What are the 4Vs and why they matter? Illustrate your answer with your own example(s).
4 Vs determine the way a process and operation are managed.
- –Volume
- –Variety
- –Variation
- –Visibility
McD ?
Why is a supply chain named so?
What is supply chain management and what flows is it concerned with?
Illustrate the answer with your own examples.
Value chain:
Sequence of value-adding activities
• Manufactured goods:Buy->make/store->move->sell
Supply chain:
The system of suppliers, manufacturers, transportation, distributors, and vendors that exists to transform raw materials to final products and supply those products to customers
Concerned with: Three flows
–Goods
–Information
–Cash
Explain the following concepts: (a) lead-time (b) inventory, and (c) service level. Explain how these concepts are interlinked
Lead-time:
A lead time is the time between the initiation and execution of a process.
types: Delivery LT and information LT
Inventory:
The raw materials, work-in-process goods and completely finished goods that are considered to be the portion of a business’s assets that are ready or will be ready for sale
role: Fulfilment, Manufacturing capacity smoothing , Meet promotion requirements
benefits and costs: (of to little and too much)
Service Level:
The percentage of orders or total demand, if partial orders are acceptable to customer that must be fulfilled during a replenishment cycle (time bucket)
- Discuss high allways good? (draw SL diagram)
Explain the concept of 3PL. What are the benefits and risks of getting into such partnerships?
- What is 3PL?
- Outside firms perform logistics functions
- Long term commitments and multiple functions
- What are the advantages of 3PL?
- Focus on core strengths
- Provides technological flexibility
- Provides flexibility in
- geography
- workforce size
- additional services
- resource flexibility
- However,
- Loss of control, 3PL employees may interact with customers
- Sharing of confidential info
Describe four types of retailer-supplier partnerships. Use the relevant case(s) to illustrate your answer
- 4 different types (3PL is not RSP)
- Quick response
- Continuous replenishment
- Advanced continuous replenishment
- Vendor managed inventory
- Important points
- Who makes order-related decisions
- Who owns inventory?
- Two cases we did
- Barilla (a manufacturer and a distributor),
- VMI (KM and their relationship with Costco)
The benefits and risks of partnerships in supply chain. Use the relevant case(s) to illustrate your answer
- Benefits (at different levels)
- Suppliers: access to real data => better forecasting => better production and inventory management
- Customers: better price, lower stockout, reduced workload
- Consumers: better price, lower stockout
- Risks
- Shared information
- Expensive to run
- Increased cost to suppliers initially
- If the supplier is incompetent, it will get worse
- Pushing inventory to retailers by suppliers
- Investment burden can be passed over to the supplier
- Two cases we did
- Barilla
How should a company decide to buy or make it?
- This framework is for both products and components and more general
- Reasons for outsourcing (think of Toyota: engine vs. carradio)
- Dependency on capacity
- Dependency on knowledge
- Product architecture
- Modular: Modular design, or “modularity in design”, is a design approach that subdivides a system into smaller parts called modules or skids, that can be independently created and then used in different systems (music system)
- Integral (engine)
How should a company decide to buy or make themselves?
I am expecting to see the 2nd framework, which is for components. Some examples are welcome!
- Five criteria
- Customer Importance: Impact on customers experience and/or choice
- Component clockspeed: Speed of related technology change
- Competitive position: Can you make it cheaper and/or better?
- Capable suppliers: how many?
- Architecture: modular or integral?
When a company buys a product/component from an outside supplier, how the company should manage procurement?
What is pricing strategy? Illustrate it with your own example(s).
- Revenue management
- Exclusive resort with C=400 identical rooms
- Three –tier pricing can increase the revenue significantly
- Pricing strategy
- Revenue maximization
- Controlling demand uncertainty
- Effective pricing strategy requires effective barriers (think of flighttickets).
- Dynamic pricing ( an end of the season sale by the retailer)
- No differentiation
- The main purposes 1) revenue maximisation (examples?) and for improving SC efficiency
- Mail-in-Rebates
- Pricing strategy for manufactures
- An effort to increase sales
- Why?
- Your own examples are welcome
What known-unknwon risks does a company face when it decides to expand its supply chain internationally? Use your own examples to illustrate the answer.
- Exchange rate uncertainties
- Operating exposure
- Substantial geographic distances
- Added forecasting difficulties
- Infrastructural Inadequacies
- Cultural difference
- Political instability
What is operating exposure?
- Operating exposure
- Results of exchange rate uncertainties
- Changes a firm’s competitive position and future cash flows
- Regional operations become relatively more or less expensive
- Factors affect the impact of operating exposure
- Customer reactions
- Competitor reactions
- Supplier reactions
- Government reaction
Discuss different ways of dealing with unknown-unknown supply chain risks. Use the examples of 1) Nokia and Ericsson, and 2) Toyota and Aisin Seiki to illustrate your answer
- Invest in redundancy capacity
- Simple but expensive
- Efficient sensing and responding system
- Nokia and Ericsson
- Adaptive supply chain community
- Toyota and Aisin
What is “design for manufacturing and logistics” (DFML)? What aspects of supply chain are you trying to control?
- Economic Transportation and Storage
- Supply Chain Cost
- Transportation
- Inventory
- Better utilization of retail space
- Supply Chain Cost
- Concurrent/ Parallel Processing (the printer example)
- Mainly to reduce LT by modifying manufacturing process (cost)
- For those in the early stage of product life cycle, when the time required to reach market is critical
- Also it enables a company to reduce 1) inventory level and 2) forecast error
- May require re-modification of components
- Standardisation
- Process and part
- Cost and demand uncertainties
- The role of modularity in process and products => which standardisation?
What is postponement? What are the tradeoffs of doing it?
- Process Standardization
- Standardizing as much of the process as possible, making a generic or family product
- Delaying differentiation
- Called “Delayed differentiation”
- Tradeoffs
- Enables the use of aggregate forecasts
- Enables the delay of detailed forecasts
- Reduces scrapped or obsolete inventory, increases service levels
- May require new processes or product design with associated costs
- Cases
- HP
- Altera
How are the concepts of modularity and standardisation are connected?
- Postponement is possible when there is high modularity in
- Product
- Modular Product
- Can be made by appropriately combining the different modules
- It entails providing customers a number of options for each module
- Modular Product
- Process
- Modular Process:
- Each product undergo a discrete set of operations making it possible to store inventory in semi-finished form
- Products differ from each other in terms of the subset of operations that are performed on them
- Modular Process:
- Product
- We choose a type of standardisation based on the level of modularity in product and process
- Part standardisation: product modularity (yes) and process modularity (no) (–> maximise component commonality across products)
- Process standardisation: product modularity (yes) and process modularity (yes) (–> delay customization as much as possible)
Discuss the benefit(s) and dis-advantage(s) of push strategy and pull strategy
- Push strategy (based on long-term forecast)
- Economies of scale
- Bulk buying
- Bulk manufacturing
- Better utilization of transportation
- Inability to meet changing demand patterns
- Obsolescence
- Bullwhip effect
- Economies of scale
- Pull strategy (responding to actual demand)
- Responsiveness
- Quick to respond to demand changes
- Less inventory
- Less bullwhip effect
- Responsiveness
What is a push-pull strategy? Can a company have different push-pull strategies for different products?
- Push-Pull strategy (Combination of push and pull)
- Initial portion (usually) of the supply chain is replenished based on long-term forecasts
- Final supply chain stages based on actual customer demand.
- Yes, it depends on
- Demand uncertainty
- Importance of economies of scale
- Higher demand uncertainty suggests push
- Higher importance of economies of scale suggests push
- High uncertainty/ EOS not important such as the computer industry implies pull
- Low uncertainty/ EOS important such as groceries implies push
What are the benefits of a push-pull strategy? Illustrate your answer with the case of Altera or HP Network Printer
- Altera is moving from a push-based supply chain strategy to push-pull or pull strategies
- How? For mainstream chips
- Altera builds main stream products to stock (Push) but in die bank. Once orders are confirmed, the subcontractor to test, package and ship (Pull)
- To reduce inventories
- To be better able to match demand and supply => avoid the risk of obsolete inventories
- How? For mainstream chips
- HP
- How? Universal power supply
- Aggregated forecast => easier
- Less safety stock
- Transshipment became possible
What is the economic order quantity?
- Total inventory cost has two components
- Order cost
- Holding cost
- EOQ = quantity of order, the sum of (order cost ) and (holding cost) per unit of time is minimum
- •You should be able to show how we can derive EOQ formula
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Explain Min-Max inventory model with fixed leadtime
- Continuous review model
- Assumptions
- Random demand
- LT
- Decision on
- When: re-order point
- How much: order up to level
Imagine you make your living by selling newspapers. How should you determine the optimal order quantity?
- Assumptions
- You have only one chance to order newspaper (unlike the two other models).
- If you cannot sell them on the day, the left over papers have very little salvage value
- Assumptions
- Steps for determining optimal order quantity:
- Based on the past data, you forecast the demand for tomorrow
- You use probabilistic demand forecast for tomorrow
- You find out
- Marginal profit of selling a newspaper for the day
- Marginal cost of not selling a newspaper for the day
- If
- MC > MP: order less than the forecasted demand
- MC < MP: order more than the forecasted demand (very unlikely to happen for newsvendors)
- Based on the past data, you forecast the demand for tomorrow
What are the causes of bullwhip effect? How we can cope with bullwhip effect? Illustrate your answer with Barilla case
- Causes
- Demand forecast => (S,s or Min-Max inventory policy)
- Lead-time
- Batch-ordering
- Price fluctuation => promotion
- Inflated order => shortage
- How to cope with it?
- Reducing uncertainty (centralized information system)
- Reducing variability (no promotion)
- LT reduction
- Strategic partnership (Barilla SpA, JITD)
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1. Operations and process management16
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Introduction to supply chain managemen14
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3. Strategic alliance15
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Basic Concepts of SCM12
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4. Procurement and Outsourcing Strategies10
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Customer value7
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Smart Pricing16
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Supply Chain Network Planning4
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Product design and supply chain14
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Supply chain integration and Distribution strategy23
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Inventory Management31
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Value of information19
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Global Logistics and Risk Management17
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Revision23
