
utilization is measured by
the portion of time servers are busy
low rates of utilizations
appropriate when the degree of uncertainty (in demand) is high and/ or the stakes are highj
higher rates of utilization
possible for predictable services or those without extensive customer contact
over ___% of all businesses sell services
80%
the ideal utilization for a human is ___%
70%
the ideal utilization for a machine is ___%
100%
what is a project
a series of related jobs, usually directed toward some major output and requiring a significant period of time to perform
project management
planning, directing, and controlling resources (people, equipment, and material) to meet the technical, cost, and time constraints of a project
why is project management important?
at the highest levels of an organization, management often involves juggling a portfolio of projects
pure project
a self contained team works full time on the project
functional project
responsibility for the project lies within one functional division of the firm. Employees from that division work on the project, usually only part timem
matrix project
a blend of pure and functional project structures- people from different functional areas work on the project, possibly only part time
a project always starts with a...
statement of work (SOW)
statement of work
a written description of the objectives to be achieved
a brief statement of work to be done
proposed schedule
task
a further subdivision of a project- usually not longer than several months and performed by a single group or organization
work package
a group of activities combined to be assignable to a single organizational unitpr
project milestone
specific events in the life of the project to be reached at points in time
work breakdown structure (WBS)
defines the hierarchy of project tasks, subtasks, and work packagesa
activities
defined within the context of the work breakdown and are pieces of work that consume time
gantt chart
shows in a graphical manner the amount of time involved and the sequence of activities (often referred to as a bar chart)
critical path
the path taking the longest time through this network of activities
critical path method (CPM)
identify each activity to be done and estimate how long it will take to complete it
determine the required sequence of activities and construct a network diagram reflecting the precedence relationships
determine the critical path
determine the early start/ finish and late start/ finish schedule
slack time
the time that an activity can be delayed without delaying the entire project-- the difference between the late and early start times of an activity
when activity times vary, a single time estimate may not be reliable, instead, estimate three values:
optimistic time
pessimistic time
most likely time
time-cost model
extension of the critical path models that considers the trade-offs between the time requires to complete an activity and the cost
project crashing
the compression of time to complete project
lead time
the time needed to respond to a customer order
customer order decoupling point
where inventory is positioned to allow entities in the supply chain to operate independently
lean manufacturing
a means of achieving high levels of customer service with minimal inventory investment
production process are
used to make any manufactured item
production processes steps
source the parts needed
make the product
deliver the product
make to stock
a production environment where the customer is served "on-demand" from finished goods inventory
assemble to order
preassembled components, subassemblies, and modules are put together in response to a specific customer order
make to order
the product is built directly from raw materials and components in response to a specific customer order
engineer to order
firm works with the customer to design and then make the product
days of supply
a measure of the number of days of supply of an item (the inverse of inventory turn scaled to days)
production processes
project
workcenter (job shop)
manufacturing cell
assembly line
continuous process
project layout
the product remains in a fixed location, equipment is moved to the product, may be developed by arranging materials according to their assembly priority
workcenter (job shop) layout
similar equipment or functions are grouped together, focused on a particular type of operation
manufacturing cell layout
a dedicated area where products that are similar in a processing requirements are produced, dedicated to a limited range of products
assembly line and continuous process
area where an item is produced through a fixed sequence of workstations, designed to achieve a specific production rate, converts raw materials into finished product in one continuous process
assembly line design
workstation cycle time, assembly line balancing, precedence relationship
workstation cycle time
a uniform time interval in which a moving conveyor passes a series of workstations-- also the time between successive units coming off the line
assembly line balancing
assigning all tasks to a series of workstations so that the required cycle time is met and idle time is minimized
precedence relationship
the order in which tasks must be performed in an assembly process
service package
the bundle of goods and services that is provided in some environment
service bundle consists of five features:
supporting facility
facilitating foods
information
explicit services
implicit services
services cannot be...
stored in inventory
in services ___ becomes the dominant issue
capacity