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Supply Chain Chapter 1
Terms in this set (36)
The goal of Supply Chain Management is to increase customer service by increasing inventory and reducing costs (True or False)
What was #1 from the Top 10 SCM innovations video?
Toyota Production System
What are the 3 P's of the Triple Bottom Line
Supply Chain Visibility refers to:
Identifying your suppliers and customers beyond Tier 1 to ensure you policies are followed throughout the supply chain
In the history of supply chain, the 1980's through early 2000's saw:
Companies facing intense global competition
How many Rights are in the "R's Rule" of supply chain management?
In the Make-to-Order or Pull Model, stock is produced based on anticipated (i.e., forecasted) demand. (True or False)
Service firms offer intangible products (meaning products that cannot be physically touched), therefore, they do not have a supply chain. (True or False)
Which are the Manufacturer's Tier 1 supply chain partners?
The ones that are closest to the manufacturers
Most definitions of Supply Chain Management revolves around 2 key words
Management & Customers
A basic supply chain is the flow of products & services from:
Raw material suppliers
Finished product manufacturers
Wholesalers and Distributors
Retailers and Consumers
Supply Chain Management
-Managing all the steps involved in bringing a product to market
-Improves profitability by managing process of all trading partners work together to effectively minimize total cost of ownership
-Term Supply Chain Management was coined by Dr. Wolfgang Partsch and his team at Booz, Allen & Hamilton in the early 1980's
Goal of Supply Chain: Seven "R's" Rule
-have the Right product,
-for the Right customer,
-in the Right quantity,
-at the Right place,
-in the Right condition,
-at the Right time,
-for the Right price.
Challenge of Supply Chain
-Balancing Competing Goals:
--> Balancing Production capacity with low cost manufacturing
-->Balancing low cost manufacturing with variable customer demand
Supply Chain Visibility
Identifying your suppliers and customers beyond Tier 1 to ensure you policies are followed throughout the supply chain.
1950's and 1960's
-Focus was on mass production techniques as their principal cost reduction and productivity improvement strategies. External collaboration and partnerships were virtually nonexistent
1960's and 1970's
-Manufacturers focused on inventory reduction to improve cash flow and reduce cost. Still internally focused. Introduction of MRP & MRPII
Materials Requirements Planning (MRP)
A method of determining what materials are needed and when they are needed to support the production plan
Manufacturing Resource Planning (MRPII)
A method for the effective planning of all resources of a manufacturing company
1980's, 1990's & early 2000's
-Intense global competition - enter concepts for quality, inventory management & development of alliances.
-Implementation of JIT, TQM & BPR:
-Just-in-Time-->philosophy of manufacturing based on planned elimination of all waste and continuous productivity improvement
-Total Quality Management-->management approach to long-term success through customer satisfaction based on the participation of all members of an organization in improving processes, goods, services, and the culture in which they work. Everyone has to take ownership for quality
-Business Process Reengineering-->procedure involving fundamental rethinking and radical redesign of business processes to achieve dramatic organizational improvements in such critical measures of performance as cost, quality, service, and speed
2000 to Today
-Companies are focusing on their own core competencies, outsourcing, global supply chain coordination, integrating with suppliers and customers for competitive advantage and speed. Focus on Triple bottom line, dealing with digital disruptions and intense competition from new entrants
First Shipping Container
-In 1956 the world's first container ship was capable of carrying approximately 58 - 35 foot containers. Invented by Malcolm McLean it reduced handling cost by 97%
-On April 26, 1956 the Ideal X sailed from Port Newark, New Jersey to Port Houston, Texas
Supply chains are generally described as spanning from end-to-end, i.e., from your suppliers-suppliers on one end, through your internal operations, and out to your customers-customers on the other end
SCM basic model: Plan--> Source --> Make --> Deliver --> Return
Supply Chain Operations Research Model: Plan
-Planning establishes the parameters within which the supply chain will operate
-Companies need a strategy for managing all of the resources necessary to address how a product or service will be created and delivered to meet the needs of their customers
-Planning includes the determination of marketing and distribution channels, promotions, quantities, timing, inventory and replenishment policies, and production policies
Supply Chain Operations Research Model: Source
-Sourcing is the process of identifying the suppliers that provide the materials and services needed for the supply chain to deliver the finished product(s) desired by the customer(s)
-This phase involves not only identifying reliable suppliers but also building a strong relationship with those suppliers
-Supply chain managers must also develop pricing, shipping, delivery, and payment processes with suppliers and create metrics for monitoring and improving the performance
Supply Chain Operations Research Model: Make
-Make or manufacturing is the series of operations performed to convert materials into a finished product.
-Finished product is manufactured, tested, packaged, and scheduled for delivery.
-Quality management is a core component of the manufacturing process.
-This is the most metric-intensive portion of the supply chain, where companies are able to measure quality levels, production output, and worker productivity.
Supply Chain Operations Research Model: Deliver
-Also known as the Logistics phase, this is the part of supply chain management that oversees the planning and execution of the forward flow of goods and related information between various points in the supply chain to meet customer requirements.
-Where companies coordinate the receipt of orders from customers, develop a network of warehouses, pick carriers to transport products to customers, and set up an invoicing system to receive payments, among other aspects.
Supply Chain Operations Research Model: Return
-Also known as Reverse Logistics, this is the part of supply chain management that deals with planning and controlling the process of moving goods specifically from the point of consumption back to the point of origin for repair, reclamation, remanufacture, recycling, or disposal.
-As this process quite literally goes against the normal outbound flow of products to the market, supply chain managers have to create a responsive and flexible network for receiving defective and excess products back from their customers and supporting customers who have questions and problems
Supply Chain Operations Research Model: Enable
-Enabling processes facilitate a company's ability to manage the supply chain and are spread throughout every stage.
-->We must enable our capabilities as we plan, source, make, and deliver (and return).
-Enabling processes include elements such as
-->Supply Chain Systems and Network Operations
-->Systems Configuration Control
-->Electronic Data Interchange (EDI)
-->Training and Education
Supply Chain Must Be Aligned With Business Strategy
-Understand the company's business strategy and core customer requirements.
-Define core competencies & how your company will serve your customers.
-Develop supply chain capabilities to support your company's chosen strategy.
-Supply Chain and processes are designed to minimize cost
-->Predictable supply and low cost
-->Low cost production / utilized capacity
-->High inventory turns
-->Ideal for Functional Products:
-->Staples that people buy everywhere
-->Don't change much over time
-->Stable predictable demand
-Supply Chain designed to respond quickly to market demand
-->Fast response, Minimal inventory
-->Flexible capacity / Inventory of parts
-->Minimize lead time
-->Ideal for Innovative Products:
---->Rapidly changing / Very short life-cycle
---->Very unpredictable demand
Push or Make-to-Stock vs. Pull or Make-to-Order
-Push or Make-to-Stock: Producing stock on the basis of anticipated demand. Demand forecasting can be done via a variety of sophisticated techniques
-Pull or Make-to-Order: Producing stock in response to actual demand
Companies are focused on risk mitigation to offset business volatility. Supply chain risks can only be effectively mitigated by managing risk at each node in the supply chain
Flexibility & Responsiveness
Firms need to be more flexible and responsive to customer needs, adapting to unexpected changes. Necessitating closer integration and collaboration
Cost Reduction and Continuous Improvement
Reducing purchasing costs, waste, excess inventory & non-value added activities. Improving demand planning. Increased outsourcing of non-core competencies
Expanding the Supply Chain Internationally, both mature and emerging markets have become a part of the overall business growth strategy for many companies
Societal pressures to make and source in 'the right way'; minimizing social, economic and environmental impact while developing a positive impact
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