Supply Chain Exam 1

Quick, Candid, Courteous

Fast, natural, respectful.

Management Triangle

Senior Management (lead), middle management (manage), entry level (learn and do).

Operations and Supply Chain Management (OSCM)

The design, operation, and improvement of the systems that deliver goods and services to customers.

Supply Chain

The entire process of moving Material, Information, and

Products to and from the Sourcing, Manufacturing, and Service processes of a firm.

Development of Supply Chain

Standardization & transportation → mass production → management science → "Just In Time" → quality → e-commerce → analytics → connected/digital operations → resilience & AI

Five Supply Chain Processes

Planning, sourcing, making, delivering, returning.

Goods

Tangible (patentable), there is little or no direct contact with end customers, produced to consistent and measurable standards, and production can be scheduled by Firm.

Services

Intangible (usually not patentable), firms interact directly with end customers, delivery is highly variable, perishable (Time-Sensitive).

Products

What firms produce and sell. Can be goods, services, or a combination of both.

Pure Goods

Low-margin or commodity products (ex: gas, milk)

Core Goods

A significant Service Component sold with the Product (ex: appliances, data storage systems, automobiles)

Core Services

Include both tangible and intangible products (ex: McDonald's, Amazon)

Pure Services

Exclusively intangible services (Colts, Butler)

Efficiency

Performing processes at the lowest possible cost.

Effectiveness

Performing processes to create the most value for customers (even if the cost of processing is higher).

Benchmarking

Comparison of Processes, Results, and other Metrics to others.

Triple Bottom-Line Sustainability

1. Social Responsibility

2. Financial Performance

3. Environmental Stewardship

Core Competency

The one thing that a firm can do better than its competition (hopefully sustainably).

Mutual Exclusivity

The idea that a company has to choose where to focus its resources because it cannot be the best at everything (there are always trade-offs).

Qualifiers

The characteristics a company or product must have to be considered by customers (basic needs met).

Contract Manufacturer

A firm produces goods (often under contract) for another company.

Product Innovation

Creating new ideas or products so a company does not fall behind its competition.

Design for Manufacturing and Assembly (DFMA)

A systematic review of product design and usage to determine how the product can be simplified or improved (want to do things as simply and cheaply as possible).

Supply Chain Risk

The likelihood of a disruption that could affect a firm's ability to continuously supply goods and services.

Supply Chain Risk Management

The process of identifying potential disruptions, assessing their impacts, developing mitigation plans, and following up on outcomes.

Forecasting

Using information and techniques to predict future demand.

Decoupling Point

The point in time when the customer takes ownership of the product. We want to get there as fast as possible because that speeds up cash flow, less spending on inventory storage

Forecast Limitation

Forecasts are never completely accurate because there are often too many variables that can affect demand.

External Impacts on Demand

Economic Conditions (i.e. inflation), Government Policies/Elections, War/Military Actions, Political Uncertainty, Climate Change, Social Unrest, Pandemics

Consumer Inputs/Behavior

Selling price, Payroll Cycles ("First of the Month"), Advertising/Promotions, Consumer Confidence, Weather/Seasonality, Competitive factors, Product Life-Cycle

Qualitative Forecasting

Forecasting using consumer feedback or

managerial judgement, expertise, or experience.

Quantitative Forecasting

Forecasting using numeric models.

Causal Forecasting

Forecasting using observed demand patterns. If price goes down → demand goes up, and vise versa.

Time Series Analysis

Past demand is used to predict future demand.

Seasonality

Predictable variation in demand that happens within a calendar year.

Cyclicality

Predictable Demand variations across multiple years. Often difficult to determine, since this technique may require several years to identify.

Simple Moving Average

Forecast is the average of a fixed number of past periods.

Weighted Moving Average

Forecast is made from past data where more recent data is weighted more heavily.

Exponential Smoothing

Time-series forecasting technique using weights that decrease exponentially for each past period.

Benefits of Exponential Smoothing

1. Exponential models are surprisingly accurate

2. Formulating the exponential models is relatively easy

3. Users can understand the model

4. Little computation is needed for the model

5. Computer storage requirements are smaller because of the limited use of historical data

6. Tests for accuracy as to how well the model is performing are easy to compute

Causal Forecasting Equation

Forecasting based on independent variable(s). Must have two sets of known data points (independent & dependent). Identify the SLOPE of the data points. Determine an INTERCEPT for the data points. (y=mx+b)

Multiple Regression Forecasting

Requires advanced data analysis techniques, particularly useful for location and demographic planning.

FORECAST.ETS

Returns the forecasted values for a specific future target date using exponential smoothing method. It can handle a lot of data and pinpoint a period far in advance.

Collaborative Planning, Forecasting, and Replenishment (CPFR)

Online access to demand and sales data. Retailers and advanced manufacturers are leaders.

Vendor-Managed Inventory Replenishment (VMI)

As the vendor, you manage the inventory inside the retailer's building. Transferable skill set, people pay a premium for it.

Capacity

Output that a system can achieve in a given period of time. What we're capable of doing.

Best Operating Level

Output level where Average Unit Cost is minimized.

Capacity Utilization Rate

Firm's Current Output Rate ÷ Best Operating Level

Strategic Capacity Planning

Planning the overall capacity level of capital-intensive resources to best support the firm's long-term strategy.

Economies of Scale

As volume increases for a given operation, the average cost per unit decreases (until the point of diminishing returns).

Diseconomies of Scale

As plants or production increase, it becomes difficult (and often dangerous) to keep an operation's efficiency (unit cost can increase). Things start to cost more money as we add more units.

Focused Factory

Production facilities designed for a limited set of production

goals and dedicated to a specific product or product group tend to be more efficient (high volume) (specialization)

Plant Within a Plant (PWP)

Focused operations are limited to specific areas within a larger facility (more flexibility/higher costs).