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264 Cards in this Set
- Front
- Back
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Reasons business operations move from domestic to international.
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1. Reduce costs (labor, taxes, tariffs, etc.)
2. Improve supply chain. 3. Provide better goods & services. 4. Understand markets. 5. Learn to improve operations. 6. Attract & retain global talent. |
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What are maquiladoras?
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- Mexican factories located along the US-Mexico border; receive preferential tariff treatment.
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What is the World Trade Organization?
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WTO
- international organization that promotes word trade by lowering barriers to the free flow of goods & services across borders. |
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What is NAFTA
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North American Free Trade Agreement:
- free trade agreement between Canada, Mexico and US. |
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What is EU
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European Union:
- European trade group that has 27 member states. |
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Why does an organization need a mission and a strategy?
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An effective operations management effort must have a mission so it knows where it is going and a strategy so it knows how to get there.
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Mission
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- purpose or rationale for an organization's existence.
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Strategy
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- how an organization expects to achieve its missions and goals.
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Three strategic approaches to competitive advantage
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1. Differentiation
2. Cost Leadership 3. Response |
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Differentiation
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- distinguishing the offerings of an organization in a way where customer perceives added value.
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Low-Cost Leadership
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- achieving maximum value as perceived by customer.
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Response
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- set of values related to rapid, flexible and reliable performance.
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Competitive Advantage
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- creation of a unique advantage over competitors.
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Experience Differentiation
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- engaging the customer with a product through imaginative use of the five senses; so customer 'experiences' the product.
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Operations Decisions
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Strategic decisions of OM are:
- goods & service design - quality - process and capacity design - location selection - layout design - human resources & job design - supply-chain management - inventory - scheduling - maintenance |
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Resources View
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- view in which managers evaluate the resources at their disposal and manage or alter them to achieve competitive advantage.
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Value-Chain Analysis
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- way to identify the elements in the product/service chain that uniquely add value.
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Five-Forces Analysis
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Way to analyze the five forces of competitive advantage:
1. Immediate Rivals 2. Potential Entrants 3. Customers 4. Suppliers 5. Substitute Products Different issues are emphasized during different stages of the product life cycle. |
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Product Life Cycle
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1. Introduction
2. Growth 3. Maturity 4. Decline |
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Introduction
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Company Strategy:
- best period to increase market share (R&D engineering is critical. OM Strategy: - product design and development critical, frequent product and progress design changes, short production runs, high production costs, limited models, attention to quality. |
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Growth Cycle
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Company Strategy:
- practical to change price or quality image - strengthening niche. OM Strategy: - forecasting critical - product progress reliability - competitive product improvements and options - increase capacity - shift toward product focus - enhance distribution. |
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Maturity Cycle
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Company Strategy:
- poor time to change image or price or quality - competitive costs become critical - defend market position. OM Strategy: - standardization - less rapid product changes (more minor changes) - optimum capacity - increasing stability of process - long production runs - product improvement and cost cutting. |
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Decline Cycle
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Company Strategy:
- cost control is critical OM Strategy: - little product differentiation - cost minimization - overcapacity in the industry - prune line to eliminate items not returning good margin - reduce capacity |
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SWOT Analysis
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Method of determining internal strengths and weaknesses and external opportunities and threats.
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Strategy Development Process
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1. Perform environmental analysis.
2. Determine the corporate mission. 3. Forming a strategy. |
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Key Success Factors (KSFs)
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Activities or factors that are key to achieving competitive advantage.
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Core Competencies
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A set of skills, talents and activities that a firm does particularly well.
A core competency may be a subset of, or a combination of KSFs. |
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Activity Map
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A graphical link of competitive advantage, KSFs and supporting activities.
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What is the goal of an operations manager?
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1. Implement an OM strategy
2. Provide competitive advantage 3. Increase productivity |
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International Business
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A firm that engages in cross-border transactions.
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Three phases of Project Management
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1. Planning:
- goal setting - defining the project - team organization 2. Scheduling: - relates to people, money and supplies to specific activities and relates activities to each other. 3. Controlling: - firm monitors resources, costs, quality and budgets. - revises or changes plans and shifts resources to meet time and cost demands. |
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Projects
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- series of related tasks directed toward a major output.
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Project Organization
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- organization formed to ensure that programs (projects) receive the proper management and attention.
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Work Breakdown Structure (WBS)
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- defines a project by dividing it into more and more detailed components.
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Gnatt Charts
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- planning charts used to schedule resources and allocate time.
- project scheduling serves several purposes: |
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What purpose does project scheduling serve?
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1. Shows the relationship of each activity to others and to the whole project.
2. Identifies precedence relationships among activities. 3. Encourages setting realistic time and cost estimates for each activity. 4. Helps make better use of people, money and material resources by identifying critical bottlenecks in the project. |
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Project Controlling
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Computerized programs produce a wide variety of PERT/CMP reports, including:
1. Detailed cost breakdowns for each task. 2. Total program labor curves 3. Cost distribution tables 4. Functional cost and hour summaries 5. Raw material and expenditure forecasts 6. Variance reports 7. Time analysis reports 8. Work status reports |
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Program Evaluation and Review Technique (PERT)
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A project management technique that employs three time estimates for each activity.
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Critical Path Method (CPM)
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A project management technique that uses only one estimate per activity.
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Critical Path
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The computerized loungers time path(s) through a network.
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Activity-on-node (AON)
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Network diagram in which nodes designate activities.
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Activity-on-arrow (AOA)
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Network diagram in which arrows designate activities (nodes represent starting and finishing times - aka. Events).
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Dummy Activity
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An activity having no time that is inserted into a network to maintain the logic of the network.
Can be added to the end of an AON diagram for a project that has multiple ending activities. |
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Critical Path Analysis
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Process that helps determine project schedule.
To find a critical path, calculate two distinct start and end times for each activity: Earliest Start (ES) = earliest time which an activity can start, without delaying the completion time of the entire project. Earliest Finish (EF) Latest Start (LS) = latest time activity can start without delaying entire project. Latest Finish (LF) = latest time activity has to finish without delaying completion time of entire project. |
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Forward Pass
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Process that identifies all the early start and early finish times.
ES = Maximum EF of all immediate predecessors. EF = ES + Activity Time |
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Backward Pass
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Process which identifies all late start and late finish times.
LF = Minimum LS of all immediate following activities LS = LF - Activity Time |
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Slack Time
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Free time for an activity.
Slack = LS - ES or Slack = Lf - EF |
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Critical Activities
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Activities with zero slack; said to be on the critical path.
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Critical Path
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Continuous path through the project network that starts at the first activity in the project, terminates at the last activity in the project and includes only critical activities.
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Optimistic Time
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The "best" activity completion time that could be obtained in a PERT network.
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Pessimistic Time
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The "worst activity time that could be expected in a PERT network.
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Most Likely Time
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The most probable time to complete an activity in a PERT network.
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Activity Time Estimates following Beta Distribution
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Expected activity time T = (a + 4m + b) / 6
Variance of Activity Completion Time = [(b - a) / 6]² σ²p = Project Variance = ∑ (variances of activities on a critical path) Z = (Due Date - Expected Date of Completion) / σp Due Date = Expected Completion Time + (Z X σp) |
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Crashing
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Shortening activity time in a network to reduce time on the critical path so total completion time is reduced.
Crash cost per period = (Crash Cost - Normal Cost) / (Normal Time - Crash Time) |
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Forecasting
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The art & science of predicting future events.
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Economic Forecasts
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Planning indicators that are valuable in helping organizations prepare medium to long range forecasts.
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Technological Forecasts
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Long-term forecasts concerned with the rates of technological progress.
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Demand Forecasts
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Projections of a company's sales for each time period in the planning horizon.
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Why is there a Strategic Importance of Forecasting?
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The forecast is the only estimate of demand until actual demand becomes known.
Forecasts of demand drive decisions in many areas including: - human resources - capacity - supply-chain management |
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Seven Steps in the Forecasting System
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1. Determine the use of the forecast.
2. Select the items to be forecasted. 3. Determine time horizon of the forecast. 4. Select the forecasting model(s). 5. Gather the data needed to make the forecast. 6. Make the forecast. 7. Validate and implement the results. |
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Quantitative Forecasts
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Employ mathematical modelling to forecast demand.
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Qualitative Forecasts
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Incorporate such factors as the decision makers intuition, emotions, personal experiences and value system.
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Jury of Executive Opinion
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Takes the opinion of a small group of high-level managers and results in a group estimate of demand.
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Delphi Method
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Uses and interactive group process that allows experts to make forecasts.
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Sales Force Composite
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Based on salespersons' estimates of expected sales.
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Consumer Market Survey
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Solicits input from customers or potential customers regarding future purchasing plans.
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Time Series
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Uses a series of data points to make a forecast.
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Naive Approach
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Assumes that demand in the next period is equal to remain in most recent period.
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Moving Averages
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Uses an average of the n most recent periods of data to forecast the next period.
Moving Average = (∑ Demand in previous n periods) / n Weighted Moving Average = [∑ (Weight for period n) (Demand in period n)] / [∑ Weights] |
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Exponential Smoothing
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A weighted moving average forecasting technique in which data points are weighted by an exponential function.
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Smoothing Constant
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The weighting factor, α, used in an exponential smoothing forecast, a number between 0 and 1.
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Exponent Smoothing Formula
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Ft = Ft-1 + α(At-1 - Ft-1)
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Mean Absolute Deviation (MAD)
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Measure of the overall forecast error for a model.
MAD = [∑ | Actual - Forecast |] / n |
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Mean Squared Error (MSE)
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Average of the squared differences between forecast and observed values.
MSE = ∑ (Forecast Errors)² / n |
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Mean Absolute Percent Error (MAPE)
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Average of the absolute differences between the forecast and actual values, expressed as a percentage of actual values.
(Formula doesn't work on computer well) |
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Exponential Smoothing with Trend Adjustment
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Forecast including trend adjustment (FITt) = Exponential smoothed forecast (Ft) + Exponentially smoothed trend (Tt)
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Trend Projection
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Time-series forecasting method that fits a trend line to a series of historical data points and then projects the line into the future for forecasts.
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Seasonal Variations
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Regular upward or downward movements in a time series that tie to recurring events.
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Cycles
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Patterns in the data that occur every several years.
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Linear-Regression Analysis
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A straight line mathematical model to describe the functional relationships between independent and dependent variables.
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Standard Error of the Estimate
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A measure of variability around the regression line.
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Coefficient of Correlation
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Measure of the strength of the relationship between two variables.
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Coefficient of Determination
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Measure of the amount of variation in the dependent variable about its mean that is explained by the regression equation.
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Multiple Regression
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An associative forecasting method with >1 independent variable.
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Tracking Signal
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Measure of how well the forecast is predicting actual values.
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Bias
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Forecast that is consistently higher or lower than actual values of a time series.
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Adaptive Smoothing
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Approach to exponential smoothing forecasting in which the smoothing constant is automatically changed to keep errors to a minimum.
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Focus Forecasting
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Forecasting that tries a variety of computer models and selects the best one for a particular application.
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Product Decision
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The selection, definition and design of products.
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Product-by-Value Analysis
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List of products, in descending order of their individual dollar contribution to the firm as well as the total annual dollar contribution of the product.
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Generating New Products
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Product selection, definition and design are continuously ongoing.
Changes in product opportunities, the products themselves, product volume and product mix may arise due to understanding the customer, economic change, sociological and demographic change, technological change, political/legal change, market practice, professional standards, suppliers or distributors. |
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Quality Function Deployment (QFD)
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Process for determining customer requirements ('wants') and translating them into attributes ('hows') that each functional area can understand and act on.
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House of Quality
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Part of the quality function deployment process that utilizes a planning matrix to relate customer wants to how the firm is going to meet those wants.
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Product Development Teams
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Teams charged with moving from market requirements for a product to achieving product success.
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Concurrent Engineering
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Use of participating teams in design and engineering activities.
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Manufacturability & Value Engineering
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Activities that help improve a products design, production, maintainability, and use.
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Robust Design
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Design that can be produced to requirements even with unfavourable conditions in the production process.
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Modular Design
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Design in which parts of components of a product are subdivided into modules that are easily interchanged or replaced.
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Computer-Aided Design (CAD)
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Interactive use of a computer to develop and document a product.
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Design for Manufacture & Assembly (DFMA)
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Software which allows designers to look at the effect of design on manufacturing of a product.
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3-D Object Modeling
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Extension of CAD that builds small prototypes.
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Standard for the Exchange of Product Data (STEP)
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Provides a format allowing the electronic transmission of 3-D data.
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Computer-Aided Manufacturing (CAM)
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Use of information technology to control machinery.
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Virtual Reality
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Visual form of communication in which images substitute for reality and typically allow the user to respond interactively.
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Value Analysis
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Review of Successful Products that takes place during the production process.
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Sustainability
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Production system that supports conservation and renewal of resources.
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Life Cycle Assessment (LCA)
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Assesses environmental impact of a product from material and energy inputs to disposal and environmental releases.
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Goals for ethically, environmentally friendly designs
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1. Develop safe & environmentally sound products.
2. Minimize waste of resources 3. Reducing environmental liabilities 4. Increasing cost-effectiveness of complying with environmental regulations 5. Being recognized as a good corporate citizen |
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Time-Based Competition
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Competition based on time; rapidly developing products and moving them to market.
Internal Development Strategies: - new internally developed products - enhancements to existing products - migrations of existing products External development Strategies: - purchase the technology or expertise by acquiring the developer - establish joint ventures - develop alliances |
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Joint Ventures
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Firms establishing joint ownership to pursue new products or markets.
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Alliances
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Cooperative Agreements that allow firms to remain independent but pursue strategies consistent with their individual missions.
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Engineering Drawing
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shows the dimensions, tolerances, materials and finishes of a component.
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Bill of Material (BOM)
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List of the components, their description and the quantity of each required to make one unit of a product.
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Make-or-Buy Decision
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Choice between producing a component or a service and purchasing it from an outside source.
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Group Technology
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Product and component coding system that specifies the type of processing and the parameters of the processing; allow similar products to be grouped.
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Assembly Drawing
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Exploded view of a product
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Assembly Chart
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Graphic means of identifying how components flow into sub-assemblies and final products.
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Route Sheet
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List of the operations necessary to produce a component with the material specified in the bill of material.
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Work Order
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Instruction to make a given quantity of a particular item.
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Engineering Change Notice (ECN)
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Correction or modification of an engineering drawing or bill of material.
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Configuration Management
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System by which a product's planned or changed components are accurately identified
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Product Life Cycle Management (PLM)
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Software programs that tie together many phases of product design and manufacture.
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Techniques to reduce costs and unhand the service offering include...
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1. Delaying customization
2. Modularizing 3. Automating 4. Designing for the "moment of truth" |
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How to form a Decision Tree?
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1. Include all possible alternatives (including 'do nothing')
2. Enter payoffs at the end of the appropriate branch 3. Determine the expected value of each course of action by starting at the end of the tree and working toward the beginning; calculating values at each step and "pruning" inferior alternatives. |
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Transition to Production
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Knowing when to move a product from the development stage to production.
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Quality & Strategy
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Managing quality helps build successful strategies of differentiation, low cost & response.
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Two Ways Quality Improves Profitability
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1. Sales Gains - via improved response, price flexibility, increased market share and/or improved reputation.
2. Reduced Costs - via increased productivity, lower rework and scrap costs and/or lower warranty costs. |
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Quality
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ability of a product/service to meet customer needs
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Cost of Quality (COQ)
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cost of doing things wrong; price of non-conformance
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Categories of Cost Associated with Quality
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1. Prevention Costs
2. Appraisal Costs 3. Internal Failure 4. External Costs |
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ISO 9000
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set of quality standards developed by the International Organization for Standardization (ISO)
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ISO 4000
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series of environmental management standards established by the ISO
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Total Quality Management (TQM)
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Management of an entire organization so that it excels in all aspects of products and services that are important to the customer.
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Seven Concepts of an Effective TQM
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1. Continuous Improvement
2. Six Sigma 3. Employee Empowerment 4. Benchmarking 5. Just-In-Time 6. Taguchi Concepts 7. Knowledge of TQM Tools |
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PDCA
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continuous improvement model that involves four stages: plan, do, check and act
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Six Sigma
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program to save time, improve quality and lower costs
(process or product with 99.9997% accuracy) |
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Employee Empowerment
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enlarging employee jobs so that the added responsibility and authority is moved to the lowest level possible in an organization
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Quality Circle
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group of employees meting regularly with a facilitator to solve work-related problems in their work area.
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Benchmarking
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selecting a demonstrated standard of performance that represents the very best performance for a process or an activity.
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Just-In-Time (JIT)
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continuing improvement and enforced problem solving. Designed to produce/deliver goods just as they are needed.
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Quality Robust
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products that are consistently built to meet customers needs, in spite of adverse conditions in the production process.
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Quality Loss Function (QLF)
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mathematical function that identifies all costs connected with poor quality and shows how these costs increase as product quality moves from what the customer wants
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Target Oriented Quality
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philosophy of continuous improvement to bring the product exactly on target
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Cause & Effect Diagram
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schematic technique used to discover possible locations of quality problems
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Pareto Chart
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graphic that identifies the few critical items as opposed to many less important ones
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Flow Chart
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block diagram that graphically describes process or system
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Statistical Process Control (SPC)
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process used to monitor standards, make measurements and take corrective action as a product/service is being produced.
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Control Chart
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graphical presentation of process data over time, with predetermined control limits
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Inspection
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means of ensuring that an operation is producing at the quality level expected
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Source Inspection
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controlling/monitoring at the point of production or purchase: at the source
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Poka-Yoke
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"fool proof"
has come to mean a device or technique that ensures the production of a good unit every time |
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Attribute Inspection
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classifies items as being either good or defective
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Variable Inspection
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classifications of inspected items as falling on a continuum scale, such as dimension, size, or strength
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TQM in Services
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determinants of service quality:
- reliability - responsiveness - competence - access - courtesy - communications - credibility - security - understanding/knowing the customer - tangibles |
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Service Recovery
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training & empowering frontline workers to solve a problem immediately
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Process Strategy
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approach to transforming resources into goods/services
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Process Focus
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facility organized around processes to facilitate low-volume, high variety production
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Repetitive Process
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product-oriented production process that uses modules
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Modules
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parts or components of a product previously prepared, often in a continuous process (i.e. assembly line)
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Product Focus
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facility organized around products; a product-oriented, high volume, low-variety process
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Mass Customization
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rapid, low-cost production that caters to constantly changing unique customer desires
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Build-To-Order (BTO)
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produce to customer order rather than to forecast
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Postponement
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delay of any modifications or customization to a product as long as possible in the production process
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Crossover Chart
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chart of costs at the possible volumes for more than one process
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Process Analysis
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1. Flowcharts
2. Time-Function Mapping 3. Value-Stream Mapping 4. Process Charts 5. Service Blueprinting |
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Flowchart
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drawing used to analyze movement of people/materials
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Time-Function Mapping (process mapping)
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flowchart with time added on the horizontal axis
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Value-Stream Mapping (VSM)
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helps managers understand how to add value in the flow of material and information through the entire production process
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Process Charts
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use symbols to analyze the movement of people or material
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Service Blueprinting
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process analysis technique that focuses on the customer and the providers interaction with the customer
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Service Process Design
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1. Service Factory
2. Service Shop 3. Mass Service 4. Professional Service |
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Separation
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structuring service so customers must go where the service is offered
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Self-Service
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customers examining, comparing and evaluating at their own pace
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Postponement
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customizing at delivery
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Focus
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restricting the offerings
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Modules
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modular selection of service; modular production
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Automation
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separating services that may lend themselves to a type of automation
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Scheduling
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precise personnel scheduling
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Training
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clarifying service options; explaining how to avoid problems
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Flexibility
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ability to respond with little penalty in time, cost or customer value
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Computer Numerical Control (CNC)
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machinery with its own computer and memory
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Automatic Identification System (AIS)
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transforms data into electronic form (i.e. bar codes)
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Radio Frequency Identification (RFID)
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wireless system where integrated circuits with antennas send radio waves
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Process Control
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use of information technology to control a physical process
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Vision Systems
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use video cameras and computer technology in inspection roles
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Robot
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flexible machine with ability to hold, move or grab items
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Automated Storage & Retrieval System (ASRS)
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compter-controlled warehouses; provide automatic placement of parts within warehouse
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Automated Guide Vehicle (AGV)
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electronically guided and controlled cart used to move materials
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Flexible Manufacturing System (FMS)
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automated work cell controlled by electronic signals from common centralized computer facility
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Computer-Integrated Manufacturing (CIM)
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CAD, FMS, inventory control, warehousing and shipping are integrated
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Process Redesign
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fundamental rethinking of business processes to bring about dramatic improvements in performance
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Sustainability
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1. Resources (production)
2. Recycling 3. Regulations 4. Reputation (firm) |
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Chapter 7
Capacity |
- the throughput or number of unit’s a facility can hold ,receive, store, or produce in a period of time
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Design capacity
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- the theoretical maximum output of a system in a given period under ideal conditions
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Effective capacity
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- the capacity a firm can expect to achieve, given its product mix, methods of scheduling, maintenance, and standards of quality
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Utilization
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- actual output as a percent of design capacity
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Efficiency
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- actual output as a percent of effective capacity
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Capacity Analysis
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- a means of determining throughput capacity of workstations of an entire production system
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Bottleneck
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- the limiting factor or constraint in a system
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Process Time of a Station
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- the time to produce units at a single workstation
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Process time of a System
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- the time of the longest (slowest) process; the bottleneck
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Process Cycle Time
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- the time it takes for a product to go through the production process with no waiting
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Theory of Constraints (TOC)
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- a body of knowledge that deals with anything that limits an organization’s ability to achieve its goals
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Break Even Analysis
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- a means of finding the point, in dollars and units, at which costs equal revenues
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Net Present Value
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- a means of determining the discounted value of a series of future cash receipts
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Chapter 8
Tangible Costs |
- readily identifiable costs that can be measured with some precision
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Intangible Costs
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- a category of location costs that cannot be easily quantified, such as quality of life and government
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Clustering
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- the location of competing companies near each other, often because of a critical mass of information, talent, venture capital, or natural resources
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Factor Rating Method
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- a location method that instills objectivity into the process of identifying hard to evaluate costs
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Locational Break Even Analysis
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- a cost volume analysis to make an economic comparison of location alternatives
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Center of Gravity Method
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- a mathematical technique used for finding the best location for a single distribution point that services several stores or areas
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Transportation Model
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- a technique for soling a class of linear programming problems
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Geographic Information System (GIS)
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- a system that stores and displays information that can be linked to a geographic location
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Chapter 9
Office Layout |
- the grouping of workers, their equipment, and spaces/offices to provide for comfort, safety, and movement of information
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Retail Layout
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- an approach that addresses flow, allocates space, and responds to customer behavior
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Slotting Fees
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- fees manufacturers pay to get shelf space for their products
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Services Cape
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- the physical surroundings in which a service takes place, and how they affect customers and employees
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Warehouse Layout
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- a design that attempts to minimize total cost by addressing trade offs between space and material handling
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Cross Docking
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- avoiding the placement of materials or supplies in storage by processing them as they are received for shipment
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Random Stocking
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- used in warehousing to locate stock wherever there is an open location
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Customizing
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- using warehousing to add value to a product through component modification, repair, labeling, and packaging
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Fixed Position Layout
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- a system that addresses the layout requirements of stationary projects
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Process Oriented Layout
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- a layout that deals with low volume, high variety production in which like machines and equipment are grouped together
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Job Lots
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- groups or batches of parts processed together
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Work Cell
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- an arrangement of machines and personnel that focuses on making a single product or family of related products
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Task Time
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- pace of production to meet customer demands
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Focused Work Center
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- a permanent or semi permanent product oriented arrangement of machines and personnel
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Focused Factory
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- a factory designed to produce similar products
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Fabrication Line
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- a machine paced, product oriented facility for building components
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Assembly Line
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- an approach that puts fabricated parts together at a series of workstations; used in repetitive processes
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Assembly Line Balancing
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- obtaining output at each workstation on a production line so delay is minimized
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Cycle Time
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- the maximum time that a product is allowed at each workstation
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Heuristic
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- problem solving using procedures and rules rather than mathematical optimization
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Supply-Chain Management
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management of activities related to procuring materials and services, transforming them into intermediate goods and final products and delivering them through a distribution system.
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Make-or-Buy Decision
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a choice between producing a component or service in-house or purchasing it from an outside source
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Outsourcing
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transferring to external suppliers a firm's activities that have traditionally been internal
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Sic Supply-Chain Strategies (outside sources)
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1. Negotiating with many suppliers; pitting one supplier against another
2. Developing long term relationships with few suppliers 3. Vertical integration 4. Joint Ventures 5. Developing keiretsu networks 6. Developing virtual companies that use suppliers on an as-needed basis |
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Vertical Integration
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developing the ability to produce goods or services previously purchased on actually buying a supplier or distributor
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Keiretsu
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Japanese term describing suppliers who become part of a company coalition
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Virtual Companies
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companies that rely on a variety of supplier relationships to provide services on demand. AKA - hollow corporations or network companies
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Bullwhip Effect
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increasing fluctuation in orders or cancellations that often occurs as orders move through the supply chain
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Pull Data
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accurate sales data that initiate transactions to "pull" product through the supply chain
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Single Stage Control of Replenishment
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fixing responsibility for monitoring and managing inventory for the retailer
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Vendor-Managed Inventory
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a system in which a supplier maintains material for the buyer, often delivering directly to the buyer's using department
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Collaborative Planning, Forecasting and Replenishment
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a system in which members of a supply chain share information in a joint effort to reduce supply chain costs
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Blanket Order
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a long-term purchase commitment to a supplier for items that are to be delivered against short term releases to ship
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Postponement
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delaying any modifications or customization to a product as long as possible in the production process (i.e. printers - adding power cord at the end so product can be shipped to any country)
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Drop Shipping
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shipping directly from the supplier to the end consumer rather than from the seller, saving both time and reshipping costs (i.e. Dell Computer - for computers but not printers as they are drop shipped)
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Pass-Through Facility
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facility that expedites shipment by holding merchandise and delivering from shipping hubs (i.e. UPS, FedEx)
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Channel Assembly
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system that postpones final assembly of a product to the distribution channel can assemble it (i.e. computers)
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E-Procurement
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purchasing facilitated through the internet
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Electronic Data Interchange (EDI)
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standardized data-transmittal format for computerized communications between organizations
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Advanced Shipping Notice (ASN)
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a shipping notice delivered directly from vendor to purchaser
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Vendor Selection Process
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1. Vendor evaluation
2. Vendor development 3. Negotiations |
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Vendor Evaluation
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finding potential vendors and determining the likelihood of their becoming good suppliers
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Vendor Development
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everything from training, to engineering and production help, to procedures for information transfer
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Negotiation Strategies
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approaches taken by supply-chain personnel to develop contractual relationships with suppliers
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Logistics Management
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seeks efficiency of operations through the integration of all material acquisition, movement and storage activities
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Five Major Means of Distribution
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1. Trucking
2. Railroads 3 Airfreight 4. Waterways 5. Pipelines |
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Supply Chain Benchmark Metrics
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1. Lead Time
2. Time spent placing an order 3. Percent of late deliveries 4. Percent of rejected material 5. Number of shortages per year |
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Percent Invested in Inventory
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PII = (total inventory investment/total assets) x 100
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Inventory Turnover
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cost of goods sold divided by average inventory
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Weeks of Supply
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WS = inventory investment / (annual cost of good sold/52 weeks)
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Supply Chain Operations Reference Model
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set of processes, metrics and best practices developed by the Supply Chain Council. Has 5 parts:
1. Plan 2. Source 3. Make 4. Deliver 5. Return |
