Term
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Definition
| Supply of items held to meet demand. |
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Term
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Definition
1. Balancing Supply and Demand
2. Buffers against Uncertainty
3. Economies of Buying
4. Geographic Specialization |
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Term
| Balancing Supply and Demand |
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Definition
| In most cases, it is beneficial to produce in batches. |
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Term
| Buffers against Uncertainty |
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Definition
| variation in supply and demand are managed with buffer (safety) stock |
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Term
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Definition
| price discounts or reduced shipping costs |
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Term
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Definition
Buy large amounts when prices are low in anticipation of price increases (jet fuel, heating oil, silicon,…)
Type of "Economies of Buying" |
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Term
| Geographic Specialization |
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Definition
| supply and demand locations vary |
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Term
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Definition
1. Opportunity cost (including cost of capital)
2. Storage and warehouse management
3. Taxes and insurance
4. Obsolescence, spoilage, & shrinkage
5. Material handling, tracking, and management |
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Term
| Ordering and Set-up Costs |
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Definition
1. Purchased items: placing and receiving orders
2. Make items: change-over between items |
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Term
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Definition
1. Lost sales or customer loyalty
2. Expediting
3. Schedule disruption |
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Term
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Definition
| ratio between average inventory on-hand and level of sales |
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Term
| Inventory turnover (3 Definitions) |
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Definition
= (Cost of goods sold) / (Average inventory at cost)
= (Net sales) / (Average inventory at selling price)
= (Unit sales) / (Average inventory in units) |
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Term
| Advantages of High Turnover |
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Definition
1. Increased sales volume, rapid flow
2.Less risk of obsolescence
3. Decreased holding expenses
4.Lower asset investment, increased asset productivity |
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Term
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Definition
1. Stockouts may mean lower sales
2. Increased costs from missing quantity requirements
3. Increased cost from purchasing, ordering, and receiving |
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Term
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Definition
| length of time operations can be supported with inventory on-hand |
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Term
| Equation for Days of Supply |
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Definition
| Days of supply = Current inventory/Expected rate of daily demand |
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Term
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Definition
| measures the ability to meet customer demand without a stockout. |
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Term
| 2 important tools for managing inventory |
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Definition
1. Inventory item classification
2. Information systems and accurate inventory records |
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Term
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Definition
-Inventory item classification tool.
-Ranking of inventory by Criteria of Importance(ex: Cost, Difficulty of acquiring) |
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Term
| General procedure for quantitative ABC analysis: |
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Definition
1. Determine annual usage/sales for each item (units/value)
2. Determine the percentage of the total usage/sales by item
3. Rank the items from highest to lowest percentage
4. Classify the items into ABC categories |
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Term
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Definition
1. Not all items are equally important
2. Different policies for different items: |
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Term
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Definition
| small percentage of items have a large impact on sales, profit or costs |
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Term
| Global Trade Item Number (GTIN) |
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Definition
| identification system for finished goods sold to consumers |
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Term
| Uniform Code Council (UCC) |
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Definition
| issues manufacturer ID, manufacturer assigns codes for finished products |
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Term
| Raw Materials and Components: Inventory Information Systems |
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Definition
-No standardized systems developed yet, part number vary between companies
-Part Number: unique identifier used by each specific firm |
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Term
| Inventory Record Accuracy: Cycle Counting |
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Definition
inventory is physically counted on a routine schedule
(ABC analysis used to determine audit cycles) |
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Term
| Inventory Record Accuracy: RFID tags |
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Definition
| Point-of-sale scanning (barcodes) increase accuracy |
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Term
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Definition
| variation increases upstream in the supply chain (from consumer to manufacturers) |
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Term
| Vendor-managed Inventory (VMI) |
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Definition
| the vendor is responsible for managing inventory for the customer |
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Term
| Collaborative planning, forecasting and replenishment (CPFR) |
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Definition
| supply chain partners sharing information |
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Term
| Definition of lean systems |
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Definition
| A systematic approach that has been developed to help managers identify and reduce/eliminate waste and variance in the processes under control. |
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Term
| Just-in-Time Manufacturing |
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Definition
| An older name for lean systems |
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Term
|
Definition
| Another term for lean systems; refers to the specific lean system implemented by Toyota. |
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Term
|
Definition
| A philosophy that emphasizes the minimization of the amount of resources used in the various activities of enterprise |
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Term
| Strategic Benefit of Lean Systems |
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Definition
Lean produces benefits at a more strategic level:
1.By eliminating wastes of all sorts in the system, the lean approach lowers variable production costs (labor, materials, energy) and raises profitability.
2. attacks fixed costs.
3. can adapt to market changes more quickly. |
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Term
|
Definition
1. Only the products the customers want.
2.Only as quickly as customers want to use them
3. With only features that customers want, and no others.
4. With perfect quality
5. In minimum possible lead times
6. With no waste of labor, materials, or equipment
7. using methods that reinforce occupational development of workers |
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Term
|
Definition
1. Precisely specify value for each specific product.
2. Identify the value stream for each product.
3. Make value flow without interruptions.
4. Let the customer pull value from the producer.
5. Pursue perfection. |
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Term
| Waste is a ________ of a _________ and does not add __________. |
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Definition
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Term
| Seven Basic Types of Waste |
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Definition
1. Overproduction
2. Waiting
3. Transportation
4. Processing
5. Inventory
6. Motion
7. Product Defects |
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Term
| Inventory as a measure of the _________ of an operating system. Why? |
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Definition
| Health; The more inventory needed for the system to work, the less healthy the system is. |
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Term
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Definition
| Activities in the operating processes are initiated by actual customer demands, and not by forecasted demands. |
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Term
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Definition
| Usually based on the supplier's forecasted demand. |
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Term
|
Definition
| The culture that is present in lean systems and that places a high value on respect for people in the system. |
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Term
| Lean System Culture Beliefs |
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Definition
1. Acceptance
2. Source of Flexibility
3. Working in teams
4. Power in their hands
5. Waste as a symptom
6. Goals are met
7. Standardization
8. Process focus |
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Term
| Lean System Tools and Techniques |
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Definition
1. Total Productive Maintenance (TPM)
2. Group Technology (GT) |
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Term
| Lean System Tools and Techniques: Total Productive Maintenance (TPM) |
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Definition
| The processes and systems that work to identify and prevent possible equipment breakdowns |
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Term
| Lean System Tools and Techniques: Group Technology (GT) |
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Definition
| An approach to work layout and scheduling that gathers in one location all of the equipment and work skills necessary to complete production of a family of similar products |
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Term
| Lean System Tools and Techniques: Focused Factories |
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Definition
| grouping processes designed to satisfy specific customer segment |
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Term
| Lean System Tools and Techniques: Takt Time Flow Balancing |
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Definition
| Lean systems scheduling approach aimed at synchronizing the output rate of customer demand. |
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Term
| Lean System Tools and Techniques: Kanban (Pull) Scheduling |
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Definition
| output generated in response to actual demand |
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Term
| Lean System Tools and Techniques: Level, Mixed Model Scheduling (heijunka) |
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Definition
| build smaller quantities more frequently |
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Term
| Lean System Tools and Techniques: Setup Reduction |
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Definition
-shorter, easier changeover leads to smaller batches
-Single Minute Exchange of Dies (SMED) |
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Term
| Lean System Tools and Techniques: Statistical Process Control (SPC) |
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Definition
| use of statistical tools to monitor processes |
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Term
| Lean System Tools and Techniques: Visual Control |
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Definition
| making performance and problems immediately visible |
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Term
| Lean System Tools and Techniques: Quality at the Source |
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Definition
Emphasis on eliminating defects at the origination points
-Jidoka
-Stop-and-Fix (Line-stop) Systems |
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Term
| Lean System Tools and Techniques: Jidoka |
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Definition
| A focus on developing technological features of equipment that automatically detect problems. |
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Term
| Lean System Tools and Techniques: Stop-and-Fix (Line-stop) Systems |
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Definition
| The practice by which an operator should stop the process and immediately fix the product rather than continue making poor quality products. |
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Term
| Lean System Tools and Techniques: Kaizen Events |
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Definition
| short-term, cross-functional focused, intense process improvement |
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Term
| Lean System Tools and Techniques: Poka-Yoke |
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Definition
| redesign so mistakes are impossible or immediately detectable |
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Term
| Lean System Tools and Techniques: 5-S |
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Definition
| effective housekeeping (sort, straighten, scrub, systematize, standardize) |
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Term
| Lean System Tools and Techniques: Simplification/Standardization |
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Definition
| removing non-value-added steps, making processes exactly repeatable |
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Term
| Lean System Tools and Techniques: Process Analysis/Value Stream Mapping |
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Definition
| graphical analysis flow through a process |
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Term
| Lean Suppply Chains strive to eliminate the need for _________, _________, and _____________ |
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Definition
| inventory, lead time, capacity buffers |
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Term
| Applying Lean Supply Chain Principles |
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Definition
1.Purchase for lowest total cost (not price)
2.Geographically close partners
3.Fewer suppliers
4.Focus on root cause
5.Work with, not against, suppliers |
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Term
| Supply chain becomes fragile when protection from buffers is ______________________ |
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Definition
| reduced to its lowest levels |
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Term
| Risks of the Lean Supply Chain: |
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Definition
| any problem has a big effect because supply chains are more tightly linked and have reduced buffers (ex: strike, lighting storm, etc) |
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Term
| Reduce Product Design Waste |
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Definition
1.Complexity: few, simple processes
2.Precision: capability to attain specifications
3.Variability: attainable specifications
4.Sensitivity: not easily damaged
5.Immaturity: tested technology
6.Danger: customers & environment are safe
7.High skill: ease for workers and customer |
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Term
| Lean Design: strive to meet the objectives of: |
|
Definition
1. Exactly meet customer needs
2. Support corporate strategy
3. Reduce variance and waste |
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Term
| Most compatible with _________ innovation. |
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Definition
|
|
Term
| Chapter 9: Customer Management |
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Definition
| The design and execution of the processes that provide customers with the products and services they desire. |
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Term
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Definition
| A supplier's ability to provide product availability, lead-time performance, and service reliability. |
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Term
| Six Basic "Rights" to the Customer |
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Definition
1.right amount
2.right product
3.right time
4.right place,
5.right condition
6.with the right information |
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Term
| Product Availability: Unit Fill Rate |
|
Definition
The percentage of total quantity of units ordered by customers that are actually delivered.
Unit Fill Rate = Total units delivered/total units ordered |
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Term
| Product Availability: Line Fill Rate |
|
Definition
Measures service performance as the percentage o purchase order lines that are filled in total.
Line Fill Rate = Number of order lines delivered complete/total ordered lines |
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Term
| Product Availability: Order Fill Rate |
|
Definition
Measures the percentage of orders shipped complete with all items ordered by a customer.
Order fill rate= total complete orders delivered/total orders |
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Term
|
Definition
| time between start and end of an activity |
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Term
| Different Aspects of Lead Time |
|
Definition
1. Design
2. Order
3. Procurement
4. Production
5. Delivery |
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Term
| Order-to-Delivery Lead Time |
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Definition
| The time that passes from the instant the customer places an order until the instant that the customer receives the product. |
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Term
|
Definition
1.Engineer to Order
2.Make to Order
3.Assemble to Order
4.Make to Stock |
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Term
|
Definition
-A firm's ability to perform all order related activites error-free.
-Also encompasses a firm's ability to provide customers with critical information regarding inventory and order status. |
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Term
|
Definition
| an order should be delivered without failure in any customer service attribute. zero defects. |
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Term
|
Definition
meeting or exceeding customer expectations, including:
1.Reliability
2.Responsiveness
3.Access
4.Communication
5.Credibility
6.Security
7.Courtesy
8.Competence
9.Tangibles
10.Knowing the customer |
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Term
| Customer Satisfaction Gaps |
|
Definition
1. Knowledge Gap
2. Standards Gap
3. Performance Gap
4. Communications Gap
5. Perceptions Gap
6. Satisfaction Gap |
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Term
| Customer Success requires: |
|
Definition
1. Long-term relationship focus
2. Comprehensive knowledge of customer's needs
3. Consideration of customer's customers |
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|
Term
| Customer Relationship Management (CRM) |
|
Definition
| technology enabled data gathering about customers to develop strategic relationships |
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Term
| Pareto - _________ can be grouped according to 80-20 curve |
|
Definition
| Customers; A Customers, B Customers, C Customers |
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Term
| Chapter 10: Supply Management |
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Definition
| The identification, acquisition, and management of inputs and supplier relationships. |
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|
Term
| Goals of Supply Chain Management |
|
Definition
1. Ensure timely availability of resources
2. Reduce total costs
3. Enhance Quality
4. Access technology and innovation
5. Foster social responsibility |
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|
Term
| Total Cost of Ownership (TCO) |
|
Definition
| sum of costs incurred before, during and after a purchase |
|
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Term
|
Definition
1.Labor Cost
2.Transportation Cost
3.Inventory Cost
4.Lead Time
5.Probability of Product defect
6.Flexibility |
|
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Term
|
Definition
| choosing between insourcing or outsourcing |
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|
Term
| Outsourcing Decision Process |
|
Definition
1.Assess Fit with the Firm's Core Competencies
2.Evaluate the suitability for outsourcing
3.Evaluate reasons for outsourcing
4.Assess all relevant quantitative costs
5.Assess all qualitative factors
6.Review the capabilities of suppliers
7.Make and implement a decision
8.Monitor the decision and revise if necessary |
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Term
|
Definition
Reduce and control operating costs
Improve company focus
Gain access to world-class capabilities
Free internal resources for other purposes
Resources are not available internally
Accelerate reengineering benefits
Function difficult to manage/out of control
Make capital fund available
Share risks
Cash infusion |
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Term
|
Definition
| identify what purchases are being made in an organization |
|
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Term
|
Definition
| gather data on the market’s structure, including number of suppliers and buyers |
|
|
Term
| Sourcing approaches and tactics vary by ________ |
|
Definition
|
|
Term
|
Definition
| number of suppliers to use |
|
|
Term
| Types of Supplier Relationships |
|
Definition
Adversarial Relationships
Arm's Length Relationship
Acceptance of Mutual Goals
Full Partnerships |
|
|
Term
| Capabilities and location are important because: |
|
Definition
-Proximity impacts ease of communication, transportation costs and community perceptions
-Consideration of trade barriers and incentives
-Global presence may impact access to markets |
|
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Term
|
Definition
Competitive bidding (when price is most important)
Weighted-point model
Online Reverse Auctions
Negotiation |
|
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Term
|
Definition
| suppliers bid in real time for buyer’s business |
|
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Term
|
Definition
| Planning, reviewing, analyzing, and compromising |
|
|
Term
| Electronic Data Interchange (EDI) |
|
Definition
| structured, secure mode of transmitting data |
|
|
Term
| Monitor and Improve Supplier Performance |
|
Definition
| Key Performance Indicators on a Supplier Scorecard |
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