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3 parts of social responsibility

Legal &Ethical behavior Sustainability
Commitment to the Community


– Acting within the law in all of the nations in which they conduct business. It might also include treating stakeholders well - employees, business partners, and customers.

Legal and Ethical Behavior


Earth-friendly business practices. Having business practices, products, and services that do not harm the environment in the present nor in the future.



Investing in the well-being of the communities in which the business operates as well as the greater world.

Commitment to the Community


Ways SC can be more sustainable

• Procurement – Purchasing better materials, fewer materials, safer materials
• Logistics – Transportation efficiencies, reduce fuel consumption
• Manufacturing and Operations, Facilities – Energy consumption, defect reduction, minimize emissions
• Reverse logistics – Recovery of packaging, damaged items, parts, etc. for reuse, refurbishing, re-sale, recycling
• Supply chain sustainability catalysts – Large powerful companies can become catalysts often have the power to motivate thousands of suppliers to become sustainable. This not only impacts the catalyst’s supply chain, it impacts every other company that buys material from that supplier.
• Rethink design – Poor design will always yield poor outcomes. Sometimes companies need to start from scratch and develop a new design. Example: Electric car engines instead of gasoline powered engines
• Sustainability Accounting – Companies cannot fix a problem until they can find the source. With the help of accounting supply chains can identify primary areas of costs related to unsustainable business practices.
• Develop Sustainability Metrics – Metrics help companies find problems, track improvement, and they can also motivate employees to change their behavior.


Purchasing better materials, fewer materials, safer materials



Transportation efficiencies, reduce fuel consumption



Energy consumption, defect reduction, minimize emissions

Manufacturing and Operations, Facilities


Recovery of packaging, damaged items, parts, etc. for reuse, refurbishing, re-sale, recycling

Reverse logistics


Large powerful companies can become catalysts often have the power to motivate thousands of suppliers to become sustainable. This not only impacts the catalyst’s supply chain, it impacts every other company that buys material from that supplier.

Supply chain sustainability catalysts


Poor design will always yield poor outcomes. Sometimes companies need to start from scratch and develop a new design. Example: Electric car engines instead of gasoline powered engines

Rethink design


Companies cannot fix a problem until they can find the source. With the help of accounting supply chains can identify primary areas of costs related to unsustainable business practices.

Sustainability Accounting


help companies find problems, track improvement, and they can also motivate employees to change their behavior.

Develop Sustainability Metrics


A geographic area sanctioned by the government where items are not under the control of customs authorities. As such, goods can be imported into a country, brought into an FTZ and then stored, displayed, and/or manipulated before being re-exported without ever being inspected or taxed by customs officials.

Free Trade Zone
(In some countries these types of areas go under different names – free economic zone, free zone, export processing zone, special economic zone)


A voluntary program developed by US Customs and Border Protection for companies importing goods into the US. The program requires member organizations to report a significant level of detail related to supply chain partners and actions for each imported shipment. In exchange for providing this information to US Customs, member companies are allowed opportunities for speedier and more hassle-free customs clearance.

Customs-Trade Partnership Against Terrorism (C-TPAT)


A contractor (company or person) that helps a client’s goods clear customs in a foreign country.
• Before goods reach the border: Preparation of documents, issues relating to import fees and taxes • During inspection: Answers the customs agents’ questions in an effort to facilitate customs clearance

Customs House Broker


A contractor (company or person) that helps companies organize the efficient and effective shipment of goods from one point in the supply chain to another.
do not actually transport the goods, instead they negotiate and arrange for one or more logistics companies to prepare, secure, store, track, and move the cargo.

Freight Forwarder


A contractor that performs one or more logistics functions for their client in an effort to facilitate effective and efficient movement in the supply chain.
(procurement, assembly, etc.). Below is a short list of the types of services that might be performed by a 3PL:
• Arranging shipping itineraries, in some cases taking over all the client’s logistics responsibilities
• Aiding in the import and/or export process
• Warehousing, Distribution, Picking and Packing
• Containerization and Transportation • Packaging
• Documentation
• Product tracking, Logistics data and information management
• Logistics specific financial services
• Management of digital marketplaces for logistics services

Third party Logistucs


A type of offshoring where the manufacturing facility is relatively close to the consumer

Near sourcing
Also referring to :
Near source offshoring
Near source offshoring and outsourcing


A company that produces goods on behalf of another organization

Contract manufacturer


Apple designs numerous digital devices but they outsource manufacturing to companies like Foxconn and Pegatron. Foxconn and Pegatron would therefore be considered Apple’s ________

contract manufacturers


The outsourcing of office activities like accounting, human resources, customer service activities (like call centers and customer chat). Sometimes these types of outsourced activities are referred to as back office activities.

Business process outsourcing


IBM offers companies help in the areas of employee recruitment, supply chain services, customer care and management of financial data. If you owned a small company you might consider having IBM help manage these types activities rather than developing departments internally. IBM is an example of

Business Process Outsourcing


When a company moves manufacturing out of its “home” country to another country.



Ford Motors is an American company that has manufacturing plants in the United States, it also has plants around the world in many countries including China, Germany, Brazil, Russia, and South Africa. this is an example of?



A strategy where a company utilizes a contractor in another country to perform services and/or operations.

Offshoring and outsourcing


When a company contracts an outside firm to perform services, operations, or business processes that were previously performed in-house.



is a supply chain phenomenon where fairly stable demand results in a proliferation in the amount of inventory that is carried as one travels upstream in the supply chain

Bullwhip effect


Distribution carries more inventory than retail.  Manufacturing carries more inventory than distribution.  Suppliers carry more inventory than manufacturers.  And so on, and so on.
Example of??

Bullwhip effect


4 causes of the bullwhip Effect

Order Batching
Forward Buying
Shortage Gaming


When companies place large and infrequent orders from their suppliers. Typically this is done to take advantage of quantity discounts and economies of scale in purchasing and delivery. The problem is that the infrequent orders leave large communication gaps (uncertainty) for suppliers and it may also require suppliers to carry large amounts of inventory so they can be prepared when those large orders are actually placed.

Order Batching


This is the result of suppliers offering sales.  Buyers are motivated to buy in large quantities to take advantage of low prices.  Buyers are not buying based on demand, but rather on price.  Therefore, true demand is unknown by sellers (uncertainty).  Sellers experience the uncertainty of demand due to their own short-term drops in price for their customers

Forward Buying


Sometimes, despite their best efforts, suppliers do not have enough inventory to satisfy the demand of all of their customers.  If this is the case, suppliers may ration their inventory and send each of their customers only a fraction of the inventory that was ordered.  For example, if a company receives orders for 1,000 total units from their customers, but only has 800 units of inventory available, that company might only send each of their customers 80% of their orders.  These smaller than expected deliveries introduce doubt into the system and thus may trigger negative behaviors in the future.



In rationing, customers only receive a fraction of their placed order.  This leaves the customer short of their desired inventory level.   If customers feel that this rationing may occur again, customers may try to “game” the system by placing an order larger than their expected demand.  For example, if their demand is 80 units, they may place an order 100 units instead of the 80 units needed.  The rationale is that when the supplier sends them only 80% of their placed order, they will get exactly the demand needed.

Shortage Gaming


A system that combines push and pull - pushing product elements that are considered standard and then allowing customers to pull product elements that can be customized. Those product elements that are standard will be produced in advanced, and then final production will be delayed until the consumer places an order that specifies the customized elements.



postponement, relationship to push and pull

Postponement is to combine a push/pull system. It can be valuable because it allows some degree of customization and standardization (speed and customization).
The relationship to push is through the standardized portions of manufacturing.
The relationship to pull system is the customization options offered to customers.
example: painting an chair after received an order


strategy: pull
inventory: evil: minimize it
quality control: quality at the source
supplier relations: suppliers are partners
supply chain communication: open communication required
consumer market: customer dictates what supply chain must produce
business practices: best today won't be best tom

Lean manufacturing


• A production philosophy that strives to meet consumer demand and desires but with minimal inventory levels and minimal supply chain waste.
• Ex. TPS(Toyota Production System/ Just- In Time)

Lean manufacturing


• High Performance Quality
• Consistent Quality
• Quality at the source – Empowering every employee to be a quality inspector and manager
• Continuous Improvement - Being lean means being devoted to the consumer.
• Poka-yoke – Mistake-proofing. Lean companies will find ways to completely eliminate certain types of errors.
• Close supplier ties – Good relationships, trust, and information sharing reduce uncertainty and thus will result in fewer unwanted supply chain surprises.
• Small lot sizes
• Standardized components and work method
• Dedication to the Workforce – Lean systems require finding errors, fixing errors, identifying opportunities for improvement, and relationship management with supply chain partners.”
• Using Automation when Appropriate
• Short Set-up/Change-over – Set-up time is the amount of time it takes to change a system from producing one product to producing a different item. Keeping short set-up times allows systems to run “leaner”.
o Consider the EOQ formula for manufacturing: EOQ = Sqrt [(2*Demand* Set-up Costs) / Holding cost]”

Keys to lean manufacturing


focus on productivity and value, an irresistible combination for any supply chain manager.

Lean system


A system in which consumer demand is known and expected.  As a result a supply chain will preemptively buy materials, manufacture finished goods, and even deliver them to a store or a picking and packing facility where consumers can buy them at a later date.
Supply chains are quite similar.  Some supply chains proactively begin manufacturing and delivering products to stores before customers even know they want them.

Push system


•  High finished goods demand readily available for buyers
•  Opportunities to take advantage of quantity discounts
•  End-items are standardized with little opportunity for customization
•  Vulnerable to obsolescence of inventory, high holding costs, and poor demand forecasts that may result in stockouts or massive overstocks.

Push System characteristics


System that is activated by consumer demand as a result a supply chain will not make and store finished goods inventory until someone wants something
Other supply chains wait for the customers to place their orders

Pull systems


• High raw materials inventory readily available to produce a specific consumer order
• End-items are very likely offer a range of customization options
• Vulnerable to sudden increases in demand, poor forecasts that may result in poorly planned production systems/facilities

Pull systems characteristics


Retailers that are fully committed to engaging customers via catalogs, phone calls, websites, email, internet chatrooms, social media sites or mobile apps, and of course also in stores.

Omni-Channel Retailing


VMI stands for ??

Vendor Managed Inventory


An arrangement where retailers allow vendors to monitor in-store inventories, initiate orders/shipments to the store when inventories are low and also bring the items into the store and onto the shelf

Vendor Managed inventory


Refers to the portion of the supply chain between the final inventory holding facility and the end consumer/ is not always necessarily home

Last mile

- Miles rom Amazon ceneter to you
-End consumer could be a office, mechanic, factory
-Variation in size, location and consumer expectations


When a customer joins the line, gets frustrated and leaves the line.



When a potential customer sees the line, but never joins the line because they think it looks too long and/or too slow



Queuing systems - Goals and Trade-offs

- Goal: To serve people efficiently.
- Trade offs - Having too many staff and underutilizing them OR having too long a line, and angry customers. Both lose money


Goal of waiting line management

Balance the cost paid by the customers (time) with the cost paid by the company (money paid to maintain the system)


Distribution of goods from an upstream supplier to a downstream customer through a distribution center with minimal handling and storage times typically less than 24 hours.

Cross Docking


are typically used to store inventory for long periods of time (weeks, months, or even years). storage is the primary function. Items need to be kept safe and preserved for future use.



focus on efficiently getting items to retail and/or wholesale outlets. try to quickly get large shipments of a good off of a single truck and then get that good ready for distribution to dozens of downstream stores. The idea here is to have full trucks with large quantities of one (or a few goods) in-bound and then full trucks with small quantities of many different items outbound.

DC Services
Distribution Center Services


5 Modes of Transport

and pipeline (used only for liquids)


___is not the fastest or the cheapest. It is neither the most expensive nor the slowest. is thus a reasonable combination of a number of important transportation attributes.



Pros: Accessibility, Flexibility, Versatile, Reliable. 2nd Fastest mode, Much cheaper than air. Vital to Intermodalism.

Cons:Long Trips mean excessive regulations. Vulnerable to fuel prices, tolls, taxes, fees. One driver, one truck, insurance. LTL's and LCL's will make many stops.

Road Pros and Cons


Good for heavy and/or bulky shipments that do not need speedy delivery. Also good for items with low “value/weight” ratios. A good intermodal option for lengthy domestic shipments where speed is not vital.



Warehousing V Distribution Centers Differences

W: Provides storage
DC: facilitates movement


Pros: Ability to carry heavier cargo, better for distance, not as effected by fuel cost, more affordable than road costs, more capable in poor weather.

Cons: Susceptible to in-transit damage from vibration. Poor on time reliability. Avg. Speed about 30 mph. Access to infrastructure required (rails and loading stations)

Railway Pros and Cons


excellent for large and bulky international shipments that require low transportation costs, but do not require quick shipment.



Pros: Low Cost, transports almost any form of cargo.

Cons: Much slower than air, port capabilities, Channel depth challenges.

Water Pros and Cons


An attractive option with items that have a high “value/weight” ratio. Especially useful when short lead times and low inventory levels are valued. In addition, useful when security and damage are significant concerns.



Pros: Speed, fastest growing mode (becoming more affordable)

Cons: Extremely Expensive, incompatible containers.

High Value ($) to weight ratio (diamonds, wine, cigars, race horses)
High Insurance Cost Items
Overnight Preference or Emergencies
Short Shelf Life (Flowers and food)

Infrastructure Examples

Air Pros and Cons


Used only for liquids or items that can be shipped in a slurry



o When cargo is moved from one vehicle or vessel to another vehicle or vessel without directly handling the cargo. Typically the cargo would be stored inside of a standardized container or a truck trailer. The standardized container can swiftly and securely be moved from a ship to a rail car, from a rail car to a truck chassis, etc.



A controlled atmosphere container



TEU stands for?

Twenty-foot equivalent unit
o Stands for Twenty-foot Equivalent Unit. This is how containerized cargo is measured. One 20-foot container is equal to 1 TEU



Less than a truck load
– If a company has a reasonable amount of goods going to a single location, but not enough goods to fill an entire truck or container



o Truckload Shippers
These types of shippers specialize in moving large amounts of goods, enough to fill an entire truck. If you are dealing with 20 or 40-foot containers instead of a truck, the term CL Shipper can also be used, where CL stands for container-load.


bubble wrap, Styrofoam popcorn, small inflatable airbags used in boxes, large inflatable bags used in shipping containers
-Used to fill the empty space inside boxes, tubes, etc.



• A map of where every product goes on a retail store shelf.
Schematic drawings that illustrate product placement



Typically these are large items that do not quite fit into either the bulk or break bulk categories. This might include vehicles, logs, and livestock. items are typically not moved in standardized containers.
Automobiles, logs, steel, cattle

Neo Bulk


Cargo that is packaged (box, bottle, can, etc.) and/or secured on a pallet. This type of cargo can then be placed inside of a standardized container or a truck trailer.
General or packaged cargo

Break Bulk


Cargo that is loose and free flowing. cargo is not in any type of bag, box, or packaging vessel. As such, cargo is typically loaded and unloaded by being pumped, scooped, shoveled, etc.
Free flowing cargo, stored loosely- grain



base is the collection of companies from which an organization presently purchases products and/or services. implies that an organization has a group of companies with which they have developed a working relationship. This advanced relationship might imply that transactions occur regularly and perhaps more fluidly.

Established supplier base


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 The largest workstation is your slowest workstation. This limits the output of the assembly line. IT is the weakest link”

Bottle Neck


resource(s) with the smallest capacity



What is Cycle Time?

What does it dictate?

How does it relate to capacity?

-Maximum time allowed for work on one unit at each station

-Time it takes for 1 unit to come off the assembly line

-Less cycle time = more capacity higher effective cycle time
If the time required for work elements at a station exceeds the line's cycle time, the station will be a bottleneck, preventing the line from reaching its desired output rate.


"A manufacturing layout that combines elements of both line flow and flexible flow layouts. In this layout, products may pass through a layout in a linear fashion, but each workstation would have the ability to allow for some level of customization.
Items requiring low degrees of customization may be created in systems that very much resemble line flow systems except for one or two areas. On the other hand, items requiring higher degrees of customization may only utilize line flow elements in a few parts of their facility."

Hybrid Strategy


A manufacturing strategy and layout that typically works well for producing end items (or services) that have relatively low demand levels and that may require a high level of customization. The work centers focus on a particular type of function like drilling, sanding, welding, painting, assembly, etc. While each work center performs a single function, a large degree of variation is possible at each workstation."

Flex Flow


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)

Assembly line


is a manufacturing strategy and layout that typically works well in producing end items (or services) that have relatively high demand and that require very little (if any) customization. The work centers are located in a linear path. Items begin on one end of the line and continue in a linear path to the last work center. Each work center performs the exact same work to every unit that passes through that work center."

Line Flow Strategy


systems must run to completion once the process has been started.
Loaves of common sliced sandwich bread might be an example of a product that might utilize a continuous flow system. "

"Continuous flow


What are the key differences between:
-Line Flow Systems
-Flexible Flow
-Hybrid systems

Line: Makes same item
Flex Flow: Makes customize item
Hybrid: Mix between line and flex flow


What should be considered in choosing a supplier?

o Consumer needs
o Cost, Quality, Speed,
o Technological capability
o Location
o Information Technology
o Ability to innovate
o Capacity Potential
o 2nd and 3rd tier
o Reliability
o Service


What does it mean if
Should you increase or decrease Q in each case?

Holding more than you are ordering. Decrease Q
you’re on the right side of EOQ


What does it mean if

Holding less than you are ordering. Increase Q
(left side of EOQ)


is the lot size (Q) that will minimize total annual inventory cost (TC); it is therefore seen as the optimal lot size.
-The order size to minimize cost & maximize outcome

Economic Order Quantity.


EOQ’s relationship to Holding Costs and Ordering costs?

EOQ is the equilibrium between holding costs and ordering costs


Benefits 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”


Benefits 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”


The act of a company taking on additional supply chain responsibilities that were formerly done by outside parties.

Vertical Integration


Taking over supply chain responsibilities formerly performed by downstream supply chain partners. ”
-taking over the roles of companies closer to the customer

Forward Integration


Taking over supply chain responsibilities formerly performed by upstream supply chain partners”
-taking over the role of your supplier

Backward Integration


Protects against uncertainty in demand, lead time, supply with no intention of using. (such as insurance)

safety stock


inventory that is on its way to customer. Order that has been placed but not yet been paid nor received by the customer.

pipeline inventory


A firm that provides goods and/or services to a company’s first-tier supplier.

2nd tier suppliers


A company’s direct supplier. A firm that directly provides goods and/or services to a company.

1st tier suppliers


The management of products and packaging that flow backward in the supply chain, away from the consumer and back in the direction of manufacturers.

Reverse Logistics


In a supply chain the direction in which products flow towards an end consumer.



In a supply chain the direction from customers to suppliers.



o is the Efficient Integration of suppliers, transporters, manufacturers, warehouses, retailers and all other parties associated with the delivery of the final product.
o Purchasing
o Production
o Distribution
o Retail

Supply Chain Management


The branch of the supply chain responsible for making business processes effective and efficient

Operations Management


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 branch of an organization responsible for acquiring materials, equipment, products, and services.



Value Questions

customer perspective
o What do I get?
o What is the Price?
o Value is the ratio of “output purchased” divided by “inputs used to purchase” the product or service. Customers seek value. Value can be increased by giving the customer more for the same price, or by giving them the same amount at a lower price.


Productivity Questions

organizational perspective
o What did I make? (input)
o What was the cost? (output)
o ratio of outputs to inputs. 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.
o Productivity is a relative term, so typically it can only be compared to the productivity of periods that precede the present productivity.


Competitive Priorities

Cost, Quality, Speed, Flex
Material Costs
Production Costs
Packing Costs
Quality Costs
Customer Service
Delivery Time
• Lead time (pizza)
On- time delivery
• Airlines

Material & Production
Quality Level
Consistent Quality
Service Quality
Materials/ Parts
 Product or Customization
• Options offered
 Volume Flexibility
• Timely
 Mass Customization



Step-by-step breakdown that aids in providing high quality results on a consistent basis utilizing minimal resources.

What is a business process


Relationship between business processes and the supply chain, Importance of business processes

Supply Chains are made up of a series of interconnected and interdependent processes

Each Process is a mini-supply chain – Managing Inputs and Outputs at a smaller scale


Three requirements of a good process

Good Intentions –
Goal Oriented, Stakeholders considered, Effective and Efficient, Outputs are desired

Reproducible Results – Documented and Easily Understood.

Measurable and Manageable – Entire system considered. Accountability, good metrics, easy to identify problems.


Common reasons for bad processes:

Ambiguity – Goals are not clearly understood. Laziness, Hubris, Lack of information
Misalignment– Goals and Actions not in alignment (More in parts 2 & 3)
Miscommunication – Employees do not understand goals, process…

Market Evolution – Customer’s needs have changed
Miscommunication – New employees do not understand goals, process…

Development of poor or limited processes - May result in limited capacity, inefficiency, confusion…
Lack of appropriate tools, technology…


Cow path theory - Story and Lessons

The cow path shows a path that is made and is continued to be used, when it gets so busy there is no time for improvements even when the necessary improvements are known/obvious.

This demonstrates:
how processes develop and bad processes became accepted

The cow is told by boss to go drink water. It runs into walls but eventually finds water. Boss is happy, customer is happy, and more customers want to see the cow drink. The cow doesn’t have room for error and accepts flawed system of drinking water rather than trying faster and effective way. When old cow leaves, new cow comes in and is expected to do job the way the old cow did, when it clearly sees faster and more effective way to reach water.


In-class example of Ticket Brokerage

ticketmaster, stubhub
people buy and sell tickets - different types of customers.
Ticket BUYERS want selection of tickets, good prices, easy to find, easy to buy, fast transaction, secure transaction, good delivery options. Value: convenience, security, reliability. Measure: measuring effectiveness, value, convenience, security, reliability.
Ticket SELLERS: Want: good market of buyers, reasonable transaction fees, easy to post, etc.
Value: convenience, security, reliability.
Measure: measuring effectiveness, value, convenience, security, reliability


steps in designing a business process

Define Goals and Parameters
Goals, Values, Stakeholders – What needs to be accomplished? Who is involved?
Block Diagram – A process is part of something bigger. Describe the system in which process will lie.
Establish the Scope – Define parameters of process. Beginning and End.

Define Success
Define the Service – Get more specific. Establish exactly what process needs to accomplish
Measurement & Management Considerations – Metrics and Data. How will they be used?

Build it, Test it, Improve It
Primary Steps Detailed – Begin to build the process steps
Develop a Process Map – Create a visual representation of the process
Evaluation, Testing – Evaluate the process before rolling out.


In the chain of processes, where is this particular process?
Using a block diagram, detail the steps before and after this process.
Use the diagram to better understand the requirements of your process.

Block Diagram


Stage One in a business Process?

Stage One: Define Goals and Parameters

Objectives – Goals, Values, Stakeholders
Who are all of the people involved? At all levels.
Provide a detailed list of the things each party wants and values.
Create a list of things that must be accomplished within the process.

2. Block Diagram
In the chain of processes, where is this particular process?
Using a block diagram, detail the steps before and after this process.
Use the diagram to better understand the requirements of your process.

Define process requirements and boundaries.
Processes are typically connected to other processes.
Where does your process begin and end?


Stage Two in a business process??

Define Success

Define the Service
What is this process? Provide a simple and clear explanation
Delivery Method – Automated, online, in person…Which one?
What will be accomplished during this process?
Which resources will likely be used/needed during the process?

5. To Manage Performance you must Measure Performance
Which numbers will be used to measure performance?
What is the value of each metric?
Consider the messages those metrics will send.


Stage Three in a business process??

Build it, Test it, Improve it

Create a List of the Required Steps
Consider whether each step adds value
Anticipate every probable outcome and situation before they happen

7. Develop a Business Process Map (Flow Chart)
Used to communicate, teach, demonstrate, analyze. Used to discuss the process.
An important tool to identify weakness, opportunity, ambiguity.
Basic flow chart types: Business Process Map and Swim-lane Flowchart

8. Evaluate and Improve the Process, Test the Process
Visual Evaluation – Failure points, resources, capacity, metrics, data collected,
technology requirements, training, etc.
Share Process plans with key stakeholders
During and after development: Test the Process, Evaluate and Improve


Used to communicate, teach, demonstrate, analyze. Used to discuss the process.
An important tool to identify weakness, opportunity, ambiguity.
Basic flow chart types: Business Process Map and Swim-lane Flowchart

Business Process Map (Flow Chart


– Define parameters of process. Beginning and End

-Define process requirements and boundaries.



is when work goes beyond the minimum required to get the job done.

Scope Inflation

When scope grows out of control


|___| Rectangle

Task, Operation, Data collection


<> Diamond

Decision point where multiple flow paths possible


(____) Very Long Oval

Terminator: Depicts Start/End
Entrances and Exits to Process



Depicts Flow of Customer/ Material within the Process


| | Square within a square
_|____ |__

Process: Depicts an entire process
Likely depicted in another flowchart


----------/ Thick Arrow



0 Oval



D looking oval

Delay in


--->O O--->

Connector: Output leads to another flow chart or into another flowchart


value of flowcharts for the organization

Build a detailed process plan
Find areas of weakness, opportunity, and ambiguity


Takes a basic flowchart and breaks it up into different people and departments

groups functional areas responsible for different sub processes into lanes. Most appropriate when the business process spans several department boundaries

swimlane flowcharts (functional)


In-class example: Catalog Order Process

block diagram is important because customers ask questions and we need to be able to know more information
scope is the full phone call


Value of Process improvement and Project Management on Careers – In-class examples

Vital to Corporate Careers - No matter what the major
Well-defined goals
Teams and Individuals have responsibilities
Recommendations and Implementation
Measurable Results – Success or Failure?

Resume Builder – Little stories about your career
What you have done. Ability to get results. Leadership experience.
How do you deal with adversity and ambiguity…
Good way to document your accomplishments (Grades & Degrees are useless)

Corporate Career
Successful Leaders get more responsibility, power, money…
Top Project Managers have the ability to choose projects, teams…
Unskilled, unintelligent, and “control freaks” are easily exposed in a project environment


Attributes of a good consultant

DATA SKILLS - Are you skilled at Data Collection, Data Analysis?

VALUES FEEDBACK - Seek Feedback, Use Feedback

CREATIVITY - Be creative in developing solutions

UNDERSTANDS PEOPLE - Create solutions that work for humans

CHANGE AGENT - Anticipate Learning Curves and Resistance to Change

DESIRE TO HELP PEOPLE – Don’t get angry. Remember you are there to help.

VALUES SIMPLICITY - Easy to Understand Solutions – Explain changes, benefits, metrics


Common consulting errors

MAKING ASSUMPTIONS – Never assume. Investigate. Investigate more.

DEVELOPING SOLUTIONS TOO SOON - Long lasting solutions are rarely obvious


SCOPE INFLATION – Limited time. Limited Resources. Stay focused.

STICKING TO A DEAD-END SCOPE – Is it time to quit?

MAITAINING HAPPINESS – Change is difficult.


Interview Client - Identify Objectives, Goals and Metrics

What do they want? Why? Consider values. Establish a hierarchy

Goals must be quantifiable.

Restate what you’ve heard. Repeat this until everyone agrees.



Interview, Observe, and/or Collect Data

Process Maps and Data Inspections – Do actions and documentation match?

Utilize the same metrics from “Step One”



Step THREE: Gap Analysis – Gap between Desired and Present State

Illustrate the GAP – utilize desired metrics and goals
Share and discuss the “GAP” with clients Why does the gap exist? Consider potential causes.
Do NOT develop Solutions!!!


Develop a focused project. Which GAPS will be addressed on this improvement project?
Establish goals and desired outcomes.
What will be investigated? What will be developed?

Step FOUR: Develop Project Scope


Deeper internal investigation
External investigation (benchmark, learn from others, success/failure)
GET FEEDBACK - Share and Discuss Findings
Consider possible elements of a solution

Step FIVE: Collect Data, Share Data, Analyze


Does this problem even require change and/or innovation?
If a solution is needed, where to start?
Start with Two Options - Change Nothing, Eliminate Process
Get Innovative: Embrace the Repugnant
“Good Ideas” are Useless - Will they actually adopt the idea?
Focus on YOUR client - Avoid one-size fits-all solutions
Do some issues require further study? Future projects
Get Feedback Early and Often –Are you Preparing for Resistance at Final presentation

Step SIX: Develop Solutions and Recommendations


How should these ideas be put into action? Be Specific!
Training and Development Considerations Outlined
Anticipated problems and corrective actions

Step SEVEN: Develop an Implementation Plan


Primary steps to consider when selling consulting recommendations

SECTION ONE – Present a Valuable Idea
List Values, Objectives, and Goals – What does the client want?
Recommend - Basic Solutions and Anticipated Benefits

SECTION TWO – Convince on all fronts
Cost-Benefit Analysis - Money is important
Value to Work Ratio – Expected outcome / Expected investment
Organizational fit – Rules, Regulations, Culture, Organizational structure

SECTION THREE – How will success be Measured?
Explain the GAP and the path to success with metrics
How will metrics signal positive and negative?

SECTION FOUR – Implementation (Making the idea happen)


“An endeavor in which human, material, and financial resources
Are organized, in a novel way,
To undertake a unique scope of work, of a given specification,
within the constraints of cost and time,
so as to achieve a beneficial change
defined by quantitative and qualitative objectives.”

What is a project


Four steps in project management

Clarity of objectives. Eliminate ambiguities. Avoid Arguments later.

Choose two types of quality: Cost, Time, Performance
Break work items into smallest units.
Estimate of needs: people, Time, Cost

Are we on-time, ahead of schedule, behind schedule?
What happens when different groups need help?
Importance of project management software


Project priorities triangle from lecture

Choose two types of quality: Cost, Time, Performance


AON Diagrams

(Activity On Node) Network Diagram

Look at diagram


The Longest Path (in terms of time) in the AON Network Diagram. This path dictates the expected completion time of the Project. Items on this path must be completed in time in order for project to be completed on schedule.

Critical Path


- The amount of time an activity or path can be delayed with impacting the length of the critical path.



- Shortening the Time of the Project by increasing the number of resources usually in the most cost effective manner. When Crashing in this class, ALWAYS choose the cheapest solution.

Crashing the Project


A single performance measurement used to evaluate, motivate, and improve performance.

Performance metrics (PM)



Measuring employee performance for the purpose of motivation, improvement, statistical reference, promotion, termination, etc.

Performance Measurement


A collection of measurements used to evaluate a process, person, company, etc. from multiple perspectives.

Basketball example: Points/game, Rebounds/game, Assists/game, Turnovers/game, Turnovers caused/game
Academic example: GPA, SAT Scores, Years to complete degree

System of Metrics


reasons organizations use Performance metric pms

1. helps to establish and support standards
2. motivate good behavior
3. identify trends
4. manage from afar
5. managing large numbers of resources
6. performance data can facilitate decision making and planning


Importance of Goals and Stakeholders

Knowing the relationships between the stakeholders helps a manager understand how certain actions by one party may result in certain reactions by the other stakeholders.

• Stakeholders and Goals - Have plan that revolves around the stakeholders and the goals


Consequences of poor metrics

SC GOALS NOT MET: drive companies away from being effective, efficient, and adaptable

POOR OUTPUT: employees work quickly but it could cause them to make more mistakes

WASTE: employees driven to work quickly may make more defects result employee time wasted

UNDESIRABLE EMPLOYEE BEHAVIORS: driven to cheat, seek shortcuts
Managers may make poor decisions

EMPLOYEE VICTIMIZATION: honorable employee may become victims of employees that will "game" the performance metric system at any cost. When employees that take shortcuts are rewarded, honorable employees feel hurt for doing the "right thing"

UNDESERVED WINNER: unqualified and/or dishonorable employees may be promoted into positions of power. Result long-term corporate dysfunction

LACK OF CONTENMENT: when employees know performance measurement system FLAWED they become unhappy with their jobs and lose motivation


Requirements of a good metric

- Metrics require a reliable scale. Does the metric have the ability to measure outcomes using a sound numeric metric

Easily Understood
Metrics can help people make good decisions. Do the stakeholders see the connection between the metric, outcomes, desired behaviors, etc. ? If not, how will the metric provide guidance?

Do the stakeholders feel they can achieve the goals (or be successful) as defined and/or measured by the metric?

Strategically Oriented – Align goals/objectives with desired actions. Does it motivate good behavior?

Ease of Measurement - Easy to implement and/or capture. Low effort level.

Provides Value - What can be learned from metric?
Identify trends and/or capabilities
Provide information on resource utilization - $, materials, time
Provide information on outcomes – Cost, Quality, Speed, Flexibility

Provides Guidance - Does it point to corrective action?
What does a good number mean? What does a bad number mean?
Is it helpful to the manager and/or employee?

Cheater proof


SMART metrics

: Specific, Measurable, Attainable, Relevant, Timely


3 Key measurement system attributes

Having the right output at the right place at the right time at the right price. Meeting your customers’ expectations.

In the pursuit of effectiveness, minimizing resources and eliminating waste.

Flexibility of the process to handle special requests and changing customer expectations. Often it is not the problem that matters; it is how the company handles the problem.


individual performance metrics identified by the company as being imperative to achieving the organization's most important goals



a computer-generated visual representation of a company's performance that is often available to executives on nearly any of their digital devices. Data can include KPI'S, real time data and historical data.

Executive dashboards


a situation where managers are inundated with data. This overflow of data actually slows decision-making and may even result in managers stalling or avoiding decision-making

Managerial paralysis


Common measurement pitfalls

-Managers fail to use the data.
-blind belief in institutional metrics
-incomplete measurements
-utilizing too many metrics
-driving toward perfection may waste resources
-what do those numbers really mean


A metric that is impacted by two related parties
having metrics that motivate companies to work toward outcomes that favor both sides of a supply chain relationship is vital. Modern supply chain managers are working to develop shared metrics

Shared metrics


a performance management tool that focuses on strategic activity and strategic outcomes
Aligns Vision, Mission, Customer Expectations, Day-to-Day Operations Management. Allows for communication of corporate progress.

Balanced scorecard


4 Elements of a scorecard

financial results
customer-related results
business process results
learning and growth results


A measurement tool that enable supply chain partners to track performance, communicate progress, and develop opportunities for improvement.

SCOR Model


5 categories of a SCOR Model

Plan – Demand and supply chain planning
Source – Purchasing Process
Make – Manufacturing Process
Deliver – Logistics and Transportation
Return – Reverse Logistics


the cost of every process, material, fee, defect, etc. that runs through the supply chain.

Total SCM Costs


Amount of days that money related to inventory is out of pocket.
a measure of the number of days the time a company pays their supplier for inventory and the time that same company is paid for the same inventory by their customer

Cash-to-cash cycle


A percentage of the total available capacity that is presently being used

Capacity Utilization



(Actual Output) / (Design Capacity)


Capacity Utilization: A factory can produce a maximum of 225 cars per day. The factory is presently producing 150 cars per day.

Capacity utilization = 150 / 225 = 0.67 = 67%


Cash to Cash Cycle FORMULA

Days Inv : Amount of inventory presently on hand

PLUS: Days AR : Inventory for which you have not been paid by customer

MINUS Days AP : Inventory you have not paid for yet

Cash to Cash Cycle = (Days of Inv) + (Days A/R) - (Days A/P)


Cash to Cash Cycle

Sale price of one unit = $30 Cost of one unit from supplier = $10
Units of inventory sold in one day = 100 units

Days of Inventory: 3000 units (Value $90K) = 30 days of Inv
Days of Accounts Receivable: $15,000 (equal to 500 units) = 5 days of Inv
Days of Payables Outstanding: $3,000 (equal to 300 units) = 3 days of Inv

Cash-to-Cash Cycle = 30 + 5 – 3 = 32 days


measures time productivity

Process Velocity


Process Velocity Formula

(Throughput Time / Value Added Time)

Throughput Time – Total Time a job is in the system (Includes time when job is sitting idle)

Value Added Time – Time item was worked on during processing


Process Velocity
Car was in the shop for a total of 8 hours. Car only took 2 hours to fix.

Process velocity = (8 hours) / (2 hours) = 4.0


the percentage of order that are full, arrive on time, and are damage free

Perfect Order fulfillment


There are actually a number of criteria that can help raise a university’s rank.

Rejecting a high percentage of applications,
raising faculty salaries,
accepting students with higher SAT and/or ACT scores,
increasing the number of freshman students that return for their sophomore year,
having small class sizes,
increasing the number of faculty with PhDs.



chief analytics executives constantly gets asked, “As you work with different departments within this company, what’s the most common question you get?”

“What are the most important supply chain metrics?”

hockey baseball cricket


Relationship between accuracy and speed:

Battle between accuracy and Speed
Can make a quick decisions but not as accurate
Can make a btter decision based on analytics but slower

a company could be very speedy but if the products are not coming out correctly then not useful need to find happy place where as fast as someone can go while maintain quality


Six-step evaluation of a system of metrics

1. Make the list – stakeholders desires, KPI’s, corporate and client desires
2. Identify metrics that create discord
3. Look for redundancy in KPI’s
4. How is data collected
5. Analytics strategy among corporate leadership
6. Data visualization


The ability of a product or service to meet a consumer’s expectations.



Dimensions of quality (product)

•  Performance – The car goes from zero to 60mph in 4.9 seconds
•  Reliability – A car you can count on.  A car that won’t breakdown.
•  Durability – A car that can handle tough conditions.  A car that will last “forever.”
•  Features – Entertainment system, 4-wheel drive, sunroof, navigation system, leather interior, heated seats…
•  Aesthetics – Beautiful shots of the car in the sun, at night, in multiple colors…
•  Reputation/Brand – Toyota, Mercedes, Ford, Porsche, BMW…
•  Service Response – Is it easy to find a service center.  Are there phone numbers, chat systems, email addresses, and websites available?  Are they friendly and trustworthy?  Is the service delivered promptly?
•  Serviceability – Is the item easy to use?  For digital devices, this may be especially important for some consumers.
  •  Maintenance and Repair - This might include the type of warranty.  It could also include the costs associated with the required upkeep/maintenance of the item.  (This might even include whether a product can be repaired if damaged.  It can also extend to the idea that while a TV can be repaired if broken, the cost to repair it would be prohibitive.  A customer might just be better off buying a new TV. )


Dimensions of quality (service)

•  Time –Time from arrival to service completion (too long or too short).  Waiting time in lines.
•  Timely – Was the service received when expected?  Was the service available when needed?
•  Complete – Did the service fulfill all of the customer’s expectations?
•  Accurate – Were all customer requests fulfilled?  If you asked for no tomatoes and sauce on the side, did they do it?
•  Responsive – If a mistake was made, did the waitress see the problem, acknowledge the problem, and then fix the problem promptly?
•  Courtesy – Was the service provided with an acceptable level of both friendliness and professionalism?
•  Consistent – Can a consumer expect every visit to be just as good?
•  Accessible – Location, hours of operation, website availability, 1-800 numbers •  Convenient – Hours of operation, user-friendly, paperwork…


Costs of Quality –

internal value cost increase,
external value cost decrease.
Prevention value cost increase,
Appraisal Costs


Quality Guru

W. Edwards Deming
Joseph Juran,
Phillip Crosby.


Fouteen Points – was a champion of continuous improvement.  In an effort to help organizations foster a culture of continuous improvement he developed a list of quality recommendations that are often just referred to as Fourteen Points.

Quality Guru:


Quality Trilogy – His primary quality teachings emphasized three things: quality planning, quality improvement, and quality control.

Quality Guru


Quality is Free – is famous for his book that proclaimed, “Quality is Free”.  Before most saw quality as a burden on corporate costs.  argued that a lack of quality may have lower costs, but it would eliminate any value.  As a result, the more that was invested in quality, the greater the value of the product or service.



a measure of the percentage of time a system or product operates successfully.



Reliability Formula

Reliability of a product with n interdependent components = (Reliability of component 1) * (Reliability of component 2) * (Reliability of component 3)*…(Reliability of component n) Reliability (Product) =
r(1) * r(2) * r(3) *…r(n)


Total back-up reliability Formula

1.0 - (1.0 – r) Total # of components


to address the management of quality at all levels of an organization and/or supply chain.

Total Quality Managment


process whereby companies compare their practices and performance measurements to those of other companies.



This type of benchmarking is used when companies want to measure their processes, programs, and outcomes versus those of their direct competitors.  Examples: Honda benchmarking Toyota, Dell benchmarking Apple

Competetitve Benchmarking


When a company benchmarks an organization that is successful in an area where their processes reflect similar inputs, outputs, or values.  Examples:  A Ford dealership benchmarking customer service programs at Southwest Airlines.  Boeing benchmarking quality control techniques at Toyota.  A restaurant benchmarking a hospital for cleaning/sanitation techniques.

Functional Benchmarking


– Some organizations are so big that they can benchmark one department versus another.  In reality, even smaller organizations can do some kinds of internal benchmarking.  Example: General Electric’s energy group benchmarking hiring practices from General Electric’s healthcare group.

Internal Benchmarking


is a quality program that was developed by Motorola in the 1980’s and has been used widely around the world since the 1990’s.  This program strives for the complete elimination of defects.  The program uses different techniques and quality tools to assess and improve business processes.

Six Sigma


is an international quality certification that helps organizations to understand the basics of quality management, to measure their present state of quality, and also to identify areas for improvement.

ISO 9000


is awarded to companies based in the US that are deemed to demonstrate the very best in the area of performance excellence.

The Malcolm Baldrige National Quality Award (MBNQA)


A Japanese quality award given to companies or individuals that have contributed to the field of quality.

A Japanese quality award given to companies or individuals that have contributed to the field of quality.


Quality Tools

Cause and effect Fishbone Charts
Scatter Diagrams
Pareto Charts
Flow charts
Control charts


A diagram used to identify possible causes to quality programs. The chart begins as a signle horizontal arrow that points to the right. The arrow points to the Quality problem. Each of the four arrows is a category of issues that may be causeing the problem
The 4 categories are labor, process, machine and material

Cause ane effectt


Diagram that attempts to show a possible relationship and/or correltaion between two sets off data

Scatter Diagram


when a company experiences a number of different qualities problems. these charts can help managers identify which categories of problems are the most prevalent
Qualititative data

Pareot charts


Similar to pareto, attemps to categorize outout.
Quantitive dData



A diagram made up of different series of symbols that maps a process. Each symbol represents a different step or activity in the processs

Flowcharts (Process Maps)


A chart that plots sample data over a period of time The chart has a center line (goal) upper control limit and lower control limit

Control Charts








What are some key things to consider in making an SCM IT investment?

o Knowing your Company and your Supply Chain. Knowing your needs.
o Purchase, Lease? From whom?
o Technical Considerations – Old System vs. New System, Data collection
o People – Customers, Employees
o Business processes
o Testing of system
o Upgrades
o Constant Changes and Upgrades in Technology
o Evolving Businesses and Supply Chains – Mergers, Acquisitions, Partnerships…


Goals of SCM and relationship to SCM IT decisions

Low Cost
On time
Shrinkage: Damage, Theft



Process: Effective, Efficient, Adaptable
Data: Collection, Access, and Security
Security: Virtual and Physical
Relationship Building

- IT system connects all parts of the business
- IT systems are the way SC's are executed and how they collect data


Using IT to remap processes to find more efficient methods, which leads to faster processing and possible cuts to costs
Implementation of a supply chain system will typically result in supply chain compression.

Identification and elimination of non-value added steps in supply chain processes

Single point of contact, compresses everything into one point to make it more controllable, flexible, cheaper (like the Whirlpool washing machine example) In order to compress supply chain need to map out processes to identify areas that need improvement, mapping it out helps find cow paths. Identification and elimination of non-value added steps in supply chain processes

made people want to upgrade modern systems. Changed systems drastically. Instead of having 30 days to do something we only have 5 because of Y2K

Supply Chain compression (Whirlpool)


Buying each category from different companies that are good at that one category

Best-of-breed approaches to IT


Buy everything from one company

Single vendor


Implementation Considerations TO IT

• Data Consolidation and Conversion
• Legacy Systems
• Change Management – Learning Curves, Confusion, Fear, Corp. Culture
• Improved Technologies = More work for everyone?
• Change Processes OR Customize IT System?
• Corporate Mergers and Acquisitions
• New Technologies and Evolving Technologies
• Data Consolidation and Conversion
• Legacy Systems
• Change Management – Learning Curves, Confusion, Fear, Corp. Culture
• Improved Technologies = More work for everyone?
• Change Processes OR Customize IT System?
• Corporate Mergers and Acquisitions
• New Technologies and Evolving Technologies



• Focus is on integration of data
• Does not actually do any planning
• Collects and Stores data for Analysis, Forecasts
• ALL Business Functions See/Share Same data – Fast, Immediate


Primary Reasons for ERP

• Integrate Financial Data – One Story vs. Many, One Set of Numbers
• Integrate Inventory Data – Supply Chain Visibility, Reduce Inventory
• Standardize Human Resources Data - Tracking Employee Time, Benefits,
• Manufacturing and Business Process Data - Standardization, Speed, Visibility
• Integrate Customer Order Information -Supply Chain Coordination


Challenges Challenges to ERP

• The company does not know what they need to do for the ERP to work
• 75% of companies would consider theirs a failure but 66% would go back to the same company for a different ERP


Implementation Considerations TO ERP

• Data Consolidation and Conversion
• Legacy Systems
• Change Management - Learning Curves, Confusion, Fear, Corp. Culture
• Improved Technologies = More work for everyone?
Change Processes OR Customize IT System?
• Corporate Mergers and Acquisitions
• New Technologies and Evolving Technologies



Radio Frequency Identification Technology

Next generation of bar codes
Bar codes you have to scan the product, but an RF reader sends a code to the RFID to know that you took a bottle of water you took.
Each RFID tag is different, so the RF reader will know not only that you took a bottle of water but which one exactly you took


Implementation Issues TO RFID

Really expensive have to buy a lot of different pieces to implement this and is very time consuming
Limited technology can miss some readings or products being picked up twice
Storage/ cost of storage a lot of data to deal with


Challengess to RFID

Costs, compatibility, security


Benefits to RFID

Understanding your customers buying habits
Quicker then tradition bar codes
In class example: American Apparel and using RFID tags in their dressing rooms
Data, tracking, analysis

Places who use RFID tags: Top Golf, ASU parking garage/ Sun cards?


hOW CAN you use RFID tags

-Nordstrom's can put them in their shoes to help prevent from theft, know who bought their items, and be able to see when you enter into the store and be able to alert you with coupons/ "they see you are in the store"
-If you sell your shoes and that person robs a different store with RF readers and they think its you things people worry about
- They have developed RFID deactivation kits that once you buy the product you can deactivate your RFID



Supplier Relationship Management
• Broadly refers to planning and control of activities and information systems that link a firm with its upstream suppliers
• system that allows you to segment your customers into more appropriate segments so you can better use your resources
• Suppliers



Customer Relationship Management

• Broadly refers to planning and control activities and information systems that link a firm with its downstream customers
• Buyers



Logistics Management System



Manufacturing Execution System


• web application for purchasing goods and services.
• allows shoppers to browse online catalogs, add items to a shopping cart and submit the requisition electronically.




Warehouse Management System



Automated Storage and Retrieval System

Provide a basic explanation of IoT, AI, and Blockchain. In the most basic way, how does each of these three technologies provide value to the supply chain?



The Internet of Things attempts to create a similar type of system for “THINGS”.

The “Human” internet allows people to learn from each other, communicate, tweet, track people or things, make transactions, etc.

Through the use of
• sensors,
• electronics,
• software, etc.

Real-time efficiencies and outcomes.
AND via learning: improvements in the future

”THINGS” can communicate with each other,
control each other, and document events.


artificial intelligence refers to a drive to have machines behave more like humans

AI is often rooted in fundamental statistics, in particular Bayesian statistics.


would be the highest form, when machines act like a human that learns and solves problem



A lower level of AI would be
When a machine, via a basic and very simple algorithm, makes relatively low level decisions.

machine learning.


list of records that are collected among a shared network of computers. It cannot be corrupted. This “distributed ledger” collects and constantly updates transactions

Money, inventory, and nearly anything else can be tracked and recorded in this ledger


Blockchain can aid in eliminating lies,
misinformation, IT security scandals,
late payments, false transactions, etc.