SCM 3301 Exam 2 (Miller)

Strategic Sourcing Process

Identifying ways to improve long-term business performance by better understanding sourcing needs, developing long-term sourcing strategies, selecting suppliers, and managing the supply base.

Spend Analysis

The application of quantitative techniques to purchasing data in an effort to better understand spending patterns and identify opportunities for improvement.

Pareto chart

highlights the most important causes of the problem, highest to lowest left to right.

Internal Category profile

Understanding all aspects of a particular sourcing category that could ultimately have an impact on the sourcing strategy within our organization.

External Industry Analysis

Profiling the major forces and trends that are impacting an industry, including pricing, competition, regulatory forces, substitution, technology changes, and supply/demands trends.

Maverick Spending

Spending without purchasing process from suppliers to save cost

The Make-or-Buy Decision

A high-level, strategic decision regarding which products or services will be provided internally (Make) and which will be provided by external supply chain partners (Buy)

Insourcing

The use of resources within the firm to provide products or services. "Do it Myself" [Insourcing the Supply Chain is "Vertical integration"]

Outsourcing

The use of supply chain partners to provide products or services. "Pay someone to Do it"

Off-shoring

Location of an Insourced or outsourced Firm in a foreign country

Near shoring

Offshoring in an adjacent country

On-shoring

Location of an insourced or Outsourced Firm in the firm's country

Kraljic's Portfolio analysis

A structured approach used by decision makers to develop a sourcing strategy for a product or service, based on the value potential and the relative complexity or risk represented by a sourcing opportunity.

The Routine Quadrant: Office supply

Readily available products or services representing a relatively small portion of a firm's purchasing expenditures.

The Leverage Quadrant: Sub Supply

Standardized and readily available products or services representing a significant portion of spend.

The Bottleneck Quadrant: Merch

Products or services with unique or complex requirements that can be met only by a few potential suppliers.

The Critical Quadrant: Fashion

Products or service with unique or complex requirements coupled with limited supply base.

SSQDC

Safety, Sustainability, Quality, Delivery, Cost

Purchase Order (PO)

A document that authorizes a supplier to deliver a product or service and often includes key terms and conditions such as price, delivery, and quantity requirements [details taken from the Quotation or Proposal]

Statement of work (or scope of work)

Terms and conditions for a purchased service that indicate, among other things, what services will be performed and how the service provider will be evaluated

Product-based layout (continuous flow & production lines) EX: Sub

resources are arranged sequentially according to the steps required to make a product

Functional layout: Room by room

resources are physically grouped by function

Continuous flow processes: fluid

Produces highly standardized products using a tightly-linked, paced sequence of steps

Production Line: conveyor

used to produce a narrow range of standard items with identical or highly similar designs

Job shops

manufacturing operations that handle custom orders or small batch jobs

Make to stock (MTS): soup

0 customization

Assemble to Order (ATO): shirt

customized only at the very end of the manufacturing process.

Make to Order (MTO): sub

similar design, customized during production

Engineer to Order (ETO)

unique, customized products from start to finish.

Service Package

All the physical and intangible activities that a service organization provides

Physical

Requires capital expenditures, material costs, tangible assets

Intangible

Requires training, skill development, knowledge assets

Front Room

Direct customer interface, high customer contact. Activities designed to guide the customer through the process - "Onstage Activities"

Back Room

Activities done away from the customer, low customer contact. Activities carried out much like a manufacturing process - "Backstage Activities" and "Support Processes"

Challenge

communicating customer needs throughout the service process

Value Perspective

Quality is how well the characteristics of a product or service align with the needs of a specific customer.

Conformance Perspective

Quality is how closely a product or service was made or performs as measured against a pre-established standard.

Concept phase 1st

Project planners develop the project's definition, scope, budget, time.

Project definition 2nd

how to: accomplish, organize, resources, etc. Focus more on the budget.

Planning Phase 3rd

detailed planning

Performance Phase 4th

Execute the plan, making sure of dl/quality/costs/etc

Postcompletion Phase 5th

confirm and evaluate the outcome

Material Requirements Planning (MRP)

Translates the master production schedule (independent) into planned orders for actual parts and components needed (dependent)

Sales and operations planning S&OP

a process to develop tactical plans by integrating customer-focused marketing plans for new and existing products with the operational management of the supply chain

Master Scheduling

determines when specific products will be made, when specific customer orders will be filled, and what products/capacities are still available to meet new demand

Independent Demand

Typically for Finished Goods - products made up of purchased or produced components and materials

Product Tree Structure

Graphical or "outline" representation off all the components involved in building the Independent Demand Item

Planning Lead Time

The time from when a component is ordered (or produced) until it arrives and is ready to use.

Backward Scheduling

MRP calculates when Dependent Demand items must be ordered and when sub-assembly components must be produced in order to complete the Independent Demand item on schedule

Process

A set of logically related tasks or activities performed to achieve a defined business outcome.. To create value for a customer.

Primary process

A process that addresses the main value-added activities of an activities: Creating value for external customers.

Support process

A process that performs necessary, albeit not value-added activities: Creating value for internal customers

Development process

The process that seeks to improve the performance of primary and support processes (Process Improvement)

Gantt Chart

A graphical tool used to show expected start and end times for project activities and to track actual progress against these time targets.

FlowChart Process Map

-Well defined start to finish

- top-down (but may be also left to right)

-Usually involves both tasks and options.

-several possible paths to get from the start to the finish.

-Used to understand and simplify complex processes.

SwimLane Process Map

-Well defined start to finish

-Parallel work flows

-left to right

-arranged on a timeline.

-The various functions/people/specialties each have a horizontal "swimlane" within which all of their responsibilities are listed.

-Often used to describe processes that are managed by software.

Value Stream Process Map

-Diagrams the entire creation of value through a company.

-Each product category is mapped separately.

-Left to right, from raw materials and tracking the creation of value through to the customer.

-Describes who does the work, in what quantities, the time it takes to do the work, and delays encountered.

-The top describes customer" infos influences the process.

-Decrease process delays/waste and meet the customer requirements.

Line Balancing Process Map

-Lists all the individual tasks

-Graphically describes how long complete a process compared to a target rate

-"rebalance" the process by changing the responsibilities

-Allowing overworked functions/people to transfer some of their responsibility to underutilized functions/people.

Benchmarking

company compares its performance within the same organization or other businesses to help improve performance.

Lean

the identification of waste anywhere in a process and removing it

Six sigma

targets problem-solving and consistency using a well-defined analytical tools to improve

DMAIC

A six-sigma process: define, measure, analyze, improve, and control.

7 Wastes of Lean (TIMWOOD)

Transportation

Inventory

Movement

Waiting

Overproduction

Overprocessing

Defects

**Unused employee ingenuity

Cross Sourcing

The buying firm uses a single supplier for one particular part or service and another supplier with the same capabilities for a different part or service.

Balances risk while allowing for strong relationships with supplier.

External failure costs

costs that arise when a defect is discovered after the customer receives the service or product

Internal failure costs

costs for defects incurred within the system

Appraisal costs

costs of the inspection and testing to ensure that the product or process is acceptable

Prevention costs

costs associated with preventing defects before they happen

Check sheet

a sheet used to record how frequently a certain event occurs

Lower customization

Allow for standardized processes. Primary measurements are related to productivity and cost

Higher customization

Requires flexible processes. Primary measurement becomes customer satisfaction.

The level of customer contact

Front Room, Back Room, and Challenge. (Mapped using "Service Blueprinting)

Strategic Sourcing Process (STEP 1-6)

1. Assess opportunities

2. Profile internally and externally

3. Develop the sourcing strategy

4. Screen suppliers and create selection criteria

5. Conduct supplier selection

6. Negotiate and implement agreements

Visual management

The practice of making it easy to see how a process flows and what to do at each step.

Kanban tools

replenishment as soon as possible ex: box/bin

Total Quality Management (TQM)

-customer-focus

-leadership involvement

-continuous involvement

-employee empowerment

-quality assurance

-supplier partnership

-strategic quality plan

Taguchi Loss Function: watch

More variation, lower quality, higher cost. Quality is a target, the closer = less cost

5 Main steps for Procure-To-Pay-Cycle

1. Ordering

2. Follow-up & expediting

3. Receipt & inspection

4. Settlement & payment

5. Records maintenance

Settlement and Payment

○ May be paid through Electric Funds Transfer (EFT) Payment ○ Payment is aligned with Quotation, Receipt, and Inspection

Records Maintenance

Supplier Relationship Management (SRM) Software

Statement of work, or scope of work (SOW)

terms and conditions for a purchased service that indicate, among other things, what services will be performed and how the service provider will be evaluated