Week 11 and 12 Flashcards
What are lean operations?
Moving towards the elimination of all waste to develop an operation that is faster, more dependable, produces higher quality product and services, operates at low cost
What is “Just-in-time”
Disciplined approach to improving overall productivity and eliminating waste
Performed using minimum amount of facilities, equipment, materials and human resources
Dependent on the balance between user and supplier flexibility.
What is supply chain management?
Total system approach to managing the entire flow of information, materials and services from raw material suppliers through factories and warehouses to the end customer
Explain how supply chain management improved from the 70’s to 90’s
70’s: Inventory push era that focused primarily on physical distribution of finished goods
80’s: Realisation that productivity could be increased significantly by managing relationships, information and material flow across enterprise borders
90’s: Computers change the way business is done, internet revolutionised the information pathway and the distribution system of the business
What are the advantages and disadvantages of single sourcing
Better quality because more supplier quality assurance possibilities, stronger relationships, better communication, higher confidentiality
Vulnerable to disruption if a failure to supply is available, individual supplier more affected by volume fluctuations
What are the advantages and disadvantages of multi sourcing
Purchaser can drive price down by competitive tendering, can switch sources in case of failure
Difficult to encourage commitment by supplier, less easy to develop effective supplier quality assurance, supplier less likely to invest in new processes
What is the bullwhip effect?
Sourced from updating demand forecasts. Parties of supply chain build their forecasts based on historical demand patterns of immediate customers.
Only retailers build on the actual demand patterns of the customer and the other parties adjust to (unmotivated) fluctuations in the ordering policies of those preceding them in the supply chain.
If everyone reacts to fluctuations with smoothing techniques (exponential smoothing) , fluctuations will amplify through the supply chain so safety stocks will actually amplify the bullwhip effect
Explain how order batching and price fluctuations contribute to the bull-whip effect?
order batching: Force customers into periodic ordering (destroy customer demand patterns) , contributes to bull whip effect
Push ordering also occurs, amplifying the variability with orders from customers overlapping end-of quarter and beginning-of-quarter months, to destroy connections with actual demand patterns of customers, contributes to bullwhip effect
Price fluctuations: Buying patterns no longer reflect consumption patterns (buying in bulk if discount available), possible overflowing of storage space to meet seasonal/ promotional demand.
Explain how rationing and shortage gaming contribute to the bull-whip effect with an industrial example?
Occurs when demand exceeds supply. If producers have once met shortage with a. rationing of customer deliveries, customers will start to exaggerate their real needs when there is a fear that supply will not cover demand
Example: Shortage of DRAM chips
Bull whip effect will amplify if customers are allowed to cancel orders when their real demand is satisfied
Explain three ways to combat the bullwhip effect
- Channel Alignment: Adjust scheduling and material movements to bring operations closer together, use vender-managed inventory (VMI) where supplier takes responsibility for the stocks to meet customer demand
- Operational Efficiency: Aim to reduce operation complexity, simplify supply chain, become more predictable to demand variation
- Information Sharing: good communication between supply chain, make end customer demand available to downstream operations
Explain how collaborative C-commerce contribute to the bull-whip effect?
Optimisation of supply chains involving organisations electronically interlinking their business processes across the internet
When properly implemented, this improves n-tier forecast accuracy as the originating demand and supply chain dynamics are known (largest cause of bullwhip effect)
What is the definition of quality and how might we overcome poor quality?
Degree to which a set of inherent characteristics fulfils requirements
Acceptance sampling, batch testing for defects (pass or fails), “Just in time” approach- requires quality from suppliers
