supply chain ch1-4

Supply Chain

Any organization offering products or services that involves suppliers, manufacturers, and customers.

Strategic Perspective

Long-term planning set by executives to move a company forward.

Tactical Perspective

Short-term actions taken by a company to execute strategic plans.

Supply Chain Flow

The movement of products, information, payments, and returns through the supply chain.

Logistics

The management of the flow of goods and services from origin to consumption.

Supply Chain Disruption

An unexpected event that affects the supply chain, such as a shortage of raw materials.

Consumer Feedback

Information provided by consumers that influences product improvements and recommendations.

Reverse Logistics

The process of returning products back into the supply chain for refurbishment or recycling.

Supply Chain Management

Coordination of the network of otherwise independent trading partners who create a desired product or service, and then move it through supply chain to customers & when and where the customer wants it 

Silo Effect

A situation where organizations focus only on their internal operations without considering the supply chain.

Value Creation

The process of managing trading partners to collaborate efficiently and effectively.

Goals of Supply Chain Management

1. Want increased customer satisfaction

   1. Getting products & services that customers want to them, when & where they want hem, at the lowest possible cost 

      1. If customer satisfied they'll buy product and you'll be able to retain them over long period of years 

2. Reducing inventory and operating costs 

   1. Achieving #1 (above) while keeping your inventory and cost as low as possible

Service Industry Supply Chains

Involves intangible products and often requires facilitating goods for service delivery.

SCOR Model

A framework for supply chain management that includes planning, sourcing, making, delivering, and returning.

Planning

Establishing parameters for how the supply chain will operate, including marketing and distribution strategies.

Sourcing

Identifying and building relationships with reliable suppliers.

Making

The process of producing high-quality products and ensuring timely delivery.

Delivering

The logistics phase of getting products to customers.

Returns

The process of handling product returns and managing reverse logistics.

Enabling Technology

Tools like AI and machine learning that enhance supply chain efficiency.

Origins of Supply Chain Management

Evolved from materials management and logistics in the 1950s and 1960s.

Collaborative Planning

Working together to set goals and strategies for supply chain operations.

Just-in-Time

A strategy that aims to reduce waste by receiving goods only as they are needed.

Total Quality Management

A philosophy that encourages all members of an organization to take ownership of product quality.

Supply Chain Agility

The ability of an organization to quickly respond to changes in demand or supply.

Demand Planning

The process of forecasting future demand for products and services.

Independent Demand

The demand for finished products that is not dependent on other items.

Dependent Demand

The demand for components that are needed to produce finished products.

Forecast

an estimate of future demands

Forecasting Horizon

Forecasting Error

Goal of forecasting & demand planning process is to minimize forecast error

Bullwhip Effect

The phenomenon where small changes in consumer demand lead to larger fluctuations in supply chain demand.

Collaborative Planning, Forecasting, and Replenishment (CPFR)

A strategy that emphasizes sharing forecasts among supply chain partners.

Inventory Management

The planning and controlling of inventory levels to meet customer demand while minimizing costs.

Cycle Stock

Inventory that is regularly used and replenished.

Safety Stock

Extra inventory held to protect against fluctuations in demand or supply.

Economic Order Quantity (EOQ)

A model that determines the optimal order quantity to minimize total inventory costs.

ABC Analysis

A method of classifying inventory based on importance, with A items being the most critical.

Reorder Point (ROP)

The inventory level at which a new order must be placed to avoid stockouts.

Fixed Order Quantity System

A system where a predetermined quantity is ordered each time inventory reaches the reorder point.

Periodic Review System

A system where inventory levels are reviewed at set intervals to determine if replenishment is needed.

RFID Technology

A system that uses radio waves to automatically identify and track inventory.

Inventory Turnover

A measure of how many times inventory is sold and replaced over a period.

Obsolete Inventory

Stock that is no longer needed or usable, often leading to financial loss.

MRO Inventory

Maintenance, repair, and operating supplies that are necessary for production but not part of the finished product.

Supply Chain Risk Management

The process of identifying vulnerabilities and minimizing disruptions in the supply chain.

ERP Systems

Integrated software solutions that connect various functional areas of an organization for better data management.

Data Analytics

The process of analyzing data to identify trends and inform decision-making in supply chain management.

Supply Chain Digital Transformation

The integration of digital technologies to enhance supply chain processes and efficiency.

Product & services flow

Product and service flow from point of origin to point of consumption → flowing down supply chainy Performance Metrics

Information flow

information flows back & forth 

• Ex: requirements, orders, confirmations, shipping notice, invoice, etc 

• Most important entity is consumer bc they give feedback on product (recommendations, improvements, etc)

Payment flow

where money is originated 

• Only place where revenue is produced in supply chain is point of consumption 

• Money goes back up supply chain bc they are advancing funds on intuition that customers will pay for their products 

Returns flows

• reverse logistics 

  • Ex: when u get phone, and it works for 2 days, so you exchange it or they refurbish it → take item back into supply chain & do something with it 

 the 2 main reasons that companies implement supply chain management are to:(On test)

1. Achieve cost saving 

2. Better coordinate resources

 Many services require Facilitating goods

which are tangible elements used  along w/ the service provided

responsive model

• Proximity to customer 

• Responsive to customer 

  • Ex: fast fashion (H&M, Zara) chasing what demand is in styles, don't use plants in 100% capacity (80%), so when demand shifts they can shift what they’re making 

  • Is more flexible and fast to respond quickly to dynamic market demand

• is configuredto be fast and flexible to respond quickly to dynamic market demand and new product launches

efficient model

• Maximize output with a minimum input level at lowest possible cost 

• Maximum efficiency → economies of scale (when you produce more, cost per unit goes down) 

  • If overhead is constant, then per unit cost goes down as you produce more

pull business model

All products are highly customizable 

demand

• the need for a particular product or component. 

  • could come from various sources, such as a customer order, a forecast, the manufacturing of another product, etc

forecasting

•  is business function that estimates future demand for products so they be purchased or manufactured in appropriate quantities in advance of need 

  • Process of mathematically predicting future demand 

  • Also uses historical data to determine future of data 

• is is the attempt to predict future outcomes based on past events and management insight

short term (forecasting horizon)

forecasting less than 3 months & Mainly used for tactical decisions 

medium term (forecasting horizon)

3 months to 2 yrs & Used  to develop strategy over 6-18 months

long term (forecasting horizon)

greater than 2 yrs & Used to detect general trends and identify major turning points

doppler effect

 the closer you are to an event, the easier it is for you to predict what it is 

• Ex: if standing on subway platform, the further away it is, the sound is loopy and can’t hear, but the closer the subway comes to me the waves less loopy, but sound more compressed → is very loud 

• Ex: sleeping on train platform, the closer the train is, the more likely you can hear it

Qualitative forecasting

1. based on opinion & intuition 

2. Generally used when data is limited, unavailable, or irrelevant

   1. Ex: best used for new product, new market segment  

   (personal insight, delphi, jury of personal opinion, customer survey, historical analogy)

Personal insight

forecast is based on insight of most knowledge, experienced person 

delphi method

• collected so that ppl aren’t influenced by another 

  • Advantages: reduces group think & enriches decisions

customer survey

• directly approach consumer & get feedback 

  • Advantages: 

    • Primary source 

    • Simple to get & understand 

    • No bias or value judgment 

  • Disadvantages: 

    • Poor questions = unreliable info & customers might not answer & time consuming and costly due to large population

historical analogy

•  judgemental forecasting technique based on identifying a store's history comparable to the present situation

  • Advantages: 

    • Significant amt of info that can be used initial to create forecast 

    • Is inexpensive 

  • Disadvantages: 

    • May not find historical comparison advantage 

    • Ineffective bc not everything will be identical

jury of personal opinion

•  ppl who know the most about the product & the marketplace would likely form a jury to discuss & determine forecast 

  • Advantages: component enriches decisions, and companies don’t have to spend time &  resources collecting data by survey 

  • Disadvantages: bias & groupthink

forecasting

is blend of art & science using quantitative and qualitative methods