Study Guide Exam 1 - Supply Chain PDF

**[Study Guide Exam 1 - Supply Chain ]** **[Lecture 2: Why is supply chain management important? ]** - - - - - **Today and the Future:** - - - - - **The supply chain evolution** - **Factors Driving Supply Chain Management** - - - - - - **[Lecture 3: S...

**[Study Guide Exam 1 - Supply Chain ]** **[Lecture 2: Why is supply chain management important? ]** - - - - - **Today and the Future:** - - - - - **The supply chain evolution** - **Factors Driving Supply Chain Management** - - - - - - **[Lecture 3: Supply Chain Explained ]** - - - - - - - **Examples of Supply Chains** - - - - - - - **What is a supply chain?** - - **Fundamental Steps of a Supply Chain** - - - - - - **Fundamental Flows** - - - **Who's in the Supply Chain** - - - - - - - - - - **The SCOR Model - End to End Supply chain** SUPPLIERS (plan \[sales & operations planning\]) ---\-\-\-\-\-\-\--\> CUSTOMERS SUPPLIERS (source)(make)(deliver) ---\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\--\> CUSTOMERS SUPPLIERS ←---\-\-- (source return) (deliver) ←---\-\-\-\-\-\-\-\-\-\-- CUSTOMERS SUPPLIERS (enable) CUSTOMERS **SCOR Model - Scope of Processes in the Supply Chain** - - - - - **Benefits of Supply Chain Management** - - - - - - **What is needed for success?** - - - - - - **Value Chain** - **Value Chains vs. Supply Chains** - - **Supply Chain vs. Value Chain** ***Inbound Logistics:*** - - ***Manufacturing/Production Operations*** - - ***Outbound Logistics*** - - **Key Differences:** ***Supply chain:*** - - - ***Value Chain;*** - - - - - **What is supply chain mapping?** - - **Supply Chain Flow Diagram** Raw materials ---\> supplier ---\> manufacturer ---\> distributor ----\> retailer ----\> consumer 1. 2. 3. 4. 5. 6. **Supplier Tiers** Manufacturer - contracts with tier 1; may influence other tiers Tier 1 Supplier - selects tier 2 Tier 2 Supplier - selects tier 3 Tier 3 Supplier - selects tier 4 **Distribution Channels** Manufacturer ---\> wholesaler ---\> retailer ----\> end consumer Manufacturer ----\> retailer ----\> end consumer Manufacturer ---\-\--\> end consumer Supply Chain of Orange Juice? → ask chatgpt **[Lecture 4: Introduction to Fresh Connections ]** **The fresh connection sufferers from a lot of misalignment** - - - - - **The challenge...** - - - - **The Fresh Connection** - - - ( the mission is to make the company profitable again, by making strategic and tactical choices) **The TFC Value Chain: source - make - deliver** Source \_\_**components**\_\_ make: mixing ---\> make: bottling\_\_**finished goods**\_\_ deliver **Markets & Segments** 3 customers - - - **[The Product Portfolio (Assortment)]** 2 types of packaging: - - 3 flavors in each size 1-liter cartons: - - - 0.3 liter PET Bottle: - - - Who is their largest customer? **Who are their customers?** - **(shelf life of finished products is 20 weeks)** - - - - *Central KPI:* return on investment (ROI) *Costs:* operational costs, improvement projects *Investments:* inventory, payment terms, machines *Revenue:* price; customer satisfaction, volume; portfolio = Highest ROI **[The Supply Chain - Operations ]** 3 warehouse and overflow when needed - - - 2 stage production: mixing and bottling - Customer delivery is the next day - **[To Start]** Goal - make the company profitable again Each round is 6 months (half a year) Each week is 5 days (m-f) **Name what each role is responsible for!** **Each team has 4 roles** - - - - How often do we deliver to the customer? Where would you find info regarding the bill of material & quality on a pallet? Where do you find financials in a fresh connection? **Read**: "the mission" "the company" "course of the game" "score" "important topics" **[Lecture 5: Value Stream Mapping ]** **Value Proposition:** tangible and intangible "benefits" that customers expect from a firm - **Value Proposition** Characteristics of a well-designed value proposition 1. 2. 3. 4. 5. **A Goal of the Supply Chain** To create and capture value Why? - - - - **Understanding the Value Chain** Before we can make improvements, we must first understand the current conditions In this exercise, your team will become more familiar with fresh connection by exploring - - - - - - **What Is A Value Chain?** - - - **The Value Chain** [Secondary Activities] - - - - [Primary Activities: ] - - - - - (All involved in Margin Value) [Value Chain Analysis ] - - - - - **3 Step to Value Chain Analysis** 1. a. 2. b. 3. c. **[Lecture 6: Understanding ROI and Financial Reports]** **How do we measure financial performance?** *(metrics to effectively measure financial performance)* - - - - **Supply Chain Performance Linkage to Financial Performance** - - - - - - - **Measured by its return on investment (ROI)** - - - - - **How Is ROI Calculated?** ROI, or Return on Investment, is calculated by comparing how much money you made from an investment to how much you spent on that investment. Here\'s the simple formula: 1. 2. 3. **Here's a step-by-step example:** - - - So, your ROI is 50%, meaning you earned 50% of what you invested. ---\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-- **Improved Customer Value:** - - - - - **Improved Procurement and Operational Efficiency** - - - - - **Improved Speed and Rotation** - - - **Improved Asset Deployment and Utilization** - - - **What are the main components of the financial statement?** **Main Components** [Realized revenue:] = contracted sales revenue +/- bonus or penalties [Contracted Sales Revenue] = units sold \* contracted sales index for each customer [Cost of goods sold] = sum of all purchasing and production costs [Gross Margin] = realized revenue - cost of goods sold [Indirect Costs] = overhead + stock + handling + administration + distribution + project + interests [Operating Profit] = gross margin - indirect costs [Investments] = buildings + inventory + machinery + payment terms + software **[Lecture 7: Supply Chain Strategy, Performance KPI and Tradeoffs]** Supply chain management (SCM) is the centralized management of the flow of goods and services and includes all processes that transform raw materials into final products Supply Chain Strategy: [ ] The goal of the supply chain strategy is to ensure the organizational strategy is met - - - - - **What is a competitive strategy?** **What are the competitive priorities?** Competitive Strategy Drives Supply Chain - - - - Competitive strategy is defined based on how the customer prioritized product cost, delivery time, variety, and quality Competitive Priorities " any organizations competitive priorities are driven by and depends upon business's competitive strategies" - - - - - What is capacity? What are the types of capacity measured? Value Proposition - - Supply Chain Strategy: - - - - Supply Chain Strategy - - - - - - What is the goal of the supply chain? - - - - - - The Ultimate mission of SCM? - - - - - - The 6 Basic Rights - - - - - - ---\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-- Performance Measurements: KPI's Customer Service - Measurements Product availability: inventory available when and where desired by customer Fill rate: measure impact of stock outs over time and over multiple customer orders Unit fill rate: % of ordered units actually delivered total units delivered/ total units ordered Line fill rate: % of order lines filled completely. \# of order lines delivered complete / total order lines Order fill rate: % of orders shipped complete. Total orders shipped complete/total orders Customers Service - Measurements Example: Orders: 1,000 Units: 20,000 Lines: 5,000 Units Delivered: 19,500 Lines Delivered: 4,800 Orders Delivered: 910 - - - Lead Time Performance: Order to delivery lead time - - - Measurements - On Time Delivery - - - - - - What makes a perfect order? 1. 2. 3. What is the primary goal of any "for profit" company? How do you make money? - - - Key Performance Indicators - - - - Each position has their own KPI'S - why? Purchasing. rejection rate, raw material costs, delivery reliability Operations. warehouse utilization, production plan adherence Sales. gross margin, obsolete products, service level Supply chain. availability components, stock components & product weeks Warehouse utilization. percentage of storage capacity used Overflow. % of product being placed in overflow warehouse Flexible manpower costs. cost of overtime Total labor cost. total cost of labor Production plan adherence. % of orders completed on time and in full Total cost of storage. warehousing and labor cost Gross margin. Obsolete products. % of line items that were shipped on time and in full Attained shelf life %. the average % of total shelf life the customer received Distribution costs. cost to distribute product to customer On shelf availability. available on retailer shelf Component availability. % available upon productions request Inventory costs. inventory investment, interest on stock value Overall inventory level. amount on hand (Stock weeks) Production plan adherence. % of stock that expired prior to delivery to the customer Service level. % of line items that were shipped on time and in full Tradeoffs - Performance vs Costs - - - - However, - - - - However, - - - - - Tradeoffs - cost vs profit Spend too much → less profit Spend too little → less profit - Lecture 8 - Round 1 Prep +-----------------+-----------------+-----------------+-----------------+ | Sales: | Supply Chain: | Operations: | Purchasing: | | | | | | | - - - - | - - - - | - - - - | - - - - | | - - | - - | - - | - | +-----------------+-----------------+-----------------+-----------------+ **What is a contracted index and how does it work?** In the supply chain, a **contracted index** is like a special number used in agreements to make sure prices stay fair over time. It tracks how the prices of materials or products change. If the index shows prices are going up, the cost you pay might increase, and if prices go down, you might pay less. It helps both sides in a deal adjust to price changes so everything stays balanced. Contract Index: Negotiation instrument in sales and purchasing - - - - +-----------------+-----------------+-----------------+-----------------+ | Promise / | Contract index | Basic price | purchase-/sales | | requirement | | (\*) | price | | | - - | | | | - - | | - - | - - | +-----------------+-----------------+-----------------+-----------------+ Measuring the impact of the change in contract index... Sales Decisions: Service Level - - - - - - Understanding Service Level **What is service level and how is it measured? Impact on ROI?** **Service level** is a way to measure how good a company is at giving customers what they want on time. It\'s like a score that shows if the company has the right products when people ask for them. If the service level is high, more customers are happy. A high service level helps a company make more money because happy customers buy more, which improves the company\'s **Return on Investment (ROI)**, meaning they earn back more from the money they spend. What causes low service levels? - - - - - What is the impact of low service levels? What is the order deadline? Understanding Order Deadline - - - - - - - - **What are the shortage rule options?** Sales... Shortage Rule What happens when you run out of stock and cannot service the customer? - - - Each option has tradeoffs Purchasing Delivery Reliability - Purchasing... Understanding Delivery Reliability - - - - - - Purchasing.. Understanding Delivery Window - - - - - **Lead times?** **Lead time** is the amount of time it takes from when you order something until it arrives. For example, if you order a toy and it takes 5 days to get to your house, the lead time is 5 days. In supply chain, companies need to plan for lead time so they can have products ready for customers at the right time. **How to determine the net change in revenue based on the new and old contract index?** To determine the **net change in revenue** based on the new and old contract index, you can follow these simple steps: 1. 2. 3. 4. - 5. - 6. This will give you the amount by which the revenue has increased or decreased based on the change in the contract index. What decisions did each role have the ability to make during the first 4 rounds? Supply Chain... Understanding stock Safety stock determination - Safety stock: - - - **What is safety stock? And how can you determine how much you need?** **Safety stock** is like extra backup supplies that a company keeps, just in case they run out of their regular stock. It\'s there to make sure they don\'t run out of products if things take longer than expected, like if there\'s a delay in delivery or sudden demand from customers. To figure out how much safety stock a company needs, they look at: 1. 2. 3. By using these factors, companies calculate the right amount of safety stock to avoid problems while also not having too much extra. **What drives the need for safety stock?** The need for **safety stock** is driven by a few important reasons: 1. 2. 3. 4. 5. Having safety stock is like having extra snacks at home just in case your friends come over, so you don't run out! As the amount of safety stock carried increases, the risk of stockout decreases. - - - Safety stock protects you from uncertainty and stock outs Supply Chain... Understanding it Safety stock (weeks) - - - - - - - UNDERSTANDING THE TRADEOFF IS CRITICAL Safety Stock Determination - Components - Safety Stock Determination - Finished Product - Safety Stock Estimation - Operations... Capacity and Resource Availability What is the impact of the lack of capacity? - - Operations - Pallet Locations - - - - - - Utilization = usage/capacity Facts that influence the \# of pallet locations - - - - - Remember... - - - - **What is lot size? And how can it be determined?** **Lot size** is the number of things you make or order all at once. It helps companies decide how many toys, cookies, or other products to make or buy in one go. To figure out the lot size, companies think about a few things: 1. 2. 3. 4. By thinking about these things, companies decide the best lot size to make sure they have enough products for customers without wasting money. **What is inventory and its purpose?** **Inventory** is like a collection of all the things a store or company has to sell, like toys, snacks, or clothes. It's everything that they keep on the shelves or in the back room, waiting for customers to buy. The **purpose of inventory** is to: 1. 2. 3. 4. So, inventory is like a store's treasure chest, keeping all the goodies safe and ready for customers to enjoy! **What are the costs associated with inventory?** 1. 2. 3. 4. 5. These costs are important for stores to manage so they can keep products available for customers and make money! **What is a production interval and frozen period?** A **production interval** is the time when a company makes or produces a certain number of products. It's like a special time set aside for baking cookies or making toys, so they know when to start and finish. A **frozen period** is a time when no changes can be made to orders or production plans. It's like when you tell your friend you'll bring cookies to a party, and you can't change how many you're bringing once you've made your promise. During this time, everyone has to stick to what was planned. **How should you evaluate the production interval which is best for each period?** 1. 2. 3. 4. **How does the frozen period, production interval and safety stock impact obsolescence?** 1. 2. 3. In short, if a company doesn't manage these things well, they might end up with old products that nobody wants to buy! **Determine the material required based on demand using MRP** 1. 2. 3. 4. 5. By doing these steps, you can figure out how much material you need to make everything! Lecture 9 - Round 1 Debrief, Round 2 Prep and Inventory Concepts New Decisions - Sales & Purchasing Trade unit: - - - - - - - - Sales - Trade Unit - - - Sales - Trade Unit Customers do not buy the same amount of each product, however, the trade unit is set at the customer level Should determine the "best" trade unit for each customer based on demand for each of the products they buy How to evaluate? - - Pro\'s and Con's - - New Decision - Sales Trade unit calculator - - - - Picking Time - - - Trade Unit Calculator What to consider by customer/product? - - - - New Decision Sales Shelf life: - - - - Lecture 11 - Logistics Management Logistics - The Challenge: - - - Total Landed Costs - Transportation Management Government\'s Role: - - - - - Government Regulations - - - - Goal of trade agreements - - - Modes of Transportation - - - - - - By Water - Ocean Freight - - - By Water - Inland Waterways - Air Air freight - - - - - - Land Transportation - - - - - - - Trucking Segments - - - - - - - Intermodal - - - - Pipelines - - - - - Service Selection - - - - - - - Integrated Service Providers - - - - Fresh Connections - Transportation Modes Depending on the supplier, various transportation modes are used in the fresh connection. Truck and boat For the finished product, all shipments are made by truck The cost of transporting - Lecture 12 - Tradeoffs and Financial Implications What is ROI? - How is ROI calculated? - Trade-Offs - - - In the supply chain.. Cost benefit analysis - - - - - - - Understanding the financial implications of decisions - - - Increase Safety Stock Customer Service Level What about component Safety stock? - - - - - **[Calculations Must Knows: ]** 1. - 2. - 3. - 4. - 5. - 6. - 7. - 8. - 9. ### **Warehouse Capacity:** 1. 2. 3. ### **Bottling Line Capacity:** 1. 2. 3. In both cases, it's about figuring out how much stuff you have (products or bottles) and how much space or time it will take to handle them. **How do you determine bottling capacity and the impact on each of the improvement items that can be made to bottling?** 1. 2. 3. - - - 4. By understanding your bottling capacity and making these changes, you can fill more bottles faster!