Mkt 411: Supply Chain Management

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