Please enable JavaScript.

Coggle requires JavaScript to display documents.

SUPPLY CHAIN MANAGEMENT CAB7801E-1E05-4AF2-A52F-154E1F8D382D, Periodic…

- - - - is inventory carried to satisfy demand that exceeds the amount forecasted for a given period.
    - - Before the Corona pandemic, many hospitals in the US ordered a series of ventilators at Hamilton Medical Company of the US but their ventilator products were not enough to meet orders.
        And the US government has to import lots of ventilators from abroad
    - - Has to balance
        
        Pro: Increase of product availability
        
        Con: cost of holding (safety) inventory
      - Higher pressure on product availability
      - High pressure on reduced inventory
    - - Key questions for planning safety stock: :question:
        
        What is the appropriate level of product availability :question:
        
        How much safety inventory is needed :question:
        
        What actions can be taken to improve product availability while reducing safety inventory :question:
      - Goal is of forecasting is: :checkered_flag:
        
        Predict the systematic componen
    - - Product fill rate (fr): is the fraction of product demand
        that is satisfied from product in inventory
      - Order fill rate: is the fraction of orders that are filled
        from available inventory
      - Cycle service level (CSL): is the fraction of replenishment cycles that end with all the customer demand being met.
    - - is the process of regarding when to order and how much to order.
      - Two main approaches:
        
        Continuous review
    - - The safety stock level is influenced by:
        
        Uncertainty in lead-time (of supplier, production)
        
        Uncertainty in demand
        
        Number of independent stocking locations
      - Can be improved BY: :recycle:
        
        Reducing the lead-time
        
        Reducing the uncertainty in demand
        
        Reducing the number of independent stocking location
    - - Improved visibility
        
        To see how much is available
        
        To see where this is available
      - Better coordination of the SC
        
        Using RFID systems
        
        Integrating different stages
- - - - Static method
        
        estimating level and trend :explode:
        
        estimating seasonal factors :explode:
      - adaptive forecasting
        
        moving average :fire:
        
        simple exponential smoothing :fire:
        
        trend and seasonal corrected exponential smoothing :fire:
- - - - Role in the SC :question:
        
        High levels of inventory
        
        Reduction in production and transportation costs
        
        Increase inventory holding cost
        
        Low levels of inventory
        
        Improve inventory turns
        
        Reduce product availability
      - Components :question:
        
        Safety inventory
        
        To counter seasonal variability
        
        Seasonal inventory
        
        To counter predictable season
        
        Predictable demand
        
        Cycle inventory
        
        The cost of holding larger lots of inventory (cycle inventory is high)
        
        The cost of ordering more frequently (cycle inventory is low)
        
        Level of product availability
        
        Meet timely demand
      - Inventory related metrics :question:
        
        Average inventory
        
        Inventory turns
        
        Cash-to-cash cycle time
        
        Fraction of time out-of-stock
        
        .....
    - - Role in the SC :question:
        
        Move product between different stages
        
        Affect both responsiveness and efficiency
        
        More responsive <= Faster transportation
      - Components :question:
        
        Choice of transportation mode
        
        Air✈️, truck🚚, rail🛤️, sea🚢, and pipeline
        
        Design of transportation network
        
        Modes, locations, and routes
      - Transportation related metrics :question:
        
        Average outbound transportation costs
        
        Fraction transported mode
        
        Average inbound transportation costs
        
        ...
    - - Role in the SC :question:
        
        Increasing the flexibility or capacity
        
        Increase facility costs
        
        Decrease inventory costs
        
        Decrease response time
        
        Increasing the number of facilities
        
        Increase facility and inventory costs
        
        Decrease transportation costs
        
        Reduce response time
      - Components :question:
        
        Location
        
        Centralize to gain economies of scale
        
        Decentralize - closer to the customer
        
        Capacity
        
        The right amount of capacity
        
        Narrow or large band to deviation
        
        Role
        
        Flexible
        
        Dedicated
        
        A combination of the two
      - Facilities related metrics :pen:
        
        Capacity
        
        Utilization
        
        Processing/setup/down/idle time
        
        Production costs per unit
        
        Theoretical and actual flow/cycle time
        
        ......
  - - - Components :question:
        
        Supplier selection
        
        Procurement
        
        In-house or outsource
      - Sourcing related metrics :question:
        
        Days payable outstanding
        
        Average purchase price
        
        Range of purchase price
        
        ....
      - Role in the SC :question:
        
        A responsive or efficient source
        
        Internal to the company or a third party
    - - Components :question:
        
        Everyday low pricing versus high-low pricing
        
        Fixed price versus menu pricing
        
        Pricing and economies of scale 📈
      - Sourcing related metrics :question:
        
        Profit margin
        
        Days sales outstanding
        
        Average sales price
        
        ...
      - Role in the SC :question:
        
        How much :question:
        
        Customer segments :silhouettes:
    - - Components :question:
        
        Coordination and information sharing
        
        Sales and operations planning
        
        Push versus pull
        
        Enabling technologies (EDI, CRM, ISCM, and SRM..)
      - Information related metrics :question:
        
        Forecast error
        
        Forecast horizon
        
        Ration of demand variability versus to order variability
        
        ...
      - Role in the SC :question:
        
        Good information
        
        Increase responsiveness
        
        Reduce costs
- - - - Supply :red_flag: capacity, intentory, subcontracting
      - Demand :red_flag:short-term prices discount, promotion
  - - - Capacity
        
        Inventory
        
        Customer
        
        Profit
        
        Production
    - - Time flexibility from workforce
      - Seasonal workforce
      - Subcontracting
      - Dual facilities
      - Design product flexibility
    - - Common components across multiple products
      - Build inventory of high-demand/ predictable demand products
    - - Price
      - Promotion
- - - - Customer Priorities
        
        Prices
        
        Variety
        
        Quality
        
        Delivery Time
    - - ✍Definition
      - ✍3 Steps
        
        1 :red_flag:
        
        :warning: Customer Uncertainty
        
        Quantity, Time, Variety, Services Level, Price, Trend
        
        :warning: Supply Chain Uncertainty
        
        Predictable supply
        and demand
        
        Unpredictable supply
        and demand
        
        :warning: Uncertain Products
        
        Less mature Product
        
        Result
        
        Stock-out
        
        Oversupply
        
        Less direct competion Product
        
        2 :red_flag:
        
        The SC Capabilities
        
        SC Responsiveness
        
        Increase costs <= Quick-response
        
        SC Efficient
        
        Lowest Cost <= High Efficient
        
        3 :red_flag:
        
        Achieving Strategic Fit
        
        Increasing implied uncertainty- Increasing Responsiveness
        
        Zone of strategic fit
        
        Challenges
        
        Increasing product variety and shrinking of life cycles
        
        Globalization and increasing uncertainty
        
        Fragmentation of supply chain ownership
        
        Changing technology and business environment
        
        The environment and sustainability
    - - ✍️Definition
        
        Functions within the firm
        
        Stages across the SC
        
        An integrated strategy with an aligned objective
      - ✍Stages of expansion
        
        Intraoperation scope
        
        Intrafunctional scope
        
        Interfunctional scope :
        
        Intercompany scope
- - - - :red_flag: Now Dell is outsourcing retail to Walmart and others
      - :red_flag: Apple is insourcing retail with selling via own Apple Stores
      - :red_flag: P&G has never attempted to sell its products directly to customers
    - - Key questions
        
        :question: Will third party increase the supply chain surplus relative to performing the activity in house
        
        :question: How much of the increase in surplus does the firm get to keep
        
        :question: To what extent do risks grow upon outsourcing
      - Sourcing is the entire set of business processes required to purchase goods and services
      - A sourcing decision should aim to increase the net value created by the supply chain
      - Outsourcing is that a supply chain function is performed by a third party
    - - :check: Supplier scoring and assessment
      - :check: Supplier selection and contract negotiation
      - :check: Design collaboration
      - :check: Procurement
      - :check: Sourcing planning and analysis
    - - How do third parties increase the Supply Chain Surplus
        
        :check: Capacity aggregation
        
        :check: Inventory aggregation
        
        :check: Transportation aggregation by transportation intermediaries
        
        :check: Transportation aggregation by storage intermediaries
        
        :check: Warehouse aggregation
        
        :check: Procurement aggregation
        
        :check: Information aggregation
        
        :check: Receivables aggregation
        
        :check: Relationship aggregation
        
        :check: Lower costs and higher quality
      - Risks of using a third party
        
        :warning: The process is broken
        
        :warning: Underestimation of the cost of coordination
        
        :warning: Reduced customer/supplier contact
        
        :warning: Leakage of sensitive data and information
        
        :warning: Loss of supply chain visibility
        
        :warning: Loss of internal capability and growth in third party power
        
        :warning: Ineffective contracts
        
        :warning: Negative reputational impact
      - Strategic factors in Sourcing
        
        :pencil2: Support the business strategy
        
        :pencil2: Improve firm focus
    - - Examples
        
        :pen: Asset based logistics providers: Penske, DFDS
        
        :pen: Network logistic providers: UPS, TNT, FedEx
        
        :pen: Skill-based logistic providers: Maersk
    - - Examples
        
        Kuehne & Nagel AG handles all outbound logistics from factory to customers for Nortel
        
        Li & Fung helps global companies like Reebok managing sourcing and production across many locations in the developing world
    - - Important aspects of supplier selection
        
        Decision to work with one single source or multiple suppliers
      - Mechanisms for supplier selection
        
        :check: Offline competitive bids
        
        :check: Reverse auctions
        
        :check: Direct negotiations
    - - Independent actions of two parties in a supply chain often result in lower profits
      - Each supply chain step makes decisions only considering its own margin, solutions
        
        :pencil2: Buyback or return contracts
        
        :pencil2: Revenue sharing contracts
        
        :pencil2: Quantity flexibility contracts
    - - Important because
        
        :red_flag: 50-70% of spending comes from purchasing
        
        :red_flag: 80% of costs of parts is fixed during design
      - Advantages
        
        :pen: Speeds up the design process, shorter time-to-market
        
        :pen: Focus on integration leads to higher quality
        
        :pen: Focus on integration leads to lower costs
    - - Use multifunctional teams
      - Ensure appropriate coordination across regions and business units
      - Always evaluate the total costs of ownership
      - Build long-term relationships with key suppliers
  - - - Air: fast and fairly expensive
      - Package Carriers: relative expensive but fast
      - Truck: Flexible door-to-door shipment, short distance
      - Rail: Large, heavy, dense products over longer distances
      - Water: Carrying large loads at low(est) costs but slow speed
      - Pipeline: Suitable for continuous transport of fluids and gas
      - Intermodal. For example: Container Ship <> Truck
    - - Direct shipment network to single locations
      - Direct shipment with milk runs
      - All shipments via intermediate DC with storage
      - All shipments via intermediate TP with cross-docking
      - Shipping via DC using milk runs
      - Tailored network
      - :question: Three basic questions
        
        :question: Should transportation be direct?
        
        :question: Should the intermediate site stock product or serve as cross-docking location?
        
        :question: Should each delivery route supply a single destination or multiple destinations (milk-run)?
    - - By customer density and distance
      - By size of customer
      - By product demand and value
    - - :check: Vehicle load optimization
      - :check: Route planning
      - :check: Position determination (GPS)
      - :check: Digital markets balancing capacity and demand
    - - :warning: A shipment is delayed
      - :warning: A shipment does not reach its destination
      - :warning: Hazardous material
    - - :red_flag: IKEA uses a global network, transportation in dense volumes and big stores
      - :red_flag: Seven-Eleven uses a responsive transportation system replenishing stores several time a day
      - :red_flag: Netflix operates a movie rental business without stores but using transportation for distribution
    - - Impact of different transportation modes on inventories, response time and cost in the supply chain
      - Transportation costs are closely linked to the degree of responsiveness the supply chain aims to provide
        
        Transport costs
        
        Aggregate: Low
        
        Disaggregate: High
        
        Demand uncertainty
        
        Aggregate: High
        
        Disaggregate: Low
        
        Holding costs
        
        Aggregate: High
        
        Disaggregate: Low
        
        Customer order size
        
        Aggregate: Large
        
        Disaggregate: Small
    - - :pen: Align transportation strategy with competitive strategy
      - :pen: Consider both in-house and outsourced transportation
      - :pen: Use technology to improve transportation performance
      - :pen: Design flexibility into the transportation network
- - - - Providing raw materials
    - - Producing products for sale
    - - Buying products from a manufacturer and selling them to other businesses and stores
    - - Buying products from the distributor and selling them to end users or customers
    - - Using products
  - - - A very responsive replenishment system to ensure that products are available
      - Changing the merchandising mix at each store by time of day to Precisely match customer demand
      - Higher transportation costs and labor costs
    - - Clusters of stores around distribution centers
      - Facilitating frequent replenishment at its retail stores
      - a cost-effective manner
      - Improving product availability
    - - Selling products directly to the end customers
      - Passing distributors
  - - - How to structure the supply chain
      - The supply chain’s configuration
      - How resources will be allocated
      - What processes each stage will perform
    - - The strategic or design phase
      - A forecast for the coming year of demand and other factors, such as costs and prices in different markets
    - - Handling incoming đến customer orders in the best possible manner
      - Allocating inventory or production to individual orders, an order to a particular shipping mode and shipment, set delivery schedules of trucks, and place replenishment orders.
  - - - Customer order cycle
        
        Demand is external to the supply chain and thus is uncertain
      - Replenishment cycle
      - Manufacturing cycle
      - Procurement cycle
        
        A tire supplier to an automotive manufacturer can predict tire demand precisely once the production schedule at the manufacturer is known
    - - Response to customer need (pull)
      - supplier need (push)
- - - - Design Options
        
        Manufacturer storage with direct shipping
        
        Manufacturer storage with direct shipping and intransit merge
        
        Distributor storage with carrier delivery
        
        Distributor storage with last-mile delivery
        
        Manufacturer/distributor storage with customer pickup
        
        Retail storage with customer pickup
      - Service factors
        
        Response time
        
        Returnability
        
        Order visibility
        
        Time to market
        
        Customer experience
        
        Product availability
        
        Product variety
  - - - :
        
        Facility role
        
        Facility location
        
        Capacity allocation
        
        Market and supply allocation
    - - Phase 2: Identity regions where Facilities will be located
      - Phase 3: Select a set of desirable potential sites within each region
      - Phase 1: Define a broad SC design
- - - - Local optimization within functions or stages
      - Sales force incentives
    - - Forecating based on orders and not on customer demand
      - Lack of information share
    - - – Ordering in large lots
      - – Large replenishment lead times
      - – Rationing and shortage gaming
    - - Lot size-based quantity discounts
      - Price fluctuations
    - - – Each stage sees only own stage and not the impact on the rest.
      - – Different stages reacting to current local situation rather than trying to identify the roof cause
      - – Based on local view different stages blame each other becoming enemies
      - – Not learning from own actions resulting in a vicious circle
      - – Lack of trust among supply chain partners resulting in less/no information is shared
  - - - Aligning goals across the supply chain
      - Aligning incentives across functionsAligning incentives across functions
      - Pricing for coordination
      - Altering sales force incentives from sell-in to sell -through
    - - Sharing point-of-sale data
      - Implementing collaborative forecasting and planning
      - Designing single-stage control of replenishment
    - - Reducing replenishment lead-time and lot sizes
      - Ration based on past sales and sharing information to limit gaming
    - - Moving from lot size-based to volume based quantity discounts
      - Stabilize pricing
  - - - Retail event collaboration
      - DC replenishment collaboration
      - Store replenishment collaboration
      - Collaborative assortment planning
    - - :check:Execution
      - :check:Strategy and Planning
      - :check:Demand and forecasting management
      - :check:Analysis
    - - :star:Organisation and technology Requirements
        
        Cross functional, customer specific teams
        
        Including sales, demand planning and logistics
      - :star: Risks and hurdles:
        
        Relationships with competitors of partners
        
        Necessity to follow IT scale/technology of partner
        
        Difference in organizational culture
- - - - AGGREGATE PLANNING
        
        Production quantities
        
        Inventory held
        
        Backlog/ Stock outs
        
        Workforce hired/ laid off
        
        Machine capacity increase/ decresse
        
        PROFITABILITY
  - - - Regular
      - Over time
      - Subcontracting
- - - - waste, emissions :checkered_flag:
      - the global warning :checkered_flag:
      - climate change :checkered_flag:
    - - mutual coercion
        
        command-and-control approach
        
        the government or regulators set standards that everybody must adhere to :explode:
        
        An example is carbon monoxide emission standards set by the United State for new automobiles :explode:
        
        market mechanisms
        
        Cap-and-trade
        
        constrains the aggregate emissions by creating a limited number of tradable emission allowances that emission sources must secure and allowances leads to a significant fine :explode:
        
        emission tax.
        
        A charge for emissions encourages companies to reduce their emissions using all ideas whose marginal cost is less than the charge :explode:
        
        India introduced a nationwide carbon tax of 50 rupees per metric :explode:
  - - - workforce
        
        employment quality :red_flag:
        
        health :red_flag:
        
        safety :red_flag:
        
        training and development :red_flag:
        
        diversity and opportunity :red_flag:
      - customer
        
        accurate product information and labeling :red_flag:
        
        the impact of the product on the customer’s health and safety :red_flag:
      - social
        
        human rights :red_flag:
        
        the impact on local communities :red_flag:
    - - components
        
        land :check:
        
        water :check:
        
        air :check:
        
        ecosystems :check:
      - activities that improve the environmental pillar
        
        product innovation :check:
        
        emission reduction :check:
        
        resource reduction
        
        it is best for a firm to first focus on resource reduction activities :check:
  - - - Facilities tend to be significant consumers of energy and water and emitters of waste and greenhouse gases :star:
    - - Most supply chains focus on raw materials, work in process, and finished goods inventory.Although this form of inventory is viewed as an asset and included in the financials, few firms even consider the inventory sitting in a typical landfill. :star:
    - - Transportation is another driver with which firms are likely to find several positive cash flow opportunities that improve environmental performance through resource as well as emission reduction. :star:
    - - Verifying and tracking supplier performance with regard to sustainability, however, continues to be a major challenge for most firms :star:
    - - Good information continues to be one of the biggest challenges to improved supply chain sustainability :star:
    - - incorporate suitable prices for the social and environmental impacts of different actions such as emissions :star:
      - any emissions pricing mechanism should be evaluated along with: :star:
        
        Price volatility :warning:
        
        Cost of administration :warning:
        
        Emission uncertainty :warning:
        
        New information uncertainty :warning:
        
        Industry competitiveness :warning:
        
        transfer to energy-exporting countries :warning:
        
        Revenue neutrality :warning:
  - - - the lack of customer : :fire:
      - the lack of manufacturer effort :fire:
- - - - :check: Price based on the value assigned by each segment
      - :check: Different prices for each segment
      - :check: Forecast at the segment level
  - - - :pencil2: Vary price dynamically over time to maximize expected revenue
      - :pencil2: Overbook sales of the asset to account for cancellations
  - - - Example: Amazon’s use of free shipping serves as an off-peak discount