supply chain study guide

Supplier Relationship Management (SRM)

Strategic planning and management of interactions with key suppliers to maximize value

SRM Purpose

Build long term partnerships rather than short term price focused relationships

Transactional Supplier Relationship

Short term price focused supplier interaction

Strategic Supplier Relationship

Long term partnership based on trust shared goals and collaboration

Key SRM Objective

Maximize value from supplier relationships

Strategic Partnership

Mutual commitment and trust over time sharing risks and rewards

Building Trust

Foundation of successful strategic supplier partnerships

Shared Vision and Objectives

Suppliers and buyers align on cost quality and growth goals

Personal Relationships

Improves communication and problem solving between firms

Mutual Benefits

Partnership must create a win win outcome

Top Management Commitment

Senior leadership support is critical to partnership success

Information Sharing

Open formal and informal communication channels

Supplier Capabilities

Suppliers must meet cost quality and delivery needs now and in future

Continuous Improvement

Ongoing small improvements to eliminate waste

PDCA Cycle

Plan Do Check Act continuous improvement process

Measuring Supplier Performance

Use metrics for cost quality delivery and flexibility

Total Cost of Ownership

All costs associated with acquiring using and maintaining a product

Supplier Evaluation

Data driven process to assess supplier performance

Weighted Criteria Evaluation

Scoring suppliers using multiple performance dimensions

Supplier Development

Buyer assistance to improve supplier quality delivery and performance

Supplier Development Goal

Lower total supply chain cost and improve reliability

Early Supplier Involvement

Involving suppliers early in product and process design

Value Engineering

Reducing cost and improving quality during product design

Supplier Recognition

Rewarding top performing suppliers

Supplier Recognition Purpose

Motivate suppliers to exceed expectations

Operations Management

Managing processes that convert inputs into goods and services

Efficiency

Doing things right with minimal resources

Effectiveness

Doing the right things to achieve desired results

Manufacturing

Converting raw materials into finished goods

Lean Philosophy

Waste reduction and value enhancement approach

Waste

Any non value adding activity

Value Added Activity

Process step customer is willing to pay for

Non Value Added Activity

Consumes resources without adding customer value

Lean Goal

Eliminate waste and improve flow

Lean Layout

Facility layout that minimizes movement and waste

Pull System

Production driven by actual demand

Push System

Production driven by forecasts

Make to Stock (MTS)

Produce goods based on demand forecasts

Make to Order (MTO)

Produce goods only after customer order

Assemble to Order (ATO)

Assemble components after order is received

Engineer to Order (ETO)

Custom design and production after order

Six Sigma

Data driven approach to reduce defects and variability

Six Sigma Goal

Less than 3.4 defects per million opportunities

DMAIC

Define Measure Analyze Improve Control

DMADV

Define Measure Analyze Design Verify

Total Quality Management (TQM)

Organization wide commitment to quality

Voice of the Customer (VOC)

Capturing customer expectations and preferences

Cost of Quality

Costs incurred because quality is not perfect

Prevention Costs

Costs to prevent defects

Appraisal Costs

Costs to evaluate quality

Internal Failure Costs

Defects found before delivery

External Failure Costs

Defects found after delivery

Acceptance Sampling

Using samples to judge shipment quality

Supplier Risk

Rejecting good shipments

Buyer Risk

Accepting poor quality shipments

Logistics

Planning and control of product movement and storage

Inbound Logistics

Movement from suppliers to company

Outbound Logistics

Movement from company to customers

Warehousing

Storage and handling of inventory

Primary Warehouse Functions

Receiving storage picking packing shipping

Public Warehouse

Shared storage rented short term

Contract Warehouse

Storage provided under long term contract

Private Warehouse

Company owned warehouse

Consolidation Warehouse

Combines shipments into full truckloads

Break Bulk Warehouse

Breaks full truckloads into smaller shipments

Cross Docking

Minimal storage with immediate transfer

Transportation

Movement of goods between locations

Transportation Objective

Right product right place right time

Truck Transportation

Most flexible and widely used mode

LTL

Less than truckload shipments

FTL

Full truckload shipments

Rail Transportation

Best for heavy bulk long distance

Air Transportation

Fastest and most expensive

Water Transportation

Lowest cost but slow

Pipeline Transportation

Used for liquids and gases

Intermodal Transportation

Use of multiple transportation modes

Globalization

Increasing global economic interdependence

Global Location Decision

Choosing facility locations worldwide

Offshore Factory

Low cost manufacturing with minimal capabilities

Source Factory

Low cost with skilled labor

Server Factory

Regional market focused facility

Contributor Factory

Facility involved in product development

Outpost Factory

Located near research and advanced suppliers

Lead Factory

Primary innovation and best practice facility

Tariffs

Taxes on imports

Ad Valorem Tariff

Percentage based tariff

Specific Tariff

Fixed amount per unit

International Trade

Exchange of goods and services across borders

Import

Goods brought into a country

Export

Goods sold to foreign countries

Four Ts of Trade

Transaction tariff transport and time costs

Customs and Border Protection (CBP)

US agency controlling imports

International Trade Compliance

Adhering to laws and regulations for trade

Service Supply Chain

Supply chain supporting service operations

Service Characteristics

Intangible customer involved hard to inventory

Service Productivity

Difficult due to variability and customization

Service Strategies

Cost leadership differentiation focus

Service Delivery Systems

Self service blended or full service

Facilitating Goods

Tangible items required to deliver services

Service Response Logistics

Managing capacity waiting time and quality