SCM exam 3

Project

Something done one time — unique, has deadlines and a set budget. Different from a process.

Process

Something done repeatedly — repeatable, ongoing operations. Processes are the fabric of a business.

4 Steps of Project Management

1) Define the project, 2) Establish priorities (cost-time-performance triangle), 3) Work Breakdown Structure (WBS), 4) Track Progress with AON diagram

Work Breakdown Structure (WBS)

Breaking a project into smaller, manageable tasks so it can be planned and tracked step by step.

Cost-Time-Performance Triangle

Framework for project priorities — you can optimize two of three: cost, time, and performance. Sacrificing one impacts the others.

AON Diagram (Activity-On-Node)

A diagram where each node represents an activity; arrows show dependencies and sequences between tasks. Used to track project progress.

Project Paths

A path of sequences for the project — all possible routes from start to finish in an AON diagram.

Critical Path

The path with the LONGEST total time through the project. It determines the minimum project duration. A project can have multiple critical paths.

Slack / Float

How much time a non-critical path can be delayed without delaying the overall project. Formula: Slack = Critical Path Length − Path Length. Critical path activities have Slack = 0.

Objectives

Measurable goals for a project. Everyone must agree on them upfront.

Deliverables

What the project will actually produce — reports, software, buildings, etc.

Milestones

Specific events in a project timeline (e.g., closing allocation, final inspection).

Scope Creep / Scope Inflation

When the project keeps expanding beyond the original plan — adding new goals/deliverables to the same budget and timeline.

Project Crashing

Shortening the project duration by adding resources, always done in the most cost-effective way. Crashing ALWAYS costs money.

When to Crash a Project

Crash when: (1) earlier deadlines are required, (2) savings from finishing early exceed the crash cost, or (3) NOT crashing would be more expensive.

How to Crash — Step 3

Find the cheapest task(s) to crash on the CRITICAL PATH. Only crashing a critical path activity shortens the project.

How to Crash — Full 10 Steps

1) Find all paths, 2) Identify critical path(s), 3) Find cheapest task to crash on CP, 4) Crash by one week, 5) Update AON times, 6) Update all affected path times, 7) Find new critical paths, 8) Repeat 3–7 until desired duration, 9) Find total crash cost, 10) Non-critical paths retain slack.

Project Priorities

Balance between Cost, Quality, and Time — the triple constraint of project management.

Business Process (Definition)

Any activity or group of activities that takes an input, adds value to it, and provides an output to an internal or external customer using an organization's resources.

Process vs. Project

A process is REPEATABLE (done over and over). A project is UNIQUE (done once). Processes are the backbone of operations; projects build or change things.

3 Characteristics of a Good Process

1) Good Intentions — goal-oriented, effective & efficient. 2) Reproducible Results — documented, easily understood. 3) Measurable and Manageable — good metrics, clear accountability.

Benefits of a Good Process

1) Hits goals consistently, 2) Makes operations more manageable, 3) Supports growth and economic stability (each process is a mini supply chain).

Good Process: Good Intentions

Process is goal-oriented, stakeholders are considered, outputs are desired, and it is both effective and efficient.

Good Process: Reproducible Results

Documented and easily understood steps so anyone can follow them and get consistent results.

Good Process: Measurable and Manageable

Define outcomes in a measurable way. Use good metrics. Know who is accountable. Make it easy to identify and fix problems.

Never Was Good (Bad Process Type)

Poor goals/priorities, misalignment between goals and actions, unreasonable expectations from the start.

Used to Be Good (Bad Process Type)

Poor or no training, miscommunication/fractured culture, or market evolution made the process obsolete.

Process Limitations (Bad Process Type)

Demand exceeded capacity, human resource challenges, lack of qualified people or poor work environment.

Cow Path Theory

People mindlessly follow old, outdated processes. Just because a path exists does not mean it is best. Finding a better route can dramatically improve a process.

Block Diagram

A high-level map of many interconnected processes — not very detailed. Shows functions and how they relate.

Business Process Map / Flowchart

A detailed diagram of ONE specific process, step by step. Used to test, evaluate, and improve a process.

Swim Lane Flowchart

A flowchart that organizes steps by WHO does them — each lane represents a different person, department, or role.

Consulting

Helping an organization diagnose and solve a problem by defining root causes, developing solutions, and assisting with implementation.

Engagement

The term for a consulting project — the formal relationship between consultant and client.

SME (Subject Matter Expert)

A specialist consultant. Low flexibility; best for well-defined projects with clear scope.

Generalist Consultant

Broad-knowledge consultant. Better fit for clients seeking innovation or when the problem is unclear.

5 Consulting Services

1) Gather info, 2) Define the problem (root cause), 3) Develop solutions, 4) Provide recommendations, 5) Implementation assistance.

Waterfall Methodology

Sequential phases — each must be completed before the next starts. No backtracking. PM directs the project. Low flexibility. Good for government/well-defined projects.

Agile / Iterative Methodology

Flexible methodology — phases can run concurrently. Team collectively manages. Open to changes and feedback throughout. Good for innovation projects. Client is central throughout.

Issues Clients Have

1) Lacks real goals, 2) Damaged ego, 3) Weaknesses (lack drive/discipline), 4) Limited budget.

Good Consultant Traits

Values feedback, values simplicity, avoids jargon, anticipates resistance to change, creative in solutions, understands people.

Bad Consultant Traits

Trying to maintain happiness, expecting to be liked, developing solutions too soon, listening to client pre-fab solutions, one-size-fits-all solutions.

Common Consulting Solution Errors

1) Developing solutions too soon, 2) Listening to client's pre-fabricated solutions, 3) Using one-size-fits-all solutions.

BPI — Business Process Improvement

A structured 7-step approach to identify gaps between current and desired process performance and develop targeted improvements.

BPI Step 1: Desired State

Define quantifiable goals — what does success look like? Interview client; identify objectives and metrics.

BPI Step 2: Present State

Collect data and observe current operations. Use the same metrics from Step 1. Do process maps match actual employee actions?

BPI Step 3: Gap Analysis

Compare present state vs. desired state. Illustrate the gap with data. Identify WHY the gap exists — do NOT jump to solutions yet.

BPI Step 4: Project Scope

Decide what this project WILL and WILL NOT address. You can't fix everything. Define desired outcomes, timeline, and budget.

BPI Step 5: Collect and Analyze Data

Deeper investigation — benchmark against others, gather feedback, share findings with client.

BPI Step 6: Develop Solutions

Focus on YOUR specific client. Get feedback early. Consider: change nothing, or eliminate process entirely. Avoid one-size-fits-all.

BPI Step 7: Implementation Plan

How will ideas be put into action? Timeline, training, metrics for success, anticipated problems and corrective actions.

Scope Creep (BPI Warning)

Continually adding new problems or goals to a project beyond original scope. Drains time and resources — stay focused.

Flowchart: Rectangle

Task or Operation (also used for data collection)

Flowchart: Oval / Rounded Rectangle

Start / End of Process (Terminator)

Flowchart: Diamond

Decision Point — multiple possible exit paths

Flowchart: Filled Arrow

Flow of Process — shows direction

Flowchart: Bold Rectangle

Entire Sub-Process — depicted in detail elsewhere

Flowchart: Transportation Arrow

Movement or Transportation (e.g., box delivered to customer)

Flowchart: Circle

Inspection (e.g., employee checks quality)

Flowchart: D-Shape

Delay in Process (e.g., wait for UberEats driver)

Flowchart: Connector (A)

Shows where the flow continues on another page

CSR — Corporate Social Responsibility

Three pillars: 1) Legal and ethical behavior, 2) Serving the community/society, 3) Environmental sustainability.

ESG Framework

Environmental, Social, Governance — the three dimensions used to evaluate a company's responsible behavior.

ESG: Environmental

Managing carbon, energy, waste, and natural resource usage responsibly.

ESG: Social

Relationships with stakeholders — how the company treats customers, employees, and the community.

ESG: Governance

Integrity in leadership — addressing corruption, ethical issues, diversity, and executive pay.

Why Companies Act Responsibly (External)

External pressures: consumer preferences, legal regulations, avoiding fines, public relations.

Why Companies Act Responsibly (Internal)

Business risks (political/legal pressure, resource scarcity) and business opportunities (lower costs, competitive advantage).

Triple Bottom Line

People, Planet, Profit (Prosperity) — evaluating business success on social, environmental, and financial dimensions.

Life Cycle Assessment (LCA)

Analyzes the environmental impact of a product from raw material extraction through disposal — every step of the producer chain.

The Sustainability Consortium (TSC)

An organization that improves the sustainability of consumer products — creates scores and guidelines for companies and investors.

SASB (Sustainability Accounting Standards Board)

Develops industry sustainability standards and provides guidance for companies and investors on reporting.

Carbon Footprint

Total greenhouse gas emissions produced by an entity.

Carbon Neutral

When total emissions are offset to zero — either reduced or compensated through credits.

ISO 14000

A series of certifications that prove sustainable business practices and environmental management.

SA8000

An auditing standard focused on human rights and labor practices — ensuring fair treatment of workers.

Closed-Loop / Cradle-to-Cradle Framework

Using reverse logistics to keep raw materials circulating — waste from one process becomes input for another (e.g., aluminum cans, HP cartridges).

Whistleblower Program

A protected reporting system that allows employees to report unethical behavior without fear of retaliation.

Supply Code of Conduct

A document that outlines ethical expectations and standards for suppliers — sets rules for business practices.

Fair Trade Certification

Certifications designed to ensure fair prices and ethical practices for producers, especially in developing markets.

Due Diligence in SCM

Investigating new business partners to verify ethical practices, legal compliance, and business territory risks before entering a partnership.

System Reliability Formula

rs = r1 x r2 x r3 x … x rn. Multiply the reliabilities of ALL components in series. Weakest link drives down the total.

Backup / Redundancy Reliability Formula

1 minus (1 minus r)^m, where r = component reliability, m = number of backup components. Ensures at least one works.

Why Simple Design Helps Reliability

Fewer components = fewer chances for failure. Each additional part multiplies down the total system reliability.

Failure Rate Formula

Failure Rate = 1 minus Reliability. If reliability = 0.85, failure rate = 0.15 (15% of units will fail).

Defects Formula

Defects = Units Produced x Failure Rate. Example: 10,000 units x 0.15 = 1,500 defects.

Total Failure Cost Formula

Defects x Cost per Defective Unit. Example: 1,500 defects x $175 = $262,500.

Savings from Adding a Backup

(Original Failure Cost) minus (New Failure Cost + Cost of Backup). If positive, the backup pays off.

Shrinkage / Order Size Formula

Order Size = Demand divided by (1 minus Loss%). Work UPSTREAM — start at retail and move back to supplier layer by layer.

Why Divide for Shrinkage (Not Multiply)

Multiplying by (1 + loss%) gives too few units. Dividing by (1 minus loss%) correctly accounts for acceptable items needed. Example: 1000 divided by 0.90 = 1112, not 1000 x 1.10 = 1100.

Shrinkage: Working Upstream

Start at consumer demand, divide by retail rate, divide by DC rate, divide by MFR rate, divide by supplier rate. Each step gives the order quantity needed at that stage.

Currency: Strong Dollar

More foreign currency per $1 USD. Foreign goods are CHEAPER in the US. Bad for US manufacturers; good for US consumers.

Currency: Weak Dollar

Fewer foreign currency per $1 USD. Foreign goods are MORE EXPENSIVE in the US. Good for US manufacturers; bad for US consumers and foreign exporters.

Currency Profit Calculation

1) Identify cost currency and revenue currency. 2) Convert revenue to the cost currency using the exchange rate. 3) Profit = Converted Revenue minus Cost.

Exchange Rate: USD to Foreign

USD x (foreign per USD rate) = Foreign Currency. Example: $35,000 x 1.2 Euro/USD = 42,000 Euros.

Exchange Rate: Foreign to USD

Foreign x (USD per foreign rate) = USD. Example: 240,000 Euros x 1.40 USD/Euro = $336,000.

Manufacturing in US vs. Abroad (Currency Impact)

Manufacturing in US = profit locked in USD, stable. Manufacturing abroad = profit fluctuates with exchange rates. Weak dollar hurts foreign manufacturers selling in US.