Term
| What are the four elements of waiting lines? |
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Definition
1. An input, or customer population, that generates potential customers
2. A waiting line of customers.
3. The service facility, consisting of a person, a machine, or both necessary to perform the service for the customer.
4. A priority rule, which selects the next customer to be served by the service facility |
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Term
| Finite Customer Population |
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Definition
| Small amount of customers; appreciably affected by the number of customers already in the system; |
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Term
| Infinite Customer Population |
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Definition
An infinite customer population is one in which the number of customers in the system does not affect the rate at which the population generates new customers.
Ex: ordering from a catalog; large customer population, small number of orders placed at a time |
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Term
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Definition
| a customer who decides not to enter the system |
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Term
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Definition
| a customer who leaves the system before being served |
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Term
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Definition
Channel: is one of more facilities required to perform a given service
Phase is a single step in providing the service
Managers should choose an arrangement of both channels and phases |
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Term
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Definition
| The priority rule determines which customer to serve next. Most service systems use the first-come-first-serve rule. |
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Term
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Definition
A rule that allows a customer of higher priority to interrupt the service of another customer.
Ex: In a hospital emergency room, patients with the most life-threatening injuries recieve the first treatments. |
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Term
| Service Facility Utilization |
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Definition
| The collective utilization of service facilities reflects the percentage of time that they are busy. Management’s goal is to maintain high utilization and profitability without adversely affecting other operating characteristics. |
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Term
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Definition
The simplest waiting line model is a single server and a single line of customers. To further specify the model, we make the following assumptions:
1. The customer population is infinite and all customers are patient
2. The customers arrive according to Poisson (?) distribution, with a mean arrival rate of 1
3. The service distribution is exponential, with a mean service rate of m
4. The mean service rate exceeds the mean arrival rate.
5. Customers are served on a first-come, first-served basis
6. The length of the waiting line is unlimited |
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Term
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Definition
| A waiting line is one or more ‘customers’ waiting for service. The customers can be people or inanimate objects. A waiting line forms because of a temporary imbalance between the demand for service and the capacity of the system to provide the service. |
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Term
| Why are waiting lines important? Especially in America? |
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Definition
- Waiting lines are extremely American because most are first-come first-serve, shows how much we believe in equality. They’ve vital to American society.
- Waiting lines are everywhere. Government waiting lines, like at the DMV, are the worst because you can’t go anywhere else for the service; they don’t care as much about customer service. |
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Term
| Goals & Trade-Offs in Queuing System |
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Definition
Stakeholders
- Customers
- Corporate- owners, managers, employees
Stakeholder costs
- What is the cost of waiting for the customer? TIME
- Companies that provide shorter lines are perceived as providing higher service level. Customers may be willing to pay more.
- What is the cost to the company for keeping lines short? MONEY
- Shorter lines typically means more employees with less work
Waiting line goals
- Find the proper BALANCE between long lines and unhappy customers as well as idle staff and high cost
- Being able to answer the question: how many servers are required to run our business? |
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Term
| What do managers have control over in queuing system? |
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Definition
- Customers
- Servers
- Waiting lines
- Service facility |
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Term
| Why are arrival rates and service rates important? |
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Definition
Arrival rates
- Steady stream of customers? Busy and slow time periods? Busy and slow days of the week? Seasonal trends?
Service rates
- Are all servers equal? Are they motivated? Do they get tired/bored? Stressed?
- What happens if we add more employees?
- Full-time, part-time, seasonal? Experienced?
- Types of customers: prepared/unprepared customer, big/small orders, high/low maintenance customers, paying cash vs. check
o Because of this, customers have some degree of control over service rates. They can hold up the line if they’re unprepared, and thus people are waiting there longer and aren’t getting served as quickly as they could be if the customer were prepared. |
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Term
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Definition
| Single line, first come first served, sense of fairness |
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Term
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Definition
| Could cause line jumping or jockeying, there is a “bad” line and a “good” line |
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Term
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Definition
- 1st come 1st served (Burger King)
- Earliest due date or shortest processing time (Homework)
- Reservations or appointments possible (Restaurants)
- Emergency situations (Emergency rules)
- Preemptive discipline- special rules (VIP lines, frequent fliers) |
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Term
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Definition
| Customer switches lines, moving from one queue to another to whichever one looks shorter or more efficient at the time |
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Term
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Definition
Few potential customers. Every customer in the store significantly decreases the chance of another customer arriving.
o Ex: retail store that sells jumbo jet airplanes |
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Term
| Infinite Pool of Customers |
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Definition
Many potential customers. Odds barely affected by new arrivals.
o Ex: McDonald’s |
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Term
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Definition
1. Keep content current: merchandise presentation and merchandise description
2. Make the site easy and enjoyable to use
3. Structure an online community where consumers can interact with one another or contribute to the site’s content |
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Term
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Definition
| Represents how effectively the retailer utilizes its space and is usually measured by sales per square foot of selling space or gross margin dollars per square foot of selling space. |
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Term
| Elements that compose the store environment: |
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Definition
Store image and productivity:
- Visual Communications
- Retail identity
- Graphics
- POS signage
- Store Planning
- Space allocation
- Layout
- Circulation
- Store Design
- Exterior design
- Ambiance
- Lighting
- Merchandising
- Fixture selection
- Merchandise presentation
- Visual merchandising |
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Term
| Objectives of store environment |
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Definition
Primary objectives: creating the desired store image and increasing space productivity
3 basic tasks of retailing:
- Get customers into the store (market image)
- Once inside the store, convert them into customers buying merchandise (space productivity)
- Do this in the most efficient manner possible |
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Term
| Consumer Behavior: Supermarkets |
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Definition
- More shoppers are prone to look right, so supermarkets display the higher gross margin merchandise on the right of an aisle.
- Since 90% of all customers entering a store turn right, that area is most valuable for the store. A deli, bakery, etc. is the first section a customer will reach
- Grocers use the most recognizable brand to lead off the product category as the consumer is walking towards it.
- Merchants sometimes try to make their point-of-purchase displays look like a mess so they look like a good deal, and cheap.
- Handwritten signs create the impression of recently lowered prices.
- End-caps of aisles are usually the customer’s focus as they go through the store.
- By occasionally changing the location of staple products, it increases the amount of products the customer is looking at and increases the chance of an impulse sale.
- By “limiting” a certain number of products to a customer, it portrays a great deal and customers will often buy that amount.
- Many customers will be excited about peanut butter being on sale that they wont notice the complimentary items, bread and jelly, have increased prices. |
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Term
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Definition
| A schematic that shows where merchandise and customer service departments are located, how customers circulate through the store, and how much space is dedicated to each department. |
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Term
| Warning Signs there may be a space problem |
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Definition
Open spaces on the selling floor, even if the product is on hand
- Cluttered and disorganized tables, hallways, and stockrooms
- Excessive time required to put away new receipts
- Insufficient staging space for large shipments of advertised products
- Sales associates continually required to leave the sales floor to locate additional merchandise
- Poor utilization of vertical space and excessive time required to retrieve products stored on high shelves
- Sales lag expectations for specific locations where space or fixtures are a known issue
- Off-site storage or multiple stockrooms required for a single commodity |
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Term
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Definition
| Occurs when a chain store retailer operating over a wide geographic area, usually nationally, tailors its merchandise and services in each store to the needs of the immediate trading area |
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Term
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Definition
Formula for higher sales per square foot: sales per square foot = f(number of customers) x (length of time they spend in the store)
- Retailers should concentrate on the time customers spend browsing and experiencing the store, not how much merchandise they are exposed to.
- Kahn outlined 4 things that Wal-Mart should do:
1. Ensure that in every aisle, a customer with a cart can comfortably pass another customer with a cart without having to ask that customer to move.
2. Make the restrooms the best in town so that a customer will never leave the store and rush home to use the bathroom.
3. Put at least one bench in each store, in the alcove at the front.
4. In all large stores, install a coffee stand catty-corner from the snack bar so that customers can recharge themselves in order to spend more time and money shopping. |
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Term
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Definition
| Fixtures and merchandise are grouped into free-flowing patterns on the sales floor. Customers are encouraged to low freely through all the fixtures, since there are usually no defined traffic patterns in the store. Works well in small stores with merchandise of the same type. |
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Term
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Definition
| counters and fixtures are placed in long rows or “runs”, usually at right angles, throughout the store. Customers circulate up and down through the fixtures; supermarkets are examples of this type of layout. |
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Term
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Definition
| has become a popular tool for enhancing the productivity of retail stores. A “loop” provides a major customer aisle that begins at the entrance, loops through the store, then returns the customer to the front of the store. Exposes the customer to the greatest possible amount of merchandise. Encourages browsing and cross-shopping. |
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Term
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Definition
| Based on a single main aisle running from the front to the back of the store, transporting customers in both directions. On either side of the spine, merchandise departments branch out toward the back or side walls. The spine is used in medium sized specialty stores, especially in fashion stores. |
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Term
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Definition
| two elements: the finishes applied to the surfaces and the architectural shapes. |
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Term
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Definition
| Brighter lighting in a wine store influences shoppers to examine and handle more merchandise. However, department stores have noted that bright lighting depicts a discount image. Different types and levels of lighting can have a direct impact on sales. How many foot-candles to use: more in urban areas and less in suburban areas. This decreases the chance for lawsuits. |
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Term
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Definition
Wal-Mart: Slowing customers down at the beginning of their visit before entering, to hel pthem adjust to the new environment
Smells should add to the store’s mood, can even encourage customers to buy things. Music is being seen as a valuable marketing tool, it creates an environment that is both reflective of the merchandise being offered as well as soothing.
Ex: certain malls use Bing Crosby music and pink lighting to keep kids out after school |
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Term
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Definition
Items that need to be kept in inventory to maintain operations. Important to customer experience. The material consumed by the buyer or items provided by the consumer.
- Essentially, anything kept in inventory to help maintain operations. Can be anything (I think)
- Dry cleaner- hangers, cleaning products, etc.
- Restaurant- Food, ingredients, etc. |
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Term
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Definition
Vendor managed inventory: Inventory planning and replenishment system where supplier (vendor) accepts negotiated responsibilities that typically include monitoring and restocking
Value to vendor and “retailer”
- End customer is the focus
- A better understanding of partner and their needs
- Retailer: fewer responsibilities, decreases costs
- Vendor: better understanding of demand rates, fewer retailer errors, responsive |
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Term
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Definition
| The term process integration means sharing information and coordinating resources to jointly manage a process. This can be an extremely difficult task because it requires proper training and preparedness, willing and competent trading partners, trust, compatible information systems, and potentially a change in one or more organizational cultures. Benefits of collaboration and information sharing include: reduced SCM costs, greater flexibility to respond to market changes, less supply chain safety stock, higher quality levels, reduced time to market and better utilization of resources. |
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Term
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Definition
| Lean systems are operations systems that maximize the value added by each of a company’s activities by removing waste and delays from them. Lean systems encompass the company’s operations strategy, process and technology and inventory management, and can be used by both service and manufacturing firms. |
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Term
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Definition
| A method in which production of the item begins in advance of the customer’s needs |
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Term
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Definition
| A method in which customer demand activates production of the service or item |
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Term
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Definition
| The group of activities needed to change or readjust a process between successive lots of items, sometimes referred to as a changeover. (lot: a quantity of items that are processed together) |
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Term
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Definition
| Mistake-proofing methods aimed at designing fail-safe systems that attack and minimize human error. (Ex: modular products that can only be assembled in one way- the correct way. |
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Term
| Customer Relationship Management (CRM) |
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Definition
| This process provides the firm with the structure for developing and managing customer relationships. Over time, relationships with key customers are solidified through the sharing of information, the formation of cross-company teams to improve product design, delivery, quality, and cost, the development of shared goals, and the improved performance and profitability for the trading partners along with agreements on how to share these benefits. The firm should monitor CRM and how it impacts their financial statements and customer satisfaction levels. |
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Term
| 8 Supply Chain Business Processes |
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Definition
1. Customer Relationship Management: Identifying key customers segments, tailoring product and service agreements to meet their needs, measuring customer profitability and the firms impact on customers.
2. Customer Service Management: Providing information to customers such as product availability, shipping dates, order status; administering product and service agreements.
3. Demand Management: Balancing customer demand with the firm’s output capacity; forecasting demand and coordinating with production purchasing, and distribution
4. Order fulfillment: Meeting customer requirements by synchronizing the firm’s marketing, production, and distribution plans.
5. Manufacturing Flow Management: Determining manufacturing process requirements to enable the right mix of flexibility and velocity to satisfy demand
6. Supplier Relationship Management: Managing product and service agreements with suppliers; developing close working relationships with key suppliers
7. Product Development and Commercialization: Developing new products frequently and getting them to market effectively; integrating suppliers and customers into the process to reduce time to market
8. Returns Management: Environmental compliance with substance disposal and recycling, composing operating and repair instructions, troubleshooting and warranty repairs, developing disposition guidelines, designing an effective reverse logistics process, and collecting returns data. |
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Term
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Definition
Silo Mentality
Lack of supply chain visibility
Lack of trust
Lack of knowledge
Activities causing the bullwhip effect |
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Term
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Definition
| Failing to see the big picture, and acting only in regard to a single department within the firm, or a single firm within the supply chain. |
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Term
| Lack of Supply Chain Visibility |
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Definition
| The inability to easily share or retrieve trading partner information in real time, as desired by supply chain participants |
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Term
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Definition
| Unwillingness to work together or share information because of the fear that the other party will take advantage of them or use the information unethically. |
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Term
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Definition
| Lack of process and information system skills, and lack of knowledge regarding the benefits of SCM among management and other employees, within the firm and among partners. |
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Term
| Activities Causing Bullwhip Effect |
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Definition
Demand forecast updating: Using varying customer orders to create and update forecasts, production schedules, and purchase requirements.
Order batching: Making large orders for goods from suppliers on an infrequent basis to reduce order and transportation costs.
Price fluctuations: Offering price discounts to buyers, causing erratic buying patterns.
Rationing and storage gaming: Allocating short product supplies to buyers, causing buyers to increase future orders beyond what they really need. |
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Term
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Definition
| Occurs when retailers and consumers, between distributors and retailers, and between manufacturers and distributors due to pricing promotions at each stage of the supply chain, all contributing to erratic buying pattern, inaccurate forecasts, and consequently the bullwhip effect. |
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Term
| EDLP (Everyday Low Prices) |
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Definition
| Manufacturers can reduce forward buying by offering uniform wholesale prices to its customers. Many retailers have adopted EDLP while eliminating sales of promotions that cause forward buying. Similarly, buyers can negotiate with their suppliers to offer EDLP, while curtailing promotions. |
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Term
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Definition
| Can occur when demand exceeds a supplier’s finished goods available, and in this case, the supplier may allocate product in proportion to what buyers ordered. (Ex: If the supply of goods is 75% of total demand, buyers would be allocated 75% of what they ordered) |
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Term
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Definition
| When buyers figure out the relationship between their orders and what is supplied, they tend to inflate their orders to satisfy their real needs. |
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Term
| Activities Used to Manage Supply Chain Risk |
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Definition
Increase safety stocks and forward buying: Can be costly. A stop gap alternative.
Identify backup suppliers and logistics services: Can create ill-will with current partners; requires additional time and relationship building
Diversify the supply base: Use of suppliers from geographically dispersed markets to minimize the impacts of disruptions
Utilize a supply chain IT system: Collection and sharing of appropriate information with supply chain partners
Develop a formal risk management program: Identifies potential disruptions and the appropriate responses |
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Term
| Basic Responsibilities of Supply Chain |
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Definition
- Meet customer demand
o Right items, right place, right time
o Reasonable prices
o Quality- high performance, consistency
o Flexibility- customization and/or volume
- Contribute to profitability
o Support revenue streams: cost, quality, speed, flexibility offerings
o Control costs: minimize waste and inventory
- Continuous improvement
o Capture data, measure performance, analyze data
o Responsive to changes in market demand |
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Term
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Definition
| in the direction of the customer (ex: moving from distribution to retail sales) |
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Term
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Definition
| in the direction of the suppliers (ex: moving from distribution, to production, to purchasing) |
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Term
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Definition
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Term
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Definition
| out of sight, what customers do not see |
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Term
| Strengths & Weaknesses of Push System |
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Definition
Strengths:
- High inventories
o Low ordering costs
o Easier to take advantage of quantity discounts
o High customer service rates possible. Less likely to run out of product.
- Shorter lead times (order placement to delivery time)
o Quicker delivery if required
o Allows inventory to be closer to the customer
o Decreases customer’s need for safety stock
- Mistakes and defects tolerable
o Time to inspect
o Inventory can support returns
Weaknesses:
- High inventories
o High holding costs and risk of obsolescence
- Low customization flexibility
o Items manufactured a long time ago, far away
o Less of an opportunity for customization
o Requires a static market
- Mistakes and defects tolerable
o Humans use allowances
o More waste, higher operational costs
- Forecasting miscalculations can be costly
o Demand high: shortages, lost revenue
o Demand low: high amounts of waste |
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Term
| &Strengths Weaknesses of Pull Systems |
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Definition
Strengths:
- Low inventories
o Low holding costs- fewer pipeline storage requirements
o Decreased handling, shrinkage, damage
- Demand driven system
o Make only what is required
o Minimizes waste- materials, labor, transportation
- Flexible manufacturing possible
o Higher customer satisfaction- specific needs, high performance
o Able to adapt to changes- market needs, technology, laws
- Closer supplier ties are developed
o More efficient coordination
o Quality: higher performance items developed
Weaknesses:
- Low inventories
o Higher ordering costs
o Lead times may be long- increase in supply chain anxiety
- Risky customer service rates
o Vulnerable to unexpected spikes in demand, seasonal demand
o Vulnerable to supply chain partner weaknesses/errors
o Vulnerable to labor utilization and labor contract issues
- Tougher sell?
o High tech items require customer be educated
o Do display items/pictures portray all options and variations?
- Forecasting miscalculations can be costly
o Demand high: does supply chain have available speed/capacity?
o Demand low: did you build too much capacity? Sunk costs |
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Term
| Primary Goals of JIT Systems |
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Definition
Goals for supplies:
- Minimize inventories
- Short lead times
- High quality
Goals for operations and manufacturing:
- Short cycle times
- High quality
- Low defects
- Control costs |
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Term
| Why is JIT more of a philosophy than a checklist? |
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Definition
No two companies would utilize the same practice. “Best practice” for one company is not ideal for another. JIT businesses tend to be pull oriented.
- Inventory is evil: hides problems
- Eliminate all types of waste
o Quality at the source (Jidoka)- everyone’s responsibility
o Minimize inventory, overproduction
o Waiting time, transportation, motion, non-value added processes
- Continuous improvement culture
- Open communication flows required
- Intelligent and flexible human resources required |
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Term
| What are the essential elements of JIT? |
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Definition
Quality at the source (jidoka)
- Rather than wait for final inspection, assure that quality is built in at every stage of the process. This may involve stopping the line if necessary.
High performance quality
- In order to remain competitive, JIT companies must outperform Push competitor offerings
Consistent quality
- Perfection in every facet of supply chain is required every time. Errors create huge problems and delays
Preventative maintenance
- Reduces downtime. JIT cannot tolerate unplanned downtime. May be scheduled during down times.
Continuous improvement
- Required to maintain competitive edge.
Close supplier/partner ties
- Favor quality, speed, and flexibility over low cost
- Share plans and schedules
- Rationalization: reduce the number of suppliers
- Smaller, more frequent deliveries are required
- Performance measures that align goals
Utilize standardized parts when possible
- Especially when they can be used on multiple end items
- Reduces inventories, safety stock requirements (variability)
- Easier for employees to learn, work, manage
Facilities and manufacturing systems
- Well designed and engineered systems and layouts- avoid bottlenecks
- Create systems that allow for both speed and flexibility
- Reduce set-up times when changing from manufacturing one product to manufacturing even when order sizes are small
Employees and/or automation
- Educated and empowered employees are required
- Standardized work methods when possible
o Easy to learn- increases productivity
o Reduce costs- learning, defects, speed
- Automate for the right reasons
o Consistent quality and increase speed/capacity
o Reduce per unit cost
Logistics and transportation
- Communication
- High speed deliveries
- Controlled costs
- Ability to manufacture/assemble during distribution
- Efficient packaging
- Eliminate damage during transportation
Information technology
- Open and secure real-time data exchanges
- Controlled costs
- Hardware and software capability
Human resources
- Flexible and intelligent workforce (skilled, knowledgeable about system, problem solvers)
- Culture devoted to continuous improvement
- Automation/technology for speed/consistency only? |
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Term
| Time, Flexibility, Quality, & Cost on Supply Chain System |
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Definition
Time
- Amount of automation? Maximum output/capacity required?
- Line balancing, bottlenecks, lead times
Flexibility
- Volume flexibility vs. customization flexibility?
- Automation and/or workers capabilities- Postponement
Quality
- Consistency and high performance- training, automation
- Jidoka- everyone is responsible for quality
Cost
- Inventory, defects, loss, damage, labor, facilities, packaging
- Product, service, support system |
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Term
| What is postponement and why can it be valuable? What is its relationship to push/pull systems? |
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Definition
Postponement: Delay the final assembly of the end item. Allows some degree of customization and standardization. Speed and customization
Push through the standardization portions of manufacturing
Pull only the customization options offered to customers
Inventories: WIP (push elements) + Components: pull elements |
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Term
| PROs & CONs of Centralizing Warehouses |
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Definition
Pro: lower required stock levels, less likely to stock out, warehouse operating costs could decrease
Con: distance/responsiveness, transportation costs |
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Term
| What is the bullwhip effect and what are it's causes? |
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Definition
Bullwhip effect: very high and very low supply levels despite fairly constant demand levels
Contributions to/results of bullwhip effect:
- Poor forecasting, poor analysis, poor communication
- Order batching- trying to place large orders
- Price fluctuations- promotions, quantity discounts, special pricing/payment options. Can cause batching
- Rationing- Demand higher than supply. Promotes rationing on part of “distributor”. “Retailers” might get less than they ordered.
- Shortage gaming- Retailers inflate their order sizes to counteract rationing |
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Term
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Definition
1. All work must be completely specified as to content, sequence, timing, and outcome. Detail is important, otherwise, a foundation for improvements is missing.
2. Every customer-supplier connection must be direct, unambiguously specifying the people I nvolved, the form and quantity of the services or goods to be provided, the way the requests are made by each customer, and the expected time in which the requests will be met.
3. The pathway for ever service and product must be simple and direct. That is, services and goods do not flow to the next available person or machine, but to a specific person or machine. With this principle, employees can determine whether a capacity problem exists at a particular workstation and then analyze ways to solve it.
4. Any improvement to the system must be made in accordance with the scientific method, under the guidance of a teacher, at the lowest possible organizational level. |
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Term
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Definition
| Represents philosophy behind continuous improvement in lean systems. In manufacturing, the water surface represents product and component inventory levels. The rocks represent problems encountered in the fulfillment of services or products. When the water surface is high enough, the boat passes over the rocks because the high level of capacity or inventory covers up problems. As capacity or inventory shrinks, rocks are exposed. Ultimately, the boat will hit a rock if the water surface falls far enough. Through lean systems, employees and supervisors can apply methods for continuous improvement in order to demolish the rock. |
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Term
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Definition
| A Kawasaki plant in Nebraska periodically cuts its safety stocks almost to zero. The problems at the plant are exposed, recorded, and later assigned to employees as improvement projects. After improvements are made, inventories are permanently cut to the new level. This is a trial-and-error process to develop more efficient manufacturing operations. |
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Term
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Definition
| Saga’s factory replaced its conveyor belts with a cluster of robots that could seamlessly hand off work to one another, and synchronize production using software. As a result, throughput time decreased from 2.5 days to 40 minutes which allowed Saga to make twice as many phones per week. This allowed a reduction in inventory, and the plant could quickly change the product mix as customer demand shifted and new products were introduced. |
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Term
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Definition
| Example of poka-yoke. At Toyota plants, every vehicle being assembled is accompanied by an RFID chip containing information on how many nuts and bolts need to be tightened on that vehicle for a given operation at a given workstation. A green light comes on when the right number of nuts have been tightened, and only then does the vehicle move forward on the assembly line. |
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Term
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Definition
| NB follows the principles of lean manufacturing and ships directly to retailers an customers without the intervening intermediaries who may discount its products. Their research and development group is located at its oldest plant, so the company’s design and manufacturing operations are tightly integrated. During the past few years, NB migrated away from the shoe industry’s typical batch and queue method and towards small-lot, cellular flow production. Some production steps remain manual, although NB automates processes wherever it can. In terms of deciding how many shoes to produce, it uses a pull rather than a push method. Its production schedules are driven by market demand. |
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Term
| University of Pittsburg Medical Center Case |
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Definition
| Began the Clinical Design Initiative, replicating the lean approach of Toyota’s production system. This approach focuses on determining the root cause of a problem through direct observation, and then eliminating it by designing solutions that are visual, simple, and unambiguous. These solutions are then tested in a small area and improved until the desired clinical and cost outcomes, along with enhanced patient and staff satisfaction, are achieved. Once perfected, the improved process is rolled out to other areas of the hospital. This CDI methodology was used to speed up turnaround time in the pathology lab. Equipment was moved around the lab to create a cellular layout. |
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Term
| Process Integration at ViewSonic Case |
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Definition
| Adopted the General Integration Suite (GIS) from Sterling Commerce which helps keep the global business-to-business integration intact. The key feature of GIS is the centralized partner-management capabilities which deliver a single interface for ViewSonic employees to monitor business processes and navigate reports and statistics in her-real time. It also offers insight as to where and how processes can be improved. The tight integration of the company allows ViewSonic to offer customers, the global network of distributors and retailers, maximum flexibility when they place, check, or change orders. The highly integrated supply chain allows near real-time purchase order modification, shipment notification, and electronic invoicing. |
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Term
| Supply Chain Visibility at Solectron |
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Definition
| Their supply chain visibility called RapidResponse is also called a “glass pipeline”. Draws together information such as inventory levels, WIP, forecasts, outstanding orders, and backlogs. By sharing information all the way along the supply chain, it’s easier to make a decision on what to do if something goes wrong. This prevents supply chain shocks. |
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Term
| Wal-Mart's Drive to green its supply chains Case |
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Definition
| WM is partnering with the Carbon Disclosure Project on a new program to audit energy consumption and carbon emissions of seven product categories throughout their supply chains. Taking initiatives to reduce packaging and make their trucks more energy efficient because they know it will save them money. Asked their suppliers to reduce their packaging by five percent, which saved Wal-Mart 3.4 billion dollars. |
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Term
| What is the value of close customer ties? |
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Definition
| Close cooperation between companies and their suppliers should be a win-win for both parties. Better communication of component requirements, for example, enables more efficient inventory planning and delivery scheduling by suppliers, thereby improving supplier profit margins. Customers can then negotiate lower component prices. When a lean system is implemented, it is important to make sure the suppliers are in close proximity in order to promote strong partnerships and better synchronize product flows. |
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Term
| What is the value of small lot sizes? |
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Definition
| Small lots have the advantage of reducing the average level of inventory relative to large lots. Small lots pass through the system faster than large lots since they do not keep materials waiting. In addition, if any defective items are discovered, large lots cause longer delays because the entire lot must be examined. Small lots help achieve a uniform workload on the system and prevent overproduction. Disadvantage of small lots: increased setup frequency. |
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Term
| What is the value of quality at the source/Jidoka? |
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Definition
| Quality at the source is a philosophy whereby defects are caught and corrected where they are created. Workers never pass on defective units to the next step, everyone checks eachother’s work. Automatically stopping the process when something is wrong and then fixing the problems on the line itself as they occur is known as jidoka in the Toyota Production System. |
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Term
| What is the value of uniform workstation loads? |
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Definition
| For manufacturing processes, uniform loads can be achieved by assembling the same type and number of units each day, thus creating a uniform daily demand at all workstations. Efficiencies can be realized when the load on the firm’s resources can be managed. |
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Term
| What is the value of standardized components? |
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Definition
| In manufacturing, the standardization of components increases the total quantity that must be produced for that component. Because the requirements per component increase, each worker performs a standardized task or work method more often each day. Productivity tends to increase because workers learn to do their tasks more efficiently with increased repetition. Standardizing components and work methods help a firm achieve the high-productivity, low-inventory objectives of a lean system. |
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Term
| What is the value of a flexible workforce? |
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Definition
| The role of workers is elevated in lean systems; workers in flexible workforces can be trained to perform more than one job. A benefit of flexibility is the ability to shift workers among workstations to help relieve bottlenecks as they arise without the need for inventory buffers. Also, workers can step in and do the job for those who are on vacation or out sick. |
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Term
| What is the value of automation? |
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Definition
| Automation plays a big role in lean systems and is key to low-cost operations. Money freed up because of inventory reductions or other efficiencies can be invested in automation to reduce costs. The benefits, of course, are greater profits, greater market share, or both. Ex: ATM’s |
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Term
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Definition
| Firms usually internalize, or make in-house, those value-chain activities that they consider a part of their core competence, or which involve the use of proprietary knowledge and trade secrets that they want to control. |
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Term
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Definition
| Firms will usually externalize when the sourced products or services are peripheral to the firm’s main offerings, can be obtained at a lower cost, or can be provided by suppliers specialized in providing the specific offerings. |
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Term
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Definition
| The procurement of selected value-adding activities, including production of intermediate goods or finished products, from independent suppliers. |
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Term
| Business Process Outsourcing |
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Definition
| The outsourcing of business functions to independent suppliers, such as accounting, payroll, human resource functions, IT services, customers service, and technical support. |
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Term
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Definition
| An arrangement in which the focal firm contracts with an independent supplier to manufacture products according to well-defined specifications |
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Term
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Definition
| The relocation of a business process or entire manufacturing facility to a foreign country |
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Term
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Definition
- Large-scale manufacturing industries whose primary competitive advantage is efficiency and low cost
- Industires such as automobiles that have uniform customer needs and highly standardized processes in production and other value-chained activities
- Service industries that are highly labor intensive, such as call centers and legal transcription
- Information based industries whose functions and activities can be easily transmitted via the internet, such as accounting, billing, and payroll
- Industries such as software preparation, whose outputs are easy to codify and transmit over the internet or by telephone, such as routine technical support and customer service activities |
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Term
| Jobs Difficult to Off Shore |
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Definition
| Many jobs in the services sector cannot be seperated from their place of consumption. Personal contact is vital at the downstream end of virtually all value chains. Doctors, dentists, lawyers, and accountants are examples. In addition, companies like Harley Davidson won’t offshore because a big part of their selling point is the fact that they make everything in the United States. |
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Term
| Benefits to Global Sourcing |
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Definition
- Cost efficiency
- Faster corporate growth
- Access to qualified personnel abroad
- Improved productivity and service
- Busines process redesign
- Increased speed to market
- Access to new markets
- Technological flexibility
- Improved agility by shedding unnecessary overhead |
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Term
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Definition
| Example: California ports of LA and Long Beach handle over 40 percent of imports into the United States. Although the two California ports process thousands of containers per day, infrastructure deficiencies and increasing demand combine to result in long delays, which translate into longer transit times and higher costs for US importers. |
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Term
| Transportation Mode Trade-Offs |
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Definition
| There are three considerations to make in choosing a particular mode: transit time, predictability, and cost of tranportation. Ocean transport is slower but cheaper than air transport. Air transport is fast and extremely predictable, but costly. Air transport is preferred when transporting perishable products, such as food or flowers, to transport goods with a high value to weight ratio, and to make emergency shipments. Land transport is usually more expensive than ocean transport but cheapaer than air freight. |
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Term
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Definition
1. Less-than-expected cost savings
2. Environmental factors
3. Weak legal environment
4. Risk of creating competitors
5. Inadequate or low-skilled workers
6. Over-reliance on suppliers
7. Erosion of morale and commitment among home-country employees |
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Term
| Strategies for Global Sourcing |
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Definition
1. Go offshore for the right reasons
2. Get employees on board
3. Choose carefully between a captive operation and contracting with outside suppliers
4. Emphasize effective communications with suppliers
5. Invest in supplier development and collaboration
6. Safeguard interests |
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Term
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Definition
| The procurement of products or services from independent suppliers or company-owned subsidiaries located abroad for consumption in the home country or a third country |
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Term
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Definition
Nearly 40% of clinical trials for new drugs in the pharmaceutical industry are now conducted in emerging markets such as China and Russia. Drug testing used to take place in developed economies, but pharmaceutical firms increasingly prefer emerging markets because they offer:
- Lower costs for recruitment of physicians and patients
- Large potential patient populations
- Diversity of patient populations and medical conditions
- Less likelihood of patients taking other medicines that could interact with the drug under study
Recruiting patients accounts for 40% of the trial budget. Testing in emerging markets greatly reduces recruitment costs. Firms typically outsource the trials to contract research organizations, which in turn hire physicians in local communities and hospitals to find patients. People are eager to participate, as they see the trials as a way to access medical treatment. Russia’s centralized hospital system recruits patients for trials quickly, which shaves millions of dollars, and several months off of the drug development process. |
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Term
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Definition
China aims to surpass India in services outsourcing, and the Chinese government is making huge investments to upgrade worker training and the quality of its universities. China has three major advantages:
1. The country is home to a large amount of skilled, low-cost labor.
2. China has a huge domestic market with rapid and sustainable economic growth.
3. The attitude of the Chinese government, long an obstacle to foreign firms, is increasingly probusiness.
However, China is weak in intellectual property protection, has a language and culture that foreign firms find challenging, and lacks quality infrastructure. Dealing with the Chinese government is always complicated because of substantial bureaucracy and infighting among its various agencies. The resulting chaos hampers the ability of Chinese entrepreneurs to launch and manage companies. India is still better, ah! |
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Term
| How can a globalization strategy open up opportunities for increased profits for a company? |
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Definition
Increase revenues globally
- Growth opportunities- new markets
- Managing risk
- Understanding markets and trends
Decrease costs globally
- Cheap labor and resources
- Taxes, tariffs, and other benefits
- Understanding markets and trends
Globalization makes this easier? Makes this harder?
- Competition- revenues and costs
- Legal issues- opportunities and restrictions
- Exchange rates- fluctuating
- Information management |
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Term
| Describe the EMS industry and how it can be beneficial |
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Definition
Electronic Manufacturing Services (EMS) Industry:
- Companies that can take on numerous primary supply chain responsibilities associated with the manufacturing of electronic components assembled end-items.
- Exploit economies of scale in the manufacturing of electronic devices.
- Similar parts, processes, designs, techniques, channels of distribution.
Advantages of using EMS
- Focus on your strengths
- Cost advantages- economies of scale, small orders possible, learning
- Higher quality
- Supply chain services- purchasing, delivery, manufacturing, expertise, international channels of distribution
- Flexibility- large volume or small volume orders
Example: Microsoft manufacturing Xbox’s |
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Term
| Calculate Profits in strong and weak currency scenarios |
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Definition
Example: Euro vs. Dollar
Strong dollar Scenario (weak Euro)
- 2 euros = 1 dollar
- Consumer effect: $30,000 car would cost 60,000 Euros
- This means American cars are difficult to sell in Europe
- Bad for US manufacturers, good for foreign manufacturers selling in the US
- Good for US consumers
Weak Dollar Scenario (Strong Euro)
- 1 Euro = 2 dollars
- Consumer effect: $30,000 car would cost 15,000 Euros
- This means American cars are easier to sell in Europe
- Manufacturing effect: $2,000 in wages would cost 1,000 Euros
Example: Importing Volkswagens into US
- 15,000 Euros to manufacture in Europe
- $30,000 sale price in US
Even scenario (1 Euro = $1)
- Cost = $15K (15K Euros), Price = $30K. Profit = 15K Euros
Weak dollar scenario (1 Euro = $2) US consumer feels poor
- Cost: $30K (15 Euros), Price: $30K. Profit = 0
Strong dollar scenario (2 Euros = $1) Us consumer feels rich
- Cost: 15K Euros ($7.5K), Price: $30K. Profit = $22.5K (45K Euros) |
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Term
| What is C-TPAT? Describe the 3-tier system, what are the difficulties associated with volunteering for the program? |
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Definition
Customs-Trade Partnership Against Terrorism
- Corporations assume responsibility for their supply chains
- Voluntary program with benefits for participants
- Data mining program with 100+ data elements
- Low cost + low security = late shipment + higher cost
Three tier system
- Tier 1: Must perform risk analysis. Take steps to control/improve weaknesses.
- Tier 2: Validated Tier 1 findings by US customs
- Tier 3: Green Lane- Follow supply chain best practices
Challenges and considerations
- Attest to SC member’s security
- IT issues- cost to integrate IT system, sharing information with government
- HR issues- background checks, training, education |
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Term
| What type of companies will be hurt most by increasing oil prices? |
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Definition
- Retailers: Wal-Mart and Target
- Heavy and bulk items
o Higher shipping costs
o High start-up/capital investment costs. Hard to move production
- Fresh produce industry
- Companies utilizing JIT systems- lots of small shipments
- American retailers trying to capitalize on weak dollar |
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Term
| Why are some American companies considering importing products via Mexican ports? What are some challenges of using a Mexican port strategy? |
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Definition
Shipping Alternative- Mexican Ports
- LA/ Long Beach port congestion
o Operate at roughly 130% utilization
o Constant delays, excessive labor and fuel fees
- Lazaro Cardenas port
o Affordable and dependable workforce- strikes are rare
o US Government working to facilitate “no-hassle” imports via Mexican border
o NAFTA- Super railway (Mexico/US/Canada)
- Port of Guaymas
o Located on east side of Gulf of California
o 250 miles south of AZ Border (1-10) |
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Term
| What constitutes a socially responsible firm? |
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Definition
- Legal and Ethical: practices and attitude towards customers and associates
- Community: Committed to programs and practices that benefit society
- Environmental Sustainability: Earth friendly business practices |
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Term
| What are some of the ties between social responsibility and supply chain? |
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Definition
- Eliminate waste
- Proliferation of legal and ethical business practices
- Improve quality of life: save lives- teach SCM practices, develop SC infrastructure, execute SC operations |
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Term
| How can supply chain hurt social responsibilities? |
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Definition
- Customer related issues
- Business partner related issues- buyers and suppliers
- Labor related issues
- Culture related issues
- Environment related issues |
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Term
| What are some barriers to/arguments against companies acting in a SR manner? |
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Definition
Critics:
- Reduces profits, increases costs
- Takes focus away from business, core competencies
- Company may acquire too much social power
- Problems solved according to Western values
Risks/Barriers
- Lack of knowledge and education – customers, employees, partners
- Lack of effective and accepted measurements (landscaping, hybrids)
- What is the right thing to do? Perceptions vs. reality
- Scrutiny by media and special interest groups
- Long and complex chain of partners/suppliers |
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Term
| What are some ethical issues global supply chains confront? |
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Definition
Product and Customer related: quality, safety, environmental impact
- Mattel, Firestone, Dog food, Baby formula
- Cars, Airplanes, Homes, Batteries
Supplier
- Relationship: treatment of partners/suppliers
- Partner’s labor and other business practices
- Price paid for materials
- Corruption, bribery, collusion
- Processes used to develop, acquire, extract materials
- Examples: DeBeers, WalMart, Nike, Microsoft
Logistics
- Environmental issues: pollution, landscape
Manufacturing and Labor related issues
- Hiring practices- hiring illegal workers, etc
- Work conditions: safety, health, hours, labor unions
- Environmental impact: toxic emission, waste
- Closing and relocating facilities
- Examples: Nike, WalMart, Car manufacturers |
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Term
| What are some of the issues faced by developing countries that SCM can help improve? |
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Definition
- Corruption, black market
- Counterfeit drugs, drugs going to US market
- Procurement: purchasing drugs at lower prices (budgets)
- Distribution: lack of infrastructure (national, local, disaster related)
- Theft, spoilage
- Lack of SC Consistency |
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Term
| Define Sustainable development/design. Why is a tree considered a sustainable system? |
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Definition
Development that meets the needs of the present without compromising the ability of future generations to meet their own needs.
Creations which are energy efficient, healthy, comfortable, flexible in use and designed for long life. Example: most of nature (trees) |
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Term
| Environmental technology discussed in class: |
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Definition
Renewable Energy Sources: solar, bio-fuel, landfill
Triple bottom line: Attempt to balance economic, social, and environmental concerns
End of pipe solutions: Solutions geared at dealing with the outputs of traditional supply chains
Cradle to grave design: Designing products and services with only the useful life of the product/service and its materials in mind. Manufacture to disposal.
Cradle to cradle design: Ecologically intelligent design that considers not only the useful life of the product but also the recovery, disposal, and reuse of the materials and components that make up the product. |
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Term
| Waste Equals Food Example |
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Definition
- Waste Equals Food- type programs
o Eliminate the idea of waste
o When there is no waste, there is nothing to regulate
o Products of consumption- completely biodegradable items
o Products of service- return items, reuse materials in other products |
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