Supply Chain Management Exam 2

Tactical aspect of the buy process; The purchase of merchandise or services at the optimum total cost, the correct quantity, time and quality; Day to day purchasing function
Strategic Sourcing
The institutional process that continuously reevaluates and improves the purchasing activities of a company; focuses on improving
Supplier Scorecard
Monitor performance across multiple metrics over extended time period; Categorize suppliers based on their scores; offer additional business to best performers
Purchasing a product, part, or component from an outside supplier vs. manufacturing it in-house; the act of moving a firm’s internal activities and decision responsibility to outside providers; requires a “make or buy” analysis
Costs and Challenges of Outsourcing
Insufficient supply, poor quality supply, expensive supply, long lead-time of supply
Process by which the inputs are combined and transformed into outputs; we can produce both goods and services
3 Key Components of Production
How much output to make, which transformation process to use, how much of each input is required
Lean Production
A business model that emphasizes eliminating waste while delivering quality products at the least cost to the manufacturer and customers.
Objectives of Lean Production
Reduce production resource requirements, increase manufacturing velocity and flexibility, improve quality and eliminate defects
Mass Customization
Using specific details the customer gave to produce their unique product
Project Layout
Fixed location layout where the product remains in place for the duration of production; typically used to build a one-of-a-kind product; production activities revolve around a fixed location (ex: assembly of a cruise ship)
Factors of Project Layout
o Facility size: At customer site
o Process Flow: Independent activities
o Speed: Slow
o Run Length: Unique events
o Labor content: Very high
o Skill level: High
o Material requirements: Somewhat predictable
o Scheduling: Uncertain, frequent changes
o Challenges: Estimating completion time, managing critical activities
Process-focused layout that groups together similar equipment or functions
Factors of Workcenters
o Facility size: Usually small
o Process Flow: Many patterns
o Speed: Slow
o Run Length: Short
o Labor content: Very high
o Skill level: High
o Material requirements: Hard to predict
o Scheduling: Uncertain, frequent changes
o Challenges: Estimating labor utility, debottlenecking fast response
Manufacturing Cells (Plant within a Plant)
Process-focused layout that dedicates production areas to a narrow range of products with similar requirements (ex: factory that builds safety products for cars)
Factors of Manufacturing Cells
o Facility size: Moderate
o Process Flow: Dominant patterns
o Speed: Moderate
o Run Length: Moderate
o Labor content: Varies
o Skill level: Mixed
o Material requirements: More predictable
o Scheduling: Varies, frequent expediting
o Challenges: Balancing stages, responding to diverse needs
Assembly Line
Product-focused layout; machines and workers are arranged according to the progressive sequence of operations needed to make high quality products; benefits = cost efficient, eliminate cross-flows and backtracking, limit work-in-process, streamline production time
Factors of Assembly Line
o Facility size: Often large
o Process Flow: Rigid pattern
o Speed: Fast
o Run Length: Long
o Labor content: Low
o Skill level: Low
o Material requirements: Predictable
o Scheduling: Fixed
o Challenges: Productivity improvement, occasional rebalancing
Continuous Flow
Product-focused layout; high-volume flow with little flexibility; used for high-volume standardized products like paper, chemicals, and beverages; production work via equipment, workers monitor and repair; creates: economies of scale, low-cost production
Factors of Continuous Flow
o Facility size: Large
o Process Flow: Inflexible
o Speed: Very fast
o Run Length: Very long
o Labor content: Very low
o Skill level: Varies
o Material requirements: Very Predictable
o Scheduling: Inflexible, technology dictates
o Challenges: Avoiding downtime, expansions, cost minimization
Break-Even Analysis
basic mathematical technique that allows a comparison of total costs for different processes. This technique takes the fixed costs and variable costs and finds the break-even point for which the cost of two or more processes are equal in cost.
Assembly Line Balancing
production strategy that involves setting an intended rate of production for required materials to be fabricated within a particular time frame; effective line balancing requires assuring that every line segment’s production quota can be met within the time frame using the available production capacity
Coordinating function in a supply chain; part of supply chain management that focuses on the planning, implementation, and control of the flow and storage of goods, relevant information, and related services; Grown to importance today because it promotes activity and strategic integration, boosts demand, promotes efficiency and profitability, and supports the creation of utility
focuses on the efficient physical flows of product between facilities across the supply chain; links all pick-up and deliver-to points; highest cost logistics function ($848 billion)
Key Considerations of Transportation
o Volume of freight
o Customer location
o Product characteristics
o Product value
o Service requirements
Primary purposes of holding inventory
To maintain independence of operations, to meet variation in product demand, to allow flexibility in production scheduling, to provide a safeguard for variation in raw material deliver time, to take advantage of economic purchase order size
Fixed Order Quantity Model
Suggest appropriate reordering intervals; point out why you should reduce order placement costs
-Order Quantity: Set quantity ordered at variable time intervals
-Order Timing: When inventory drops to the reorder point
-Order Trigger: Event triggered
Fixed Time Period Model
Every time period, a variable order is placed to bring the inventory level up to maximum desired quantity
-Order Quantity: Variable quantity ordered at set times
-Order Timing: When the time to reorder arrives
-Order Trigger: Time triggered
Continuous Replenishment Model
Combines FTP and FOQ methods; Vendor re-supplies customer based on point-of-sale data, inventory levels, & warehouse information, rather than purchase orders
Post-Sales Customer Service
A series of activities designed to enhance the level of customer satisfaction – that is, the feeling that a product or service has met the customer expectation
Call Centers
Respond to customer through inquiries, orders, complaints, helpdesk, dispatching, credit, and return authorization
Service Parts Logistics
Management of the time critical delivery of spare parts to end users as part of an after sales service; critical for maintaining high value items; highly fragmented activity (3rd party suppliers, 3rd party logistics suppliers, in-house service)
Service Parts Logistics vs. Traditional Logistics
o Item demands = Low (1 to 2 a year)
o Demand Events = Random
o Response Times = 2 – 4 hours
o Delivery Network = Increasing in complexity
o Profit Margins = Increasing
o Inventory Strategy = Pre-Position
o IT Investment = Under-funded
Reverse Logistics
Post-sales service activity that deals with returns, remanufacturing, and refurbishment
Challenges of Reverse Logistics
o Product quantity not uniform
o Product damaged or defective
o Product not packaged consistently or properly
o Different product flows (Return & repair, return & deploy, remanufacture or recycle)
o Poor visibility (returns volume)
o Returns condition assessment (resell, recondition, refurbish, remanufacture, cannibalize, recycle, dump)
Form of return; most profitable option, market unused products as new
Form of return; repackage or clean the products to return it to a “like new” state
Form of return; perform simple product repairs
Form of return; conduct extensive product repairs which may require product disassembly and rebuilding
Form of return; retrieve reusable parts from products that are otherwise unrepairable or too costly to fix
Form of return; retrieve materials for conversion into other products with different purposes
Form of return; Send defective or broken products to a landfill

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