Scm 301 Exam 1 Study Guide PDF

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SCM 301 EXAM 1 REVIEW GUIDE First Lesson (4 Questions) What is a supply chain? ● Network of producers and service providers that work together to convert and move goods from raw materials stage to the end user ● All parties involved, whether directly or indirectly, in fulfilling a customer request ● Active mgmt of activities and relationships in order to maximize customer value and achieve a sustainable competitive advantage ****A focus on product, workflow and the customer Impetus for Change ● Traditional view ○ From an organization structure with a vertical, functional or “silo” focus ○ Only care about themselves ● Supply chain mgmt view ○ To an organization structure with a horizontal, operational focus across the film and across the enterprise ○ Operations come together SCM Definition: A Transformation Process ● Inputs: 1. Material 2. Labor

Outputs: business processes &

Goods and services whose value is measured by the marketplace

3. Information technologies 4. Capital 5. Energy *****Define outputs first ● A business transformation process is an organized grouping of activities that together convert inputs into outputs that have value to the end user Supply Chain Focus ● = R-C ● In business, our greatest goal is to maximize profit.

Why do we study it? ● Availability of info ○ easy access to technology for decision making, communication, and business transactions (electric commerce) ● Increasing globalization & competition ○ new sources, technologies, and markets ● Importance of relationship mgmt ○ Awareness and focus outside the traditional walls of the business Upstream ● Upstream is closer to the source of raw materials ● Cash predominantly flows upstream (but goes both) Downstream ● Downstream is closer to the customer ● product/service predominantly flows down (but goes both) ● ***INFO FLOWS BOTH****

Models (6 Questions) ● Stages, players, and models

○ Nodes - where activity stops

○ Links - how we get from one node to another ■ Ex: trucking company ○ We’re only as good as the weakest link

● 2 ways to view processes performed in a supply chain: cycle view and push/pull view ○ Cycle view: the processes in a supply chain are divided into a series of cycles, each performed at the interface between the two successive stages of a supply chain ○ Is useful when considering operational decisions ○ 4 cycles: ■ Customer order cycle: demand is external to the supply chain, so it is uncertain (between customer and retailer) ■ Replenishment cycle: order placement is uncertain, but can be projected (between retailer and distributor/wholesaler) ■ Manufacturing cycle: order placement is uncertain, but can be projected (between manufacturer and distributor/wholesaler) ■ Procurement cycle: order placement is uncertain, but can be projected (between supplier and manufacturer) ○ Push/pull view: the processes in a supply chain are divided into 2

categories depending on whether they are executed in response to customer or in anticipation of a customer order ○ Is useful when making strategic decisions ○ Pull processes (reactive) - are initiated by a customer order ■ Operate in environment where customer demand is known ■ Advantage - eliminates waste inventory ■ Ex: you are a baker who only makes cakes when customers order them ○ Push processes (speculative) - are initiated and performed in anticipation of customer orders ■ Operate in an uncertain environment, customer demand unknown ■ Risk - separates push process from pull processes, boundaries can move and change ■ Ex: you are a baker who fills a truck with your products without knowledge of demand, then you go door-to-door selling the cakes that you’ve already bake ○ Push/pull boundary - separates the push processes from the pull processes ● Network analysis

○ ○ Hershey Example: Constantly evolving ● Raw materials

● Manufacturers - 2nd tier ● Wholesalers = distributors - 1st tier ● What do you find in a return part of SCOR model? ○ SCOR = Supply Chain Operations Reference ○ Model of the core management processes and individual process types that, together, define the domain of supply chain management ○ PLANNING AND ENABLING FOUND EVERYWHERE ○ ENABLE: manage business rules, performance resources, assets, contracts, regulatory requirements, and risk ■ Incorporate Operations Management techniques to assist in planning and managing manufacturing, inventory, sourcing, delivering, and return processes ■ Use heuristics or “rules of thumb” to assist in framing problems and decisions ■ Understand supply chain impacts on balance sheet, income statement, cash flows, and other performance metrics ■ Leverage information technologies as a competitive advantage for the firm ○ PLANNING: seek to balance demand requirements against resources and communicate these plans to various participants ■ Balance supply and demand → balance efficiency and responsiveness → align supply chain with strategic and business partners → manage performance, data collection, inventory, capital assets, etc. in order to reach a firm’s goals → establish and communicate plans with supply chain partners ■ Three planning levels (decision phases) ● Supply chain strategy/design - long-term ● Supply chain planning - medium-term ● operations/flow planning - short-term (day-to-day) ○ SOURCE: include identifying, developing, and contracting with suppliers, and scheduling the delivery of incoming goods and services ● Identify need → conduct make/buy analysis → select vertical/virtual integration strategies → identify/select supply sources → procure materials and services in a formalized process → manage supplier networks and agreements → assess supplier performance/capability ○ MAKE: which cover the actual production of a good or service ■ Select manufacturing process → schedule production

activities → manufacture and test production → manage inventories (RM, WIP, FG) → manage performance, equipment, facilities, and production network → package and stage product → release product for delivery ○ DELIVER: include everything from entering customer orders and determining delivery dates to storing and moving goods to their final destination ■ Manage customer expectations to ensure that the product meets customer needs while providing the delivering firms/supply chain with competitive advantage → manage the detailed processes in moving from a customer order to a delivered product → manage value-adding customer services → manage the movement, storage, and safeguarding of product ○ RETURN: include the activities necessary to return and process defective or excess products or materials ■ Manage return processes from authorization to disposition → manage reverse supply chains → minimize resource footprint → manage return business performance → clean and lean production → designing for the environment → total quality environmental management (protect the environment) → manage product end-of-life practices

Strategy (7 Questions) Top down model

● Firm has a vision ---------------->

● How are we going to fulfill our vision? ----------------------------->

● How do I put these strategies

together to fulfill the mission statement? ----------------------->

Performance Dimensions ○ Companies must design their supply chain strategy so that it aligns with the overall Corporate strategy of the firm ○ Firms cannot competitively distinguish themselves on all criteria. Trade -offs must exist ○ Examples: ■ Wal-Mart’s supply chain focuses on low cost operations, not having the fastest on-time delivery ■ BMW’s supply chain focuses on providing a quality product above low-cost operations or fastest time delivery ■ FedEx supply chain focuses on fast delivery, although low cost operations is always a consideration ■ The U.S. military focuses highly on flexible supply chains, often employing redundant suppliers, numerous distribution centers and transportation modes 1. Cost ○ Always a concern ○ Varies by organization ○ Readily understood metric ○ Typical costs: ■ Labor ■ Inventory ■ Facilities ■ Engineering ■ Quality- related costs (positive, negative, and avoidance/ prevention) 2. Quality ○ Characteristics that show the capability of a product or service to satisfy stated or implied: ■ Performance - What is the product supposed to do? (basic characteristics ■ Conformance - the specifications that particular product is supposed to meet (How well the product does ■ Reliability - the consistency at which the product meets that specification

3. Time ○ Normally thought of along 2 dimensions ■ Speed (how fast can we get it - either through production or delivery) ● Averages or expected values ■ Consistency/ reliability (can production/ delivery times be consistent and do we get what we wanted?) ● Variances/ standard deviations 4. Flexibility ○ Being able to respond to unique requirements from different customers ■ Mix flexibility - producing many good/ services (one-stop shopping) ■ Changeover flexibility - switching to different products with minimal down times or delays ■ Volume flexibility - reacting rapidly to changing levels of customer demand Trade offs 1. Cost 2. Quality 3. Time ■ Attributes are interrelated ■ There are trade-offs in attempting to maximize simultaneously ○ Cheap/fast = low quality ○ High quality/ fast = high cost ○ High cost/ long time= high quality

SCORE - best option? Higher score is better

Forecasting (8 Questions) ● Last period ○ Simplest time series model, uses demand for current period as forecast for next time period ● Moving average ○ Derives forecast from the average of recent demand values ● Weighted moving average ○ Place more weight on more recent observations ● Exponential smoothing model ● Error calculations ○ CFE = demand - forecast ○ MFE = CFE / # of forecast points ○ MSE = Sum of all the SQUARED forecast errors / # of forecast points ○ MAD = Sum of all the ABS VAL of forecast errors / # of forecast points ○ MAPE = (Sum of all the ABS VAL of forecast errors / actual demand) / # of forecast points ○ Tracking Signal = CFE / MAD

● Thinking question or two ● under/over forecasting ○ Model with negative MFE → over forecast ○ Model with positive MFE → under forecast Metrics (5 Questions)

Cross functional and logistical drivers ○ There are 6 drivers (3 are cross-functional, 3 are logistical) - they interact with each other to determine supply chain’s performance in terms of responsiveness and efficiency ○ Responsiveness: company’s capability to respond to a wide range of demand, short lead times, wide product variety, supply and demand uncertainty, etc ○ Efficiency: relates to cost; the lower the cost of supply chain, the more efficiency

●

Logistical Drivers ● Facilities - the actual physical locations in a supply chain network; where product is stored, assembled, or fabricated ○ Two major types - production sites and storage sites ○ Decisions regarding the - role, location, capacity, and flexibility have a large impact on a supply chain’s performance

● Inventory - encompasses all raw materials, work in process, and finished goods within a supply chain ○ Changing inventory policies - can dramatically change the supply chain’s efficiency and responsiveness ● Transportation - entails moving inventory from point to point in the supply chain ○ Transportation choices - have a large effect on supply chain responsiveness and efficiency ● Cross-Functional Drivers ● Information- consists of data and analysis concerning facilities, inventory, transportation, costs, prices, and customers throughout the supply chain ○ Potentially the biggest driver of performance in the supply chain ○ Presents management with opportunity to make SC more responsive and efficient ● Sourcing - the choice of whom will perform a particular supply chain activity, such as production, storage, transportation, etc ○ Sourcing decisions affect responsiveness and efficiency of SC ● Pricing - determines how much a firm will charge for goods and services that it makes available ○ Pricing affects the behavior of the buyer - therefore, pricing affect SC performance

Supply Chain Metrics ● goal

accomplishment

Evidence of progress/

○ Manage transformation/ production processes (manage change) ○ Forcing function to move towards goal ○ Integral part of continuous improvement ● Can be used as a means of managing competitive advantage

Cross and metrics ●

functional logistical Logistic Driver Metrics ○ Factitlity metrics: ■ Capacity - maximum amount of throughput ■ Utilization - % of capacity used ■ Cycle time - time required to process a unit ○ Transportation metrics: ■ Average transportation cycle time ■ Average transportation reliability ■ Capacity ○ Inventory metrics: ■ Average inventory - amount of inventory stocked ■ Service level rate - fraction of demand met from stock ■ Zero balance - % of items with no stock on-hand

Relationship models ● Efficient vs. Responsive Supply Chains ○ Efficiency relates the costs, the lower the cost of the supply chain, the more efficient. The true cost impact is usually seen by the customer ○ Responsiveness - relates the capability to respond to: ■ A wide range of quantities demanded ■ Short lead times

■ Wide variety of products ■ Supply/ demand uncertainty ****There are trade-offs between these as well...