SCM exam 2 - Chs 7-10

Continuous Improvement Principles

1. Customer Satisfaction: (external and internal) customers are the object of one's worth

2. Management by facts: for decision making, objective data must be collected

3. Respect for people

W. Edward Deming

Pioneer of continuous improvement

PDCA Cycle

1. Plan: Selecting the problem, narrowing the project focus, and brainstorm possible causes

   1.  THE BIGGEST MISTAKE: Unable to define the problem from the customer's perspective

2. Do: Implement the solution and monitor the plan

3. Check: Review and evaluate results

4. Act: Reflect and learn

Check Sheet

• historical record of observations representing real-time data generation for pattern/trend identification

Run Chart

• Takes the check sheet and plots it by months; visualizes the trend

Histogram

Frequency distribution in bar-chart form, no categorization of plot

Pareto Chart

• Orders frequency from most to least to focus efforts on the problem that offers the greatest potential improvement

Scatter diagram

Strictly dot plot; identifies correlation between two variables

Control chart:

Monitoring process with upper and lower limits

Benchmarking

The comparison with performance of other companies known for being "best in class"

Steps:

1. Select critical process that needs improvement

2. Identify an organization that exce;s in the process

3. Contact the benchmark firm (???), make a visit, study the process

4. Analyze findings

5. improve process accordingly

Deming's 14-point program

• Held that management was responsible for 85% of all quality problems

ISO 9001

• Certification of a quality management system, not a requirement here but is a requirement in European economy

  • Components:

1. Planning:

2. Control:

3. Documentation:

Six Sigma

Quality management system featuring project oriented top-down support to identify targets of opportunity; First adopted by Motorola

• Steps: (DMAIC)

1. Define

2. Measure

3. Analyze

4. Improve

5. Control

   

Lean Service/Just-in-Time (JIT) production

Having resources enough to just satisfy consumers on time; pioneered by Toyota

• Philosophy that bulk of resources (safety stock) = wasted capital

• After COVID: JIT turned into Just-in-Case

• Principles:

1. Satisfy customer needs

2. Define the "value stream:

3. Eliminate waste

Flexibility

• Degree to which the service can react to changing economic situations (demographics, cultural, competitive changes)

  • ex) Sites in different states reduces risk from regional economic downturns

Competitive positioning

• how a firm establishes itself relative to competitors

  • ex) Acquiring prime locations before market development creates advantage and competitive barrier to entry

Demand management

• Ability to control the quantity, quality, and timing of demand

  • ex) Hotels located near airports/tourist spots, and Starbucks placed before exits

Focus

• Offering the same narrowly defined service at many location, may result in businesses siphoning customers from each other

  • 'Cannibalization' not seen in shopping centers because of exclusivity clauses

Competitive Clustering

• Philosophy that being near competitors yield higher traffic than being in isolated locations

• Consumer choosing among a cluster of competitors

  • ex) LV strip or Valley Auto Mall

Saturation Marketing

• Grouping outlets of the same firm tightly together

• ex) Vacant office spaces because of hybrid/remote work

Telecommunications

Method to move customers from one place to another

• ex) Vacant office spaces because of hybrid/remote work

Marketing Intermediaries:

Evolution of channels of distribution that allows previously intangible and non-transportable services to reach a wider audience

Co-location

1. Separating the front and back end physically

   1. ex) Drive through orders in one state may be taken in another state

   2. Can save on costs through centralization

E-commerce

Limitation of physical travel becomes irrelevant in virtual locations

E-Distance

1. Barrier created by internal and external navigation

   1. Developers use the two-click rule where a customer's destination should be no more than two-clicks away from the homepage

Site selection

1. Includes insights on access, visibility, and traffic

   1. The most crucial step

Complementary Services

ex) Motel with restaurants nearby

Private Sector

• governed by either minimization of costs or maximization of profit (ROI)

  • Trade-off between cost of building + operating and the cost of transportation

Public sector

• Objective for public decision making and maximizing societal benefit

  • ex) Welfare, DMV

Optimization

1. Maximize utilization

2. Minimize distance per capita

3. Minimize distance per visit

Network Model

*What the supply chain is built-upon

Value chain

Suppliers, Manufacturing, Distribution, Retaining, Recycling

• Concerns for sustainability have awakened manufacturers to the need of product life-cycle management

• Recycling such an issue in some countries they go to great lengths

  • ex) Germany recycling all parts of a car to avoid heavy penalty

Bullwhip effect

a small change in retail is magnified to supply chain, and up to the distributor then manufacturer

• ex) COVID Toilet Paper Scare

Supply Chain uncertainties

1. Supplier delivery performance

2. Manufacturing reliability

3. Customer demand

   • Recommended Safety stock; 10-15% pre-COVID, 25-30% post-COVID

Omnichannel Supply Chain

The customer experience of purchasing, tracking, and receiving goods ("Amazon Effect" - pressuring businesses to follow)

Service Supply Relationships

Nature of services create a customer-supplier duality - all services act on something provided by the customer; customers are also acting as suppliers in the exchange

Bidirectional Optimization

• The possibility of doing what is best from the customer's perspective while doing the best of the service enterprise

  • ex) Allowing customers to choose from a variety of time windows

Productive Capacity

Measured by the worker-hours available to serve customers

• Strategies of improvement:

1. Transfer: Make knowledge available to customers so that value can be transferred with very low cost

   1. ex) FAQs

2. Replacement: Substituting technology for HR

3. Embellishment: Enabling self-service

Professional services

Services delivered by knowledgeable workers

• Features:

1. High level of specialization + customization

2. Frequency and importance of face-to-face interactions

3. Service delivered by people who represent the assets of the firm

4. Commands a body of knowledge

Bodies of Knowledge

1. Cognitive (know-what) - Basic mastery of discipline

2. Advanced skills (know-how) - Translating book to effective execution

3. Systems understanding (know-why) - Deep knowledge of cause-and-effect underlying the discipline

4. Self-motivated creativity (care-why)

Profit-per-partner

(profit/fees)(fees/staff)(staff/partners)

(Margin)(Productivity)(Leverage)

Productivity

(Fees/Hours)(Hours/Staff)

(Value)(Utilization)

Outsourcing

The decision to have an external vendor supply service once accomplished in-house

Process:

1. Need identification:

2. Information Search:

3. Vendor selection: One of the most important challenges

   • Must consider experience, reputation, geographical proximity, and cost parameters

4. Performance Evaluation: One of the most important challenges

   • Must consider communication ability, dependability, flexibility in operation, and historical on-time records

Classification of Business Services

Classified according to degree of tangibility or extent to which the service has physically measurable output 

• Dimensions:

  1. Focus of service: Property, people, process

  2. Importance of service

M-Commerce

Subset of e-commerce that involves selling through mobile devices

• ex) Japan and China incorporating "anytime, everywhere" selection and payment via phones

Globalization

The integration of economies and societies

However a movement towards glocalization more apparent (localized approach on a global field)

Focused Service

Begins with a singe location/initial service and then expands

• In LV, dry cleaners started in one location and then spread throughout the valley (All dry cleaning went to a central location)

Clustered Service

Situation where many services are offered at a single location

• ex) CCSN diversifying into CSN because of rising demand for 4-year degrees

Focused Network

A single service offered at multiple sites, often by use of franchising

• ex) Motel chains, fast food restaurants

franchising

Where a brand allows an independent business owner the rights to operate business using brand's name through contract

Benefits of a Franchisee:

1. Brand Name

2. National Advertising

3. Acquisition of a Proven Business

4. Economies of Scale

Issues for the Franchisor:

1. Franchisee autonomy

2. Franchise contract

3. Conflict resolution 

Diversified Network

Combining both multisite and multi service strategies

• ex) Pepsi investing into chips (Fritos) and restaurants (KFC, Pizza Hut, Taco Bell)

Following Your Customers: 

Expansion overseas to service existing customers who already have established multinational operations

Five Cs of Strategic Planning

1. Customers

2. Competitors:

3. Company: Internal readiness (staffing, resources) crucial in determining

4. Currency: Consider fluctuations

5. Country: Consider potential risks

Service Offshoring

Sending back-office activities overseas to gain labor cost savings

Global strategy

Homogenous service integrated across countries; ie: Ikea

Multidomestic (Multi-country) strategy

a service is replicated in more than one country using a franchising formula with little adaptation to the local culture

• ex) Professional Service Firms

Transnational strategy

'the hybrid'; leveraging certain corporate assets such as research and specialized expertise but the service delivery must be adapted to local needs

Multiservice single-site strategy

Destination based; customers must be willing to travel a long distance and stay for an extended time, or telecommunications must be substituted

• ex) LV Strip, Rome Colosseum

Beating the Clock: 

Using service locations around the globe to achieve 24-hour service availability.