Supply Chain Management Exam 1 Review

Supply chain management SCM 300 Exam 1 Review Class this is the consolidated study guide for exam 1, 99% of the exam is contained in this study guide. I will provide formulas for the exam. SCM 300 – Spring A Exam 1 Study Guide 1. 3 branches of supply chain & what they are responsible for 1. Procurement, (Purchasing): the branch of supply chain where deals happen, negotiations a for the best price on materials, equipment, goods, and services. 2. Operation: the branch responsible for efficiency, operation help the organization to create and acquire high quality products or services while using the fewest resources from the organizations end. 3. Logistics: is concerned with transportation, finding the right partners or best ways to get the product or service from origin to consumption. 4. Reverse 2. DC, TBO, AHC, AOC, EOQ, total annual savings, minimum inventory levels, cycle time, theoretical minimum number of workstations calculations & logic (formulas will be provided) 1. Key variable in elementary inventory calculations: 1. Q - Lot size 2. D – annual demand 3. C – Cost to purchase one unite 4. H – Cost to hold one unit of inventory in one year 5. S – Cost to place a single order 2. Annual cost to purchase inventory = DC 3. Annual holding cost (AHC) = (Q/2)*H 4. Annual ordering cost (AOC) = (D/Q)*S 1. TC = DC + AHC + AOC 5. Economic Order Quantity (EOQ): EOQ is the lot size (Q) that will minimize total inventory cost (TC) , making it the optimal lot size. 1. Calculations: EOQ = SQRT { (2DS) / (H) } 2. So, if a manager is looking to minimize inventory costs and maximize total annual savings then he would calculate optimal lot size through this formula. 6. Cycle time: is the pace at which products move through the assembly time to meet the demand for that given product. 1. Cycle Time = Operating time / Demand OR OT / D 7. Theoretical Minimum number of workstation calculations (TM): 1. = Total Task Time/ Cycle Time TM OR t/c 3. Simple moving average & weighted moving average calculations 4. 3 supply chain flows 1. Money, Material, Information. 2. Downstream Supply Chain: the direction that points moving towards the end consumer. 1. e.g., (finding ways to get goods and services to the consumer efficiently) 2. delivering goods from a manufacturer to a distributer. 3. Main suppliers (S1) working to get parts prepared in time for the manufacturer 3. Upstream Supply Chain: Going backwards, moving towards the supplier. 1. e.g. (Finding ways to maximize efficiency coming back) 2. see if all the boxes that have arrived at the retailer are empty and not damaged to send them back for reuse 3. developing relationships with the companies first tier supplier to enhance and better communication. 5. Supply chain competitive priorities 1. COST, QUALITY, SPEED, FLEXABILITY 1. Cost: Material, energy, waste, transportation 2. Quality: Design, reliability, consistency, materials or fabrics. 3. Speed: Delivery, on time, innovative time. 4. Flexibility: Customization, size of orders, design. 1. It is important to understand how each of these competitive priorities relate to the context of what your company is offering as well as what their customers are expecting. For example, a fast food restaurant will customize these priorities differently from a higher up restaurant. 6. Types of inventory 1. Raw materials: materials that will be used to create an item or a service. Have not yet begun their manufacture to create them into a god or a service. 2. Work-In-Process (WIP): Items that have gone through the manufacturing but have not been completed. Example, a partially assembled shovel. 3. Finished goods (FG): items that have completed manufacturing and are ready for shipment. 4. Maintenance, Repair, and Operations (MRO): Items that are not intended for the Finished goods but are important to the day to day operations of the business. (Examples, Desks, papers, computers, cleaning material for the office, and so on). 5. Market Inventory: Inventory readily available on the shelfs, like “Ragu Tomato sauce.” 6. Safety stock (Buffer stock): inventory to insure demand is met, if a company ships 100 soccer balls every Sunday of the week, for Buffer stock they would ship 125, the extra 25 is the buffer stock. 7. Anticipation Inventory: Inventory created for the purpose of storage to use in the future. 8. Pipeline Inventory: Inventory that is moving from one point in the supply chain to another. For example, the amount of time it takes a shovel from raw material (Point A) to being on the shelves (Point B). this is also known as lead time. 1. To calculate Pipeline inventory, you = Periodic Demand* Lead time. 9. Inventory visibility (Supply Chain Visibility): The ability to see or visualize what is happening with inventory upstream and downstream. 7. Definitions: 1. Drop Shipment: a three-party system made up of, retailer (show casing products), Manufacturer (creating the goods and services to be sold), and the consumer (the person ordering). Cutting out the middle man in the process. 2. Dunnage: bubble wrap, Styrofoam popcorn, small inflatable air bags, large inflatable airbags. 3. ROI: A ratio of Total Profit/ Total Investment. 4. Cross Dock: Distribution of goods from an upstream supplier to a downstream customer. 5. MRO: Items that are not intended for finished goods but required for a healthy office, desks, computers, cleaning supplies and so on. 6. Supplier certifications: A list of standards that that is wanted form the buyer buying from the supplier. The official certification can be done by a supplier or by a third-party company. 7. Bottleneck: The weak point in an assembly. It is the point that is causing overall less efficiency, identifying that point will help create a better assembly system. 8. Idle time: Is the total amount of time not utilized in a work station. 1. Calculation: Idle time = n (the number of workstations) * c (cycle time) – t (Asked time) 9. Effective cycle time: increasing the pace of assembling a single unit to then have a higher output if wanted. 8. 9. 10. 11. 12. 13. 14. 1. Efficiency = task time/ {(Work S.) (Cycle Time)} 10. Last mile: Refers to the part of supply chain were the final inventory holding facility is on its way to the end consumer. Centralized vs Decentralized 1. Centralized Purchasing: A purchasing system were all corporate employees are required to file requests for purchase through a purchasing department that handles the logistics of that order. 1. Advantages: 1. Avoiding duplication: since all employees must go through the same department if two employees made the same request then it will be clear and easy to avoid 2. Quantity discounts, whole sale prices. 3. Establishing suppliers base, building deep suppliers relations. 4. Supplier Specialization: since a lot of items are bought over and over again, the purchasing department can develop a more complicated depth of understanding to the items being purchase. 2. Decentralized purchasing: Unlike centralized purchasing, requests are sent to each department separately, meaning that each office can make purchases all on their own. 1. Advantages: 1. Closer knowledge of requirements: knowing exactly what to buy and from which supplier to get the best part of the product they want. 2. Closer knowledge of suppliers: since Purchasing Departments can be far away, local buyers can make better decisions on purchasing. 3. Speed of purchase 4. Supplier tiers 1. Tier 1 suppliers (S1): are the direct suppliers of the company, providing goods and services to the company directly. 2. Tier 2 Suppliers (S2): providing goods and services to S1, S2 suppliers must be on point because if not then S1 are not on point and neither is the company. Building Deep Supplier Relationships – Case Study (need to read) 1. Basically, Toyota and Honda have this way of creating good competition between their suppliers without treating them like they have no dignity. They also, unlike GM and American auto makers, don’t let suppliers fight over the cheapest deal possible and kick the others out the water. They care about quality as well as price, and time after time they have showed innovation, reliability, and customer loyalty that is not found in American automakers. The reason we see this in Japan and not the U.S is because they play the game different, they prioritize different, and the way they share information is different. It’s like a really good and complicated jazz song, if everyone’s on board than its perfect, but if someone messes up than we need to change that person and give someone else an opportunity until the person that messed proves worthy of coming back. That jazz song is called “Keiretsu” or the Keiretsu System. Turning supplier rivalry into opportunity, getting the most out of their suppliers’ creativity as possible for the benefit of the company. Air, truck, ocean, rail shipments and their advantages/disadvantages Cycle time rule and precedence rule for line balancing 1. Cycle time rule: in order for each workstation to be allowable the task time must be equale to or less than the cycle time. 2. Precedence rule: is to balance an assembly line by grouping and isolating tasks in workstation so to not go over the cycle time. TEU: (twenty-foot equivalent unit): it is how container cargos are measured 1. 20-Foot container is equal to 1 TEU 2. 30-Foot containers is equal to 2 TEU CA Containers: (Controlled atmosphere containers) 15. Cargo classifications 1. Bulk: Cargo that is loos and free flowing, loaded and unloaded by being pumped, scooped, shoveled, etc. 2. Break bulk: Cargo that is packaged. 3. Neo bulk: items too big to fit into bulk or break bulk, livestock, cars, etc. 16. Packaging classifications 1. Plenty of thought goes into packaging to maximize its efficiency. It is an important part of the supply chain, because if done correctly packages will arrive in the correct time, undamaged, not stolen, and, depending on the business you’re in, ready for assembly out of the bag. 2. Dunnage: bubble wrap, Styrofoam popcorn, small inflatable air bags, large inflatable airbags. 3. Pallets: A platform upon which large amount of cargo can be moved by an automated forklift. 4. Shipping Labels: A label that is attached to the inventory being shipped that identifies what it is. 5. Standardized containers: Steel boxes that can be loaded on cargo. 17. Line flow layouts 1. Assembly Line: Can be stopped at any time without compromising inventory. 2. Continuous flow system: Cannot be stopped in the middle or in-between, the cycle of the flow system must be completed every time. Examples: What is the classification of packaging that fills up the empty space inside of a package? For example, this type of packaging would include the inflatable bags inside Amazon shipping boxes. 1. 2. 3. 4. Dunnage Filler Peripherals Packaging waste 1. According to the eNotes, a _____ is when a customer orders from an online retailer, the website sends the order to a manufacturer, and the manufacture directly sends the product to the customer: In this scenario, the online retailer never owns or even possesses the inventory. 1. 2. 3. 4. Last Mile Cross Dock Dunnage Drop Shipment