Supply Chain Exam 3

(5) primary functions of a warehouse

Picking, Shipping, Storage, Receiving, Packing

Which mode of transportation has the most capability?

Rail

Which mode of transportation is the fastest over a long distance?

Air

Which mode of transportation has the lowest per-unit cost?

Pipeline

Which mode of transportation is the most flexible, providing the most accessibility?

Truck

Which mode of transportation is the most reliable?

Pipeline

What transportation intermediary purchases blocks of rail capacity and sells it to shippers?

Intermodal Marketing Company

What transportation intermediary consolidates LTL shipments into FTL shipments (i.e., they take small shipments from multiple companies and consolidate them into larger shipments)?

Freight Forwarder

What transportation intermediary is a nonprofit cooperative which arranges for members' shipments?

Shippers Association

What transportation intermediary brings shippers and carriers together?

Transportation Broker

What transportation intermediary is an outsourced provider that manages all, or a significant part, of an organization’s logistics requirements (including transportation) for a fee

Third Party Logistics Company

Newer technologies and trends in transportation (i.e., within the last 25 years)?

Platooning, Vertically Folding Shipping Containers, Driverless trucks, Driver monitoring, Drone Deliveries

Consolidation Warehouse

Receives products from different plants or suppliers, stores them, and then combines them with similar shipments from other plants or suppliers for further distribution.

Contract Warehouse

A variation of warehousing that handles the shipping, receiving, and storage of goods on a contract basis for a fee., is known as a?

Public Warehouse

A business that provides storage and related warehouse functions to companies on a short or long-term basis for a month-to-month fee, is known as a?

Break-Bulk Warehouse

A warehouse operation that divides full truckloads of items from a single source or manufacturer into smaller, more appropriate quantities for use or further distribution, is known as a?

Private Warehouse

A storage facility that is owned by the company that owns the goods being stored in the facility, is known as a?

Assemble to Order

Manufacturing strategy requires that the basic parts for the product are already manufactured but not yet assembled

Make to Order

Manufacturing strategy creates additional wait time for the buyer to receive the product, but allows customers to purchase pre-designed and pre-engineered products that can be customized to the the buyers specifications

Engineer to Order

Designing, engineering, and building a unique order

Make to Stock

Manufacturing strategy that has the shortest / fastest lead time (i.e., the manufacturing strategy that will provide product to customers the quickest)

Histograms

A tool to graphical display data grouped into ranges

Cause and Effect Diagrams

A tool used to aid in brainstorming and isolating the causes of a problem

Control Charts

A tool used to graph how a process changes over time

Flow Diagrams

A tool used to sequence the movements or actions of people or things involved in a complex system or activity

Check Sheets

A tool used to identify the frequency of occurrence for each identified problem

Scatter Diagrms

A tool used to plot the values of two variables along two axes in order to reveal any correlation present

Pareto Analysis

A tool used to organize and present process problems from most to least severe

Continuous Flow Production

Production is highly automated and inflexible, running uninterrupted and producing large quantities

Batch Production

Production is in small fixed quantities with all items completing one step in the process before all items proceeding on to the next step in the process

Line Flow Production

Production is standardized with limited variations and each item moving through various stages of production .

Job Shop Production

Production is in very small volumes with very high customization and variety, generally adopted by small specialty businesses

Internal Failure Cost

Costs associated with determining the cause(s) of defective products during production

Costs associated with correcting work-in-progress materials that do not meet the company's quality standards

Prevention Costs

Costs associated with establishing and operating the company's quality training program

Costs associated with creating quality standards/specifications for purchased materials

Costs associated with designing and maintaining the company's quality system

External Failure Costs

Costs associated with replacing defective finished products in the market

Costs associated with investigating the cause(s) of recalled finished products

Appraisal Costs

Costs associated with evaluating and approving a supplier's quality systems

Costs associated with inspecting incoming materials to ensure that they meet quality standards

Costs associated with auditing your company's quality systems to ensure they are functioning accurately

two (2) manufacturing strategies that are most aligned with Line Flow Production.

Make to Stock
Assemble to Orderr

Lean Layout

Move people and materials when and where needed, and as soon as possible.

Lean Supply Chain Relationship

Companies connect with customers and suppliers in ways that allow them to easily exchange information, demand data, and the visibility of status.

Continuous Improvement

A system involving every employee that is based on making little changes on a regular basis, anywhere changes can be made, to reduce process, delivery, and quality problems.

Waste Reduction

Firms reduce costs by eliminating wait times, inventories, material and people movement, processing steps, variability, and any other non-value-adding activity.

Workforce Commitment

Managers must support LEAN Manufacturing by providing subordinates with the skills, tools, time, and other necessary resources to identify problems and implement solutions.

Kaoru Ishikawa

Created the cause and effect diagram to help find the root cause of a problem

W. Edwards Deming

Stressed management's responsibility for quality and Created the continuous improvement model

Philip Crosby

Introduced the four absolutes of quality and Introduced the concept of zero defects

Cross-Docking

Warehouse practice where materials are unloaded from incoming transportation and directly loaded onto outbound transportation with little or no storage in between.

Its purpose is to reduce inventory, storage time, and handling costs while improving efficiency and speed

Intermodal Transportation

Multiple modes of transportation to move shipment to destination (for example, rail and truck or ship and truck).

Improve efficiency and reduce costs by combining the strengths of different transportation

Third Party Logistics (3PL) company

Outsourced provider that manages all, or a significant part, of an organization’s logistics requirements for a fee.

5 modes of transportation.

• Truck

• Rail

• Air

• Water

• Pipeline

5 major benefits of a Supplier Recognition Program

• Motivate suppliers

• Improve supplier loyalty

• Encourage suppliers to adapt to the company’s culture

• Help create entry barriers for competitors

• Encourage supplier participation in product innovation

5 key characteristics to consider in the development and implementation of a Supplier Relationship Management System

• Automation

• Integration

• Visibility

• Collaboration

• Optimization

7 major reasons why ISO certified suppliers are preferred by procurement departments

• Conform to an externally defined set of standards

• Easier to qualify initially and periodically audit

• More open to sharing supply chain information

• Welcome building relationships with their customers

• Have formal processes for continuous improvement

• Certified by an independent third-party agency

• Must be re-certified every three years

8 quality management principles on which the ISO 9000 series quality management system standards are based

• Customer focus

• Leadership

• Involvement of people

• Process approach

• Systems approach to management

• Continual improvement

• Factual approach to decision making

• Mutually beneficial supplier relationship

What is a Root Cause Analysis?

Method used to identify the underlying cause of a problem, rather than just addressing its symptoms.

In what phase of the DMAIC Methodology is a Root Cause Analysis used?

It is used in the Analyze phase of the DMAIC methodology.

Total Quality Management (TQM)

Continuous improvement of quality in all processes, products, and services

Six Sigma

A data-driven quality methodology used to improve processes by reducing variation and defects, with the goal of achieving near-perfect performance.

What is Lean

A philosophy focused on eliminating waste and minimizing the use of all resources while maximizing value to the customer. 

Supplier Relationship Management (SRM)

Strategically planning for and managing all interactions with third-party suppliers to maximize the value of those relationships. SRM focuses on key suppliers, not every supplier equally.

When is SRM typically applied?

SRM is usually applied to suppliers that provide high volumes, crucial products or services, support many business units, or require intensive engineering, manufacturing, or logistics interaction.

Successful Strategic Partnership

A long-term buyer-supplier relationship based on mutual commitment, shared information, shared risks, shared rewards, and mutual benefit.

Strategic Perspective vs. Tactical Perspective

A strategic perspective focuses on long-term partnership, value, improvement, and competitive advantage. A tactical perspective focuses more on short-term transactions, price, and immediate needs.

10 Keys to Successful Strategic Partnerships

Building trust, shared vision and objectives, personal relationships, mutual benefits and needs, top management commitment, managing change, information sharing and communication, understanding capabilities, continuous improvement, and measuring performance.

Building Trust in Supplier Partnerships

Trust makes partners more willing to cooperate, compromise, work toward long-term benefits, and go beyond minimum requirements. Trust is hard to regain once lost.

Shared Vision and Objectives

Both buyer and supplier must agree on the same long-term direction and clear objectives so the relationship moves beyond daily tactical issues.

Personal Relationships in SRM

Strategic partnerships depend on relationships between key people at each company because people communicate, solve problems, and make the partnership work.

Mutual Benefits and Needs

A partnership should create a win-win situation. If only one side benefits, the relationship is unlikely to last.

Top Management Commitment

Strategic partnerships need support from senior leadership because leadership commitment gives the relationship priority, resources, and credibility.

Managing Change in Strategic Partnerships

Companies must be prepared to handle the changes that come with deeper supplier relationships, such as new processes, new communication methods, and shared responsibilities.

Information Sharing and Lines of Communication

Formal and informal communication channels should be created so information flows freely between buyer and supplier.

Understanding Supplier Capabilities

Key suppliers must have the technology, capacity, quality systems, and delivery ability to meet current and future buyer requirements.

PDCA Cycle

Plan, Do, Check, Act. A continuous improvement process used to test improvements, evaluate results, and expand successful changes.

Plan Phase of PDCA

Identify the improvement needed, determine what change should be made, and create a plan for the change.

Do Phase of PDCA

Implement the change on a small scale first to test whether it improves the process.

Check Phase of PDCA

Use data to evaluate whether the change created a positive result.

Act Phase of PDCA

If the change worked, implement it more broadly. If it did not work, reassess the root cause and begin the cycle again.

Measuring Performance in SRM

Supplier performance should be measured using quality, cost, delivery, and flexibility metrics. The slides emphasize that 'you can’t improve what you don’t measure.'

S.M.A.R.T. Objectives

Objectives should be Specific, Measurable, Achievable, Relevant, and Time-oriented.

Supplier Scorecard

A multi-criteria evaluation tool used to measure supplier performance across categories like quality, delivery, cost, flexibility, and service.

Benefits of Strategic Partnerships for Buyers

Increased efficiency, lower costs, better service, improved quality, more innovation, preferred access to supplier ideas and people, influence over supplier technology, and sustainable competitive advantage.

Benefits of Strategic Partnerships for Suppliers

Increased efficiency, lower cost of sales, higher margins, more revenue, better visibility into buyer plans, increased business scope, innovation opportunities, predictable future business, and competitive advantage.

Supplier Evaluation

A process used to identify the best and most reliable suppliers using facts, defined criteria, regular feedback, and performance review meetings.

Supplier Evaluation Performance Metrics

Common metrics include price and cost performance, product quality, delivery performance, contractual compliance, product development participation, cooperation in third-party production management, and ethics or sustainability support.

Why Purchase Cost Becomes Less Important with Key Suppliers

For strategic suppliers, the goal is not just the lowest price. Strong suppliers can help reduce total costs through quality, innovation, reliability, and process improvement.

Weighted-Criteria Evaluation System

A supplier evaluation method where performance categories are selected, assigned weights, scored from 0 to 100, multiplied by their weights, and summed into an overall supplier score.

Supplier Rating Categories

Suppliers may be classified as certified, preferred, acceptable, conditional, developmental, or unacceptable based on their evaluation score.

Preferred Supplier Rating

A high-performing supplier, usually scoring 90 to 100, that the company wants to work with for competitive positioning and new product development.

Acceptable Supplier Rating

A supplier scoring around 70 to 89 that may continue supplying but should provide a plan to improve toward preferred status.

Developmental Supplier Rating

A low-scoring supplier, usually 0 to 69, that must take corrective action. The buyer may look for alternatives if performance does not improve.

OTIF

On Time In Full. A delivery metric that measures whether suppliers deliver the correct quantity by the required time.

SCSS

Supplier Cost Savings Suggestions. A metric that tracks supplier ideas for reducing costs.

SCAR

Supply Chain Action Report. A corrective action document or report used when supplier performance issues occur.

PPM

Parts Per Million. A quality metric often used to measure defects.

Certified Supplier

A supplier that has proven it can provide materials of such quality that little or no receiving inspection is needed before items enter stock or production.

Certificate of Analysis (COA)

A document from the supplier showing that the product was tested using approved methods before shipment.

Benefits of Supplier Certification Programs

Lower inspection time and labor, cost savings, stronger long-term relationships, recognition of excellence, and a smaller supplier base.

Internal Supplier Certification Criteria

Possible criteria include no product rejections, no late deliveries, no major quality incidents, ISO 9000 certification or quality system approval, strong performance measures, documented quality systems, and stable processes.

International Organization for Standardization (ISO)

The world’s largest developer of voluntary international standards. ISO certification shows a supplier meets standards verified by an independent third party.

Benefits of ISO Certification

Greater market potential, compliance with procurement bids, improved efficiency, cost savings, higher customer service, and stronger employee morale.

ISO 9000

A series of quality management standards related to design, development, production, installation, and service.