Supply Chain Management- Exam I – Flashcards
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Vertically integrated
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A firm whose business boundaries include former suppliers and/or customers.
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Conglomerates
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Many large firms
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Consumers considerations b4 purchase
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Cost, quality, availability, maintainability, and reputation factors.
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Focal firm
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Firm in the middle of figure
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Supply chain
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Series of companies eventually making products and s services available to consumers -including all of the functions enabling the production, delivery, and recycling of materials, components, end products and services
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Key to effective supply chain management
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Keeping the costumer in mind
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Bullwhip effect
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Supply chain forecasting, safety stock, and production problem
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BPR- business process reengineering
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Radical rethinking and redesigning of business processes to reduce waste and increase performance
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SCM evolvution
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The purchasing & supply management emphasis from industrial buyers and transportation & logistics emphasis from wholesales to retailers
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EDI
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Electronic data interchange
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Supplier management
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Encouraging or helping the firms supplier to perform in so m e desired fashion
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Supplier evaluation
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Determining the current capabilities of suppliers
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Supplier certification
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Programs can be company designed and administered, or international standardized programs (ISO 9000)
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Strategic partnerships
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Creation of closer working relationships with costumers in terms of long-term, higher-volume sales.
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Ethical & sustainable sourcing
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Purchasing from suppliers that are governed by enviromental sustainability and social and ethical issues
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Demand management
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Strategies and systems, with the objetive of matching demand to available capacity, either by improving production scheduling, curtailing demand, using a back-order system or increasing capacity.
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MRP- material requirements planning
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Software system for managing their inventory
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ERP- enterprise resource planning
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Providing real-time sales data, inventory and production information to all business units and the ket supply chain participants
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Information, money and materials
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What do supply chain managers manage?
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supply, operations, logistics, and integration
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Elements of Supply Chain
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bullwhip effect
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occurs due to lack of communication
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reverse logistics
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refers to recycling and returns
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variability and complexity
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What makes managing supply chains difficult?
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merchant buyers
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wholesalers & retailers, who primarily purchase for resales purposes
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industrial buyers
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primary task is to purchase raw materials for conversion purposes
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Electronic data interchange
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EDI
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benefits of e-procurement
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time savings, cost savings, accuracy, real time, mobility, track-ability, management (benefits to the suppliers)
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strategic procurement
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procurement for current requirement
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strategic procurement examples
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spot buying, volume purchasing agreements, forward purchasing, product life cycle, JIT, commodity purchasing, supplier management
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commodities
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use more suppliers that promotes competition, which leads to lower price
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backward vertical integration
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acquiring upstream suppliers
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technical components
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use fewer suppliers
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forward vertical integration
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acquiring down stream costumers
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responsiveness, capability, competitive value
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To select suppliers evaluate their:
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total cost of ownership
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goes beyond the purchase of the unit price involves all variables necessary to fully own product
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inventory turnover
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shows how many times inventory is utilized and replenished. Usually, the higher the better.
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vertical integration
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movement up or down, related to different industries
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horizontal integration
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movement across, related to direct competition
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small purchase orders
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a relative term depending on the size of the firm, small purchasing orders
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key tenents to Supply Relationship Management
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1. automation 2.integration 3.visibility 4.collaboration 5.optimization
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total cost of ownership
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the combo of the purchase or acquisition price of a good or a service and additional costs incurred before or after product or service delivery
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common supplier performance metrics
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1.technology 2.quality 3.responsiveness 4.cost 5.environmental 6.business
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transaction costs
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the cost of the good or service and cost associated with placing and receiving the order
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strategic sourcing
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managing the firms external resources in ways that support the long term goals of a firm
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ethical sourcing
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attempts to take into account the public consequences or organizational buying or bring about positive social change through organizational buying behavior
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fair trade products
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manufactured or grown by a disadvantaged producer in a developing country that receives a fair price for their goods
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green purchasing
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practice aimed at ensuring that purchased products/materials meet environmental objectives such as waste production, hazardous materials elimination, recycling and reuse
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sustainable sourcing
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process of purchasing goods& services that takes into account the long term impact on people, profit, and the planet.
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vendor managed inventory
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partner based approach to controlling inventory and reducing supply chain cost- vendor takes on risk of monitoring & replenishment of inventory
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bench marking
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the process of copying what other businesses do best and a comparison among the competitors
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steps to forecasting
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1. determine purpose 2. establish time horizon 3. gather/ analyze data 4. select technique 5. make forecast 6. monitor & update
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features of forecasting
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-past will project future -not perfect -forecasts for grouped items are more accurate than those for individual items
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elements of forecasting
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-timely, -accurate, - reliable, -meaningful, -documented, -easy to understand
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short term forecasts
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What type of forecasts are more accurate?
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accurate
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the further out the forecast projection the less...
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higher amount of errors- worst
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the larger the numbers of MAD, MAPE, or MSE
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lower the amount of errors-better
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the larger the numbers of MAD, MAPE, or MSE
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Reactive Approach
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Demand Planning
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Demand Planning
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-uses historical data -look in past -view forecasts as probable future demand -react to meet demand
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proactive approach
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demand management
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demand management
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-shape the quantity & timing of demand to meet a company's needs -move forward -look to future -seeks actively influence demand (advertising, pricing, products modifications) -generally requires an explanatory model a subjective assessment of the influence on demand
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primary goals of purchasing
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-ensure uninterrupted flows of raw materials at lowest total cost -improve quality -optimize costume sanctification
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purchasing contribution to goals
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-actively seeking better materials and suppliers -work closely with strategic suppliers to improve quality -involving suppliers and purchasing personnel with new product design & development
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centralized purchasing
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single purchasing department, makes ALL purchasing decisions
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centralized advantages
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-concentrated volume -avoid duplication -specialization -lower transportation costs -common supply base -no competition with in units
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decentralized purchasing
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local purchasing departments make their own purchasing decisions
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decentralized advantages
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-closer knowledge of requirements -local sourcing -less bureaucracy
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hybrid purchasing
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enables firms to exploit both the advantages of decentralized and centralized purchasing
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public procurement
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management of the purchasing of the government and nonprofit sectors (educational institutions, hospitals, federal, state, and local governments)
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public purchasing
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public procurement
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Federal Acquisition Regulation
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differentiates private purchasing from public purchasing. Ensures that purchases of goods & services are in strict compliance with statues and policies in order to maximize competition
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GSA & DOD
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Major public procurement entities
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reasons to outsource
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-better quality -cost -technical support & expertise -capacity -gain info on latest trends -volatile demand
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risks to outsourcing
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-loss of control -increases reliance on suppliers increased need for supplier management
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outsourcing benefits
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-concentrate on core capabilities -reduce staffing levels -reduce management problems -improve manufacturing flexibility
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profit leverage effect
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a purchasing performance measure that calculates the impact of a change in purchase spend on a firms profit before taxes, assuming gross sales & other expenses remain unchanged
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request for quotation
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RFQ
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request for proposal
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RFP
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RFQ
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there is no current suppliers for the item, the buyer must identify a pool of qualified suppliers and issue a request
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RFP
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enables suppliers to propose new material and technology, thus enabling the firm to exploit the expertise of suppliers
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purchasing order
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PO
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PO
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terms and conditions of the purchase, legally binding contract
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blanket purchase order
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covers a variety of items and is negotiated for repeated supply over a fixed period of time: used for small order purchases
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open-end purchase order
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additional items and expiration dates can be renegotiated
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blanket order release
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production schedule, used to release a specific quantity against the order
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procurement cards
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p-cards, credit cards with a predetermined credit limit issued to authorized personnel of the buying organization
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sustainability
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ability to meet the needs of current supply chain members without hindering the ability to meet needs of future generations in terms of economic, environmental, and social challenges.
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social sustainability
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concerns involving worker safety, hourly wages, working conditions, child workers and basic human rights
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Qualitative forecasts
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techniques that permit the inclusion of soft information, factors are difficult or impossible to quantify
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soft information
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human factors, personnel opinions and hunches
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qualitative forecasts approaches
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-jury of execution -delphi method -sales-force composite -consumer surveys
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quantitative forecasts
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techniques that involve either projection of historical data or the development of associative methods that attempt to use explanatory variables to make a forecast
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times series and associative models
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what are the types of quantitative forecasts?
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time series
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a timed ordered sequence of observations taken at regular time intervals, assumes future values can be estimated by past values
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trend
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a long-term upward or downward movement in data
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seasonality
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short term fairly regular variations related to the calendar or time of day
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cycle
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wavelike variations lasting more than one year, often related to a variety of economic, political or agricultural conditions
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random variation
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residual variation that remands after all other behaviors have been accounted for
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irregular variation
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due to unusual circumstances that do not reflect typical behavior, examples: labor strike, war, weather event
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naive forecast
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uses a single previous value of time series as a basis for a forecast- the simplicity is beneficial, used when times series is stable, and there is a trend or seasonality
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trend naive forecast
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determine if trend is +/-, then find difference of the last 2 actual values and add it to the latest real or actual #
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averaging
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techniques that smooth variations in the data
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moving average
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as new data becomes available the forecast is updated by adding the newest values and dropping the oldest.
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# of data points
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What determines the a moving average forecast model's sensitivity?
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more responsive
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fewer data points
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less responsive
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more data points
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weighted moving average
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most recent values in time series are given more weight in computing a forecast
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exponential smoothing
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weighted average method that is based on the previous forecast plus a % of the forecast error- implements forecasts error
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linear trend
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a simply data plot can reveal the existence and nature of a trend
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cause & effect model
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one or several external variables are identified as related to demand- based on the development of an equation that summarizes the effects of predictor variables
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linear regression
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the technique for fitting a line to a set of data points
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simple regression
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only one explanatory variable is used
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correlation
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a measure of the strength & direction of relationships between 2 variables
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correlation
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What has a range between (-1)-1and can be either positive, negative or none?
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correlation coefficient
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measure of the percentage of variability in the values of y that is explained by the independent variables
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correlation coefficient
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represented by r squared-the higher the better- ranges between 0-1
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forecast error
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difference between the observed value (actual) and the forecast
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mean squared error
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MSE
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MSE
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weights errors according to their squared values. highlights big or major errors but doesn't reveal smaller errors
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mean absolute deviation
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MAD
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MAD
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weights all errors evenly, does not cancel any errors out because we use the absolute values
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mean absolute percentage error
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MAPE
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MAPE
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provides a perspective of the true magnitude of the forecast error- weights errors according to relative error
