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Flashcards in EXAM1 Deck (38):
1

Difference between Supply Chain, Operations, and Supply Chain and Operations

Supply chain management

    • Cooperation between different firms to create value for customers

Operations management

    • Administration of transformation processes that create value for customers by meeting their needs or enabling them to meet their own needs

Supply Chain and Operations (SC&O)

    • Emphasizes the linkages between firms that tie operations together with the goal of satisfying customers

2

Process design, management, control, and improvement

Processes

    • Means by which all work is performed

Process Design

    • Configuring inputs and resources in a way that provides value, enhances quality, and is productive

Process Management

    • The act of executing and controlling the productive functions of a firm

Process Control

    • The act of monitoring a process for its efficacy (Produce desired result), Process Improvement • Proactive effort to enhance process performance

3

Supply chain globalization strategies

Licensing – Sale of the same product with another trademark

Strategic Alliances – Forming business alliances with suppliers

Globalization – Establishing production and marketing facilities in foreign countries

4

Outsourcing and Nearsourcing

Outsourcing

    • Process of moving the production of an item to another firm or producer

Nearsourcing

    • Production of a component or product is moved geographically closer to where it was originally produced

5

Sustainability

Sustainability

    • The proactive management of resources in an effort to be environmentally friendly

6

Difference between supply chain management and operations management

Supply Chain Management

    • Multiple firms working together to create value

Operations Management

    • Transformation of a single firm to create value

7

Primary flows of a supply chain

Upstream – Suppliers

Downstream – Consumers

Product Flows

    • Upstream to downstream

    • Reverse logistics – products move up the supply chain Monetary Flows

    • Downstream to upstream, unidirectional

Information Flows

    • Bidirectional, data flows

8

Service supply chain complexity

Many upstream suppliers and downstream consumers

Many to many relationship

Customers are also suppliers

9

Combining supply chain and operations

• Suppliers have transformation processes (operations) and the producing firm has transformation processes.

• Transformative processes of upstream suppliers are tied by supply chain and logistics activities to producers who have the same

10

Impacting

• Effectively managing core processes that affect customers

• Managing core processes satisfy the customers

11

Improving

• The act of making processes, products, and people better

• A process, not a single event

• Result of effective process management and design

12

Innovating

• Large-scale, sudden improvement, that has a dramatic effect on business results

• Incremental and continuous

• Necessary for firms to compete effectively

13

Integrating

  • Collaboration and integration between all stakeholders in a supply chain
  • Includes suppliers, operations people planners, …
  • Results in streamlined communication, information sharing, and improved management outcomes
  • One of the best ways to manage complexity

14

Upstream vs Downstream Collaboration

Upstream – Strategic sourcing or purchasing, supplier selection and development, tco

Downstream – Customer relationship management

15

Porter’s Generic Strategies

Focus Strategy

    • Seek to service only select customers and provide these niche customers with a narrow range of unique products and services

    • Amazon

Differentiation Strategy

    • Seek to provide such distinctive products or services that competitors cannot compete with them

    • Apple

Cost

    • Seek ways to reduce costs and provide customers with lower prices than competitors

    • Walmart

16

Fischer’s Supply Chain Alignment Model

Efficient Supply Chains

    • Functional Products (Mass produced toaster) Responsive

Supply Chains

    • Interactive Products (Haircut)

17

Agility and adaptability

Agility

    • The ability of a supply chain to quickly respond to short-term changes in demand or supply

 

Adaptability

    • Capturing the value of long-term changes

    • Capability to adjust a supply chain’s design to meet major structural shifts in the market

18

Order winners and qualifiers

Order Winner

    • Those attributes that differentiate a company’s products

    • How the firm wins orders

 

Order Qualifiers

    • Those necessary attributes that allow a firm to enter into and compete in a market, and a firm’s strategy must account for these necessities

19

Resource-based view

Competitive advantage come from applying tangible and intangible resources to operate effectively

Capabilities’ Four Core Aspects

    • Four specific aspects to capability that provide a company with a core competency

 

    • 1 – Value – valuable to customers

    • 2 – Rarity – competitive advantage because competitors cannot utilize these resources

    • 3 – Imitation-proof – resources that cannot be recreated or reverse engineered because of uniqueness

    • 4 – Substitution-proof – resources cannot be easily replaced

20

Core competency

Core Competencies

    • Hone only those capabilities that tie most closely to their customer values and that provide companies with a unique competitive advantage

21

Reverse logistics

Reverse Logistics

    • The ability of a company to move product upstream while managing waste streams in an effort to reduce the cost of the waste stream or make the waste stream profitable

    • Reduction, reuse, and recycling

    • Reduction – elimination of waste before waste occurs

    •   Reuse – reusing part or all of an object

    • Recycling – breaking down used items to reuse base materials

22

Dynamic capabilities

Dynamic Capabilities and Retaining Value

    • Capabilities that win customers one day may not win the same customers the next day

    • Dynamic Capabilities – firm’s ability to integrate, build, and reconfigure internal and external competencies to address rapidly change

23

Types of relationships: transactional, complementary, synergistic

Transactional Relationships

    • Firm that pursues a cost advantage through its supply chain partners, to find the lowest-cost providers for supplies

    • Arm’s length, bidding

 

Complementary Relationships

    • Occurs when a company that clearly understands its core competencies needs another firm’s competencies so as to maintain world-class service

    • Combining core competencies

 

Synergistic Relationship

    • Relationship between two companies that are committed to work together in a way that the result is greater than the sum of the individual parts

    • Sum

24

Calculate the “Economics of Purchasing” problem (pg 149-150)

Study

25

Impact of quality on profitability

Higher Perceived Value

Increased Market Share

Lower Transformation and Defect Costs

26

Portfolio approach to strategic sourcing o How to identify portfolio types o Recommended management strategies

Routine Items

    • Low value, purchased in small volumes, individual transactions

    • Automate the purchasing process, Simplify process

 

Leverage Items

    • Potential to affect profit, High level of expenditures while having many suppliers

    • Contract with suppliers to maximize commercial advantage

 

Bottleneck Items

    • There are few alternate sources of supply (complexity, new technologies, untested process) and low profit impact

    • Ensure supply, Search for alternatives

 

Critical Items

    • Big effect on profitability with few qualified suppliers

    • Form alliances and prepare contingency plans

27

Portfolio Pic

A image thumb
28

Strategic Cost Management

• Involves four types of analyses: spend analysis, price analysis, cost analysis, and total cost of ownership analysis

29

Spend Analysis

• Review of a firm’s entire set of purchases

• Answers – What is the firm spending its money on?

• Done at both aggregate and detailed levels

• Spend is categorized as direct, indirect, and capital

• Useful in categorizing purchases into the portfolio model quadrants

 

WHEN TO USE - What is the firm spending money on?

30

Direct Spend Category

• Any material or service that is part of the final product

31

Indirect Spend Category

• All the spend that supports the operations of a firm

• Everything from cafeteria services to spare parts for factory equipment

32

Capital Spend

• All spend for buildings and large equipment anything that will be depreciated

33

Spend Analysis can be used to Determine

• If a firm received the correct number of products and services given, what if paid for them

• Which suppliers received the majority of the business and if they charged an accurate price across divisions

• If opportunities to combine volumes and spending for different business groups, standardize product requirements, reduce the number of suppliers, or take advantage of market conditions to receive better pricing

34

Price analysis

• Process of comparing supplier prices against one another or against external benchmarks

• Useful when there are many suppliers, purchases categorized as either routine or commodities

• Primary challenge – comparing items with the same specifications, quality levels, lead times, warranties, and so on

• Common difference comes in payment terms

• ITEMS MUST BE THE SAME

 

WHEN TO USE - comparing suppliers

35

Cost analysis

• Analyzing each of the individual cost elements that make up the final price

• Use when price analysis is impractical or when price analysis alone does not allow a buyer to reach the conclusion that a price is fair and reasonable

• Use when there are few alternatives to sources of supply (Bottleneck/Critical categories)

 

WHEN TO USE - you can't use price analysis

36

Total Cost of Ownership Analysis

Total Cost of Ownerships (TCO)

    • Combination of all costs involved in a product

    • To include all costs in your analysis of a purchase, not just purchase price

    • Applies to all the quadrants of the portfolio model

 

TCO Cost Categories

    • Acquisition Costs: identifying, selecting, ordering

    • Ownership Costs: quality and maintenance

    • Postownership Costs: customer’s use and disposition of the purchased item

37

Calculate an effective price with differing payment windows (price analysis)

1. Calculate difference in days

2. Calculate daily cost of capital x%/365

3. Days * Daily Cost * Price

4. Price + 3

38

Profit Margin

Net Income / Sales