SCM 300 Arizona State University - Exam 1 Study Guide, Exams of Advanced Education

Download SCM 300 Arizona State University - Exam 1 Study Guide and more Exams Advanced Education in PDF only on Docsity! SCM 300 Arizona State University - Exam 1 Study Guide Supply chain management - Answer -extracting materials from the ground, selling them to raw material manufacturers, turn raw materials into materials that are usable by component manufacturers, then final manufacturers make and sell intermediate components, the final manufacturers assemble finished products and sell them to wholesalers or distributors, resell them to retailers who sell to end customers Thus, the series of companies that eventually make products and services available to consumers, including all of the functions enabling the production, delivery, and recycling of materials, components, end products, and services, is called a supply chain Primary goals of SCM - Answer -sustainable long term profits and maximize ROI Value - Answer -customer perspective-what do I get?/what is the price? Productivity - Answer -organizational perspective-outputs/inputs Shigeo Shingo's-7 Types of Waste - Answer -1. Defects 2. Overproduction- production used to mask shortcomings 3. Transportation- no added value 4. Motion- movement of employees and machines 5. Waiting- wasted resources during waiting 6. Inventory (not providing a return)- excess inventory is not providing a return 7. Over processing- more work than required is done in creating a service/good Competitive Priorities - Answer -cost, quality, speed/time, and flexibility Business models - Answer -a mechanism by which a business intends to generate revenue and profits. Summary of how a company plans to serve its customers at a strategic level B2C - Answer -business to consumer- Amazon, Best Buy, Dillards B2B - Answer -business to business- DHL, Boeing, Consulting/marketing agencies Both B2B and B2C - Answer -Apple, Dell, Ford, and Verizon Brick and Mortar- land based commerce only Internet retailer only- Amazon Click and Mortar - Answer -both land based and internet (Best Buy, Barnes and Noble) P&G Example - Answer -3 priorities= reliable service, agile, demand driven supply, and affordable differentiation Vertically integrated firm - Answer -a firm whose business boundaries include one-time suppliers and/or customers What is occurring at many of these firms today is an effort to par down the organization to focus more on core capabilities while trying to create alliances or strategic partnerships with suppliers, transportation and warehousing companies, distributors, and other customers who are good at what they do. This team approach to making and distributing products and services to customers is becoming the most effective and efficient way for businesses to stay successful -and is central to the practice of SCM. Supplier Management - Answer -this means getting your firm's suppliers to do what you want, and there are a number of ways to do this. This involves assessing your suppliers' current capabilities and then figuring out how to improve them Supplier Evaluation - Answer -determining the capabilities of suppliers. This occurs both when potential suppliers are being evaluated for a future purchase and when existing suppliers are periodically evaluated for performance purposes Strategic partnerships - Answer -organizations creating alliances, one of the foundations of SCM Reverse logistics activities - Answer -along the supply chain, intermediate and end customers may need to return products, obtain warranty repairs, or may just throw products away or recycle them Focal firm - Answer -end product manufacturer, Ex. Coca-Cola, Boeing, General Motors 1st tier suppliers/customers - Answer -- First tier supplier supplies a business directly. (EA Sports distributes Madden to Best Buy; EA is a 1st tier supplier to Best Buy). 2nd tier suppliers/customers - Answer -the suppliers' suppliers and the customers' customers. (Hershey's buys cocoa from an American company who bought it from a Brazilian company, The Brazilian company is a 2nd tier supplier to Hershey's). Grebson Example - Answer -Grebson is experiencing the bullwhip effect, meaning there is a problem in safety stock, forecasting, and production problem. Grebson is not sure Backward vertical integration - Answer -- refers to acquiring upstream suppliers -Buying a tire company to make tires for your cars (Toyota) -Instead of buying bread to make sandwiches, we are making the bread Forward vertical integration - Answer -refers to acquiring downstream customers -Acquiring a distributor Reasons for Buying or Outsourcing - Answer --Cost advantage- Sometimes the quantity needed is so small that it does not justify the investment to make the item -Insufficient capacity- a firm may be running at or near capacity, making it unable to produce the components in house. This can happen when demand is higher than expected or operations under very strict terms -Lack of expertise- the firm may no have the necessary technology or knowledge to manufacture the item -Quality- purchased components may be better in quality Reasons for Making - Answer --Protect proprietary technology- a firm may have developed an equipment, product, or process that needs to be protected for the sake of competitive advantage -No competent supplier- there are no suppliers available for a certain product -Better quality control- the make option allows for the most direct control over the design, process, labor, and inputs to ensure higher quality -Use existing idle capacity- there is excess capacity to make some of its components. -Control of lead-time, transportation, and warehousing cost- management controls all phases of the design, manufacturing, and delivery. The firm isn't relying on another firm. -Lower Cost- lower variable cost because it avoids suppliers' profits Supply Base- refers to the list of suppliers that a firm uses to acquire its materials, services, supplies, and equipment Factors in choosing a supplier - Answer --Product and process technologies- suppliers should have up to date and capable products and process technologies to produce the items needed -Willingness to share technologies and information-by increasing the involvement of the supplier in the design process, the buyer is free to focus more attention on core competencies -Quality -Cost -Reliability -Order system and Cycle Time- placing orders with the supplier should be easy, quick, and effective -Communication capability - good communication between companies, reliable way to communicate. -Location- impacts delivery lead time and logistical costs -Service- Suppliers must be able to back up their products by providing good services when needed Total cost of ownership - Answer -includes the unit price of material, payment terms, cash discount, ordering cost, carrying cost, logistical cost, and maintenance cost Single supplier - Answer -establish a good relationship with a supplier creates trust, quality levels don't vary, cheaper per unit due to bigger shipments Multiple Suppliers - Answer -when demand exceeds the capacity of a single supplier, spread of risk of supply interruption, and creates competition (could lower cost) Centralized purchasing - Answer -where a single purchasing department, usually located at the firm's corporate office, makes all the purchasing decisions, including order quantity, pricing policy, contracting, negotiations, and supplier selection and evaluation Decentralized purchasing - Answer -where individual, local purchasing departments, such as at the plant or field office level, make their own purchasing decisions Global sourcing - Answer -- international purchasing Reasons- can include lower prices, better quality, overseas supplier holds the patent, better service, better technology Challenges- dealing with duties, tariffs, customs clearance, currency exchange, political and legal problems Independent demand - Answer -- demands are unrelated and required quantities of each must be separate, influenced by market conditions (automobiles) Dependent demand - Answer -- requirement of any one item is the direct result for some other item (tire) SKU- stock keeping unit - Answer -- unique identifying number used to track each unique product customers can purchase Lead time - Answer -time elapsed between customer placing the order and order being received by customer Lot size - Answer -order size Safety stock - Answer -- inventory your keeping "just in case" Types of Inventory - Answer -raw materials, work in process, finished goods Inventory classifications - Answer -long term, seasonal, perishable Anticipation Inventory - Answer -used to absorb uneven rates of demand/supply Market Inventory - Answer -inventory readily available on the shelf Pipeline Inventory - Answer -- orders that have been placed buy not yet received nor paid by the customer, "on its way", DL= periodic demand x lead time Why Keep Inventory? - Answer -This is why we keep... -Insurance- manage risk and uncertainty -Customer expectations- support strategic plan, low cost=longer lead times -Managing cost- quantity discounts Simple moving average - Answer -works well when demand is stable Add up selected periods than divide by how many Weighted moving average - Answer -weight x sales volume -demand fluctuates -TC= D*C + (Q/2)H +(D/Q)S TC-total annual cost of inventory D- Annual Demand C-cost per unit H- Annual holding cost per unit S-cost to place a single order 1st part-cost to purchase 2nd part- annual holding cost 3rd part- annual ordering cos Cycle stock (average inventory) - Answer -inventory used to accommodate normal demand or inventory that varies directly with lot size =Q/2 EOQ - Answer -optimal order size, lowest TC c-cycle time Pacing - Answer -the movement of product from one station to the next as soon as the cycle time has elapsed Mixed model line - Answer -a production line that produces several items belonging to the same family. Achieves high volume and product variety but it complicates scheduling and increases the need for good communication New Product Development - Answer --Marketing research- identify, sell to customers...What does the customer want? How much are they willing to pay for it? Where is the customer? -Designing a new product- make the product appealing, can be a clash between the designers, engineers, and supply chain people -Connection to SCM- supplies, labor, equipment, transportation, and demand forecasting Degree of standardization- what will the customer accept as the standard? Degree of customization- which features should remain optional? Provides extra profit, changes in manufacturing/installing Facility location decisions (things to consider)- -competitive priorities -product characteristics -resource availability -labor, labor laws -land -taxes -transportation -waste disposal -culture (Germany example in class, Germans worked for John Deere in Germany and wanted to smoke/drink on job) -geography CAPACITY VS CYCLE TIME - Answer --28800 sec in 8 hrs -decrease in cycle time=increase in output -28800 secs/72 sec/unit=400 units in 8 hrs -28800 secs/70 sec/unit=411 units in 8 hrs (2.75% increase) Logistics management - Answer -plans, implements, and controls the efficient, effective forward and reverse flow and storage of goods, services, and related information between the point of origin and the point of consumption in order to meet customers' requirements Kraft foods- customers wanted to be able to order large quantities overnight for a discounted price therefore Kraft set up new logistics system Why logistics is critical?- 5 to 35 percent of total sales cost -Significant impact on customer satisfaction 5 Modes of transport - Answer -highway, water, air, rail, and pipeline Road transportation (Pros/Cons) - Answer -(Pros) -Vital to intermodalism -Accessibility, - Flexible versatile, -Reliable (95% on time rate) (Cons) -long trips usually mean excessive regulations- multiple states; multiple weight limits, driver and truck regulations. -LTL's and LCL's will usually make many stops -One driver, one truck, insurance -Fuel, prices, tolls Rail-car transport (Pros) - Answer -(Pros) -carry heavier loads -better for long distances- fewer regulations -Very affordable vs. trucks -Better in poor weather (Cons) -Loss/damage due to vibrations are high about 3% -On-time reliability poor- 70% in a good year -Total trip average speed- less than 30mph -Access to infrastructure required- tracks, loading equipment Ocean/ waterway transport - Answer -(Pros) -low cost (vs. air) -transport almost any form of cargo (Cons) -Much slower than air- time, theft, damage, insurance -Channel depth challenges- summer, winter -Port capabilities- safety, handling, warehousing Air transport - Answer -Pros -Speed is the obvious advantage -Potential economic advantages: less packaging required, less handling, decrease warehouse requirements. Cons -Extremely expensive Highway (road) - Basic facts, growth, advantages of - Answer --Moves nearly 80% of the total value of goods moved. Highway transport is a highgrowth industry because it is one of the most flexible modes of transportation. Has become more cost effective over time. Better scheduling and use of vehicle capacity, more efficient and reliable vehicles, and increased cost competition due to deregulation have all contributed to this trend. Water- when to use - Answer -- Ideal for materials with a high weight-to-value ratio, especially if delivery speed is not critical. Ex. Farm produce, timber, petroleum-based products. Because of their relatively high weight- to-value ration, shipping can significantly add to the cost of these commodities Air- when to use, reasons for growth - Answer --Air transportation is ideal for materials with a low weight-to-value ratio. Ex. Custom software or CD which weighs 4 ounces but is worth $10,000. Reasons for air transport growth include geographic extension of supply chains, greater emphasis on delivery speed and flexibility, and changes in the supply chain linkages between man Less than truckload shipment (LTL) - Answer -- a smaller shipment, often combined with other loads to reduce costs and improve truck efficiencies Consolidation warehousing - Answer -- pulls together shipments from a number of sources in the same geographical area and combines them into larger and hence more economical shipping loads Crossdocking - Answer -large incoming shipments are received and then broken down into smaller outgoing shipments to demand points in a geographic area, opposite of consolidation warehousing. Moves inventory quickly, takes advantage of technological advantages. Break-bulk warehousing - Answer -- a specialized form of crossdocking in which the incoming shipments are from a single source or manufacturer Hub and spoke systems - Answer -strategically placed "hubs" are used as sorting or transfer facilities. The hubs are typically located at convenient, high traffic locations. The "spokes" refer to the routes serving the destinations associated with the hubs. Combines consolidation and crossdocking. (example on page 50)- two trucks combine in Syracuse then go to Phoenix where they split up to Los Angeles and El Paso. Syracuse and Phoenix are the hubs and LA and El Paso are the spokes Postponement warehousing - Answer -combines classic warehouse operations with light manufacturing and packaging duties to allow firms to put off final assembly or packaging goods until the last possible moment Difference between a Warehouse and a DC - Answer -Warehousing- provides storage -safety stock, anticipation inventory -closer to retailers, customers, shorter lead times Distribution Centers (DC)- facilitates movement -product mixing-break up large shipments to create assorted full trucks -LTL to TL, consolidation, lower costs Letter of Credit - Answer -document issued/written by the buyer's bank and addressed to the seller. States that the bank will release payment to the seller after the bank is supplied in the document. Multiple banks may be involved. Bill of Lading - Answer -Contract (of carriage) between seller/shipper and the carrier- indicates terms of shipment, goods shipped, name of vessel, departure/destinations points, freight cost -states ownership of cargo -receipt for goods for shipper Issuing bank - Answer -issued LoC based on buyers demand Paying bank - Answer -responsible for pay the seller Advising bank - Answer -verifies that issuing/paying bank is reputable Confirming bank - Answer -In case of default by paying or issuing bank. These banks will pay/reimburse appropriate parties Free Trade Zones (FTZ) - Answer -Area where acceptable items can enter the country duty free for storage, display, manufacturing, transformation, assembly, re-packaging, etc. Items are then usually re-exported. Alternative to duty draw backs. Items an remain in the country permanently if the duties are levied. 3PL's- Third party Logistics Company - Answer -An organization that manages and executes a particular logistics function, using its own assets and resources, on behalf of another company. This party can either include packaging & container companies, and carriers. Companies from many different industries now consider themselves 3PLS Commercial invoice - Answer -summation of entire transaction Packing list - Answer -placed in each container of assorted Merchandise by packer. Much more detailed than an invoice. Describes content of each package in one or more containers Shipper's Letter of Instructions - Answer -provides information on handling, payment, etc to an intermediary Certificate of Origin - Answer -states origin of cargo, important to customs in collecting tariffs Shipper's Export Declaration (SED) - Answer -used by customs in recording export types and quantities -required if greater than $2500 in value Validated Export License - Answer -US government authorization for controlled or policed items/services, used for defense weapons, drugs, dual purpose technologies 3 Rules of Exporting - Answer -1. Assume everything is controlled 2. These rules apply everywhere 3. Authorization is required before export Procedure for US Export - Answer -1. Who controls the product/service being exported? 2. Classify your item 3. Get a license (if necessary) 4. Export upon receipt of customs approval