Supply Chain Management MidTerm

• What: Categorizes products total consumption (price * volume)

• Manufacturers use it to allocate limited inventory planning resources (daily planning of A items)

• Retailers use it to allocate planning resources but also to decide what items to drop (C items)

• can use ABC analysis

• lower inventory carrying cost = increase cash flow, risk reduction, faster response to market changes, decrease interest expense, leaner supply chain

• Used to help better manage inventory with fewer stock out and less excess inventory/holding cost

• Use tech and data (Point of sale data) to make forecasting better —> and plan demand better

• Forecasting across sales. Operations, Finance and Supply chain management 

• It is very hard to achieve bc of each groups different objectives 

• Pushing the market twoard certain product

• Methods like Buy one Get one

• A manufacturing management system reduces wast (inventory, set up time)

• Key Processes: Utilizing front line workers, Value stream map, JIT/Pull, Pro active continue improvement

• A process improvment method that reduces variation

• Super Bowel 51 (2017)

• Epic comeback

• First super bowl to be decided at overtime

• Lady Gaga Performed

• Non Value added

• Reducing set up time can increase capacity

• Producing what is needed when its needed

• What: Determine the optimal amounts of each order

• Why: minimize total cost

• Best way to see inefficiencies and get rid of the bottle neck

• Visualize process into individual small steps

• Is a “need” product like groceries 

• Easy to forecast —> low tock outs 

• Cost is King 

• Low Margins 

• Long life cycle 

• Low Variety 

• Is a good fit for Just in time 

• Firm schedule/info flow 

• Low cost 

• Low Inventory

• Is a “want” products 

• Difficult to forecast 

• Short lead time 

• High Margins 

• High variety 

• May also be called fashion

• Poor fit for Just in time 

• Flexible schedule

• Differentiation 

• Short Lead times 

• Buffer inventory/capacity 

• When manufacturing and supplies are waiting on stand by waiting for order to come in 

• Example: when you order food from restaurant the chef has the ingredients but doesn’t make the food until you order 

• An example of a pull system bc an order has to pull products through supply chain 

• Forecasting how much you think you can sell 

• Example: when you go to a clothing store and their is already a certain amount of inventory you can select from (there is no back what we have is what we have) 

• Push system bc we are pushing our inventory onto customers even though they haven’t yet laced orders 

• Making a customized product for each order can’t finish product design until customer tells you what they want; everything is triggered by a customer order 

• Example: Commissioning a piece of art the artist can not start the process until the customer lets them know what type of art they want how big and so on 

• A pull system bc the item has to be pulled through the supply chain 

Find/Relive bottleneck

• The total price of a product once it has landed on a customers door

• You get it by adding the original price with all the transportation cost custom duties and ect

• A structured approach to overall management

• A set of activities which take inputs (materials or info) and transform into an out put

• 2nd most important in supply chain

• Can use ABC analysis & EOQ (TAC)

• Increase cash flow

• faster response to market change

• risk reduction

• decreased interest expense

• leaner supply chain

• ROA = Profit as percentage of sales × Asset turnover = Profit before taxes × Sales

  Sales Total assets

• Hard because no one likes change and resits

• Don’t like loss of freedom

• Remember the physicians and Cortez (either get with the program or get out)

• Use “K matrix” to decide

• Want to have trustworthy suppliers

Tactical side of Sourcing— supplier scorecards , expediting, etc

• Challenges

  • Training/Qualified

  • Transition Ramp Up/Ramp Down

  • Loss of relationship/Working procedures

  • Inevitable start up cost/revenue

• Lower costs with higher volume due to spreading fixed costs

  • when you make a lot of a product, it's cheaper to make each individual unit.

• Getting bigger leads to higher costs per unit, which can reduce overall efficiency and profitability.

• Determine the types of products you have and how to best source them for maximum profit and minimized supply risk —> Use K Matrix