supply chain management exam 1- lectures

supply chain

All parties involved, directly or indirectly, in fulfilling a customer request (demand)

external supply chain

manufacturers, suppliers, transporters, warehouses, retailers, and customers themselves

internal supply chain

within a firm, the supply chain spans every function involved in receiving and fulfilling that request: new product development, marketing, operations, distribution, finance, customer service, etc.

customer

The ________ is an integral part of the supply chain, and the only source of revenue

what is supply chain

Includes movement of products from suppliers to manufacturers to distributors and information, funds,and products in both directions

information, product, funds

the 3 flows in a supply chain are

upstream and downstream, upstream

information and products go ______________, but funds only go _____________

maximize net value generated

what is the objective of a supply chain

customer value - supply chain cost

supply chain surplus = ___ - ___

supply chain management

involves the management of supply chain assets and product, information, and fund flows to grow the total supply chain surplus

cost

Sources of ______ include flows of information, products, or funds between stages of the supply chain

suppliers, manufacturers, retailers, customers

supply chain stages: __ ->__ ->__ ->__ ->

add value, add cost, surplus

each stage of the supply chain: should ________, does ______, needs _____ (profit)

cycle view

the processes in a supply chain are divided into a series of cycles, each performed at the interface between two successive stages of the supply chain

downstream, upstream

cycle view- each cycle follows the same basic pattern: the ________ stage places an order, the _______ stage fulfills it

push/pull view

The processes in a supply chain are divided into two categories, depending on whether they are executed in response to a customer order or in anticipation of customer orders

- Supply chain processes fall into one of two categories depending on the timing of their execution relative to customer demand

pull view

execution is initiated in response to a customer order/demand

reactive

pull view is also called:

push view

execution is initiated in anticipation of customer orders/demand

speculative

push view is also called

push/pull boundary

separates push processes from pull processes

manufacturing view

• Push = Make it, then sell it

• Pull = Sell it, then make it

supply chain view

• Push = Activity happens before a customer order

• Pull = Activity happens after a customer order

• Looks at all activities, not just manufacturing

push

the basic model of an F150: most common color, features, etc is an example of what view?

pull

a custom order of an F150: customer selects specific color, features, etc. is an example of what view?

CRM, ISCM, SRM

Supply chain processes discussed in the two views can be classified into:

customer relationship management (CRM)

all processes at the interface between the firm and its customers

internal supply chain management (ISCM)

all processes that are internal to the firm

supplier relationship management (SRM)

all processes at the interface between the firm and its suppliers

supplier (SRM)

source, negotiate, buy, design collaboration, supply collaboration

- external upstream

firm (ISCM)

strategic planning, demand planning, supply planning, fulfillment, field service

- internal operations

customer (CRM)

market, price, sell, call center, order management

- external downstream

operations, planning, strategy

what are the decision phases in a supply chain

supply chain strategy/design

How to structure the supply chain over the next several years

- facility locations, in-house vs outsource, customer markets, information systems integration

supply chain planning

decisions over the next quarter or year

- allocating inventory to meet upcoming demand, production planning to meet forecasted demand, sales and operations coordination

supply chain operation

daily or weekly operational decisions

- fulfilling specific customer orders, managing logistics, responding to unexpected disruptions, monitor production/inventory flows

competitive strategy

defines the set of customer needs a company seeks to satisfy through its products and services

competitive strategy

this is an example of _______? Walmart sells convenience to everyone. Sam's Club sells efficiency to those willing to pay for it.

product development

strategy specifies the portfolio of new products that the company will try to develop

marketing and sales strategy

specifies how the market will be segmented and product positioned, priced, and promoted

supply chain strategy

determines the nature of material procurement, transportation of materials, manufacture of product or creation of service, distribution of product, follow-up service, whether processes will be in-house or outsourced

strategic fit

competitive and supply chain strategies have aligned goals

demand uncertainty

a measure that reflects the uncertainty of customer demand for a product

implied demand uncertainty

how much uncertainty a supply chain takes on for the benefit of the customer

less

Forecasting is more accurate when demand has _______ uncertainty

high

Products with uncertain demand are often less mature and have less direct competition. As a result, margins tend to be _____

supply chain responsiveness

how does the firm best meet demand?

responsiveness comes at a cost

The more responsive a supply chain is, the more uncertainty it is able to handle. But...

cost-responsiveness efficient frontier

the _________ curve shows the lowest possible cost across all firms for a given level of responsiveness

beginning stages

__________ of a product life cycle

1. Demand is very uncertain, and supply may be unpredictable. 2. Margins are often high, and time is crucial to gaining sales. 3. Product availability is crucial to capturing the market.

4. Cost is often a secondary consideration

later stages

__________ of a product life cycle

1. Demand has become more certain, and supply is predictable.

2. Margins are lower because of an increase in competitive pressure.

3. Price becomes a significant factor in customer choice

capacity, inventory, time, information, price

Five Key Levers to Deal with Supply Chain Uncertainty:

scope of strategic fit

the functions within the firm and stages across the supply chain that devise an integrated strategy with an aligned objective

narrow score

a _________ or the different functions each making independent decisions to optimize local performance can minimize local cost, but may result in conflicts between functions and a decrease in firm profits

expanding

Benefits of _________ strategic scope include minimizing local cost, minimizing functional cost, maximizing company profit, and maximizing supply chain surplus

facilities

Physical locations in the supply chain network where products are transformed or stored. Includes both production and storage sites

inventory

All raw materials, work in process, and finished goods within a supply chain

material flow time

the time that elapses between the point at which material enters the supply chain to the point at which it exits

transportation

Moving inventory from point to point in the supply chain and can take the form of many combinations of modes and routes

information

Data and analysis concerning facilities, inventory, transportation, costs, prices, and customers throughout the supply chain, which provides management an opportunity to impact responsiveness and cost

sourcing

The choice of who will perform a particular supply chain activity, such as production, storage, transportation, or the management of information, which affects both responsiveness and cost

pricing

Determines how much a firm will charge customers for the goods and services it makes available in the supply chain

markdowns

discounts required to convince customers to buy excess inventory

lost sales

represent customer sales that did not materialize because of the absence of products the customer wanted to buy

globalization

Opportunities to simultaneously increase revenues and decrease costs

• Shifting production to lower-cost countries

• Access to new international markets and customers

demand shifts

consumer preferences can change faster than supply chains can adapt, what sold last year may not sell this year

political tensions and trade policy

tariffs, sanctions, and geopolitical conflict

major disruptions

COVID-19, port congestion at LA/LongBeach the War in Ukraine

exchange rate volatility

a currency shift can erase cost savings that were the entire reason for going offshore in the first place

optionality

an investment in the supply chain that maybe chosen for use from time to time

recurrent risk

expected fluctuations in factors that regularly affect supply chain performance over time

disruption risk

sudden, unexpected events that significantly interrupt or shut down supply chain operations

new product flexibility

Ability to introduce new products into the market at a rapid rate

mix flexibility

Ability to produce a variety of products within a short period of time

volume flexibility

Ability to operate profitably at different levels of output

discounted cash flow

_____________ analysis evaluates the present value of any stream of future cash flows and allows managers to compare different cash flow streams in terms of their financial value

decision tree

a graphic device used to evaluate decisions under uncertainty

onshoring

sourcing or locating production processes in the country where the products are consumed

offshoring

sourcing or locating production facilities in overseas locations, typically far from consumption market

nearshoring

sourcing or locating production facilities in countries that are close to the consumption market

shipper

requires the movement of the product

carrier

moves or transports the product

governments

___________ generally take full responsibility or played a significant role in building and managing transportation infrastructure and policies

milk run

a route on which a truck either delivers product from a single supplier to multiple retailers or goes from multiple suppliers to a single buyer location

last-mile delivery

the final step in moving products from a distribution facility to the end customer.

air

- urgent and time-sensitive shipments

- variable cost depending on passenger/cargo

- high-value and low-volume goods

- expensive

- not suitable for heavy/bulky items

- shouldn't be used for stable demand

package carriers

- small packages up to 150 lbs

- expensive (individual package cost)

- rapid and reliable delivery

- key factor: consolidation of shipments

truck

significant portion of all goods moved

- versatile options

- intermodal

- long and short distance routes

- not ideal for urgent/high value deliveries

truck load (TL)

- low fixed cost

- imbalance between flows

- one shipper

less than truckload (LTL)

- small lots

- hub and spoke system

- may take longer than TL

- 45,000 lbs of freight

rail

- moves commodities over large distances

- 268,000 lbs of cargo per car

- high fixed costs in equipment and facilities

- bulky/heavy cargo and non-perishable goods

water

- limited to certain geographic areas

- slowest

- large loads at low lost