Lecture 3 - Designing Supply Chains Flashcards
What is functional demand?
When demand is relatively predictable
When fundamental variety is relatively low
When there are relatively few new products
When lead time is relatively unimportant
What is innovative demand?
When demand is relatively unpredictable
When fundamental variety is relatively high
When there are relatively frequent new products
When lead time is relatively important
What is the responsiveness for functional demand to be like?
Fast
Fast throughput time
Flexibility
Customisation
What is the efficiency of innovative demand?
Low cost
High utilisation
Dependability
Standardisation
What characteristics do functional products have?
Product life cycle: over 2 years Product variety: low Average stock out rate: 1-2% End of season reduction: 0% Lead time: 6 months - 1 year
What characteristics do innovative products have?
Product life cycle: 3 months - 1 year Product variety: high Average stock out rate: 10% End of season reduction: 10-25% Lead time: 1 day - 2 weeks
What is lean production? (Physically efficient process)
Supply objective: Efficiency and low cost
Inventory strategy: High turn over with minimal inventory
Lead time: Reduce if costs do not increase
Suppliers: selected to by cost and quality
Product design: to minimise cost
What is agile production? (Market responsive process)
Supply objective: quick response
Inventory strategy: sufficient buffer stocks and postponement strategies
Lead times: aggressively reduced
Supplier selection: based on speed, flexibility and quality
Product design: modularisation
What supply chain does Toyota use and what are its characteristics?
LEAN
- JIT
- Basic contracts
- Sourcing based on cost not price
- Local sourcing
- Supply base reduction and short chains
What is push production?
Material is moved on to the next stage as soon as it has been processed
- Build up an inventory
What is pull production?
Material is moved only when the next stage want it
- More efficient for cost reduction
What are the challenges for lean production systems?
JIT requires frequent deliviers
Green issues
Need for level scheduling - is more responsiveness required?
More open to disruption
Large finished good inventory
Define agile supply chains
“Respond quickly to sudden changes in supply or demand. They handle external disruptions smoothly and cost efficiently” - Lee 2007
SPEED = Lead time FLEXIBILITY = Range and response
What 4 areas constitute an agile supply chain?
VIRTUAL
- Sharing information on real demand, collaborative planning and end to end visibility
PROCESS ALIGNMENT
Co-managed inventory, collaborative product design and synchronous supply
NETWORK BASED
Leverage partners capabilities, focus on core competencies and act as a network orchestrator
MARKET SENSITIVE
Daily POS feedback, capture emerging trends and listen to customers.
What are the supply side factors to creating agile supply chains? (SOURCE)
Spatial integration Leverage partners' capabilities Inventory buffers Dependable logistics system or partners Contingency planning Information flows