what are the four primary functions of distribution?
accumulation, sortation, allocation, and assortment
What is a type of distribution trade-off?
cost of distribution centers and inventory vs. cost of transportation
what are some of the network design issues?
inventory postioning, number of facilities, and facility ownership
what are the four critical issues to network design?
compatability, configuration, coordination, and control
What is continuity/contigency planning?
methodology used to create a plan and processes to ensure essential activities continue during and after a disaster
what are the factors driving change?:
change in corporate ownership, cost pressures, competitive capabilities, and corporate organizational change
what are some pitfalls to avoid in network design?
short-term horizon, too little and too much information, thinking is two dimensions and using published costs
what is the strategic role of supply chain management?
purchasers must develop qualified suppliers and work closely with other departmetns at the lowest administrative cost
what is the weighted factor model?
an effective tool when trying to decide between a number of candidates when choosing a supplier
what are the sources of information for supplier identification?
current suppliers, buyer's previous experience, purchasing database, internal contacts, and purchasing consortiums
what are closed loop supply chains?
SC's designed and managed to explicitly consider both forward and reverse flows activities in a supply chain
What are transportation, distance, documents, diversity, culture, and demanding customers?
problems associated with global logistics
What are port selection, modal selection, carrier selection, location of decision making authority?
some configuration issues in transportation
what are balancing supply and demand, protecting against uncertainty, allowing quantity purchase discounts?
the role of distribution in supply chain management
what is involved in network design?
inventory postioning, number of facilities, and facility ownership
what are compatibility, configuration, coordingation, and control?
4C's of network, fith C is contingency
what are the factors driving change?
change in corportate ownership, cost of pressures,competitive capabilities, corporate orgnaizational change
what are the pitfalls to avoid in netork design?
short term horizon, too little or too much info, thinking in two dimensions, using published costs
what is the strategic role of supply chain management?
purchaser must develop qualified suppliers to work closely with other departments at the lowest administrative cost
what is an effective tool when tyring to choose between a number of candidates for a supplier?
the weighted factor model
what are the sources of information for supplier identification?
current suppliers, buyers previous experience, purchasing database, internal contracts, puchasing consortiums
what are closed loop design chain?
supply chains designed to examine both open and closed activities of the supply chain
what are the considerations of reverse logisitcs?
gatekeeping, reducing cycle time, return centers, outsourcing your retrurns
what is supply chain sustainability?
assessing the impact of product design, manufacturing cost associated shipping raw materials impact on the environment
what are the three phases of disaster management cycle?
mitigation and preparedness, response, and recovery
what are the three big flatteners of globalization?
the infromation/experience revolution, logistics capabilities, and government intervention
what is the strategic scanning process?
scanning new competitive rules, strategic adaptation, having the right infrastructure to support that strategy
what are the forces driving change?
globalization, technology, organizational consolidation, government regulation, empowered consumer
Supply chain management
the integration of business processes from end user through original suppliers that provide products, services, and information that adds value
understand who the indispensible supply chain manager is
in one who is whole brained; one who uses his left brain and right
left: logical, sequential, rational, analytical, objective, looks at parts
right: random, intuitive, holistic, synthesizing, subjective, looks at wholes
what are the characteristics of an indispensible supply chain manager?
anxious and curious engagement
take good risks
coach to make others better
people who have analytical skills, communication, and like people
what does supply chain mangement means?
collaboraton is the art and science of building a team that consists of the right componaies and the right relationships
-a collaborative process and project management to meet the real needs of the end customer profitably
why do we work in teams?
-teams are the mechanism to design and execute SC strategy
- teaming reduces friction, shifting thinking from silo to holistic
-teams are used to make complex, difficult decisions
-teams are responsiible for difficult implementation initiatives
-teams will provide the foundation of organizational design; yet teams are not always the better way
upside of teams
-bring diverse set of talent and expertise together
-enhanced communication and cooperation
-more rapid and more thorough decision execution
what are the factors of more rapid and more thorough decision execution
-decision ownership leads to rapid buy-in and implementation
-leveraged diversity brings new and creative options to light
-organizational understanding is developed and shared across boundaries
-faster task completion as "turf" issues are mitigated
more effective problem solving emerges via brainstorming
when is teaming appropriate
-a well-defined goal is clearly articulated and communicated
-a variety of expertise and experience is needed
-get the best people with the right knowledge and experience
-leader who has the skills and clout needed to guide the team
-team composition accounts for diverse personalities and working style
-add more value by working on the team
-their other responsibilities can be effectively performed by others
-when they catch the scent on the trail, you can't stop them until they have caught their prey
major drivers in our economy in the global marketplace
-power shift from suppliers to large retailers
what forces are driving change?
- combined=the empowered customer
understand the rationale for the development of supply chain management in leading organizations
-scanning: events, trends, implications, inflection points
-new competitive rules
-do we have the right infrastructure in place to support the strategy
the process of planning, implementing, and controlling the effecient, effective flow of storage of goods, services, and related information from point of origin to point of consumption for the purpose of conforming to customer requirements
supply chain management
the integration of business processes from end user through original suppliers that provide products, services, and information that add value for customers
what are the challengens facing organizations developing and implementing supply chain strategies?
-where does SCM fit?
-how do you handle all of SCM?
getting the right product, to the right customer, in the right quantity, in the right condition, at the right place, at the right time, and at the right cost
providing time and place utility/value of materials and products in support of functional management organization objectives
activities converned with supporting the internal customer(manaufacturing) with materials and the external customer (retail stores) with product
that part of supply chain process that plans, implements, and controls the efficient, effective flow and stroage of goods, service, and related information from point of use or consumption in order to meet customer requirements
the design and integration of all aspects of support for the operational capability of the military forces and their equipment to ensure readiness, reliability, and efficiency
the network of activities, facilities, and personnel required to organiz, schule, and deploy the reources for an event to take place and to efficiently withdraw after the event
what are the value-added roles of logistics?
-marketing: possession utility
-logistics: place/time utility and quantity logistics
-production: form utility
what are the logisitcs activities?
-warehousing and storage
-return goods handling
macro level value-added
macro inventory as a % of GDP was about 14.5%
total logisitcs cost around 1.3 trillion
exames the relaitonships between logisitcs and other functional areas in an organization: marketing, manufacturing/operations, finance, accounting
understand the relationship between logisitics and other important functional areas in an organization, including manufacturing, marketing, and finance
logisitics systems can be viewed
or approached in several different ways for analysis pursposes,
including materials management vs physical distribution, cost centers,
nodes vs links and channels. All four approaches are viable for
-logisitcs systems are frequently analyzed from a systems approach which emphasizes total cost and tradeoffs when changes are proposed. Either short or long-run perspective can be used
-the cost of logisitics systems can be affected by a number of major factors, including competition in the market, the spatial realtionship of nodes, and product characteristics
the relationship suggested by a
strategic alliance is one in which two or more business organizations
cooperate and willingly modify their business objectives and proctices
to help achieve long-term goals and objectives
represents an alternative that may imply even greater involvement than the partnership or strategic alliance
understand the importance of "collaborative" supply chain relationships
-collaboration occurs when companies work together for mutual benefti
-collaboration goes well beyond vague expressions of partnership and aligned interests
-companies leverage each other on an operational basis and creates a synergistic business envirnoment in which the sum of the parts is greater than the whole
what is the process model forming logistics relationships?
-perform strategic assessment
-decision to form relationship
-structure operating model
-implementation and continous imporvement
how do you perform a strategic assessment?
-overall business goals and objectives
-identification of analysis of strategic factors and trends
-profile of current logisitics network
-benchmark values for logisitics costs
-identification of "gaps" between current and desired measures of logisitcs performance
includes those business agreements between firms that have "parallel" or cooperating positions in the logistics process
-an external supplier that performs all or part of a company's logistics functions
-among these multiple logistics activities are included, those that are included are "integrated" or managed together, and they provide solutions to logistics/supply chain problems
Types of 3PLs
likely future directions for outsourced logistics services
Negotiating barriers to collaboration
-taking down silos
-supply chain continuity
Today's SC measurement system must
-provide better understanding
-motivate collaborative behavior
-drive world class results
if you can not measure it, you do not understand it, therefore you cannot manage it
characteristics of good performance measures
-aligned with the organization's goals
-easy, simple, and understandable
-meaningful to workers, managers, and customers
-communicated to all relevant individuals
-integrated across appropriate functions or departments
-promote cooperative behavior both horizontally and vertically
-timely and easy to collect data
-tactical and strategic
-drives appropriate behavior-learning and impovement
inventory days of supply
total inventory in the supply chain relationship-incoming, plant, and field- expressed as calendar day of supply based on recent actual daily cost of sales
total order fulfillment cycle time
measures days required for each
-order authorization to entry
-entry to release
-release to shippable
-shippable to customer receipt
-receipt to customer acceptance
SC response time
theoretical time expressed in
calendar days, to recognize a major shift in demand, internalize the
change, re-plan, and increase production by 20%
= forecast cycle+re-plan cycle+time to increase production
cash to cash cycle time
average time to convert a dollar spent to acquire raw materials into a dollar collected for a finished product
= inventory days of supply + days sales outstanding - days payable outstanding
-drive constant improvement
-extends beyond metrics to processes
-includes withing and outside industry comparisons
understand the overall importance of information to scm and the role it plays in the sc
- substitutes for inventroy leads to a lean sc
-takes time out leads to an agile sc
-drives process re-engineering leads to customer centric sc
-enables collaboration leads to a learning sc
describe and differentiate between the primary types of sc solutions and their capabilities
-acquire and install the latest and greatest technology: outcome- exceeds budget, fails to deliver, easilty copied
-seek appropriate solution to a specific problem
how does a firm's willingness and capability play into information sharing?
company wants: quickly and inexpensively to share accurate, relevant information with SC decision makers
requirements of a firm's willingness and capability to play into information sharing
-the ability to collect, store, and disseminate by investing in software which leads to great progress
-the willingness to share by investing in cuclture which leasds to a mostly clueless state if let go
-technical ability to connect vs willingness to share
a company's ability to use technology to collect, analyze, and disseminate decision making information
sharing capability matrix: quadrant 2
low willingness and high connectivity- apple
critical issues in technology selection and implementation processes
-view technology as an enabler
-avoid technology detours
-drive process and relationship innovation
-keep eye on capabilities/technology map
-take a step by step approach
-stay balanced over the long run
the ability of firms throughout the SC to collaborate on activies related to the flow of product, services, information, and capital
what happens when supply and demand are misaligned?
- true end customer demand
-production cannot meet initial projected demand, resulting in real shortages
-channel partners over-order in an attempt to meet demand and stock their shelves
-as supply catches up with demand, orders are canceled or returned
-financial and production planning are not aligned with real demand; therefore production continues
-as demand declines, all parties attempt to dreain inventory to prevent write- down
aka the bullwhip affect
forecast= a(last period demand) + (1-a)(last forecast)
forecast= last period forecast- a(last period forecast error)
what makes a good forecast
-as accurate as possible
-obtained using forecasting methods which are: appropriate, easy to use, understandable, communicable
the process by which managemnt proactively communicates, coordinates, integrates and provides direction for planning the volume, rate and mix of projected demand and supply
collaborative planning, forecasting, and replenishment
- global industry- wide process for trading partners to increase forecasting effectivenss through using joint business planning and process and common interface. This will result in more efficient inventories and less out of stock. This drives more sales for both the retailer and manufacturer
understand the relationships between order management and customer service
the end customer is the only one who puts money into the supply chain
why do companies exist?
- the end customer must become the focal point for the entire sc
-key informants must share knowledge up and down the sc
-every sc member know what it must do to help meet customer needs
-upstream companies seek tighter linkage with end customer through mindshare
an attitude that permeates all departments of well-managed compnaies. This attitude incorptorates the following themes:
-understanding the customers' needs
-understanding the trends in the customers' marketplace
-designing and implementing a system that responds to those needs
the short-term, logical result of an effective customer service system. When this happens customers begin to recognize mutual interdependence with their suppliers
customer service objective
focus is on what the firm can do( measures internal service levels); the firm hopes that by performing well along thes internal measures that customers will be pleased
customer satisfaction objective
focus is on understanding what the customer views as important; measures the customer satisfaction is exteranally oreinted; the firm seeks feedback from its key customers and uses this feedback to design its value-added processes and meausrement system
customer success objective
focus is on helping customers succeed; customer success requires an intimate understanding of success factors of entire SC; the firms helps the customer meet its customers' meet its customers' needs and becomes indispensible
know how organizations influence customers' ordering patterns as well as how they execute customers' orders
-are operationg metrics driven by satisfaction metrics
-is the reward systme tied to customer satisfaction metrics?
-do employees know how the company performs to customer expectations?
do your suppliers use metrics aligned to customer needs?
-do suppliers know how the SC performs to customer expectations?
- measures the cost and
performance of activities, resources, and cost objectives; resources are
assigned to activities, then activities are assigned to cost objects
based on their use
-traditional cost accounting is well suited to stiuation where an output and an allocation process are highly correlated
-traditional cost accounting is not very effective in situation where the output is not correlated with the allocation base
know the varous elements of customer service and how they impact both buyers and sellers
-does your company have a satisfaction policy? a success policy?
-is the policy understood throughout the organization?
-are your satisfaction metrics provided by key customers?
are metrics customized for "A" customers?
-do employees know what drives customer satisfaction? customer success?
how does relationship intensity play a role?
Group A: 75% of sales, 10% of relationships- most valued
Group B: 15% of sales, 15% of relationships- valued
Group C: 10% of sales, 75% of relationships- average guy
How do we classify customers?
-ABC classification can identify "customers of choice"
-least profitable and incur a loss
can change customer interation so customer can move to another segment
charge the customer the actual cost of doing business
swith the cutstomer to an alternative distribution channel
customers have a low cost to serve and a low net sales value, so the firm should maintain the cost to serve and build net sales value to help drive the customer into the protect segment
occurs when a seller has only a portion of the product ordered by the buyers; are created secure the portion of the inventory that is currently not available