SCM Midterm Reviewer PDF

SCM WEEK 2 MODULE: Supply Chain and OPERATIONS ELEMENTS - once the materials, components, and other purchased products are its Foundation delivered to the buying org...

SCM WEEK 2 MODULE: Supply Chain and OPERATIONS ELEMENTS - once the materials, components, and other purchased products are its Foundation delivered to the buying organization, several internal SUPPLY CHAIN - refers to the sequence of processes operations elements become important in assembling or involved in the production and distribution of a processing the items into finished products. commodity. Demand Management - is a unified method of controlling and tracking business unit SUPPLY CHAIN MANAGEMENT (SCM) - refers to all the requirements and internal purchasing operations. activities associated with the flow and transformation of This is what firms often rely on to minimize costs. goods from raw materials stage, as well as the Material Requirements Planning (MRP) - is a information inflows. computer-based inventory management system designed to improve productivity for businesses. This is used to manage the inventory of firms. THE FOUNDATIONS OF SUPPLY CHAIN Enterprise Resource Planning (ERP) - is a process MANAGEMENT used by companies to manage and integrate the important parts of their business. It provides SUPPLY ELEMENTS - traditional purchasing strategies real-time sales data, inventory, and production emphasized the use of many suppliers, competitive information to all business units and key supply bidding, and short-term contracts. This often created an chain participants. opposing buyer–supplier relationship, primarily focusing Inventory Visibility - refers to having a clear view on the product’s purchase price instead of the of product inventory and location, swift capabilities of the suppliers in contributing to the long- monitoring of order progress and related supply term competitiveness of the buying organization. chain activities. Lean Production System - also known as the Supplier Management - encourages or helps the Toyota Production System, is a form of inventory firm’s suppliers to perform in some desired management that is used in waste elimination fashion, such as assessing the suppliers’ current and non-value-added activities from the capabilities and deciding if and how they need to production process. improve them. Supplier Evaluation - determines the current LOGISTICS ELEMENTS - when products are completed, capabilities of suppliers. This occurs when the these are delivered to customers through several potential suppliers are being evaluated for future different modes of transportation. Delivering products to purchases and when existing suppliers are customers at the right time, quality, and volume requires periodically evaluated for ongoing performance a high level of planning and cooperation. purposes. Supplier Certification - allows buyers to assume Customer Relationship Management (CRM) - that suppliers can meet certain product quality refers to the principles, practices, and guidelines and service requirements covered by the that an organization follows when interacting certification, thus reducing extensive evaluations. with its customers. Strategic Partnerships - refer to the significant Distribution Network - refers to an benefits from the creation of closer working interconnected group of storage facilities and relationships with customers in terms of long- transportation systems that receive inventories term, higher-volume sales. of goods to be delivered to customers. It is a way Ethical and Sustainable Sourcing - is the process to ensure successful product delivery. of purchasing from suppliers that are governed Perfect Order Fulfillment - refers to a distinct by environmental sustainability and social and measurement defined as the percentage of ethical practices. orders delivered to the right place with the right products at the right time, in the right condition, right package, and right quantity, with the = right documentation, to the right customer.  Global Supply Chains - are dynamic worldwide SCM WEEK 3 MODULE: Basic ITO Model networks wherein a company purchases or uses goods or services from overseas. These involve INPUT-TRANSFORMATION-OUTPUT (ITO) MODEL - is a people, information, processes, and resources framework for developing and classifying performance involved in the production. indicators in a supply chain. Both manufacturing and Operating Exposure - refers to the extent to service businesses employ the ITO model to create a which the firm’s future cash flows get affected systematic and functioning supply chain to sustain and due to the change in the foreign exchange rates become competitive. along with the price changes. INTEGRATION ELEMENTS - processes in a supply chain are said to be integrated when members of the supply chain work together to make purchasing, inventory, production, quality, and logistics decisions that impact the overall profits of the supply chain. Process Integration - is the sharing of events, transactions, and data between business processes, typically, in real time. Supply Chain Performance Measure - refers to ❖ The role of the customer is important, since a an approach to judge the performance of a customer’s perceived value determines the supply chain system. It is utilized to help firms actual value of the outputs (products or services.) keep track of their supply chain management All products and services evolve through a life efforts. cycle. SUPPLY CHAIN MANAGEMENT IN THE ❖ As a system, supply chain participants need to HOSPITALITY INDUSTRY interact with their environments continuously so that they can develop products more effectively. Purchasing was regarded as being a service to ❖ Integration problems arise when supply chain production, and corporate executives paid participants are connected. All supply chains limited attention to issues concerned with it. have different compositions. Obstacles develop They realized the impact of large quantities of when different corporate cultures, information purchased material and work-in progress systems, and business practices merge into a inventories on manufacturing cost, quality, new supply chain, which can stop or slow the product development, and delivery lead time. integration process. It is essential to understand that the premise INPUTS - the inputs for a manufacturing process usually under which the hospitality industry operates is include raw materials such as wood, steel, water, plastic, much different from other industries. The capital or chemicals. Production processes, such as carving costs of service industries are high, while the wood, processing steel, and blending chemicals, begin operating costs are comparatively lower. after raw materials arrive. The output of the production process includes finished goods such as furniture, toys, In hotel logistics and supply chain management, or automobiles. supplier partnerships and relationships are very important. The long-term partnership helps the TRANSFORMATION - research management has focused organization, and its suppliers achieve major on the transformation process. In manufacturing, the benefits through their direct, long-term union transformation process is usually overt because it and encourages joint planning and problem- involves a physical change in the product. Some variables solving efforts. in the transformation of services are tangible, such as determining the number of store sites for a retail business. OUTPUTS - outputs take the form of goods or things A supply chain needs to utilize both explicit and implicit which customers can measure and evaluate to see if they SCM information in different ways to realize different conform to specifications. A thin plastic paper that is business benefits. For instance, the objective of the cash- used to wrap after-dinner mints is an example of output. to-cash cycle in supply chains to increase the speed of It must be attractive and meet other physical cash flow. Therefore, explicit information about accounts specifications; simultaneously, it provides part of the receivable, inventory, and accounts payable is critical service package at a restaurant. information to capture. - Defining the output for pure service would be challenging, and the achievement of a FUNDS FLOW – when goods are move or services are satisfactory output requires variations in the provided, business partners expect monetary process used. compensation from their customers. Funds need to flow in order to support the movement of goods and services from their origins to the final delivery to the end user, and vice versa. RELATIONAL FLOW - supply chain business partners need TYPES OF FLOWS IN A SUPPLY CHAIN to both compete and cooperate in order to streamline the flow of goods, capital, and information. Foundational supply chains can be structured in different relationships require supplier–buyer relationships, forms to improve business performance in areas unique buyer–supplier linkages, customer–supplier such as operational efficiency, agility, lean relationship management, and supplier rationalization. management (an approach to managing an organization that supports the concept of Arm’s-length Relationship - is for short-term continuous improvement to improve efficiency focus, in which suppliers or buyers can easily and quality), customer satisfaction, inventory dictate the terms of each transaction that results levels, and response time to market. in conflicts between chain partners since the suppliers have a high degree of bargaining power. PHYSICAL FLOW - this is the actual movement of goods Collaborative Relationship - is for long-term or the delivery of services across the supply chain. focus, in which business partners share Financial, informational, and funds flow play supporting confidential information with the willingness to roles to ensure the core supply chain functions smoothly work toward a long-term relationship. and efficiently from one business partner to another. The relational supply chain is also dynamic. When market INFORMATION FLOW - When goods move from one conditions change, business partners respond by location to another, the information requires updating rethinking their relationships. Generally speaking, the and disseminating (act of spreading something widely) to buyer is primarily concerned with purchasing capability, supply chain partners. The absence of information while the seller is focused on customer management. synchronicity can result in overstocking, backorders, poor decision-making processes, distrust between supply SCM WEEK 4 MODULE: Determining chain partners, and slow responses to market changes. Customer Needs Explicit SCM Information - includes transactional data, procedures, policies, lessons learned, Supply chains are needed not only to lower performance criteria, and revenue reports. operating costs but also to deliver value-added These can be created, captured, refined, stored, products and services to meet the needs of managed, and disseminated in paper-based or internal and external consumers. When digital formats. customers are satisfied with products and Implicit SCM Information - such as insights, services received, they respond positively. intuition, corporate values, organizational culture, and SCM experience are difficult to Consumer Behavior is difficult to predict because of document. Implicit information often resides in uncontrollable factors such as changing market the minds of information holders, such as supply conditions and evolving technological trends that also chain managers. affect the business. INTERNAL CUSTOMER - is the recipient (person or All these indirect approaches rely on secondary data but department) of another person’s or department’s output can also effectively provide insights on customer needs. (good, service, or information) within an organization. MARKET RESEARCH - is a systematic approach in EXTERNAL CUSTOMER - is a person or organization that collecting and analyzing data about target markets, receives a good, a service, or information but is not part competition, and potential customers. Its goal is to of the organization supplying it. increase a company’s intelligence in discovering customer needs. ULTIMATE CUSTOMER - is the final recipient of goods and services and is the originator of positive revenue and METHODS IN CONDUCTING MARKET RESEARCH: customer information flow. 1. QUESTIONNAIRES - refer to a list of questions All these three (3) types of customers are involved at that potential consumers have to answer with different stages of the supply chain. They also have regard to their likes and dislikes about the distinct needs and wants. Classifying their needs based products and services that they desire. on product or service features, economic needs, location 2. FOCUS GROUP - refers to a small group led by a needs, and service needs enhance in understanding their facilitator seeking to learn customer preferences. relative importance. 3. IN-DEPTH INTERVIEW - refers to an extension of questionnaires but is more detailed. It is PRODUCT NEEDS - the primary product attributes conducted in a face-to-face format. desired by most consumers include low—or at least 4. SECONDARY MARKET DATA ANALYSIS - refers to competitive— prices, high quality, fast response time, previously published materials. and product lines with new features that roll out regularly. 5. MARKET SEGMENTATION ANALYSIS - refers to a method that seeks to find commonalities in SERVICE NEEDS - these are continually changing, along various groups or segments of consumers. with products that can no longer stand alone. These must 6. STATISTICAL ANALYSIS - refers to various be supported with a service package that includes the statistical approaches that can be used to following: identify both differences and commonalities in consumer groups. Competent and Helpful Salespersons – customers are more curious. This is the reason MARKET INTELLIGENCE - is the external data collected by why they require more knowledgeable sales a company about a specific market which it wishes to personnel in answering their queries. enter to make decisions. It is the first set of data that the Lifelong Product Support – customers are company analyzes before making any investment inclined to be more demanding of sellers to decision. It needs to include quantitative and qualitative provide support for the products regardless of demand forecasting methods. the life cycle stage to which it belongs. QUANTITATIVE FORECASTING METHODS - are APPROACHES - companies use direct and indirect statistical techniques to make predictions, which approaches to understand the needs of their customers use numerical measures and prior effects to better. predict future events. o Time-series methods - examine the past DIRECT APPROACHES - are a straightforward approach in data patterns and forecast the future which surveys, focus groups, and product samplings are based on underlying patterns that are the means of contacting the customers directly and obtained from those data. These build identifying their needs. All data collected from these upon historical data. direct approaches are primary data. o Explanatory methods - also known as causal methods, collect data about all INDIRECT APPROACHES - rely on tools such as variables that may have potential effects prototyping, mind-mapping, and group support systems on customer demand. to increase productivity in idea generation and customer wants identification.  QUALITATIVE FORECASTING METHODS - are CRM implementations need to integrate business statistical techniques to make predictions, which processes within and across companies. Its success use expert judgment instead of numerical analysis. depends on reliable delivery not only on marketing and o Survey Method - begins when a company sales activities but also on other business activities. identifies a reference population or a representative group in order to help FEATURES OF CRM understand the buying patterns of its potential customers. ❖ It collects information about customers, primarily o Delphi Method - is where panels of from sales transactions, and from other experts are selected in a series of touchpoints (points of reference) such as systematic and interactive discussions and complaints or inquiries. are individually questioned about the upcoming events. ❖ Electronic Customer Relationship Management (E-CRM) is a well-structured and coordinated COLLABORATIVE FORECASTING - is a concept that process of CRM that automates the processes in aims to enhance supply chain integration by marketing, sales, and customer service. It is a supporting and assisting joint practices. It popular means of recording website contacts, optimizes inventory levels, increases sales, and searches, and other non-sales activities. manages staff more effectively. ❖ It organizes the customer base into segments or CUSTOMER RELATIONSHIP MANAGEMENT (CRM) - groups of similar customers. refers to business processes executed by a company with its business partners to service customers and sustain ❖ It focuses primarily on customer retention. relationships with them. It is a marketing philosophy based on putting the customer first. ❖ Its programs are designed to enhance the - CRM includes account management, catalog and relationship with existing customers who are order entry, payment processing, credits and monitored closely while evaluating the results. adjustments, and other functions. ❖ It develops a set of metrics to measure the results Customer Contact Process - is where customers and to revise, modify, discontinue, and reverse directly contact the company either via phone, e- the marketing initiatives that have been mail, instant message, or fax or through a face-to- introduced. face meeting with a sales representative. BENEFITS OF CRM Back-office Process - focuses on functional aspects of the business, including planning, billing, ❖ It increases customer retention. advertising, finance, accounting, and ❖ It encourages relationships with customers to be manufacturing. more open and effective. ❖ It increases collaboration within internal Business-to-business (B2B) Relationship-building functions. Process - is where customer relationships may be ❖ It can help automate daily tasks, allowing one’s extended to business partners, industry staff to focus more on their duties and consortiums, trade associations, research and responsibilities. development (R&D) centers, distributors, ❖ It leads to improved analytical data and reporting. wholesalers, and retailers. CRM is part of a demand chain solution to address Marketing or Sales Data Analysis - is where challenges in attracting potential customers and creating transactional data are received and analyzed, then customer loyalty. Demand chains address issues related converted into useful information that is beneficial to customer demand, including product information, the to supply chain partners. product itself, services related to the purchased products, the product’s ease of use and performance, purchasing experience, and after-sales report. DEMAND MANAGEMENT - is the total integrated effort of various functions within an organization, especially top management, marketing, and operations. It attempts to satisfy customer demand with an acceptable quality level of service, at a satisfactory level of effectiveness. - Demand reflects what and how much customers want. Therefore, demand drives supply and, subsequently, production plans, which, in turn, dictate the company’s financial, logistics, and marketing plans. 1. PLANNING DEMAND - involves more than just forecasting. This also includes preparations for future demand that determine how much production and financial capacity are needed to meet such demand. It requires up-to-date information about market dynamics, trends, and customer behavior and relies heavily on marketing and sales data. 2. COMMUNICATING DEMAND - includes communicating the demand plan to supply chain partners across the entire supply chain. Accurate demand information is not worth it if it is not promptly communicated to the affected party. 3. INFLUENCING DEMAND - includes marketing and promotion plans, product positioning, and pricing. With the large number of products available in the market today, customers have a wide variety of choices for their purchases. This means that, regardless of their appeal, many products and services will go unsold. 4. PRIORITIZING DEMAND - includes customer order management and customer profiling. This is needed when customers order more than anticipated, the delivery schedule of ordered products is tight, or the current production capacity of the company is too limited to meet the unexpected demand surge.