331 final flashcards
Business Administration 331 with Scott at University of Tennessee - Knoxville
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By: Anonymous
Created: 2010-05-05
Size: 229 flashcards
Views: 366
Created: 2010-05-05
Size: 229 flashcards
Views: 366
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Resulted in uncertainty and inaccuracies in processes leading to
poor service and high inventory
Competitive Advantage
Product excellence X Process Excellence
Old Paradigm -
- Assumed problems of Scarcity, Limited Technology, and Adversarial relationships
- Resulted in uncertainty and inaccuracies in processes leading to poor service and high inventory
- Focused on Strong Brands, Large advertising budgets, and aggressive selling
- Examples- Ford, Procter and Gamble
New Paradigm -
- Sought to gain Competitive Advantage by providing better service and availability to picky...
- Resulted in the integration of demand and supply facing processes, internally through...
- Focused on winning business through capabilities and competencies , managing core processes...
- Enabled by- Responsiveness, reliability, visibility, resilience, flexibility, and relationships
- Examples- Wal-Mart, Toyota, McDonalds, Dell
Gaining Competitive Advantage through Supply Chain Management
- Goal to increase your Value advantage, Productivity advantage, or if capable both
- Commodity Market- Low value and productivity
- Service Leader- High customer value for a superior service but at a higher cost due to...
- Cost Leader- utilizes capacity well and thus can offer products at a lower cost at the...
- Cost and Service Leader- excelling in both areas and delivering a Superior Customer Value
Evolution of Supply Chain Management
- The Great Divide- Conflict between Manufacturing and Marketing Integration
- Bridging this gap makes businesses ultimately more Successful
- Manufacturing Integration- focuses on product, efficiency measured, economies of scale and scope
- Marketing Integration
- Companies often have too much inventory because they can?t coordinate the communication across the SC to get the customers wants when they want them
Service Leader- High customer value for a superior service but at a higher cost due to lower productivity advantage
Example- Verizon offering many cell phones and better coverage but at a higher cost then competitors
Cost Leader- utilizes capacity well and thus can offer products at a lower cost at the expense of customer service
Example- Wal-Mart with everyday low prices but near impossible to find an employee to help you
Marketing Integration
focuses on customer, satisfaction measured, relevance
process of strategically managing the procurement, movement and storage of materials, parts and finished inventory and related information flows through the organization and its marketing channels in such a way that current and future profitability are maximized through the cost-efficient fulfillment of orders
Goal to maximize profits through cutting cost
Porter?s Value Chain
- Primary Activities
- Support Activities
- Actions, sources, and service are what creates the value that gives you competitive advantage
4 R?s that help you gain competitive advantage
- Responsiveness
- Reliability
- Resilience
- Relationships ? to customers
Dell Supply Chain planning Steps
- Supply chain management coordinates info, materials, and logistics to support customer requirements
- Supply constraints are continuously communicated to sales and managed at point of sale
- Focus on continuity of supply and direct vendor relationships ensure material availability
- Aimed to create visibility in the Supply chain to show where they need to spend time on relationships
Logistics Management
- process of strategically managing the procurement, movement and storage of materials, parts and finished inventory and related information flows through the organization and its marketing channels in such a way that current and future profitability are maximized through the cost-efficient fulfillment of orders
Supply Chain Management
- goal to deliver superior customer satisfaction at the least possible cost to the supply Chain
Primary Activities
- Inbound Logistics, Operations, Outbound Logistics, Marketing and Sales, Service
Support Activities
- Firm Infrastructure, Human Resource Management, Technology Development, procurement
Responsiveness
- to customer wants
Customer Value
Perception of benefits/Total cost of Ownership
Reliability
- doing it the same every time
Resilience
- ability to solve problems
3 Level of Customer service
- Basic Service
- Satisfaction
- Success
Relationships
? to customers
Customer Service level Matrix
- Review Relationship- low profit margin and sales
- Efficient Service/Watch cost- high sales low profit
- Centralized inventory/expedited delivery- low sales but high profit per sell
- Customized Service /High Availability- high sales and profit
Efficient Service/Watch cost- high sales low profit
Ex. Dell shipping with UPS and not making much per ship but a lot due to bulk of shipments
Centralized inventory/expedited delivery- low sales but high profit per sell
Ex. Charging high price for overnight delivery
Goal
Find a sweet spot in the middle where you can maximize your profits while still providing a service
Logistics affects customer value through
customer service and Availability of product
Problem with marketing
is that it focuses on attracting new customers instead of keeping existing ones
Customer Service
process for providing significant value-added benefits to the supply chain in a cost-effective way.
Perfect Order Concept
- getting everything right in respect to the customer experience
Company ZARA
- example about not making anything till you know its popular and being responsive, flexible, built on relationships with customers
Shrinking service Window
- customers demanding higher level of service
Supply Chain impacts ROA and ROI
- Service- increasing revenue (what service elements we can enhance for customers to pay us more)
- Cost- lowering cost (through making production more efficient)
- Asset management- better utilization ( invest in people, equipment, etc)
companies have to reevaluate their inventory constantly to report Market Value
More than half of a company?s cost is usually tied up in inventory
Problems with traditional functional measurements
- Bias toward cost and internal Customer service
- Belief that internally generated customer service and quality metrics reflect customer perspective
- Customer service metrics are not jointly defined
- Metrics are ?on average, over-time? rather than de-averaged absolute metrics
- Functionally-oriented- unable to assess performance along horizontal process
- Unable to assess financial perspective
Financial Reporting vs. operational/managerial reporting
- Financial Reporting- focuses on the cost of activities and inputs
- Operational/managerial reporting- focuses on how much it cost to produce a product
Internal Supply Chain
- Perfect Order (customer perspective)- overall assessment of ability to achieve high levels of performance on all metrics of significant to the customer
- Cash-to- Cash (fin. Perspective)- time it takes to convert an investment in raw mat to sales of finished goods
Overall Supply chain
- Focus on the end customer (customer perspective)- increasing profitable customer take away is the ultimate goal for...
- Dwell time (operations perspective)- ratio of the number of days that inventory or other assets sit idle to the...
- Inventory Days of Supply (operations perspective)- total inventory in the supply chain expressed as calendar days of...
- Total Landed Cost (financial perspective)- the sum of all fixed and variable costs in along a supply chain
Basic Service
- achieve internal standards
Effects of Supply Chain Management on the Balance sheet
- Order cycle time, order completion rate, invoice accuracy effect Cash and Receivable
- Inventory policies and service levels effect inventories
- Distribution facilities and transportation equipment effect Property, Plant and Equipment
- Purchasing policies effect current liabilities
- Financing options for inventory, Plant and equipment effect debt and equity
Effects of Supply Chain Management on the Income Statement
- Cost of Goods Sold- reducing cost to produce a good (lean)
- Expenses- how effectively can you move your good as to reduce expenses
- Taxes- Paying local and foreign taxes for the different countries your SC goes through
Satisfaction
- meet customer expectations, find out what makes them happy
Success
- customers of choice achieve their objectives, different customers want different things
Pareto Rule
- 20% of something counts for 80% of something else
Service- increasing revenue
(what service elements we can enhance for customers to pay us more)
Cost- lowering cost
(through making production more efficient)
Asset management- better utilization
( invest in people, equipment, etc)
Inventory carrying costs
- companies have to reevaluate their inventory constantly to report Market Value
Order fulfillment decisions
- Key is being able to respond quickly but in a volatile market
- Order Cycle- time from recognition of inventory need until product is available for use or resale
- Decision Rules
Anticipatory order fulfillment = push, prior method used
- Demand is supported by deploying inventory in anticipation of projected sales levels and locations
- Order Point systems answer the question how much to order
Decision Rules
- What should we produce/purchase? Determines the inventory BOH & Forecast for Next Period
- How much should we produce/purchase? Determines the Service Level Policy & Prod. Quantities and lead Times
- Where should we position the product
Demand is supported by deploying inventory in anticipation of projected sales levels and locations
Anticipatory Forecast 2. Order 3. Inventory Development 4. Actual Demand 5. Inventory replenishment or reclamation. Then back to # 3
Economic Order Quantity Model
- Balances fixed order cost against carrying cost to determine least-cost order frequency to determine optimum order quantity
- Manufacturers use production set up cost instead of order cost
- Ignores Variance
Process measurements
- supply chain focused on the total process performance opposed to functional view
Perfect Order
(customer perspective)- overall assessment of ability to achieve high levels of performance on all metrics of significant to the customer
Cash-to- Cash
(fin.
Focus on the end customer
(customer perspective)- increasing profitable customer take away is the ultimate goal for all supply chain members
Dwell time
(operations perspective)- ratio of the number of days that inventory or other assets sit idle to the number of days it is actually moving in the supply chain
Naïve Sawtooth inventory model
- Naïve because it also ignores variance
- Conventional approach to fulfilling orders
- ROP= Reorder point= Lead time * Derived demand
- Problems occur when demand is not stable or there is a derived or dependent demand
- The more variability the more extra inventory companies end up with
Inventory Days of Supply
(operations perspective)- total inventory in the supply chain expressed as calendar days of supply based on recent actual daily rat of sale
accounts for variance with safety stock= LT *DD+SS
- Safety stock- safeguard against demand or variations in lead time
- Leads to higher inventory carrying cost
Total Landed Cost
(financial perspective)- the sum of all fixed and variable costs in along a supply chain
All about raising efficiency
- Product Focus
- Reduce uncertainty by managing demand and order cycle time VARIANCE
- Originated with Toyota after WW2
- Reducing cycle stock- less inventory, supply variance
- Reducing safety stock ? less demand variance
Reduce uncertainty by managing demand and order cycle time VARIANCE
Collaborative Plan 2. Order 3. Small Inv Deployment 4. Actual Demand 5. Flexible, Rapid Response. Then back to 3
Reducing safety stock ? less demand variance
- Key to achieving high efficiency
- Diapers example going on sell and demand variance
all about EFFECTIVNESS
- Customer Focus
- Used where there is a less predictable environment with a high variable demand
- Eliminates uncertainty by postponing form and/or time and place utility until order is received and then RAPID RESPOND when order is received
- Shift from a product forced push to a customer focused pull
- Must be able to communicate with all players in the supply chain
Eliminates uncertainty by postponing form and/or time and place utility until order is received and then RAPID RESPOND when order is received
Collaborative Plan 2. Capacity 3. Flexible, Rapid Response 4. Actual Demand
Total Cost of Ownership
Acquisition cost +mgmt.
Lean- plan and optimize- Long LT and predictable
Ex. Most chem and product manufacturers
Kanban- continuous replenishment- Short LT Predictable
Ex. Diapers and chickfila holding tray at UC
Cost Accounting System
- originated for the purpose of reporting to the financial community, not for the purpose of taking managerial action
What should we produce/purchase
Determines the inventory BOH & Forecast for Next Period
decouple through postponement- Long LT and unpredictable
Ex. Kroger waiting to put names on birthday cakes
Activity Based Costing and Management
- breaks down the activities that cause expenses
How much should we produce/purchase
Determines the Service Level Policy & Prod
Strategic Profit Model
logistic leverage
Anticipatory order fulfillment
push, prior method used
Economic Order Quantity
- tells you how much inventory you should order in anticipation of demand
EOQ inv model with variance
- accounts for variance with safety stock= LT *DD+SS
Lean fulfillment
- All about raising efficiency
Agile Order fulfillment
- all about EFFECTIVNESS
postponing
form and/or time and place utility until order is received and then RAPID RESPOND when order is received
Decoupling point
- point that customer order penetrates in the supply chain process
Hybrid
- decouple through postponement- Long LT and unpredictable
null
product life cycles
- less time available to develop new prod.
Customers? drive for reduced inventories
- firms focusing on reducing inventory to release additional capital
Volatile markets
uncertainty = high forecast error- driven by globalization and increasing competition
Value Added Time (VAT)-
% of the total cycle time that a product is actually worked on
Non-value added time (NVAT
)- % of total cycle time that a product may spend waiting, being moved, or being inspected or counted
reduce the length
of the pipeline and/or speed up the flow through the pipeline, or better visibility in the demand.
Throughput efficiency calculation (TPE)
Value added time/Total end to end Pipeline time * 100
Demand penetration point
? point the customer order penetrates in the supply chain process, more about the information
Time Based competitions
- TIME =MONEY
- Product Life Cycle (PLC)
- Marketing mix will differ over these stages
TIME =MONEY
- Regardless of lean or agile the key is speed
- New ?Great Divide? Lean vs. Agile
- Characteristics
Product Life Cycle (PLC)
- Introductory Stage- Agile- bought by EARLY ADOPTERS
- Growth Stage- Agile- bought by EARLY MAJORITY
- Maturity Stage- Lean- bought by LATE MAJORITY
- Decline Stage- Lean- bought by LAGGARDS
Characteristics
- Shortening product life cycles
- Volatile markets = uncertainty = high forecast error- driven by globalization and increasing competition
Shortening product life cycles
- less time available to develop new prod.
- Customers? drive for reduced inventories
- firms focusing on reducing inventory to release additional capital
less time available to develop new prod.
Ex. DVD has a shorter life cycle then the VCR
Supply chain collaboration
is achieved through shared information
Order-to delivery cycle- Customer perceived elapsed time from order to delivery
Stages- 1. Order preparation and transmittal
Stages- 1. Order preparation and transmittal
- Order received and entered into system
- Order processing
- Order picked/produced
- Order shipped
- Customer Receiving
Cash to Cash Cycle- time it takes from pay for raw material to cash received for product
Longer it is the less responsive it will be
Pipeline management
total time it takes to deliver product to customer
Shorten pipeline, improves visibility
- Value Added Time (VAT)- % of the total cycle time that a product is actually worked on
- Non-value added time (NVAT )- % of total cycle time that a product may spend waiting, being moved, or being inspected or counted
- GOAL- reduce the length of the pipeline and/or speed up the flow through the pipeline, or better visibility in the demand.
- Asks the question. Does this activity add value for the customer or does it add cost
Value Added Time (VAT)- % of the total cycle time that a product is actually worked on
- Provides FORM that customers want to consume it
- PLACE utility- having it available where someone wants to consume it
- TIME utility- having it available when someone want to consume it
Supply Chain Mapping
- Everything on the horizontal axis is VALUE ADDED time
- Everything off the horizontal axis is time sitting somewhere else
- Throughput efficiency calculation (TPE) Value added time/Total end to end Pipeline time * 100
- Ramp up Time
- Drain Time
Lead Time Gap
- supply chain lead time minus customer?s required order cycle time
- Decoupling Point- where the customer demand triggers an operational response
Ramp up Time
time it would take for the system to respond to an increase in Demand
Drain Time
time it would take to drain the system of inventory
supply chain lead time minus customer?s required order cycle time
- Time it takes to procure, make and deliver the finished product to the customer is often longer than the time the customer is prepared to wait for it
- Supply chain lead time- procurement, manufacturing, and delivery
- Customer?s order cycle time- the length of time that the customer is prepared to wait
- Reducing the gap is achieved by
- Forecasting- created by lack of visibility in demand and masks the real demand
Reducing the gap is achieved by
- Shortening the end to end pipeline, process integration, cross functional integration (keeping everyone informed in the SC)
- Improving visibility of demand
Demand penetration point ? point the customer order penetrates in the supply chain process, more about the information
- Farther it penetrates up the supply chain the faster you will be able to respond
- EX. Kroger sending information to supplier when an item is scanned at the register
Velocity and visibility drive responsiveness and Require
- Having a system in place to share information
- Building a relationship with SC partners so that they are willing to actually share information
Operating flows
- actually getting the job done, getting the information to do that
Enterprise Resource planning (ERP)
? gives you the system capabilities to talk to all the different parts of your organization, share all the data from different places in one consistent, standardized data warehouse
Advanced PLANNING and Scheduling- (APS)-
assist with planning and scheduling
Supply Chain Execution Software (SCE)-
uses software to execute the plan
Vender Managed Inventory (VMI)-
supplier takes responsibility for replenishment of the customer?s inventory within specified time period
The Need to develop responsive and fast systems in order to take advantage of time-based competition
Through IT and relationships
Chapter 7 Managing The Global Pipeline
- New Business paradigm drives globalization P2S28
- Two major reason why companies globalize P1S3
- Twin Challenges for globalization P1S11
- Trends affecting world trade P1S10
- Global Supply Chain Issues P1S12 P2S7
- Global Supply Chain Cost tradeoffs graph P2S20
- Global Supply Chain Strategies
Supply chain collaboration is achieved through shared information
- Using the COLLABORATIVE PROCESS allows information to be communicated to all parties much faster
- Benefits created by being much more responsive to changes in demand
Supply Chain Information flows
Coordination/Planning flows
Coordination/Planning flows
- planning what going to do, happen at high levels to plan what going to do in the future
- Operating flows
- actually getting the job done, getting the information to do that
Supply Chain Information Systems
- Biggest hurdle with synchronizing
- Radio Frequency Identification Control- helps coordinate the supply chain
planning what going to do, happen at high levels to plan what going to do in the future
Weeks/Months in advance, aggregate data of demand and capacity, and balances the load and capacities of different resources over time
actually getting the job done, getting the information to do that
Hours/days in advance, individual jobs and tasks, specific tools and capabilities, specific tasks to specific tools at specific times
Biggest hurdle with synchronizing
- Enterprise Resource planning (ERP) ? gives you the system capabilities to talk to all the different parts of your organization, share all the data from different places in one consistent, standardized data warehouse
- Advanced PLANNING and Scheduling- (APS)- assist with planning and scheduling
- Supply Chain Execution Software (SCE)- uses software to execute the plan
Enterprise Resource planning (ERP) ? gives you the system capabilities to talk to all the different parts of your organization, share all the data from different places in one consistent, standardized data warehouse
EX. Material resource planning with GM
Synchronizing essentially
combines information systems capabilities and a ppropriate relationships to reduce order cycle times for the delivery of the right product to satisfy demand
Quick Response
being agile enough to respond to changes
Efficient Consumer Response
responding quickly to changes in customer demand
Vender Managed Inventory (VMI)- supplier takes responsibility for replenishment of the customer?s inventory within specified time period
Ex. Coke guy replacing coke in Kroger
Substantial geographic distances
extended lead times and transit times
New Business paradigm drives globalization P2S28
- You must understand the global market for your product/service and be able to make complex decisions related to configuration and coordination to determine a customized competitive strategy
- And then you must execute this strategy better than your competitors
- Globalization has brought enormous challenges & opportunities into the marketplace
Chapter 8: Managing risk in the supply chain
- Drivers of Supply Chain Risk
- Managing Supply Chain Risk S21
- Supply Chain Risk Equation S3
- Risk Profile
Two major reason why companies globalize P1S3
- Increase Markets
- Decrease costs
Increase Markets
Reach international markets to grow their business
Twin Challenges for globalization P1S11
- Heterogeneous markets
- Exceptional Coordination required
Decrease costs
- Decrease costs through economies of scale (outsourcing)
- Marketing, purchasing, production, and/or assembly
- Many risk points
- Lots of opportunity for success or failure
Heterogeneous markets
- World markets are not homogenous- variation is still very much required
- Goal to offer local markets variety, while still gaining the advantage of standardized global production
- Different people like different things
- Ex. Refridgerator- people in different countries prefer different sizes
- Ex. Coke can?t just sell one coke product all over the world
Trends affecting world trade P1S10
- An Increase in economic integration and free trade (NAFTA, EU, APEC, ASEAN, MERCOSUR)
- The Decline of Economic Protectionism
- Global competition among global companies for global consumers
- Technological advances that ease and lessen cost of communication
Exceptional Coordination required
- Requirement for exceptional coordination to offset potentially higher costs in global supply chains
- Must effectively manage the complex links in a global supply chain from source to end user
- Must compensate for the heightened risk of supply chain disruption inherent in global supply chain
TCO
Net Price+ Delivery Cost+ Quality Cost + Administrative cost
Global Supply Chain Cost tradeoffs graph P2S20
- Tradeoffs between Production/procurement and transportation/logistics
- Biggest is between production and transportation
- Relates back to the two major challenges: heterogeneous markets and exceptional coordination required
- Shows the trade off for global vs. local in serving the heterogeneous local markets and cost tradeoffs for managing global supply chain
Infrastructural inadequacies
- Skilled labor, supplier capacity and quality, technology, transportation and communications infrastructure
- Can?t assume there are good roads, good parts, electricity 24/7, skilled labor all over the world
Cultural differences, local regulations
- Interactions with intermediaries, governments, relationship styles, local customs (e.g. perceptions of time)
- Different people have different expectations
Off-shoring- relocating a function or a process to another country
- Trend right now
- Ex. Production, Call centers, back office(accounting/legal work), engineering design, and R&D
Total Cost Ownership and Risk
TCO= Net Price+ Delivery Cost+ Quality Cost + Administrative cost
Global Infrastructure
Potential pressure points that many businesses have to use
Potential pressure points that many businesses have to use
Ex. Panama Canal Capacity and US Port Capacity
Supply Chain Security
Ex. Smuggling, Cargo Theft, Terrorism
Gray markets- markets where genuine/authentic products are sold through distribution channels that have not been authorized by manufacturer or trademark owner
- Very common in foreign markets
- Ex. Pharmaceuticals, clothing, cosmetics, IT products, automobiles, Industrial machinery, telecommunication equip
Global Supply Chain Cost tradeoffs
graph P2S20
null
Global Supply Chain Strategies
how to overcome global SC risks and challenges and compete globally P2S20
how to overcome global SC risks and challenges and compete globally P2S20
- Focused factories- less factories produce fewer products in larger volumes but increase transportation lead time and variance
- Inventory Centralization- inventory consolidation substantially reduces total inventory holding
- Postponement and Localization
- End-to-end visibility
- Global Planning and control, local implementation
Focused factories- less factories produce fewer products in larger volumes but increase transportation lead time and variance
- Specialized factories offer better economies of scale
- Ex. P&G make toothpaste in Germany for all of Europe
- Ex. Western Europe pre EU had to manufacturer in every country because of country-of origin laws
- Now with EU can ship between countries with no tariffs so can use more focused factories over the region
Inventory Centralization- inventory consolidation substantially reduces total inventory holding
- Square root rule- reduction in total system inventory that can be expected is proportional to the square root of the number of stock locations before and after rationalization
- Ex. Pringles produces all of their products in two locations worldwide
Postponement and Localization
Ex. HP makes printers except for power cords and then customizes at final location depending on the region
End-to-end visibility
Supply Chain Event Management- most advanced SCM tool
Supply Chain Event Management- most advanced SCM tool
Substitute info for inventory
Global Planning and control, local implementation
- Key to global
- Requires global co-ordination with local management
null
Chapter 8
Managing risk in the supply chain
Globalization
of the supply chains
Five types of Supply Chain risk
S6
Drivers of Supply Chain Risk
- all create risk and any screw up messes up the SC S5
- Five types of Supply Chain risk S6
- Environment
- Supply
- Demand
- Process
- Control Risk
all create risk and any screw up messes up the SC S5
- Efficiency/reduced inventory
- Globalization of the supply chains
- Centralized production/distribution
- Outsourcing
- Supplier rationalization
Efficiency/reduced inventory
focus on efficiency rather than effectiveness
Centralized production/distribution
focused factories and centralized distribution
Outsourcing
current trend
Supplier rationalization
Reduction of the supplier base
Environment
where across the supply chain are we vulnerable to external forces
Managing Supply Chain Risk S21
- Understand the SC
- Improve the SC
- Identify critical paths (nodes and links)
- Manage the critical paths
- Improve network visibility
- Establish a SC continuity team
- Work with suppliers and customers to improve SC risk mgmt procedures
Supply
how vulnerable is the business to disruptions in supply
Demand
how volatile is demand
Process
how resilient are our processes
Control Risk
how likely are disturbances are distortions to be caused by our own internal control systems
SC Risk
Probability of Disruption* impact
Supply Chain Risk Equation S3
SC Risk= Probability of Disruption* impact
Improve the SC
Ex. Sig Sigma way
Manage the critical paths
Ex. Root Cause Analysis
SC Risk= Probability of Disruption* impact
- Probability of disruption- how likely is this to happen
- Impact- what happens to the SC if this happens
Establishes: S22
- Greatest vulnerability on all types of risk
- Probability of disruption in the SC
- Analyze the critical paths and impact of decisions
- Understand the sources of SC risk
- Understand any mitigation plans
Risk Profile
- Establishes: S22
Powerful way to reduce variability in the supply chain processes
Quality control method for production that should only produce 3.4 defects per million
method for finding out why something went wrong at the root as opposed to a quick fix
Done by asking why? 5 times
Redundancy
- Acquire redundant suppliers
- Increase inventory
- Increase capacity
Resiliency/flexibility
- Flexibility to adapt after disruption
- Increased responsiveness (agility)
- Shared information and Communication
Six Sigma
- Powerful way to reduce variability in the supply chain processes
Root Cause Analysis
- method for finding out why something went wrong at the root as opposed to a quick fix
Risk mitigation/management
S14
Done by asking why
5 times
Functional silo/vertical organization
- Traditional functional silos represent different departments in the business
- Each is headed by different head managers who tend to guard their territories
- Results in competition and poor communication between departments
- End goal is input focused, budget driven
- Not integrated
Horizontal/Market-facing organization
- Better managed through cross-functional teams
- Headed by market-facing organization
- End goal is output focused, market driven
- Integrated
How/why inventory builds at functional boundaries
- Inventory builds up at boundaries of each facility, because the organizations structure is not integrated and no one knows what is going on at other location
- Tossing it over the wall
- Only concerned about personal department
- Ex. Shay bought land and had trouble finding where to pay property tax because of poor department communication
Traditional Accounting
- Measuring the cost of producing as set number of goods strictly on price
- Ex. Supplies 5 Millions Labor 2 Million= Cost 7 Million
Activity Based Costing
- Measuring cost considering Functional/input costs and Market/output costs
- Results in being able to know cost per product and cost to sell a product
Integration- horizontal organizational structure
- Organized around processes
- Flat and de-layered
- Built upon multi-functional teams
- Guided by performance metrics that are market based
- Order and information flows at the heart of the business
- Core organizational objective: generate orders and to fulfill those orders
- Link Demand and supply planning (DSI)
- Produce and purchase only enough to cover market requirements
Core organizational objective: generate orders and to fulfill those orders
- Everything firm does is linked to this
- Made possible with breakthrough in IT
- Ex. Property tax goal should be to bill customers and make it easy to pay
Produce and purchase only enough to cover market requirements
Functional organization will never be as efficient as possible
Purpose
- Goal to answer the question are we competitive
- Establishes the ground for creative breakthroughs and move away from tradition
- To provide externally-oriented performance input that is forward looking as opposed to financially-oriented historical input
3 Types of benchmarking, all with very different objectives
Internal benchmarking
What should I benchmark- based on the impact an activity or function has on the firm?s competitive advantage
- Processes and entities in the supply chain that are of strategic importance
- Processes and entities in the supply chain that have a high relative impact on the business
- Where there is a choice between make and buy
- Where there is internal readiness to change
internal to company and organization
- Comparing your performance to yourself either from past periods or other departments
- Ex. Boeing comparing its consumer and defense departments
compare to competition
- Continuous measurements of the company?s products, service, processes, and practices against the standards of best competitors
- Ex. Boeing comparing itself to other plane companies
Key Performance Indicators (KPI?s)- relatively small number of critical dimensions that contribute to any firm?s success or failure in the marketplace
- KPIs should be linked with the achievement of the firm?s strategic goals
- Steps for identifying KPIs
Steps for identifying KPIs
- What is the firms SC strategy
- What are the measurable outcomes of success
- What are the processes that impact these outcomes
- What are the drivers of performance within these processes
Core organizational objective
generate orders and to fulfill those orders
Benchmarking
- continuous, systematic process for evaluating the products, services, and work processes of organizations that are recognized as representing best practices for the purposes of organizational improvement
Chapter 10 Entering the Era of Network Competition
- Major Business Transformation
- Paradigm Shift
- Traditional View- individual business compete as standalone entities
- New Paradigm- Supply chains compete with one another
- Challenges to Network SCM Management- must be responsive everywhere
- 4PL Concept- goal to assemble a coalition of ?best of the breed? service providers and using information systems capabilities to ensure a cost efficient and sustainable Supply Chain solution
Internal benchmarking
- internal to company and organization
Competitive Benchmarking
- compare to competition
Non-competitive benchmarking
(process/activity benchmarking)
Key Performance Indicators (KPI?s)-
relatively small number of critical dimensions that contribute to any firm?s success or failure in the marketplace
OBJECTIVE
PROCESS/ DRIVER MEASURE (KPI)
PROCESS/ DRIVER
MEASURE (KPI)
Time
End-to-end pipeline time
Traditional View- individual business compete as standalone entities
- Independent entities
- Inventory based
- Low-cost production
New Paradigm- Supply chains compete with one another
- Focus on speed due to shortened life cycles and need to be responsive
- Virtual Networks
- Information based
- Customer Value oriented
null
Challenges to Network SCM Management- must be responsive everywhere
- Collective Strategy Development- all network members must collectively agree on a strategic goal for the network and means to attain it
- Win-Win thinking- getting members of the supply chain to focus on a goal so that if achieved everyone will benefit
- Open Communication- Information technology makes this easier and possible
4PL Concept- goal to assemble a coalition of ?best of the breed? service providers and using information systems capabilities to ensure a cost efficient and sustainable Supply Chain solution
- Architect/integrator- Change leader
- Control room (intelligence)- decision-makers
- Supply chain intermediaries- Information nervous system
- Resource Providers- Assets
Challenges to Network SCM Management-
must be responsive everywhere
4PL Concept-
goal to assemble a coalition of ?best of the breed? service providers and using information systems capabilities to ensure a cost efficient and sustainable Supply Chain solution
About this deck
By: Anonymous
Created: 2010-05-05
Size: 229 flashcards
Views: 366
Created: 2010-05-05
Size: 229 flashcards
Views: 366
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