SCM 301 Exam 1

bullwhip effect

A distribution channel phenomenon. Simply put, as a company responds to shifts in customer demand, the initial response is amplified as one moves up the supply chain.

Design for Manufacturing

Designing products so that they can be easily and inexpensively made. DFM often involves concurrent or simultaneous design—designing product and process at the same time.

Economic Order Quantity (EOQ)

Order quantity that minimizes the total cost of cycle inventory and placing orders.The amount of inventory to make (or buy) that minimizes total inventory costs. The EOQ occurs at the point when carrying (aka, holding costs) are equal to set-up (or order) costs.

environmental scanning

The process of systematically seeking, acquiring, and interpreting relevant data to identify external opportunities and threats.

Forward buy

The practice of stocking up on an item when it goes on sale. The excess inventory is then stored and used as demand occurs.

Industrial Revolution

The rapid major change in western economies that took place in the late 18th and early 19th centuries marked by the introduction of power-driven machinery.

Internet of Things

The process of connecting different devices to the Internet, creating smart devices.

Job Enlargement

Increasing the scope of a job by combining various activities. The goal is to create ownership and alleviate monotony.

Job Enrichment

Redesigning jobs so that they are more challenging and interesting. A motivational technique to help create more meaningful jobs.

Open Systems

The view that companies are "open" to and affected by changes in their environments. Managers need to recognize emerging opportunities and threats and be able to effectively respond.

Operations and Supply Chain Management (OSCM)

The business function responsible for acquiring materials, transforming those materials into higher-valued outputs, and delivering the finished product to customers; that is, for creating customer value.

Reorder Point

Inventory level in a Reorder Point System at which replenishment is triggered.Compares the amount of inventory currently available with the rate of demand to determine when to produce (or when to place an order).

SCOR Model

The SCOR model is a tool that benchmarks best practices across a company's core value added activities, including sourcing, operations, logistics, and product return.

SWOT Analysis

An analytical framework that helps companies define appropriate strategies by identifying internal strengths and weaknesses as well as external threats and opportunities.

Safety Stock

Inventory kept to compensate for uncertainty.

Six Sigma

A quality philosophy and practice that relies on the DMAIC methodology and to statistical analysis to identify and remove the causes of defects, reducing defects to 3.4 per million parts produced.

Supply Chain Management

The value creation engine of every organization, supply chain management involves collaboratively managing value-added processes and projects to meet the real needs of customers profitably.

Transformation Processes

Processes that take a set of purchased inputs and turns them into something that possesses greater.

Value Chain

The process or activities companies use to add value to a product/service and thus meet customer needs. Activities are separated into primary value-added activities like operations, logistics, and marketing as well as support activities like information technology and accounting.

Vale Proposition

The promises you make to customers about how your firm will meet their needs.

● Define operations and supply chain management (OSCM) and describe its role in supporting a company's strategy as well as the firm's ability to meet customer needs.

Their role is to create customer value, concerned with what happens on the inside of the organization. They turn inputs into more highly valued outputs. They manage the production systems in manufacturing and services. Efficient and effective OSCM kickstarts a virtuous cycle. To take advantage of this virtuous cycle, you need to understand how to design and manage world-class processes. In OSCM, your goal is to use inputs—labor, plant and equipment, component parts, and services—to "make" something customers want and are willing to pay for.

Environmental and technological

1. Consumer society and Scale Economies - consumers began to buy in large quantities to create economies of scale. They demanded efficient operations to produce a greater variety of affordable products
2. The scientific method - Fedrick Taylor - observing, training, monitoring, and improving led to a standardized operations process
3. The computer revolution - Computers made it possible for complex algorithms to be applied routinely in situations where judgment and guessing previously prevailed
4. Lean six sigma - Toyota energized a paradigm shift, demonstrating that if you build the right manufacturing environment, your people can come up with the ideas needed to continuously find and eliminate waste. Lean Six Sigma made it possible to produce high-quality products at low costs, quashing the belief that a tradeoff always exists between quality and costs.
5. The service economy - To drive growth—and living standards—service operations had to become more innovative and productive.
6. Sustainability - . As the percent of earnings spent on food decreases, consumers can prioritize other things, including a lifestyle focused on health and sustainability.5 Thus, sustainable operations became a corporate priority.

Design Decisions

Design decisions determine where and how you deploy your assets—especially plant and equipment (i.e., your infrastructure)—to create value over the long haul product, process, facility layout and location

Control Decisions

Control decisions are the day-to-day decisions you make that define how you make things. Your focus is to have the materials you need, move them efficiently through the production process, and assure that your transformation processes deliver exceptional quality.

Service Operations

activities producing intangible and tangible products, such as entertainment, transportation, and education

Manufacturing Operations

is the structure and system that produces a product that can be sold to a customer

ABC Classification

An application of the Pareto Principle to identify and group items—e.g., customers, suppliers, SKUs—in terms of how important they are. Most decision makers use three categories: A items are extremely important; B items are moderately important; and C items are relatively unimportant. 80/20 rule

Acquisition Touch Points

Refers to the process of learning about a product and making the decision to buy it.

Automation

Automation involves substituting capital equipment for labor to improve process efficiency and/or effectiveness.

Customer Relationships Management (CRM)

A software system that enables a company to accurately profile customers by tracking the customers' wants and buying habits. The software is a sophisticated form of customer segmentation.

DMAIC

An acronym that stands for Define, Measure, Analyze, Improve, and Control, which is a well-known quality improvement process.

Expectance Disconfirmation

A theory that seeks to explain post-purchase satisfaction as a function of expectations, perceived performance, and disconfirmation of beliefs.

Form Utility

Involves acquiring inputs and transforming them into products or services of greater customer value.

Hidden Plant

A term coined to describe the fact that 15-40% of a firm's capacity is used to find and fix poor-quality work.

Moment of Truth

Each touchpoint between a customer and a company is a moment of truth; that is, an experience that might influence customer feelings/perceptions of the company.

Offshoring

Offshoring involves moving production—either your own or a supplier's—from a domestic location to another country.

Order Loser

A product characteristic that disqualifies your product from purchase consideration.

Order Qualifier

a product characteristic that is required for a customer to consider your product.

Order Winner

A product characteristic that makes your product attractive; that is, an order winner differentiates your product in a way that leads a customer to want to buy it.

Outsourcing

Outsourcing involves moving from make to buy, asking a supply chain partner to perform a specific task that the company itself used to do

Place Utility

Involves delivering an item exactly where it is needed, for example the dock assigned for drop off, not just at the correct distribution center

Possession Utility

Involves translating customer needs and service requirements, promoting the resulting product's value, and facilitating exchange so the customer may "possess" a product or service

Process Improvement

Process improvement involves finding better ways to add value. Continuous process improvement is important to improving productivity and remaining competitive

Resource Orchestration

Orchestration refers the skill that enables companies to bring the resources of the entire supply network together.

Reverse Auctions

suppliers respond to an RFQ via an online system during a dedicated time window, which is usually very short, such as half an hour. Unlike a regular auction (as you may know from eBay), prices decrease - thus the name "reverse", since a lower price charged by a supplier is a more preferred offer.

Showrooming

When customers go to a bricks-and-mortar store to physically check out purchase options and then using an online app or going home to use their computer so that they can find the selected item for a lower price online

Supplier of Choice

The go-to supplier for a customer's needs. That is, the supplier that is preferred above and beyond rival suppliers.

Time Utility

Involves making sure a product arrives when it is needed, not earlier or later.

Touch Point

Any interaction between a customer and firm

Utilization Touch Points

Refers to the process of actually using a produce—after you have purchased it.

Value Gaps

Any disparity that exists in identifying, defining, and delivering outstanding customer experiences that can undermine perceptions and damage relationships.

value proposition

The promises you make to customers about the value you will deliver to them; that is, a value proposition defines how you will meet customers' needs.

Why operations strategy begins with customers' real needs

What the customer buys and considers value is never just a product. It is always a utility, that is, what a product or service does for him. The customer is the only person who puts money into a supply chain. Everyone else merely recycles it.

Five Customer Value Dimensions

COST: To reduce costs, companies pursue a combination of four strategies. Process improvement, automation, offshoring, outsourcing
QUALITY: meeting the customers' expectations - deals with performance, features, reliability, conformance, durability, serviceability, aesthetics, perceived quality
DELIVERY: customers value speed, ability to be fast consistentlyAGILITY: the ability to act quickly or respond - as customers make special requests, competitive requirements change, or the unexpected happens is critical
INNOVATION: staying relevant means innovating, critical to sustained success

service systems design

builds on the expectancy disconfirmation model to depict the key elements you need to consider as you design a service system to deliver remarkable customer experiences.

The good, bad, and ugly of global oerations

The good: more innovative products, better quality, lower costs, improved living standards
The bad: more intense competition, greater complexity, more prevalent risks,, more variable lead times
The ugly: worker exploitation, elevated carbon footprint

Resource Access - driver

Companies seek access to global resources

Market Access - driver

companies want access to global customers

Hybrid Model - driver

Most companies that go global evolve their strategies—and their networks—to gain access to both resources and market

Configuration

where you should set up operations to gain the greatest competitive advantage.
Questions to consider:
1. Is resource availability critical?
2. Are scale economies important?
3. Are relationships a key concern?
4. Is image vital to your company's success?

Coordination

Designing your network to access customers and resources

Phase I: Corporate and Supply Chain Strategy

- define why you need to go global, consider company's value proposition, strategy, readiness, nature and level of competition, and desired profitability

Phase II: Location Decisions

- the detailed analysis needed to decide where you should invest. If your goal is to access resources, you focus on resource availability. If your goal is to capture customers, you develop regional demand forecasts. From a practical standpoint, you probably need to do both.
- Country decisions, community decisions, site decisions

Collaborative Planning, Forecasting, and Replenishment (CPFR)

A formal process of aligning demand and supply across buyer/supplier relationships to help trade partners work effectively together to build a single, agreed-upon forecast and operating plan.

Economic Cycle

Economic events like recessions or inflation can create fluctuations that affect your business—and the forecasting tool you should use.

Exponential Smoothing

A simple time series technique that allows you to balance stability and responsiveness by weighting your last period's demand with your last period's forecast

Forecast Error

A measure of how far off (i.e., wrong) your forecasts are compared to what actually happened.

Forecast Horizon

The span of time for which you are forecasting. Shorter-term forecasts are usually more accurate

Forecasting

The process you use to estimate future demand (i.e., guesses based on historical data or correlations between two variables (e.g., weather and umbrella purchases)

Integrated Business Planning

A formal process to help you align supply and demand across functions within your firm as well as with your trading partners (i.e., suppliers and customers).

Mean Absolute Deviation (MAD)

a measure of forecast error, the average of all absolute. values of the difference between actual and forecasted demand

Mean Absolute Percent Error (MAPE)

A measure of forecast error. Specifically, MAPE expresses forecast error as a percentage from the actual demand.

Mean Squared Error (MSE)

A measure of forecast error. Specifically, the average of all the squared errors

Moving Average

The simplest time series technique that takes the average of several recent periods of demand.

Sales ad Operations Planning

A formal process of aligning customer-facing and supply-facing sides of your company to build a single forecast and plan to fulfill customer orders.

Seasonality

Data that reveals a regularly repeating trend.

Smoothing factor

The weighting factor used to determine how much weight to give to your last period's demand in exponential smoothing forecasting techniques.

Stockouts

a stockout occurs when demand for an item cannot be filled from existing inventory.

trend

Data that reveals a consistent upward or downward pattern

Weighted Moving Average

A simple time series technique that applies larger weights to data from more recent periods to better reflect future demand based on past experience.

DC

Distribution Center—a warehouse that holds inventory pending distribution to stores.

Dwell Time

Relative measure of the length of time for which inventory sits idly in a supply chain.

Economic Order Quantity (EOQ)

Order quantity that minimizes the sum of total relevant logistics costs.

Electronic Data Interchange (EDI)

A system for business-to- business electronic communication.

fill rates

Proportion of demand filled from on-hand inventory.

holding costs

Costs associated with holding inventory; includes, most notably, physical warehousing, handling and opportunity costs.

in-stock rates

Percentage of order cycles in which no stockout occurs.

Order quantity (Q)

Size of a replenishment (in units).

Radio Frequency Identification (RFID)

A technology in which a tag is attached to each item which broadcasts a unique, low-frequency radio signal.

SKU (Stock Keeping Units)

An individual item that must be managed (i.e., buy, store, sell). Any differentiating characteristic (size, color, and feature) creates a new SKU.

Strategic Profit Model (SPM)

Visualization of a company's finances (also called DuPont model).

Truckload (TL)

Refers to situations in which a trailer is filled with freight and travels from origin to destination without intermediate stops for loading, unloading, or consolidation of loads.

Identify different business decisions that are influenced by forecasting

- How many people should you hire?
- Which country should you enter as you seek to grow sales?
- How much inventory should you carry?
- Which products should you develop and bring to market?

Business Forecasting

the process of using analytics, data, insights, and experience to make predictions and respond to various business needs. The insight gained by Business Forecasting enables companies to automate and optimize their business processes. A Forecaster's goal is to go beyond knowing what has happened and provide the best assessment of what will happen in the future to drive better decision-making

Identify and discuss the steps in the forecasting process

1. Decide what to forecast
2. Evaluate your data (identify the right data & understand the data)
3. Select the forecasting method: amount and type of data available, degree of required accuracy, length of forecast horizon, data patterns
4. Created the forecast
5. Assess forecast accuracy (was it accurate or inaccurate?)

Influencing/Balancing Demand

Your only real option is to work with marketing to persuade customers to shift their demand. Price and lead time are your two levers of influence.

Qualitative forecast methods

Qualitative approaches rely on experts' opinions. Your task is to identify the right "key" informants and to ask them the right questions.

Inventory Performance Metrics

○ they offer information about turnover, sales, demand, costs, process success, relationships and more to improve cash flow, reduce operating costs, and increase customer satisfaction

SPM

a business practice that is used to measure, analyze, and manage the performance of a supplier

reorder point

a specific level at which your stock needs to be replenished