FAU MAN3506 chapter 15 filled notes

| October 22, 2018

Chapter 15: Supply Chain Management (Filled Notes)Learning Objectives:— You should be able to:1. Discuss the key issues of supply chain management (SCM)2. Name the recent trends in SCM3. Summarize the motivations and risks of outsourcing as a strategy4. State some of the complexities that are involved with global supply chains5. List some of the strategic, tactical and operational responsibilities of SCM6. Give examples of some advantages of e-business7. Explain the importance of supplier partnerships8. Discuss the issues involved in managing returns9. List the requirements of an effective supply chain10. Name some of the challenges in creating an effective supply chain— Supply Chain:— the sequence of organizations – their ____________________, __________________, and ________________________ – that are involved in producing and delivering a product or service— Sometimes referred to as ___________________________________Facilities:— The sequence of the supply chain begins with basic suppliers and extends all the way to the final customer§ _________________________§ _________________________§ Processing centers§ Distribution centers§ Retail outlets§ OfficesFunctions and Activities:— Supply chain functions and activities§ ____________________________§ ____________________________§ ____________________________________________________§ ____________________________________________________§ ____________________________________________________§ ____________________________________________________§ ____________________________________________________§ ____________________________________________________— Supply Chain Management (SCM)§ The strategic coordination of business functions within a business organization and throughout its supply chain for the purpose of integrating _______________ and _______________________ management— SCM Managers§ People at various levels of the organization who are responsible for managing supply and demand both within and across business organizations.§ Involved with planning and coordinating activitiesü __________________ and ______________________ of materials and servicesü Transformation activitiesü ___________________________Key SCM Issues:— The goal of SCM is to match _____________ to __________________ as effectively and efficiently as possible— Key issues:§ Determining appropriate levels of outsourcing§ Managing ______________________________________§ Managing suppliers§ Managing ______________________________________§ Being able to quickly identify problems and respond to them§ Managing riskTrends in SCM:— Trends affecting supply chain design and management:§ Measuring supply chain ____________________§ “Greening” the supply chain§ _______________________________________________§ Integrating IT§ Managing risks§ Adopting lean principlesGlobal Supply Chains:— Global supply chains§ Product _______________ often uses inputs from around the world§ Some manufacturing and service activities are outsourced to countries where labor and/or materials costs are ______________§ Products are sold ___________________— Complexities§ Language and cultural differences§ Currency fluctuations§ Political instability§ Increasing ________________________________ costs and lead times§ Increased need for trust amongst supply chain partnersManagement Responsibilities:— Aspects of management responsibility:§ _____________________ü Being knowledgeable about laws and regulations of the countries where supply chains existü Obeying laws and operating to conform to regulations§ _____________________ü Supplying products and services to meet demand as efficiently as possible§ _____________________ü Conducing business in ways that are consistent with the moral standards of societyManagement Responsibility: Strategic— Certain strategic responsibilities have a major impact on the success of both supply chain management and the business itself:§ Supply chain ___________________ alignment§ Network configuration§ _______________________________________§ Products and services§ Capacity planning§ _______________________________________§ _______________________________________§ Uncertainty and risk reductionManagement Responsibility: Tactical and Operational· Tactical:§ ______________________________§ Sourcing§ Operations Planning§ Managing inventory§ Transportation planning§ Collaborating· Operational:§ ______________________________§ Receiving§ Transforming§ Order fulfilling§ ______________________________§ Shipping§ Information sharing§ ControllingProcurement:— The _____________________ department is responsible for obtaining the materials, parts, and supplies and services needed to produce a product or provide a service.— The goal of procurement§ Develop and implement purchasing plans for products and services that support operations strategies— Duties of Purchasing:§ Identifying sources of supply§ Negotiating contracts§ ____________________________________________________§ Obtaining goods and services§ Managing supplies— The Purchasing Cycle:§ The main steps:1. Purchasing receives the requisition2. Purchasing selects a supplier3. Purchasing places the order with a vendor4. Monitoring orders5. Receiving ordersE-business:— The use of electronic technology to facilitate ________________________________— Applications include§ Internet buying and selling§ E-mail§ Order and shipment tracking§ _______________________________________§ Product and service promotion§ Provide information about products and services— Advantages of E-Business:§ Have a global presence§ Improve competitiveness and quality of service§ Analyze customer interests§ Collect detailed information about clients’ preferences§ Shorten supply chain response times§ Reduce or eliminate the role of ‘traditional’ retailers and/or intermediaries§ Realize substantial cost savings— Also allows the:§ Creation of ___________________________________ companies§ Leveling of the playing field for _________________________· E-business Order Fulfillment Problems:§ Customer expectationsü Order quicklyà Quick delivery§ Demand variability creates order fulfillment problems§ Sometimes Internet demand exceeds an organization’s ability to fulfill orders§ Inventoryü Outsourcing order fulfillment— Loss of controlü Build large warehouses— Internal holding costsSupplier Management:— Choosing suppliers— Supplier audits— Supplier certification— Supplier relationship management— Supplier partnershipso CPFR (__________________________, ____________________, and ____________________)o Strategic partnering— Vendor analysis§ Evaluating the sources of supply in terms of ____________________, _______________, ____________________, and _______________________— Supplier audit§ A means of keeping current on suppliers’ production (or service) capabilities, quality and delivery problems and resolutions, and performance on other criteria— Supplier certification§ Involves a detailed examination of a supplier’s policies and capabilities§ The process verifies the supplier meets or exceeds the requirements of a buyerSupplier Relationship Management:— Type of relationship is often governed by the duration of the trading relationship§ Short-termü Oftentimes involves __________________________ü Minimal interaction§ Medium-termü Often involves an __________________ relationship§ Long-termü Often involves greater cooperation that evolves into a ________________Inventory Management:— Inventory issues in SCM§ Inventory ____________________ü Centralized inventoriesü Decentralized inventories§ Inventory ____________________ü The speed at which goods move through a supply chain— The bullwhip effect§ Inventory oscillations that become increasingly larger looking backward through the supply chain— Variations in ____________________ cause inventory ___________________ to fluctuate and get out of control§ Inventory fluctuation can be magnified byü _______________ orderingü Reactions to _______________________ü Forecast inaccuraciesü Order batchingü Sales incentives and ________________________ü Liberal product return policies§ Results inü Higher costsü Lower customer satisfaction Mitigating the Bullwhip Effect:— Good supply chain management can overcome the bullwhip effect§ ___________________________________ü e.g., holding inventory at a distribution center rather than at retail outlets§ Replenishment based on needü ___________________________________: Vendors monitor goods and replenish retail inventories when supplies are lowTypes of Inventory:— Three aggregate categories§ _______________________________________§ _______________________________________§ _______________________________________— Classified by how it is created§ ________________________________________§ ________________________________________§ ________________________________________§ ________________________________________Inventory Reduction Tactics:— ____________________________: Reduce the lot size, Reduce ordering and setup costs and allow Q to be reduced, Increase repeatability to eliminate the need for changeovers— ____________________________: Place orders closer to the time when they must be received, Improve demand forecasts, Cut lead times, Reduce supply chain uncertainty, Rely more on equipment and labor buffers— ____________________________: Match demand rate, with production rates, Add new products, with different demand cycles , Provide off-season promotional campaigns, Offer seasonal pricing plans.— ____________________________: Reduce lead times, Find more responsive suppliers and select new carriers, Change Q in those cases where the lead time depends on the lot size, Example: Ordering key components of cell phone Example: Calculating Inventory MeasuresThe Eagle Machine Company averaged $2 million in inventory last year, and the cost of goods sold was $10 million. Figure 9.7 shows the breakout of raw materials, work-in-process, and finished goods inventories. The best inventory turnover in the company’s industry is six turns per year. If the company has 52 business weeks per year, how many weeks of supply were held in inventory? What was the inventory turnover? What should the company do?Solution: Given: Average aggregate inventory value Annual Sales (at Cost) Find: Weekly sales (at cost) Weeks of supply Inventory turnoverTrade-Offs:1. Lot-size-inventory trade-off— Large lot sizes yield benefits in terms of quantity discounts and lower annual setup costs, but it increases the amount of safety stock (and inventory carrying costs) carried by suppliers2. Inventory-transportation cost trade-off— Suppliers prefer to ship full truckloads instead of partial loads to spread shipping costs over as many units as possible. This leads to greater holding costs for customers— __________________________:A technique whereby goods arriving at a warehouse from a supplier are unloaded from the suppliers truck and loaded onto outbound truck, thereby avoiding warehouse storage 3. Lead time-transportation costs trade-off— Suppliers like to ship in full loads, but waiting for sufficient orders and/or production to achieve a full load may increase lead time4. Product variety-inventory trade-off— Greater product variety usually means smaller lot sizes and higher setup costs, as well as higher transportation and inventory management costs— ______________________________________§ Production of standard components and subassemblies which are held until late in the process to add differentiating features5. Cost-customer service trade-off— Producing and shipping in large lots reduces costs, but increases lead time— Disintermediation§ Reducing one or more steps in a supply chain by cutting out one or more intermediaries— Order fulfillment— The process involved in responding to customer orders— Often a function of the degree of customization required§ Common approachesü Engineer-to-Order (ETO)ü Make-to-Order (MTO)ü Assemble-to-Order (ATO)ü Make-to-Stock (MTS)— Mass Customization— Competitive advantagesü Managing customer relationshipsü Eliminate finished goods inventoryü Increased perceived value of services or products— Supply chain design for mass customizationü ___________________________ strategyü ___________________________ designü ___________________________Logistics:— Refers to the movement of ________________________, ______________________, ________________________, and _____________________________ in a supply chain§ Movements within a facility§ Incoming shipments§ Outgoing shipments— Incoming and Outgoing Shipments:§ Traffic management: Overseeing the shipment of incoming and outgoing goods. Handles schedules and decisions on shipping method and times, taking into account:ü Costs of shipping alternativesü Government regulationsü Needs of the organizationü Shipping delays or disruptions— Tracking Goods: ______________________________________ (RFID)§ A technology that uses radio waves to identify objects, such as goods in supply chains. Similar to barcodes but:ü Are able to convey much more informationü Do not require line-of-sight for readingü Do not need to be read one at a time§ Has the ability to:ü Increase supply chain visibilityü Improve inventory managementü Improve quality controlü Enhance relationships with suppliers and customers— ______________________________________ (3-PL)§ The outsourcing of ____________________________________§ Includes _______________________ and _______________________— Potential benefits include taking advantage of:ü The specialists’ ____________________________ü Their well-developed _______________________ systemü Their ability to obtain more favorable _______________________Strategic Implications:— Design of efficient and responsive supply chains§ Based on the nature of demand for the services or products— Efficient supply chains§ Demand: __________________________________________§ Price: __________________________________________§ Focus: efficient service, material, monetary, and information flows; keep inventory to a minimum§ Priorities: _______________________, _______________________________, ______________________________________— Responsive supply chains§ Demand: ___________________________________§ React quickly in order to hedge against uncertainties§ Focus: ______________________________________§ Priorities: _________________________________, ______________________________, _______________________________, ______________________, __________________________, _____________________________Managing Returns:— ________________________ Logistics§ The process of transporting returned items— Products are returned to companies or third party handlers for a variety of reasons and in a variety of conditions§ Elements of return managementü Gatekeeping: Screening returned goods to prevent incorrect acceptance of goodsü Avoidance: Finding ways to minimize the number of items that are returned— Challenges§ Barriers to integration of organizations§ Getting top management on board§ Dealing with trade-offs§ Small businesses§ Variability and uncertainty§ Response timeSupplier Relationship Process:Example: Supplier Relationship Process – Total Cost AnalysisCompton Electronics manufactures laptops for major computer manufacturers. A key element of the laptop is the keyboard. Compton has identified three potential suppliers for the keyboard, each located in a different part of the world. Important cost considerations are the price per keyboard, freight costs, inventory costs, and contract administrative costs. The annual requirements for the keyboard are 300,000 units. Assume Compton has 250 business days a year. Managers have acquired the following data for each supplier.Which supplier provides the lowest annual total cost to Compton?

Order your essay today and save 30% with the discount code: ESSAYHELP
Order your essay today and save 30% with the discount code: ESSAYHELPOrder Now