Flashcards in Exam 1 Deck (101):
According to the eNotes, _______ decisions are made at the highest level of the organization and impact the direction of the organization in the long-term
According to the eNotes, what does OWMM stand for?
One Worker Multiple Machines
Some DCs get inbound inventory that is then redistributed for shipment to retail stores within 24 hours of the items arriving. According to the eNotes, this quick movement of inventory in and out of the DC would be an example of
According to the eNotes, ______ is the amount of time that is not utilized at each workstation.
According to the eNotes, a(n) ______ is an illustration that shows the relationship between all the work elements in an assembly line process.
According to the eNotes, which cargo classification would loose rice most likely fall under?
What would be the required cycle time (in seconds) if you had 2 hours to make 160 units?
2 hours(3600) / 160
According to the eNotes, which manufacturing layout is best suited for items that would be make-to-stock, in cost competitive industries, and where life cycles would need to be long to recover high start-up costs?
According to lecture, a planogram would most likely be used in a(n):
According to the eNotes, which manufacturing strategy or layout would be most appropriate if the product needed to be produced without interruption?
o is the Efficient Integration of suppliers, transporters, manufacturers, warehouses, retailers and all other parties associated with the delivery of the final product.
Supply Chain Management
The branch of an organization responsible for acquiring materials, equipment, products, and services
The branch of the supply chain responsible for making business processes effective and efficient
o The branch of the supply chain responsible for developing the transportation itinerary and finding the appropriate transportation and storage partners to successfully navigate the flow of materials from the point of origin to the final destination.
The management of products and packaging that flow backward in the supply chain, away from the consumer and back in the direction of manufacturers.
o When suppliers, manufacturers, transportation companies, warehouse and distribution centers, retailers, and other supply chain partners span across multiple countries and/or continents, those are considered global supply chains.
A company’s direct supplier. A firm that directly provides goods and/or services to a company.
A firm that provides goods and/or services to a company’s first-tier supplier.
In a supply chain the direction from customers to suppliers.
o In a supply chain the direction in which products flow towards an end consumer.
3 SCM Flows
A company’s plan for how it will purchase items, transform them, deliver them, and sell them in an effort to produce a profit.
The ability to see what is happening with inventory up and down a supply chain
Supply Chain visibility
Profit ROI’s relationship to SCM
o Supply chain managers seek to help companies maximize ROI. By controlling costs investment can decrease. By creating great products and delivering them quickly and in great condition, customers may be willing to pay more,”
Types of Costs
Types of speeds
• Lead time (pizza)
On- time delivery
Types of Quality
Material & Production
Types of Flexibility
Product or Customization
• Options offered
The primary advantage a company has over its competitors. Typically, a core competency would be difficult,
the ratio of “output purchased” divided by “inputs used to purchase” the product or service.
From a manufacturing perspective companies seek to maximize the amount of outputs that can be produced and delivered to market while minimizing the required inputs.
Primary Supply Chain Goals
o Effectiveness: Are we getting the job done?
o Efficient: Are we working too hard? Spending too much?
o Adaptable: Can we deal with Change?
Seven types of waste
Keys to being a successful SC Manager
o Satisfy the needs of your customers
o Satisfy the needs of your company
o Be Prepared for the future
o Understanding the product/service and market desires
o Developing a Business Model
Business to Consumer Company
Business to Business
Both B2B and B2C
o Organizing the right group of people of partners
o Research and Planning
o Getting Product to Customer
The items that are owned by a company for the purpose of present or future sale or for use in day-to-day operations.”
The period of time between when an order is placed and when the order is received.”
An accepted order size based on increments
o Other Inventory Needs
o Legal Considerations
Why Keep Inventory?
o Insurance- Manage Risk/ Uncertainty
o Customer Expectations- Support strategic plans ex. Walmart
o Managing Cost- Economies of scale
o Long- term
types of Inventory Risk
o Loss, Damage, Theft, Breakdown
o Human Resources
o Fluctuating demand
o Market Changes
o Other- environmental, political
o Company risks: Theft or damage to inventory, late shipments from supplier, employee sickness, employee strike, machine malfunctions, harsh weather
o Supplier risks: Employee sickness or strikes, sudden increases in demand for your company’s supplies, the risks posed by their suppliers
o Customer risks: Sudden increase in demand, damage to customer’s inventory”
A predictive analysis and/or estimation of consumer demand in a future period.”
What does SKU stand for?
Stock Keeping Unit
A specific product or service’s identification code used to track inventory or catalog sales.”
An item for which demand levels is not directly impacted by the demand of another related item.”
An item for which demand levels are directly impacted by the demand of another related item.”
Dependent Demand (tires)
All 8 Inventory Classifications
o Raw Materials
o Work In Progress
o Finished Goods
o Maintenance, Repair and Operations
o Market Inventory
-o Safety Stock (buffer stock
-o Anticipation Inventory
-o Pipeline Inventory- inventory in transit
Inventory readily available on the shelf
Protects against uncertainty in demand, lead time, supply
o Safety Stock (buffer stock)
used to absorb uneven rates of demand or supply. (seasonal demand, holidays, quantity discounts, economic)
inventory in transit
(dL)“Pipeline Inventory = Periodic demand * Lead time”
Pros of High Inventory Levels
o Higher levels of customer service - Having inventory will help a company address their immediate demand for product
o Quantity discounts may be possible - Lower per unit costs
o Fewer orders will need to be placed - Possibly lower ordering costs and transportation costs
o Greater security against unexpected demand variability”
Pros of Low Inventory Levels
o Less storage space required – Costs of holding inventory may be lower
o Lower chance of inventory obsolescence and shrinkage
o Less inventory typically means less materials handling requirements
o Less money invested in inventory means more money available for other investment opportunities”
- Inventory used to accommodate with normal demand or inventory that varies directly with lot size
Cycle stock avg amount of inventory
TC = DC + (Q/2) H + (D/Q) S
Annual Cost inventory
Total Annual Cost
Annual demand for Item
Cost per Unit
Annual holding cost per unit -Hold it
Cost to place single order (D/Q)S
Annual Cost to purchase Inventory -Buy it
____ will get the lowest TC for the given cost structure and demand forecast
Number of orders per year
Time between orders
Time between orders
TC = DC +(Q/2) H + (D/Q) S
The costs associated with not having enough inventory on hand to meet customer demand.
Average demand over a number of periods
Simple Moving Avg
Average demand over a certain number of prior periods. Multiplied by perctanatge
o Weighted Moving Average
The act of a company taking on additional supply chain responsibilities that were formerly done by outside parties.
Taking over the role of companies closer to the customer. Example: We will no longer sell Coca-Cola through our distributors, from now on, we’ll only sell Coke out of Coca-Cola stores.
Taking over the role of your supplier. Example: We’re not going to buy bread for our sandwiches, we’ll make the bread ourselves from now on.
o An electronic procurement system that can aid in submitting requests for materials, making material orders, negotiating with suppliers, tracking shipments, and receiving shipments. The data collected in these systems can also help in analyzing procurement actions which can lead to better procurement decisions in the future
A purchasing system where all corporate employees send material requisitions to a single purchasing department.
“A purchasing system where material requisitions are sent to a departmental purchasing department.”
• Decentralized purchasing
o An established group of suppliers from which a company makes most of its purchases.
• Supplier base
o A report card that can be used to communicate desires before a sales presentation or shipment. It can then also communicate performance outcomes after the sales presentation or shipment. The results can then be used to discuss changes that might be required in future interactions.
• Supplier scorecards
o Assessments that help ensure that a buyer’s suppliers all meet the minimum supplier standards. Some buyers may not even consider purchasing from a supplier unless that supplier first gets certified. Supplier certifications can be developed by the buyer themselves or they may be developed by an outside agency.
o Quantity discount opportunities – When buying in large quantities a buyer may have negotiating leverage and economies of scale may be easier to achieve. This goes for both the purchase price of the tires and the transportation costs.
o Lowest total cost – Perhaps this supplier’s product and service package cannot be matched by any other supplier. Good product, reliable supplier, fast delivery.
o Intellectual property advantages – Perhaps no other company can make a tire like the one offered by this company.
o Quality control – With a single tire supplier a buyer can be fairly certain that all the tires are very similar in design and quality, and that all business interactions will be similar.
o Relationship management is easier – Sharing and communicating with a single supplier can be easier than trying to maintain multiple relationships simultaneously.
• Single Supplier
o Competition can breed innovation – Multiple tire suppliers fighting for a larger percentage “of our tire purchases will work harder to set themselves apart in both product and service dimensions.
o Risk is spread out among multiple suppliers – If one tire supplier encounters difficu
close-knit networks of vendors that continuously learn, improve, and prosper along with their parent companies
What is keiretsu?
What did American companies do to copy the Japanese partnering model? Despite the efforts of American car manufacturers, why did cost resurface as the key criterion?
• they attempted to find the best suppliers to partner with
• they jumped to the conclusion that the benefits of low-wage costs outweigh the long-term benefits of investing in relationships
o Represent the chain of organizations that help bring a product into the hands of the end user. This might include packaging companies, delivery companies, warehouses, distribution centers, perhaps even suppliers.
• Established channels of distribution
o A company’s supplier base is the collection of companies from which an organization presently purchases products and/or services. So, an established supplier base implies that an organization has a group of companies with which they have
• Established supplier base
o This can refer to an industry, or more specifically an industry that is concentrated in a particular region, where the companies compete fiercely. This intense and concentrated competition may result in rapid innovation but short cycles of competitive advantage.
o Marketing identifies a target market. Designers and engineers work to develop products that satisfy the needs of the target market. Supply chain must then buy parts, manufacture hundreds or thousands of those end items, and then deliver them into the hands of the customer.
Relationship…Marketing, Design, SCM
Decisions made at the highest levels of the organization. These decisions provide direction for the company by identifying target markets, business models, and potentially product or service categories in which the company would like to compete. These decisions typically provide the organization and its primary functional areas long-range goals
Decisions that seek to satisfy a target market in a particular product or service category. Decisions that provide a more specific roadmap to satisfying strategic goals.”
Decisions that impact the organization in the short-term. Typically they relate to the daily operations that are performed in a company on a routine basis
– These line flow systems can typically be stopped at any time without compromising the inventory flowing through the system. In other words, stopping the line during the employees’ lunchtime will not cause the work-in-process items on the line to spoil. (Cars, trucks, digital devices would all likely utilize an assembly line system)
Line Flow Strategy