International Logistics- Exam 1 Frank Adams

Open Systems View

The view that organizations operate in an environment where key resources are generally available to everyone, customers have access to information and choices, and competitive advantages are usually temporary.

In Open Systems, who has access to key resources?

Everyone/competitors can generally access the same key resources.

What happens as customers gain access to more information?

They become more aware of their options and have more choices.

Are competitive advantages generally permanent or temporary in Open Systems?

temporary

Why are product-based advantages usually temporary in open system view?

Competitors can copy the product or offer something similar.

What is harder for competitors to copy than products and services?

a company's processes and culture

In Open Systems, what creates competitive advantage?

HOW effectively a company uses its resources, not simply WHAT resources it has.

If two companies have access to the same resources, what can separate them?

How effectively they use those resources and their processes.

What three things should you immediately associate with Open Systems?

Same resources + informed customers + temporary advantages.

Open Systems = ?

Everyone can get the same resources + customers know their options + advantages are temporary.

Porter's Value Chain

A model that illustrates the roles of the different major pieces/activities of a firm and how they create value.

What are the 2 categories in Porter's Value Chain?

Primary Activities and Secondary/Support Activities

Primary Activities = ?

WHAT the firm does

Secondary/Support Activities = ?

HOW the firm is organized

What are the 5 Primary Activities?

Inbound Logistics, Operations, Outbound Logistics, Marketing & Sales, Service

What are the 4 Secondary/Support Activities?

Firm Infrastructure, Human Resource Management, Technology Development (R&D), Procurement

Is Marketing & Sales a primary or secondary activity?

Primary

Is Technology Development a primary or secondary activity?

Secondary/Support

The SCOR Model

A tool that benchmarks best practices across a company's core value-added activities.

What does SCOR stand for?

Supply Chain Operations Reference Model

What activities does the SCOR Model benchmark?

Sourcing, operations, logistics, and product return.

What is the purpose of the SCOR Model?

To help companies benchmark best practices and improve operations and value creation.

What 3 things does the SCOR Model do?

Illustrates supply chain tiers, breaks down the activities of each firm into components, and shows how those activities link together.

What do the SCOR Model and Dr. Fawcett's supply chain diagram have in common?

They both illustrate supply chain tiers.

Service Operations

Operations that produce intangible services, typically involving customer contact and the customer in the service-delivery process.

What makes service operations different from manufacturing?

Services can't be shipped, can't be inventoried, and service delivery is hard to control.

Two characteristics that distinguish service operations:

Customer contact + tangibility of the offering

What happens to customer contact as you move from manufacturing toward services?

Customer contact increases.

What happens to tangibility as you move from manufacturing toward services?

Tangibility decreases; services are more intangible.

What are the 3 distinctive realities/characteristics of service operations?

Services can't be shipped, can't be inventoried, and service delivery is hard to control.

Why can't services be inventoried?

Services are consumed as they are produced; you can't make them in advance and store them for future sale.

Because services can't be shipped, what two things are especially important?

Location and timing.

Why is service delivery hard to control?

Customers are involved in the service-delivery process, making each service experience unique.

What is an example of influencing customer behavior to match demand with capacity?

Discounts for non-peak times / yield management.

Why should we learn how to effectively manage services?

Services are very different from manufacturing operations AND service productivity growth and innovation are critical to future prosperity.

Supply Chain Tiers

Describe how supply chains are structured by classifying suppliers and customers based on how far they are from the focal firm.

What is the focal firm?

The firm from whose point of view the supply chain is being viewed.

How are supply chain tiers numbered?

Firms are 1st-tier, 2nd-tier, etc. suppliers or customers based on how far they are from the focal firm.

supply chain tier order

2nd-tier supplier → 1st-tier supplier → FOCAL FIRM → 1st-tier customer → 2nd-tier customer

Supply Chains v. Logistics

Logistics can occur within one firm, while a supply chain almost always involves multiple firms.

What is logistics?

The movement and storage of goods, services, and related information from one point to another.

What is a supply chain?

A network of multiple firms that work together to create and deliver a product or service to the final customer.

Does a supply chain usually involve multiple companies?

Yes

Is logistics part of supply chain management?

Yes. Logistics is one part of the larger supply chain.

Is supply chain management part of logistics?

No Logistics is part of supply chain management.

Customer Service

An inward-looking approach focused on what the firm can do, using internal service measures to meet or exceed industry standards.

Customer service strategy

focuses on meeting industry standards in areas like product quality, productivity, availability, on-time delivery, and reliability.

Customer Satisfaction

meeting or exceeding customer expectations.

Focus of Customer Satisfaction:

Outward looking — focuses on what the customer values and thinks is important.

Customer Satisfaction Strategy

Learn what customers need and convince them the company is committed to fulfilling those needs.

Customer Service vs. Customer Satisfaction

Customer service focuses on internal performance/industry standards; customer satisfaction focuses on customer expectations and perceptions.

Customer Success

Helping customers succeed by meeting their customers' needs.

Customer Success requires

An intimate understanding of the success factors of the entire supply chain.

Customer Success Strategy:

Find ways to work together with the customer to help them succeed.

are Customer Service, Satisfaction and Success the same thing?

NO! they all have different meanings

The Four Utilities

Form, Possession, Time, and Place

What is Form Utility?

Transforming inputs into products or services of greater customer value.

Who is primarily responsible for Form Utility?

Purchasing and operations managers

What is Possession Utility?

falls within marketing's domain and consists of efforts to communicate (i.e., promote) a product's value and then facilitate the exchange process.

What is Time Utility?

emerges from effective management of all value-added processes that influence when a product is available for purchase.

What is Place Utility?

primarily the charge of supply chain managers who assure that products and services are where customers expect to find them—when they are needed.

Possession utility refers to what?

Helping a customer understand why an offering meets their needs.

What area does Possession Utility fall within?

Marketing

Who is primarily responsible for Place Utility?

Supply chain managers.

Offshoring v. Outsourcing

Offshoring: Locating manufacturing facilities in far-flung countries with low-cost inputs.

Outsourcing: Moving from make to buy by having a supply chain partner perform an activity it can do better.

Key difference: Offshoring is about WHERE the work is done; outsourcing is about WHO does the work.

Building a plant in a foreign country to produce what you make, is an example of _________

Offshoring

A company stops making its own packaging and pays another company to make it instead, is an example of _______

outsourcing

The Pareto Principle

Different customers and suppliers have different value to the firm

Bottlenecks

The slowest step in a process that reduces throughput.

what is the term when something limits the flow/capacity of an entire process

bottleneck

the bottleneck has the __________ capacity in the process

lowest

TRUE OR FALSE: Improving a non-bottleneck will usually not increase overall throughput if the bottleneck remains unchanged.

TRUE

TRUE OR FALSE: To increase the process's throughput, you need to improve the bottleneck.

TRUE

The Five Focusing Steps

A five-step process used to identify and manage constraints (bottlenecks) to improve throughput.

define Identify (in the five focusing steps of theory)

Easily spotted, always busy, with no idle time

Work piles up and subsequent activates are waiting.

Define Exploit (in the five focusing steps of theory)

Remove any non-value adding work or interruptions to the bottleneck.

Define Subordinate (in the five focusing step theory)

Review all other (non-bottleneck) activities in the process to ensure that they are aligned.

Define Elevate (in the five focusing step theory)

Consider making investments to improve either how the bottleneck process works or to increase its capacity.

Define Repeat (in the five focusing step theory)

Constantly improve, aggressively removing one constraint and then moving on to the next.

What is the order of the five focusing steps of theory of constraints?

Identify, exploit, subordinate, elevate, repeat

Process Capacity

The maximum output your process can consistently produce over a period of time under normal operating conditions.

Design Capacity

The maximum output rate a process can achieve under ideal conditions. (What we COULD produce if everything went perfectly.)

Effective Capacity

The output rate the process can actually achieve under normal conditions. (What we can realistically produce.)

Strategic Processes

Define and deploy business strategies. (These processes decide where the business is going and what its strategy will be.)

Operational Processes

Deliver value to internal and external customers. (This is where the company carries out its mission and delivers value.)

Enabler Process

Support strategic and operational processes. (These processes support and help maintain the other processes.)

Process Map Symbols

use symbols to illustrate what happens at each step of the process

List the process maps symbols

Rectangle, Triangle, Diamond, Oval, Single Arrow, Double Arrow

what does the Rectangle represent in a process map?

An activity or task performed in the process.

what does the triangle represent in a process map

waiting

what does a diamond represent in a process map

A decision point where a yes or a no question is asked or a decision is required

what does an oval represent in a process map

the input/start of a process OR the output/end of a process

what does a single arrow represent in a process map

the direction of process flow

what does a double arrow represent in a process map

arrival into the process

Why is waiting included on a process map?

Waiting is a process step and must be mapped.

Process Types (variety v. volume)

The different ways a process can be designed based on the variety of products produced and the volume of products produced.

What are the 5 process types in order from highest variety/lowest volume to lowest variety/highest volume?

Project → Job Shop → Batch → Assembly Line → Continuous Flow

What happens to volume as product variety increases?

Volume decreases.

What happens to variety as product volume increases?

Variety decreases.

Which process type has the highest variety and lowest volume?

project