SCM 301 Exam 1 Study Guide
SCM 301 Exam 1 Study Guide SCM 301
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This 15 page Study Guide was uploaded by Lisa Thein on Tuesday February 16, 2016. The Study Guide belongs to SCM 301 at Pennsylvania State University taught by Felisa Preciado in Winter 2016. Since its upload, it has received 134 views. For similar materials see Supply Chain Management in Economcs at Pennsylvania State University.
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Date Created: 02/16/16
SCM 301 Exam 1 What is a supply chain o Supply chain consists of all parties involved, directly or indirectly, in fulfilling a customer request Manufacturer, suppliers, transporters, warehouses, retailers, and customers All functions involved in receiving and filing a customer request – new product development, marketing, operations, distribution, finance, and customer service o Involves the constant flow of information, product, and funds between different stages Stages may include: Customers Retailers Wholesalers/distributers Manufacturers Component/raw material suppliers o Primary purpose of any supply chain is to satisfy customer needs and in the process generate profit for itself o Companies that provide inputs (material, energy, labor) to those who create or transform those goods to those who transport or delivery the goods and those who mediate (retail, wholesale) o Role of distributors o Relationship between the evolution of supply chain and some of the things we are observing in the world Primary drivers of these changes go back to changes in technology and changes in consumer needs/wants Dell developing more than 1 supply chain to adapt to the needs of customers o Supply chains are more like networks Objective – to maximize the overall value generated Supply chain surplus = customer value – supply chain cost Supply chain profitability is the total profit to be shared across all supply chain stages and intermediaries o Focus on overall supply chain profitability not on individual profitability to be successful Sole source of revenue is the customer Truth 1- every organization must make a product or provide a service that someone values o Must create value!!! o Evolves and is different for different individuals Truth 2 – most organizations function as part of larger supply chains o Interdependence – dependent on the performance of other entities in the supply chain Think about the effects on the entire supply chain Truth 3 – organizations must carefully manage their operations and supply chains in order to prosper and survive o Series of pressures companies face in making decisions – suppliers, volume, product design/mix, low cost supply, demand visibility o Being able to be profitable as you grow is important – cant just focus on one single area, you have to think about the system as a whole No modern organization exists and operated as an island The only way for a manufacturer to keep transportation costs low is to bring full truckloads of product close to the market and then distribute locally using “milk runs” with smaller vehicles A not so obvious revelation of how companies really make their money o Company either serves a need or creates one o Giving customers what they want, when they want it, with the quality they expect, and the price they are willing to pay o Strategic planning – long term decisions defining the objectives and capabilities Must take into account uncertainty in market conditions over the next few years Locations and capacities of facilities, products to be made or stored at various locations, outsourcing decisions, strategic partnerships, key supplier choice, modes of transportation, outsourcing logistics, technology adoptions o Tactical planning = planning decision – intermediate term decisions defining how capacity is used to meet demand Which markets will be supplied from which locations, subcontracting of manufacturing, inventory policies to be followed, timing and size of marketing and price promotions Supply chain role in trying come up with a plan to counter what the competition is going to do Uncertainty in demand, exchange rates, and competition One year decision o Operational planning – short term priorities and schedules for resource allocation Day to day – less uncertainty about demand information Allocate orders to inventory or production, generate pick lists at a warehouse, allocate an order to a particular shipment, set order due dates and delivery schedules, place replenishment orders o Supply chain flows If they aren’t synchronized, supply and demand issue could arise or the wrong product could be sent Money flows both ways through discounts, rebates, and returns Things that happen upstream effect you and things you do effect downstream Managing relationships with suppliers is important o Process – logically related sets of tasks or activities geared towards transforming inputs into some outcome Not every process creates a product, but every process has an output Make, source, deliver, return Cycle view is used for operational decisions because it clearly specifies the roles of each member of the supply chain Customer order cycle – customer and retailer Replenishment cycle – retailer and distributor/wholesaler Manufacturing cycle – distributor/wholesaler and manufacturer Procurement cycle – manufacturer and supplier Non-traditional supply chains combine some of these cycles. o Ex: Dell – manufacturer absorbing retailing responsibilities Push – anticipation of demand Could be wrong Fresh connection is push because they make the juice in anticipation of the demand Pull – reaction to demand Have to be quick enough Push/Pull Boundary Can be anywhere in the supply chain Point in the supply chain where it goes from being primarily push driven to pull driven (vice versa) Can have multiple boundaries How soon you start acting based on pull instead of push puts different amounts of stress on the company Everything the supply chain does requires a process There are returns because things can flow upstream as well SCOR model Best representation of just about every supply chain there is Defines a basic template that allows you to benchmark and share best practices Every member of the supply chain also has internal processes Basic cross industry set of practices and benchmarks All require information, product, and monetary flows Traditional supply chain – supplier gives them ingredients and then the manufacturer makes it and then the distributor sends it to the retailers (convenience stores) and then the customer buys it Nontraditional supply chain Dell direct (MTO) o Shipping to individuals instead of in large quantities Fulfilling the role of manufacturer and supplier and distributor Management as a source of competitive advantage o Strategy – how the mission of a company is accomplished Unites an organization, provides consistency in decisions, keeps organization moving in the right direction Focuses on the gap between the firms vision and its current position o Basic principles for developing strategy Defining a primary task Assessing core competencies Determining order winners and order qualifiers Positioning the firm Deploying the strategy o Primary task – purpose of the firm – what they are in the business of doing o Core competency – what a firm does better than anyone else More likely to be processes, a company’s ability to do certain things better than a competitor Not static, they must be nurtured, enhanced, and developed over time o Competitive strategy is the first part of the supply chain decision making process o Amazon’s primary task is retail, but their core competency is being very secure, flexible, easy, and having lots of variety o Happy customers determine revenue o Effective flow of information, products, and funds determines costs Relates to inconvenient of truth about interdependence o Objective – maximum total supply chain profitability Effective management of processes throughout the various stages of the supply chain to maximize customer value and achieve a sustainable competitive advantage o Managing processes to maximize customer value for the long term As the definition of value changes so do the expectations of customers and the supply chain must adapt o Order qualifiers – characteristics of a product or service that qualify it to be considered for purchase by a customer basics o Order winner – the characteristic of a product or services that wins orders for purchase by a customer Above and beyond o Order losers – why customers avoid your firm o Positioning the firm – how are you going to set yourself up among your competitors Considers the strengths and weaknesses of the organization, the needs of the market place, and the positions of the competitors Tradeoffs between quality, speed, cost, and flexibility Extremely hard to try to optimize all 4 Quality – fitness for consumption or use in terms of meeting customer needs and desires Speed – delivery or availability when and where the customer wants Cost – expenses incurred in producing, distributing, and selling the product Flexibility – ability to respond efficiently to changes in products, processes and competitive environment Competing on cost – relentlessly pursue the elimination of all waste Produce standardized products for large markets Production process, tightening productivity standards, investing in automation Choosing the right manufacturing process could be a way to cut down costs Competing on speed – build-to-order production and efficient supply chains May pay more for transportation Competing on quality – minimization of errors Defect - anything that can take away from a customer having a satisfying experience with our product or service Competing on flexibility – manufacturing, design, product mix, volume Mass customization – develop strategies to have lower cost production, but higher volume production Postponement and modular design o Strategy deployment – start with a vision and then how then goes into your tactical plan Competitive strategy, supply chain strategy, <facilities, inventory, transportation, information, sourcing, pricing> Logistical – the transportation and physical aspects of the supply chain Cross functional – deal with the whole operation Typically cost and responsiveness are inversely related but not always Competitive strategy MUST come first Responsiveness – responding to: Wide ranges of quantities demanded Short lead times Large variety of products Very high service levels Cost efficiency – supply chain cost efficiency is the inverse of the cost associated with making and delivering the product to the customer How well you’re able to minimize the cost of responding to customer needs Ex: Carestream o Sourcing – making decisions about where you are going to get the things that you need Sometimes you have to go to external sources or sometimes you can make it yourself o Pricing – 2 way relationship Determining factor of how you manage your supply chain, but at the same time the rest of your supply chain can determine how you manage your pricing o Supply chain cost efficiency is the inverse of the cost associated with making and delivering the product to the customer o Being able to acquire information in a timely manner than could alert you to changes in customer needs is important to fulfilling demand and better planning and higher flexibility o Managing and tracking potential items for obsolescence Maintaining optimal condition of your product Drivers of Supply Chain Performance o Facilities – physical locations in the supply chain network where product is stored, assembled, or fabricated Production sites and storage sites Property, plant, and equipment Types of decisions: Capabilities (types of operations supported, technology, quality, layout) Quantity, location, and capacity of facilities Trade-offs More facilities mean higher overall facility and inventory costs but lower transportation costs and shorter response times More flexibility or higher capacity means higher facility costs but lower inventory costs and shorter response times o Inventory – all raw materials, work in process, and finished goods within a supply chain Asset Types of decisions: How much inventory is needed to satisfy demand between shipments How much inventory should be kept in case demand exceeds expectations How much inventory is necessary to deal with predictable variability in demand Trade-offs More inventory usually makes the supply chain more responsive but it increases inventory holding costs More inventory can lead to reduced productions and transportation costs (because of enhanced economies of scale) but increases inventory holding costs o Transportation – moving inventory from point to point in the supply chain Faster transportation means higher costs Outbound transportation – SG&A; inbound transportation – COGS Types of decisions Modes, locations, and routes Trade-offs Faster modes of transport increase responsiveness and transportation cost but lower inventory holding costs Consolidating small shipments (as opposed to shipping them directly) typically reduces costs, but increases transit times, handling, and the risk of damage/loss o Information – data and analysis concerning facilities, inventory, transportation, costs, prices, and customers throughout the supply chain Potentially the biggest driver of performance in the supply chain because it directly affects each of the other drivers More responsive and more efficient High level of responsiveness to customer demand while achieving production and distribution economics Types of decisions Determining different information requirements and purpose Selecting enabling technologies Selecting and/or designing information-related metrics Trade-offs Good information can aid a firm to enhance its efficiency and responsiveness, but more information could mean both higher complexity and costs (while marginal value of the information decreases) o Sourcing – the choice of who will perform a particular supply chain activity such as production, storage, transportation, or the management of information Determine what functions a firm performs and what functions the firm outsources COGS and monies owed to suppliers are A/P Types of decisions: Make vs. buy Single sourcing vs. multiple sourcing Supplier selection and type of relationship Supplier performance evaluation criteria Trade-offs More reliable or better quality suppliers usually mean higher costs Supplier performance has cascading effects on sales, service, production costs, inventory costs, transportation costs, and information costs o Pricing – determines how much a firm will charge for the goods and services that it makes available in the supply chain Types of decisions: Selecting pricing strategies to improve efficiency and responsiveness Fixed pricing vs. menu pricing Trade-offfs Prices can be managed to increase revenues or reduce costs High-low pricing strategies might help attract customers but they can increase complexity in demand planning Price reduction pressures can create upstream challenges o There are markets that you wont be able to get into unless you lower your price Framework for Structuring Drivers o Must structure the right combination of the 3 logistical and 3 cross functional drivers Process Choice and Layout Decisions in Manufacturing and Services o Manufacturing and service process decisions are very important to firms Expensive and far reaching Process decisions deserve extra attention because different processes have different strengths and weaknesses o Manufacturing processes Include people, facilities and physical layouts, information systems and equipment No manufacturing process can be best at everything Flexible manufacturing systems (FMSs) – highly automated batch processes that can reduce the cost of making groups of similar products o Production Lines and Continuous Flow Manufacturing Production line – type of manufacturing process used to produce a narrow range of standard items with identical or highly similar designs Follow a product based layout – resources are arranged sequentially according to the steps required to make a product Move through production line at a predetermined rate Achieve high degrees of equipment and worker specialization o Job Shops Wide variety of highly customized products in small quantities o Batch Manufacturing Strikes a balance between the flexibility of a job shop and the efficiency of a line o Fixed-position layout Equipment and materials are brought to the product Ship building, home building, construction sites Customization points o Early in supply chain Flexibility in response to unique customer needs will be greater Lead times to the customer will tend to be longer Products will tend to be more costly o Late in supply chain Flexibility in response to unique customer needs will be limited Lead times to the customer will tend to be shorter Products will tend to be less costly Practice Exam Questions 1. The cycle view of the supply chain is useful when considering operational decisions because: it specifies the roles and responsibilities of each member of the supply chain 2. According to the author of “Understanding the Supply Chain,” there is ONLY one source of revenue. That source is: the customer 3. Chopra emphasizes the need for companies to adapt their supply chain strategies PRIMARILY in response to: changing technology and customer expectations 4. Which of the following statements about push processes is inaccurate? a. May also be referred to as speculative processes b. Execution is initiated in anticipation of customer orders c. At the time of execution, demand must be forecasted d. May also be referred to as reactive processes 5. According to your reading the role of ________ is more significant in India than in the U.S., due to fragmentation of trade, as well as the need to build logistical economies of scale. The distributors 6. What reasons does Chopra provide to explain his claim that Dell has two supply chains? Dell needs two supply chains to address the distinct needs of two market segments 7. Based on the reading and videos (continuous flow: jack daniels; assembly line: car engine assembly plant; batch: aluminum cans manufacturing; jobs shop: jones sign; fixed layout: oil super tanker construction), which of the process examples has the LOWEST level of process flexibility? 8. Based on the reading, which of the following is an expected ADVANTAGE of making car engines using the manufacturing process type depicted in the video example? The per unit cost of items produced on the line 9. Which of the following examples is the MOST LIKELY to have a procurement cycle that is primarily PULL driven? Ship building 10. Based on the reading and the videos, which of the examples is most likely to be manufactured using an ETO approach? Ship building 11. Based on the reading and the videos, which of the examples is LEAST LIKELY to be manufactured using an MTS approach? Custom signs 12. A surgical supply wholesaler which keeps high levels of inventory, even for their not commonly sold units, is MOST LIKELY taking a _______ approach toward managing inventory. Responsive 13. A toy manufacturer trying to serve all markets across the continental U.S. from a single central location (distribution center), is MOST LIKELY seeking to be more ___________ in managing facilities in their supply chain. Cost efficient 14. A company’s ability to find a balance between ________ and _________ (that best matches the needs of its customers) is the key to developing a supply chain strategy that supports their competitive strategy. Responsiveness; efficiency 15. The Champs store in State College has run out of Under Armour women’s Velocity Tank; sales of the item are soaring. They contact East Coast regional distributor to order an expedited shipment. Which cycle is illustrated here? Replenishment cycle 16. Which of the following statements about the SCOR model is least accurate? It focuses mostly on sourcing processes 17. Apple acquired PA Semi to design their customized processors, to then send the designs to Samsung (who manufactured the chips developed by Apple’s new in-house chip architects.) This is clearly an example of a(n) ______ decision, which mostly impacts Apple’s _______ SCOR processes. Strategic; source 18. Of the three flows linking organizations in a supply chain, information and monetary flows always move upstream and physical flows always move downstream. False 19. An activity or firm that is positioned earlier in the supply chain relative to another activity or firm is said to be _______. Upstream 20. The _________ connects the manufacturer and the supplier. Procurement cycle 21. Plextor LLC is a California based subsidiary of a Japanese company that manufactures DVD drives, hard disk drives, and blu ray drives. They sell their products directly to their customers. Which traditional stage of the supply chain is Plextor bypassing? Retail and distributor 22. The __________ connects the distributor and the manufacturer. Manufacturing cycle 23. The __________ connects the customer with the retailer. Customer order cycle 24. The __________ connects the retailer and the distributor. Replenishment cycle 25. You just became the COO for a nationally recognized homecare delivery firm. Your first task, which is to develop the operations and supply chain strategy, will NOT have which of the following as a primary objective? a. Alignment of structural and infrastructural elements to convert order winners into order qualifiers as determined by the mission statement b. Supporting the development of core competencies in the firms operations and supply chain c. Helping management choose the right mix of structural and infrastructural elements, based on a clear understanding of the performance dimensions valued by customers and the tradeoffs involved d. Assurance that the firm’s structural and infrastructural choices are strategically aligned with the firm’s business strategy 26. The flow of ______ from manufacturers to distributors/retailers to customer must be rapid and reliable in order to satisfy customers. Products 27. The flow of _____ allows all supply chain members to maintain operations. Money 28. The flow of _____ back through the supply chain allows all members to coordinate efforts. Information 29. On August 28th, 2012, a key piece of equipment at one of United Airlines' data centers failed and disrupted communication with airports, reservation centers, crew- communication systems and the company's website. As the airline's gate readers also went down in airports worldwide, agents had to manually process every passenger. The glitch led to 580 flight delays and nine cancellations (more than 10% of its 5,600 daily flights). In response, United worked with the manufacturers that supply the equipment to determine why the redundant backup system did not work as it was designed to do. This disruption in United Airline's operation clearly illustrates which key point(s) in our class discussion? How companies linked by a supply chain can become highly interdependent 30. GE makes aircraft engines for Boeing. In 2007 GE bought Smiths Aerospace, one of their key suppliers of engine components, for $4.8 billion. This decision illustrates a clear example of a _____ decision make by GE. Strategic 31. Clif Bar & Co. is an American manufacturer of organic foods and drinks for active, health-conscious people. Their product stands out for its promised freshness, great taste, and wholesomeness. In the general market for snack foods, which of the following BEST represents an order qualifier for Clif Bar? Food safety 32. Which of the following tradeoffs BEST explains the reason why Dell now has “more than one supply chain”? cost vs. flexibility 33. A central PA grocery store manager is analyzing monthly candy sales data for the past 2 years. The demand fluctuations he observes due to seasonality are much smaller than those due to randomness. False 34. You are asked to develop a time series forecast using a simple moving average to predict weekly sales of bicycles for a large retailer in Boca Raton, Florida. The data you are using shows very high randomness, with wild swings from one week to the next. You decide to use a very small n (i.e., n= 2) for your model. Was this a good choice? No, because the greater the randomness in the model, the greater the number of periods that should be used in a moving average forecast. 35. _____ products involve no customization, but _____ products are completely customized. Make-to-stock; engineer-to-order 36. It takes one day for Peter Gibbons to complete a TPS report and attach the cover sheet. During that day, Peter spends about 15 minutes a day performing actual work and the other 7 hours and 45 minutes spacing out. According to your lesson #5 reading, which of the following statements is correct? Peter’s percent value added time is just over 3% 37.
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