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Demand (sales) forecasting refers to an effort to ___ future demand, is a key component in demand ___, and is helpful in managing all forms of supply chain strategy.

answer

Refers to an effort to PROJECT future demand, is a key component in demand MANAGEMENT, and is helpful in managing all forms of supply chain strategy

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Influencing demands consists of demand ___

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Demand shaping: quantity, when they buy, which product they buy

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What are the 5 supply chain strategies? Starting from bottom left corner going upward.

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1) Ship to Stock 2) Make to Stock 3) Assemble to Order 4) Make to Order 5) Buy to Order

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Explain "Ship to Stock" with example.

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Make it and also ship it, such as the grocery/convenience store

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Explain "Make to Stock" with example.

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Stops just short of shipping, such as auto parts at mechanic's, takes longer to make customer satisfied, anticipatory

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Explain "Assemble to Order" with example.

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Near, ready to sell. small superficial touches waiting for your order to bundle it such as Dell computer (picking out all the features you wanted), water bottles are made but not labeled until customer orders, paint at the paint store is already made- just add pigments when customer picks color

question

Explain "Make to Order" with example.

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Forecasts how much raw material is needed on hand, Chipotle-they got the stuff in front of you and you pick what you want, industrial settings reactive in nature.

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Explain "Buy to Order" with example.

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Doesn't act on forecast, longest lead time, example would be aircraft

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Of the 5 supply chain strategies (ship to stock, make to stock, assemble to order, make to order, buy to order), which strategy considers forecasting very important? For which is forecast not driving execution?

answer

Full faith in forecasting for ship to stock. Buy to order doesn't rely on forecasting.

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5 stages of the product lifecycle are:

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1) Development 2) Introduction 3) Growth 4) Maturity 5) Decline

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In the lifecycle, at what stage is it hardest to forecast? (Development, introduction, growth, maturity, decline)

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Introduction: lacking history, don't want to overproduce, don't want to stock out

question

What are the 3 basic types of demand forecasting models?

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1) Judgmental 2) Time-series 3) Cause and effect (associative)

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Explain judgmental demand forecasting

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Qualitative, demand shaping (the economy, seasonality, new technology, any promotional activity), surveys are used

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Explain time-series demand forecasting

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Uses historical data on the item, past trends explain future trends, use of simple moving averages and weighted moving averages

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Explain cause-and-effect (associative) forecasting

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Looks at related factors to determine anticipated sales for an item, not history for that precise item but history for related item, looks at complementary or substitute items

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4 Issues with Demand Forecasting:

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1) Selection of forecasting technique depends on many factors 2) Selecting an inappropriate technique will reduce forecast accuracy 3) Forecast accuracy can have important logistical implications 4) Computer forecasting software unable to completely eliminate forecast errors

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Order management refers to:

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management of the various activities associated with the order cycle

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Order cycle (replenishment cycle, lead time) refers to:

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the time from when a customer places an order to when goods are received; critical measure of logistics performance; captures time element, not expectations like customer service

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Order to cash cycle is:

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the length of time from order placement to receipt of the payment

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Four stages of the order cycle include:

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1) Order transmittal 2) Order processing 3) Order picking and assembly 4) Order delivery

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Order transmittal is: Methods used:

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The series of events that occur between the time a customer places or sends an order and the time the seller receives the order Methods: In-person Mail Telephone FAX Electronically (Internet or EDI)

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Order processing includes:

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Administrative activities, determining whether or not fill the order and from where to fill it -checking for completeness and accuracy of the order -a customer credit check -order entry into the computer system -marketing department credits salesperson -accounting department records transaction -inventory department locates nearest warehouse to customer and advises them to pick the order -transportation department arranges for shipment -Enterprise Resource Planning (ERP) is helpful here

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Order picking and assembly includes:

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"Pick, pack and ship" Includes all activities from when an appropriate location is authorized to fill the order until goods are loaded aboard an outbound carrier

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Order delivery is:

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the time from when a carrier picks up the shipment until it is received by the customer

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in terms of the order cycle, the time varies more for

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order prep, order picking/packing/production, transit time

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in terms of the order cycle, time varies less for

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order entry, order processing, customer receiving

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customer service is:

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the ability of logistics management to satisfy users in terms of time, dependability, communication, and convenience

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pre-transaction elements include: (there are 5)

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1) written statement of CS policy 2) customer realizes policy statement 3) organizational structure 4) system flexibility 5) management services

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transaction elements: (there are 7)

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1) in-stock performance 2) order information 3) elements of order cycle 4) transship (if necessary) 5) system accuracy 6) order convenience 7) product substitution

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post transaction elements: (there are 4)

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1) installation, warranty, alterations, repairs, parts 2) product tracing 3) customer claims, complaints, returns (and recyclables) 4) temporary replacement of products

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customer service measured through: (6 ideas)

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1) product availability 2) system accuracy and performance 3) time 4) service failure recovery 5) convenience 6) consistent performance across the above attributes

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examples of order-related service failures include:

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lost delivery, late delivery, early delivery, damaged delivery, incorrect delivery quantity

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Why is it important to keep customers happy?

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Because it takes less muscles to smile then frown or something? But because repeat customers generate greater profit margins than new customers!! serving these customers costs less and they buy more! yeahh buddyy!!!

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Equation: Lifetime value of customer =

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average transaction size * annual transaction frequency * customer life expectancy

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in mature markets there is a lot or little opportunity for new customers?

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LITTLE to NO OPPORTUNITY

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Service gaps can be seen between:

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1) supplier's expectations and customer's expectations 2) supplier's expectations and perceptions of service 3) customer's expectations and perceptions of service 4) supplier's perceptions and customer's perceptions

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What can you do to keep customers satisfied?

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FREE FOOD! ...Perceived performance being greater than or equal to expectations

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4 sources of customers expectations:

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1) past experiences 2) communications 3) competitors' services 4) requirements (hopes and needs)

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Should you manage expectations or perceptions of performance?

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BOTH!!!

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Benefits of exceeding expectations?

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Delighting customers, become more loyal

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Risks of exceeding expectations?

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Exert too much resource, money

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Upwardly spiraling expectations basically says that

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excellent service today becomes the norm tomorrow and therefore expectations keep "upwardly spiraling"

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differentiation occurs when:

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a supplier provides unique, value-added service in some area important to the customer (WHAT WE HOPE TO ACHIEVE!)

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shrinking service window is due to:

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the upwardly spiraling (because one adverb isn't good enough??) expectations

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Perfect Order requires these three things:

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1) Quality throughout process 2) Clear communications within firm and with customer 3) Willingness to stand behind the promise ("Immaculate recovery" if necessary)

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In the case of a stockout, customer may:

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switch stores, switch to substitute, switch brands, switch brand

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operational performance is:

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the service quality that fulfills form, time, and place utilities

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relational performance is:

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the service quality that demonstrates a firm's ability to understand customer needs and design processes that meet these needs

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Which is more important, operation or relational performance?

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psyche!! Both operational and relational performance are equally as important in creating customer satisfaction (leading to customer loyalty)

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Operational excellence is the order qualifier, while relational excellence is the order __

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winner (winner chicken dinner?)

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But value is a two way street, supplier satisfies customers and customers ensure suppliers ___

answer

profitability

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The Pareto Principle suggests that:

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Not all (industrial) customers are created equal. If 80% of your product is bought by 20% of your customers, focus on that 20% of your customers or you're being crazy.

question

Explain the standard prioritization method:

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Segment the customer base across important criteria. Top 30% = category A Next 50% = category B Bottom 20% = category C Establish different customer service standards for each category

Logistics Topic 2: Demand Management, Order Management, Customer Service – Flashcards

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