MSU Logistics Final (Frank Adams)
The Internet of Things
Controls devices and monitors demand forecasting
SCOR model
Plan - Source - Make - Deliver - Return - Return; Describes company actions and their linkages
Service Operations
Characterized by services that can't be shipped or inventoried and have hard-to-control delivery
Supply Chain Tiers
Upstream, Focal Firm, Downstream; Imply multiple firms cooperating for efficiency and quality
Value Chains
Linked sets of value chains between cooperating companies
Four Utilities
Form, Possession, Time, and Place utilities in the value creation process
Pareto Principle
States that not all customers are equal and don't necessarily follow an 80/20 split, roughly 80% of effects come from 20% of causes
Offshoring vs. Outsourcing
Distinct concepts in business operations
Techniques for Understanding Customers
Include surveys, focus groups, expert panels, in-depth interviews, shadowing, and ethnographic studies
Balanced Scorecard
Translates vision into actionable behavior, communicates vision, and imposes discipline
Theory of Constraints
Involves identifying, exploiting, subordinating, elevating, and repeating steps to improve processes
Flowcharts/Process Maps
Use symbols to illustrate process steps and elements
Process Bottlenecks
Slowest steps in a process that reduce throughput
Process Categories
Strategic, Operational, and Enabler processes in business operations
Product/Processes Matrix
Illustrates product variety and volume in different process types
Breakbulk
Receives large-volume TL, broken down and delivered using LTL
Modal Service Characteristics
Rated on a 1-5 scale for cost, speed, distance, and environmental impact
The Tapering Principle
Cost per unit weight decreases as distance increases in logistics
Warehouse Types
Include warehouses, distribution centers, cross-docks, and others
Carrier Types
Common, Contract, Private, and Exempt carriers in transportation
Factors Supply Chains Balance
Cost, Quality, Speed, and Flexibility in supply chain operations
Incoterms
Standardized trade terms defining buyer and seller responsibilities in shipping and determine when responsibility for a shipment transfers from one party to another
Predictive Logistics
Uses data analytics and modeling to anticipate and improve logistics decisions
Transportation Participants
Include Shippers, Carriers, Freight Forwarders, 3PL Providers, and Customs Brokers
Changeover time
Refers to the time it takes to switch from producing one product to another.
Single Minute Exchange of Dies (SMED)
Techniques that help minimize downtime during transitions between products.
Kanban
A visual signal, such as a card or tray, used to communicate production needs between stages in a system.
Kaizen
Means 'continuous improvement' and involves incremental improvements in processes through collaboration and employee input.
Kaizen events
Focused, short-term efforts to eliminate waste and improve workflow in specific areas.
Lean
Focuses on creating value for the customer while eliminating waste.
Muda
Refers to any activity that consumes resources without creating value.
Mura
Stands for wasteful inconsistency, which occurs when processes are not standardized.
Poka-yoke
Translates to 'mistake-proofing' and involves designing processes or tools to prevent errors.
Takt time
The rhythm at which production must occur to meet customer demand, calculated as: Takt Time = Available Production Time / Customer Demand.
Control charts
Used to monitor the consistency of a process and identify when it might be 'out of control.'
ISO
International Organization for Standardization that sets global standards to ensure the quality and reliability of products and services and evaluates whether firms are following best quality practices.
Six Sigma
A data-driven methodology aimed at improving processes and reducing defects, focusing on achieving near-zero errors (3.4 defects per million opportunities).
DMAIC Approach
Define, Measure, Analyze, Improve, Control; a structured problem-solving process in Six Sigma.
Center of Gravity Model
A decision-making tool used in supply chain management to find an optimal location for facilities to minimize transportation costs.
Coordination
Refers to aligning and integrating activities across all participants in the supply chain to achieve efficiency and responsiveness.
Configuration
Refers to the structural setup of the supply chain network, including the number, location, and types of facilities.
Market chasers
Supply chains designed to be close to consumer markets to respond quickly to demand changes.
Resource chasers
Supply chains that prioritize proximity to critical resources over market proximity.
Demand patterns
Stable, Seasonal, Cyclical, and Random demand types based on predictability and fluctuations.
Stable demand
Consistent and predictable demand with minimal fluctuations, common for basic goods.
Seasonal demand
Demand that fluctuates based on time of year or events.
Cyclical demand
Long-term demand changes tied to broader economic or business cycles.
Random demand
Unpredictable spikes or drops caused by unforeseen factors.
Random
Unpredictable spikes or drops caused by unforeseen factors like disasters or promotions.
Forecast horizon
The time period for which a forecast is made.
Short-term forecast
Days to a few months. Focuses on immediate operational needs like scheduling and inventory control.
Medium-term forecast
Several months to a year. Useful for budget planning, workforce adjustments, and production scheduling.
Long-term forecast
Over a year. Informs strategic decisions such as capacity planning, market entry, or product development.
Qualitative Forecasts
Rely on judgment and expertise for predicting demand when historical data is unavailable (e.g., new product launches).
Quantitative Forecasts
Use statistical models and historical data to project demand.
Correlational Models
Examine relationships between variables (e.g., sales and advertising spend).
Time Series Models
Use past demand trends to predict future outcomes.
Hybrid Approaches
Combine qualitative insights and quantitative data for comprehensive forecasting.
Procurement
The entire process of acquiring goods and services needed by the organization, from identifying needs to selecting suppliers, negotiating contracts, purchasing, and managing supplier relationships.
Purchasing
A subset of procurement that refers specifically to the process of buying goods and services.
Sourcing
Involves finding, selecting, and evaluating suppliers.
The Strategic Sourcing Matrix
A tool used to help companies categorize different items they purchase based on two factors: volume and complexity/risk of the supplier market.
Leverage Items
Products or services purchased in large quantities from suppliers in low-risk, competitive markets.
Strategic Items
Critical, high-risk items that are purchased in large volumes from markets with limited suppliers or more complexity.
Bottleneck Items
Low-volume but high-risk items. The supplier market for these items is often complex or unique.
Routine Items
Low-volume, low-risk items that are easy to purchase from a wide range of suppliers.
Aggregate planning
The process of developing, analyzing, and maintaining a preliminary, approximate schedule of the overall operations of an organization.
Common mistakes of ERP implementation
Include inadequate planning and preparation, lack of user involvement, underestimating change management, insufficient training, customization issues, and poor data quality.
Level Strategy
Involves producing the same amount of goods consistently over a period, regardless of demand fluctuations.
Chase Strategy
The production rate is adjusted to meet changes in customer demand.
Integrated planning
The process of aligning and coordinating all functional areas within an organization to work toward common goals.
Objective of integrated planning
To create a cohesive, synchronized business plan that optimizes performance across the organization.
Benefits of integrated planning
Helps reduce inefficiencies, improve communication, and ensure that all departments are working towards the same strategic goals.
Economic Order Quantity (EOQ)
A formula used in inventory management to determine the optimal order quantity that minimizes the total cost of inventory.
EOQ cost components
Includes both ordering costs and holding costs.
EOQ formula variables
D = Demand rate (units per period), S = Ordering cost per order, H = Holding or carrying cost per unit per period.
Goal of EOQ
To balance the ordering costs and holding costs.
Origin of the Pareto Principle
Named after economist Vilfredo Pareto, who noticed that about 80% of Italy's wealth was owned by 20% of the population.
Application of the Pareto Principle in business
Used to prioritize efforts based on impact, such as 80% of sales often coming from 20% of customers.
Backwards scheduling
Involves planning when to start each task or production process in order to meet a specific delivery date or finish time.
Example of backwards scheduling
If you need to deliver a product in 5 days and know it takes 2 days to assemble it, start assembly 3 days before the delivery date.
Bill of Materials (BOM)
A detailed list of all the materials, components, sub-assemblies, and parts needed to produce a finished product.
Example of BOM
For an office chair, the BOM includes items like the seat assembly, leg assembly, screws, wheels, etc.
Dependent Demand
Refers to the need for items that is driven by the demand for another item.
Example of dependent demand
The demand for car parts depends on the number of cars being produced.
Independent Demand
Refers to items whose demand is influenced by external factors like customer orders.
Example of independent demand
The demand for finished cars comes directly from customers ordering cars.
Fixed Order Quantity
An inventory management technique where a company orders a set quantity of items each time it places an order.
Example of fixed order quantity
If a company orders 250 units of a part every time, it is using a fixed order quantity.
Inventory records
Keep track of the quantity of each item in stock, on order, and in transit.
Example of inventory records
A business might have records showing 100 office chairs in stock, 50 on order, and 20 in transit.
Lot for Lot
An inventory ordering technique where the exact quantity required for each period is ordered.
Example of Lot for Lot
If demand is 100 units in week 1, 50 in week 2, and 75 in week 3, the company orders accordingly.
Master Production Schedule (MPS)
A detailed plan that outlines what a company plans to produce and when.
Example of MPS
If a company plans to produce 100 office chairs in week 1, 150 in week 2, and 200 in week 3, the MPS outlines these quantities.
Periodic Order Quantity
An ordering technique where a company orders enough to cover a set number of periods based on the demand forecast.
Example of Periodic Order Quantity
If demand is 100 units per week, the company will order 200 units every 2 weeks.
Muri
refers to waste from poor process design
Example of Muri
Asking workers to produce more units than they can realistically handle within a shift can lead to inefficiencies.
Quality dimensions of service
Factors that influence customer perceptions of service quality, including reliability, responsiveness, assurance, empathy, and tangibles.
The Square Root Rule
A principle used in inventory management that suggests the number of inventory locations should increase by the square root of the increase in demand.
Square Root Rule formula
New number of locations = Old number of locations × sqrt(New demand/Old demand).
Example of Square Root Rule
If a company has 3 warehouses and wants to meet a 4x increase in demand, they would need approximately 6 warehouses.
Continuous flow
the highest volume and lowest variety
Speed
Distinguishing characteristic of a cross dock
Truck
the best reliability - transportation
Lead time
a customer perspective on the balanced scorecard
Ship
lowest cost - transportation
Growth
a financial perspective on the balanced scorecard
Introduction
An industry reaches its ____________ life cycle stage when it identifies a new need or new way to meet an existing need
DEcline
lose interest
performance
Dr. Adams disagrees with book - services also have a ____________ quality dimension, just like products
Fixed order quantity
EOQ is an example of
The key lesson of square root rule
increasing number of locations increases total safety stock