Mkt 411: Supply Chain Management

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Chapter 4- Matching Supply and Demand
* Lead time gap
* What is it?- difference between the time it takes the actually procure, produce, and deliver the products and the time the customer is willing to wait * Customer and supplier viewpoint?

* Customer- customer order cycle, amount of time available for order fulfillment * Supplier-
* Traditionally how is it handled?
* forecasting
* Forecasting
* Pitfalls- time uncertainty, carrying too much or too little inventory * How to improve- closing the lead time gap
* Closing lead-time gap
* What does this mean- perfectly matching inventory with demand * Shortening the logistics lead time
* Improving visibility of demand
* Moving the customer’s order cycle closer to the decision making processes of the firm * Improving visibility of demand
* Demand penetration point- where real demand meets the plan, improving this means it needs to be as far upstream as possible * Supply chain fulcrum- knowing more accurately the demand will allow a company to hold less inventory * Sales and operations planning

* Steps involved
* Generate aggregate demand forecast- high-level aggregate volume forecasts at the product family level * Modify the forecast with demand intelligence- adjust the forecast with current market knowledge * Create a consensus forecast- cross-functional meetings to determine how close demand is to capacity and how to match them more closely * Create a ‘rough cut’ capacity plan- using the demand forecast to allocate resources * Execute at SKU levels against demand- not finishing anything until sure what the customer’s order specifies * Measure performance- high percentage of perfect order achievement compared to number of days in inventory and the amount of capacity needed to achieve that level * Bull-whip effect

* Volatility
* Small changes in demand cause fluctuations in orders further upstream * CPFR (Collaborative Planning, Forecasting, and Replenishment) * Relationship based
* VMI
Chapter 5- Responsive Supply Chain
* Agile and Lean
* Definitions
* Agile- high demand/supply uncertainty and low volume; ability to respond rapidly to meet the precise needs of often unpredictable market places * Demand driven, localized configuration, maximize effectiveness * Lean- high volume and low uncertainty; minimize inventory of components and work-in progress and work towards a JIT environment whenever possible * Forecast at a generic level, economic batch quantities, maximize efficiency * Differences

* Lean- predictable demand, long lead times
* Agile- unpredictable demand, short lead times
* When should each be used/when not to use
* Lean- works best in high volume, low variety and predictable environments * Agile- needed in less predictable environments where the demand for variety is high * Know the matrix

* Foundations of agility (discussed in book)
* The other combination strategies (hybrid and kanban) * Hybrid- long lead times and unpredictable demands, lean up until decoupling point and agile after (hold unfinished inventory until more is known about demand) * Kanban- “pull” system driven from the lowest point of the demand chain so bottlenecks are apparent * Reorder points- when stock drops below a certain point, it is automatically reordered * EOQ (economic order quantity)- holding a forecasted amount of inventory at a “start date”, plus safety stock is a lot of unused inventory * Push vs. Pull

* Pull- demand from the consumers pulls product into the market; JIT * Push- products are manufactured in anticipation of orders; ROP * Japanese Philosophy
* JIT
* Pay...
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