SCM 3301 Exam 1

Supply Chain Management

The active management of supply chain activities and relationships in order to maximize customer value and achieve a sustainable competitive advantage.

Supply Chain

A network of manufacturers and service providers that work together to create products or services needed by end users.  These manufacturers are linked together through physical flows, information flows, and monetary flows

Operations Management

The planning, scheduling, and control of the activities that transform inputs into finished goods and services

Plan

Activities which seek to balance demand requirements against resources and communicate these plans to the various participants

Buy/Source

Activities which include identifying, developing, coordinating suppliers and the delivery of incoming goods and services

Make

Activities designed to produce an actual good or service

Deliver

Activities which store and transport goods to a new destination

Return

Activities for returning and processing defective or excess products and materials (often called “Reverse Logistics”)

Focal Firm

The organization with which one identifies when discussing Supply Chain Management

Upstream

Activities or firms positioned earlier in the Supply Chain (prior to the Focal Firm)

Downstream

Activities or firms positioned later in the Supply Chain (after the Focal Firm)

1st Supplier

Direct supply to Focal firm

2nd Supplier

Direct supply to 1st supplier

1st Customer

Direct customer to Focal Firm

2nd Customer

Direct customer to 1st Customer

Structural Element

Large capital investments that are difficult to reverse. Includes tangible resources such as buildings, equipment, and computer systems.

Infrastructural Element

The policies, people, decision rules, and organizational structure choices made by a firm. These affect the culture and operation of the business.

What does a business always have?

Both structural and infrastructural elements

Mission Statement

Reason for existence

Business Strategy

Provides target, time frame, objectives, and targeted markets.

Operations & SC Strategies

Translates business strategy into operations & supply chain actions.

Operations & Supply Chain Strategy

A functional strategy that indicates how structural and infrastructural elements with the operations and supply chain areas will be acquired and developed to support the overall business strategy.

Objectvies of Operations & Supply Chain Strategies

Long-Term Right Mix, Strategically Aligned, Core Competencies

Quality

Performance Quality, Conformance Quality, Reliability Quality

Time

Delivery Speed, Delivery Reliability

Flexibility

Mix Flexibility, Changeover Flexibility, Volume Flexiblity

Cost

Labor costs, Material Costs, Engineering Costs, Quality-related Costs, & Overhead allocation

Trade-Offs

Difficult to excel at all four dimensions: Cost/Time/Quality/Flexibility. Sometimes sacrifices must be made

Straddling

seeking to compete on all performance dimensions. Maybe a very risky strategy.

Concept of Prioritzation

Identify product dimensions highly valued by customer, select  competitive dimensions, and design supply chain to excel on these dimensions.

Order Winner

A dimension goes above and beyond essentially. Ex.) CFA saying “My Pleasure”

Order Qualifier

Bare Minimum. Ex.) Fast Food being Fast

Stage 1

Internally neutral:  not linked to business strategy

Stage 2

Externally neutral:  follow industry best practices

Stage 3

Internally supportive:  SC strategy aligned with business strategy

Stage 4

Externally supportive:  develop/exploit SC core competencies

Customer-Value Index

A measure that uses performance and importance scores for the various performance dimensions for a product or a service to calculate a score that indicates the overall value of an item or service to a customer.

Demand forecasts

Considering Overall Market Demand and
Firm-Level Demand

Supply Forecasts

Predict material availability based upon
suppliers, trends, risk

Price Forecasts

Forward buying, futures contracts, buying
frequency

Economic Forecasts

Inflation rates, borrowing rates

1st Law of Forecast

Forecasts are almost always wrong (but still useful)

2nd Law of Forecast

Short term forecasts tend to be more accurate than longer term
forecasts

3rd Law of Forecasts

Forecasts for Groups (categories) of Products or Services tend
to be more accurate than forecasts for specific products or services

4th Law of Forecasts

Forecasts are not a substitute for Calculated Values. Only use
forecasting when a more reliable method is not available

Long-Range Forecast

3-10 Year Plan & Asset Acquisition (New Products/Tech/Facility)

Medium-Range Forecast

3 Month - 2 Year Plan & Asset Utilization (Seasonal Production/Employment/Inventory)

Short-Range Forecast

1-26 Week Plan & Asset Execution (Scheduling/Work Assign/Stocking)

Qualitive Method

Opinion Based & Uncertain Future

Quantitive Method

Calculation Base & Predictive Future

Market Surveys

Structured Questions or Market Research Panels

Panel Consensus Forecasting

Experts MEET and develop forecasts

Delphi Method

Experts develop forecasts SEPERATELY & then revise

Life-Cycle Analogy Method

Modeling growth/decline based on similar products

Build-Up Forecasts

Market Segment experts develop forecasts & then add them

Quantitive Time Series Trade-Off

Forecasts Rsponsiveness & Forecast Stability

Linear Regression

Establishes a mathematical relation between one dependent
variable and one independent variable

Multiple Regression

Establishes a mathematical relation between one dependent
variable and multiple independent variables

Positive Bias

Positive RSFE indicates that demand exceeded the forecast over time.  Forecasts with positive bias will eventually cause stockouts

Negative Bias

Negative RSFE indicates that demand was less than the forecast over time. Forecasts with negative bias will eventually cause excessive inventory

Computer Based Forecasting Packages

used to develop, evaluate and change forecasting models as needed.

CPFR

A set of business processes, backed up by information technology, in which supply chain partners agree to mutual business objectives and measures, develop joint sales and operational plans, and collaborate to generate and update sales forecasts and replenishment plans.

Top Down Planning

An approach to S&OP in which a single, aggregated sales forecast drives the planning process.

Bottom Up Planning

An approach to S&OP that is used in which forecasts for each set of products or services combine to drive the planning process.

Level Production Plan

A S&OP plan in which production is held constant and inventory is used to absorb differences between production and the sales forecast.

Chase producton plan

A S&OP plan in which production is changed in each time period to match the sales forecast.

Mixed production plan

A S&OP plan that varies both production and inventory levels in an effort to develop the most effective plan.

Rolling Planning Horizon

A planning approach

in which an organization updates its sales and

operations plan regularly, such as on a monthly

or quarterly basis.

Yield Management

An approach that services commonly use with highly perishable “products” in which prices are regularly adjusted to maximize total profit

Demand is low = Price is lowered

Demand is high = Price is raised IF PROFIT

Tiered Workforce

A strategy used to vary workforce levels, in which additional full-time or part-time employees are hired during peak demand periods, while a smaller permanent staff is maintained year-round.

Offloading

– A strategy for reducing and smoothing out workforce requirements that involves having customers perform part of the work themselves

(Ex. Self-Serve Soda)

Adjusted Expoential Smoothing

Same as regular smoothing but considers trending

Linear Regression

Models underlying trends with straight line

Seasonally Adjustd Linear Regression

Linear Regression forecassts multiplied by seasonal index