Week 3- SCM 380

Vendor

A supplier. The company from which a buyer purchases goods and/or services.

Wholesaler

Purchase goods from manufacturers, typically in large amounts and at discounted prices. Then makes this large assortment of goods avialble for sale to retail stores and retail chains.

Dropshipper

A company that takes customer orders, most often via a retail site, once the order is placed, relays the order to a 3rd party wholesaler (or manufacturer).

Franchise

Owns the rights to a company and the name. Has access to the products, services, processes and trademarks of the company.

Last Mile

Portion of the supply chain between the final inventory holding facility and the end consumer.

Planogram

A map of where every product goes on a retail store shelf

VMI (Vendor Managed Inventory)

Inventory planning and replenishment system where the vendor accepts certain negotiated responsibilities.

Scan-based trading

A system where the inventory on the retail shelf is owned by the supplier. The retail pays the supplier only when the product on the shelf is sold.

Omni-channel retailing

When an organization is capable of seamlessly selling to customers online, via the company’s app, in a physical store and perhaps via a call center.

Chargebacks

Penalties charges by retail organizations to their suppliers/vendors for any numebr of minor and major supply chain offenses. Used to motivate vendors to be compliant in the areas of on-time shipments, shipment accuracy, product quality, packaging reqirements, etc.

Goals of waiting line management

Balance cost paid by the customer (time) with the cost paid by the company (money paid to maintain the system).

3 Parts of a waiting line system

Input source, waiting line, service facility

Input Source

The population of people that might want service

Waiting Line

The area in which customers wait for service

Service Facility

The area in which customers actually receive service

4 managerial considerations in queues

Customers: How many are there? How quickly are they arriving?

The waiting lines: What types of lines? How many lines?

Employees: Who’s working in the system? How many? Skill level and speed?

Service facilities: How effective and efficient is the process? Tools?

Queue

Line

Channels

Line; refers to the number of lines available at each step

Phase

A single step in a process

Balking

When a potential customer sees the line but never joins the line because they think it looks too long and/or too slow

Reneging

When a customer joins the line, gets frustrated and leaves the line

Jockeying (Line jumping)

When customers join one line but then decides to switch to another line

Supply Chain Integration

The brining together of supply chain partners, suppliers, manufacturers, logistics companies, etc. The coordination of the business processes between these diverse supply chain partners.

Obstacles to integration

Poor communication, unwillingness to share with supply chain partners, and lack of trust between supply chain partners.

Push system characteristics

• High Inventory

• Forecast Driven

• Quantity Discounts

• Standardized Products

• Inventory Obsolescence

Push System

A system in which consumer demand is known and expected. Buy materials, manufacture finsihed goods and even deliver them where consumers can buy them at a later date.

Pull system characteristics

• Demand Driven

• Customization

• Low Inventory

• Longer Lead Times

• Flexible Manufacturing

Pull System

A system activated by consumer demand. Will not make and store finished goods inventory, instead wait for the consumer to place a specific order and then buy materials and/or parts.

Pull System: Cost of Miscalcualtions

Poor forecasts may result in poorly planned production systems/facilities

Postponement

Those product elements that are standard will be produced in advance and then final production will be delayed until the consumer places an order that specifies the customized elements.

Supply Chain Goals Trade-offs

Cost, quality, speed and flexibility

Bullwhip Effect

Phenomenon where fairly stable demand results in the proliferation of the amount of inventory that is carried as one travels upstream in the supply chain. The more layers of uncertainity between the organization and the end user, the greater the need for safety stock.

4 causes of the bullwhip effect

Order batching, forward buying, rationing, and shortage gaming

Order Batching

When a company places large and infrequent order their suppliers. Typically done to take advantage of quantity discounts and economies of scale in purchasing and delivery.

Forward Buying

Occurs when customers buy more product than is actually needed, Often this is the result of supplier offering sales.

Rationing

Sometimes supplier don’t have enough inventory to satisfy the demand of all their customers. So may ration their inventory and send each of their customers only a fraction of the inventory that was ordered.

Shortage Gaming

What rationing leads to. If customer feels that rationing may occur again, the customer may try to “game” the system by placing an order larger than thier expected demand.

5 Methods for controlling bullwhip effect

EDLP, VMI, Information sharing, improve buyer-supplier relationships, and practice lean manufacturing

EDLP

When suppliers resist the urge to have sales promotions and instead offer their lowest prices each day, buyers do not see an advantage to buying in bulk.

Lean Manufacturing (lean)

Strives to meet consumer demand and desires but with minimal inventory levels and minimal supply chain waste.

Rocks and water analogy

Each rock represents a different supply chain weaknesses. Instead of trying to hide the rock with more water, company tries to remvoe the rock. Water represents inventory. Rather than hide from their problems, they would prefer to expose the problmes and thus eliminate the threat from becoming an even bigger and more costly problem in the future.

Quality at the Source

Empowering every employee to be a quality inspector and manager. By having knowledge employees than can identify errors and are empowered to act.

Poka-Yoke

Mistake-proofing