13. What is third-party logistics? Explain the benefits.
- Third party logistics is the term used to describe outsourcing of logistics management.
- The serves can include:
- -transportation management
- customized final assembly
- The benefits of third-party logistics are:
- -Supply chain logistics is a core competency for 3PL providers
- -3PLs can have economies of scale for various operations
12. What are some principles and practices you would use to create a “lean”supply chain?
- Demand-drive supply chain
- -manufacture products and parts base don orders from the next stage in the supply chain
- -inventor pulled from one stage to the next based on real
- -time demand
- Level master production schedule and level supply chain schedules
- -include supply chain planning in S&OP
- -Just-in-time operations
- -time-phased view of inventory provides kanban signals
- Lean processes used throughout the supply chain
11. What are the benefits of effective supply chain management?
- Higher levels of order fulfillment
- Greater flexibility and agility
- Shorter lead times
- = greater customer loyalty
- Lower inventories and carrying costs
- Higher productivity
- =higher profits
Integrates separate organizations into a cohesive operating system
10. What is a supply chain?
What are the factors you need to consider tooptimize a supply chain?
- A supply chain is the sequence of organizations – their facilties, functions, and activities – that are involved in producing and delivering a product or service.
- Facilities – include factories, warehouses, distribution centers, retail outlets, and transportation vehicles.
- Functions and activities – Include forecasting, purchasing, inventory management, information management, quality assurance, scheduling, production, distribution, delivery, and customer service.
- Optimizing a supply chain1. Supply chain network design
- –locations for manufacturing facilities, suppliers, distribution centers
- -where various work packages will be performed
- 2. logistics design-transportation modes
- -logistics providers
- 3. inventory and service level optimization
- -inventory quantities and locations
- -the cost of balancing supply and demand
9. What are some of the factors you should consider to qualify a supplier asa “certified supplier”?
- supplier rating is based on their performance record
- -items from a certified supplier with a gold
- -level rating do not require receiving inspections.
- -Suppliers falling below the bronze-level rating require corrective action to improve performance to an acceptable level or they will be dropped.
8. What did you learn about implementing ERP at H&B?
- Implementing ERP required a culture change
- -new business processes
- -require complete and correct data
- Remarkable complexity for a relatively simple business
- H&B now ships 80% of orders on time, compared to 40% previously.
7. What are the essential practices for making ERP successful?
- -standardize, improve and automate business processes
- -integrate the company’s information systems-assure everyone has the same current information
- -comply with Sarbanes
- -oxley-integrate the supply chain=additional benefits derive from having a single instance of ERP in all locations
6. What is an ERP system?
What are some of the functional modules?
Why is it important?
- ERP software provides a system to capture and make data available in real time to decision makers and other users in the organization.
- -integrates financial, manufacturing, and human resources data and transactions on a single computer system.
- -automates the sequential tasks business process-example: order entry, production, shipping, billing, and payment
- -Facilitates information sharing across the organization, with a single common database.ERP is the next step in an evolution that began with MRP and evolved into MRP II.
- Functional Models:Forecasting
- Master production
- Material requirements planning
- Capacity requirements planning
- Sales and operations planning
- Bills of materials
- Purchasing and receiving
- Shop floor control
- Product costing
- Order entry and sales management
- Project resource planning
- Distribution requirements planning
- Service dispatch
- ERP Financials:Accounts payable
- Accounts receivable
- Fixed assets
- General ledger
- Human Capital Management: Personnel
- Business Intelligence:Performance scorecards
5. What is manufacturing resource planning (MRP II)?
How does it work?
- -The process of determining short-term capacity requirements.
- -Apply MRP to determine material requirements. Then calculate the necessary resources to produce the material at each work center: Machine time and labor hours
- -Verify feasibility and adjust schedule and capacity as necessary.
- -also called “closed-loop MRP”
4. What does a material requirements planning (MRP) system do?
What arethe three inputs to an MRP system?
- It is a computer-based information system that translates master schedule requirements for end items into time-phased requirements for subassemblies, components, and raw materials.
- -MRP is designed to answer three questions:-what is needed?-how much is needed?-When is it needed?
- The three inputs are:-Master production schedule – which products are to be produced, when they are needed, and in what quantities
- .-The master production schedule covers the cumulative lead time necessary to produce the end item, from ordering of parts and raw materials to completion of final assembly.
- -Bill of materials (BOM) – a listing of all of the assemblies, subassemblies, parts and raw materials that are needed to produce one unit of the finished product.
- -The BOM a hierarchal structure, showing the quantity of each item needed to complete one unit of the next higher level of assembly.
- -Inventory records – data on the status of each item by time periods.
- -primary data includes gross requirements, scheduled receipts, expected amount on hand at the beginning of the time period, safety stock, and net requirements.-additional data incudes supplier, lead time, and lot size policy.
3. What are some of the costs of carrying inventory?
How much is thetypical annual carrying cost?
- Inventory holding costs –
- – required to finance both inventory investment (purchases) and holding costs-storage
- – rent, utilities, security-material handling
- -insurance, taxes (in some states)
- -depreciation, obsolescence, deterioration, spoilage, pilferageInventory holding costs can range from 10 to 30% of cost of sales
- – situation dependent
- Ordering costs include:-planning and placing the order
- -shipping costs
- -receiving and inspecting the order
- -moving the order to storage
- -payment of invoice
What is an inventory management system?
- A set of policies and controls that:
- -monitor levels of inventory
- -establish what levels should be maintained-decide when stock should be replenished
- -determine how large orders should be
What are the different types of inventory?
- -raw materials and purchased parts
- -work-in-progress (WIP)
- -Materials or components that have undergone change but are not yet completed.-Finished products
- – (for manufacturing firms), or merchandise available for sale (for retail firms)
- -pipeline (supply chain) inventory-materials, parts, and finished products in transit to or from the producer
- -spare parts for customer service
- -maintenance/repair/operating supplies (MRC)
9. What did you learn from the Siemens-Yazake joint venture at Ford’s supplier campus?
- Siemens-Yazake is a joint venture of a German company and a Japanesecompany, located on Ford’s supplier campus in Chicago.
- • SY supports Ford and other Tier-1 suppliers on the campusCo-location of suppliers with Ford supports JIT
- • Assemblies delivered in vehicle sequenceCo-location improves response to changing demand
- • Lead time for delivery from Asia exceeds S&OP planning horizon
8. Discuss some useful strategies for assuring effective global operationmanagement.
- • Achieve deeper understanding of selected emerging markets
- • Localize/ regionalize operations• Partner with local companies
- • Build and maintain global product platforms to preserve economies ofscale, but create custom features for local tastes
- • Identify and secure low cost labor or material sources
- • Pay attention to details– Supplier quality audits– Capacity may depend on electric power availability
- • Centrally manage operations to provide flexibility to balance speed ofdelivery and cost effectiveness
7. Globalization presents both opportunities and threats for a business.What are some of the opportunities and some of the threats?
- -export current products and services into international markets
- -Source products, parts and services from lower cost countries
- -Direct investment in foreign countries to manufacture products for sale in international markets and or the U.S.
- -Sell products and services to foreign companies which are investing in operations in the U.S.
- -Take advantage of more favorable taxes, investment incentives, liability laws, and environmental regulations.
- Threats:-competition in U.S. markets from imports of low cost products, parts and services
- -When key customers invest in offshore production, suppliers may need to follow to stay in the game
6. What are some of the things an operations manager can do to managethrough a downturn and successfully protect the current business .
5. Your company is considering a strategic capacity addition. Explain howyou would go about planning for the new facility.
- 1. Set a design capacity goal and a target date for launch
- 2. Establish two planning teams– Internal operations management team– External facility design team – architects, technical specialists
- 3. Select a location and acquire the site
- 4. Define the facility layout and workflow
- 5. Identify critical equipment and select process technology
- 6. Identify essential information technology requirements
- 7. Create a conceptual design for the facility
- 8. Obtain necessary regulatory approvals
- 9. Develop preliminary cost estimate for complete facility
- 10. Verify financial viability for a range of scenarios
- 11. Make GO/ NO GO decision
- 12. Perform detailed design
- 13. Construct the building
- 14. Procure and install equipment and information systems
- 15. Recruit and train staff
- 16. Dry run the operations
- 17. Launch operation
4. Which demand forecasting techniques would you use to support S&OP?Which demand forecasting techniques would you use to supportaggregate planning?
Aggregate demand you would use trend models is it is ran short to medium and you can get 10 30 observations. S&OP you would use casual regression model as it gets updated often and can be ran short, medium or long-term.
3. Explain the exponential smoothing forecasting technique.
- Each new forecast is based on the previous forecast plus a percentage of the difference between that forecast and the actual value of the series at that point.
- The key is to select an appropriate smoothing factor.-for relatively stable demand or for moderate growth.
2. What is the objective of aggregate planning? What can you do tostimulate demand? What can you do to adjust supply or capacity?The objective is to achieve rough equality demand and capacity over the entire planning horizon.
- To stimulate demand:
- Pricing and financing-price discounts, rebates and special financing promotions-less control over timing of demand
- Back orders-order taken in one period for delivery in another period
- New Demand-use excess capacity to provide new products or services during slack times
- To adjust supply capacity:
- Open or close plants and or change production mix
- Hire or layoff workers-possible constraints: union contracts, supply of qualified workers-additional cost of hiring and firing-many companies view workers as an asset, not a variable cost
- Overtime/slack time-increase hours or days worked to add capacity-reduce hours or days worked to reduce capacity
- Part-time workers-Depends on nature of the workInventories-
- Carrying costs
- Subcontracting-Temporary capacity
What is ISO 14001?
Would it be a good idea for your company to seek ISO 14001 certification? Why?
ISO 14001- INternational standards organization published the *environmental management systems. Provides a template for setting up an environmental management system.
- Requirements:Develop environmental policy
- Identify environmental impacts
- Audit and monitor
Identify some sustainable operations strategies designed to increase revenue, to reduce costs and risks, and to enhance reputation.
- Increase Revenue:1. Develop new products energy efficient
- 2. Develop new ways to provide energy/environment solutions
- 3. Breakthrough products
- 4. Modify/improve current products
- 5. Leverage green image
- Decrease costs:1. Comply with government mandates
- 2. Increase energy efficiency
- 3. Improve resource productivity
- 4. Digitize operations (decrease paper)
- 5. Reuse durable parts
- 6. Decrease potential environment costs
- 7. Decrease environment costs up and down stream
- 8. Eliminate hazardous materials
- 9. Use sustainable resources
- Sustainable strategies to enhance Reputation:1. Obtain certification to environment standards
- 2. Decrease CO2 and GHG emissions
- 3. Utilize renewable energy resources
- 4. Decrease impact of waste disposal
- 5. Implement recycling
What are some of the dimensions of sustainable operations?
What are some key environmental impact metrics?
- Dimensions of sustainable operations:
- Resources: Energy, water, other natural resources
- Environmental Impacts: climate changes, water pollution, air pollution, toxic chemicals and heavy metals, waste management,
- ozone layer, oceans, deforestation, bio-diversity
The article "Toyota's Experiment at NUMMI" described the turnaround of a failed GM plant.
How did they do it?
- Empowered staff-decision making
- Spent 3 million for training
- Flattened hierarchy to 3 levels
- Group problem solving
The article "No satisfaction at Toyota" described Toyota's philosophy of continuous improvement.
How did they describe the content of everyone's work?
- Content of everyone's work-
- Making cars
- making cars better
- teach everyone to make cars better
- improve the process by which it improves all the the other processes
You have the opportunity to transform your company's operations to a "lean" model.
How would you go about it?
- Implementing Lean-1. Analyze value system
- 2. Design sequential flow process
- 3. Level production schedule
- 4. Implement kanban pull
- 5. Integrate suppliers
- 6. Continue to reduce inventory
- 7. Improve product design
What is a value stream?
What are 3 types of process steps?
What are the measurable benefits of eliminating non-value-added-steps?
- the collection of steps (both value added and non value added) involved in producing and delivering a product or service to a customer.
- 3 types of process steps-1) value creators0 create value for the customer
- 2) Enablers-don't create value but require it.
- 3) Waste-don't create value and can be eliminated
- Measurable Benefits-
- Reduce cycle time
- Increase profitability
- Increase customer satisfaction
What is the fundamental difference between MRP and a lean system (JIT) for production planning and control?
Are there any circumstances where they are compatible or can coexist? Explain.
- MRP vs JIT- push vs. pull
- They can coexist if you use MRP for planning and JIT for production.
What are some of the important lean principles?
Do these principles apply in a service business?
- Lean Principles-
- Sequential Flow
- Pull System- production linked to orders
- JIT- produce one at a time
- Kanban-cards or signals to communicate demand
- Design for quality
- Rapid tool change and set up
- Good Housekeeping
- Simplify Process
- Make the system accurate
- Eliminate disruptions
- REduce set up times
- Eliminate waste
- Minimize work in process
What is the "kanban" principle?
Kanban is a system of cards or signals that communicate demand and provides the authorization to move or work on parts.
The Toyota production system was established based on two important concepts.
What are they?
Explain how they work?
Jidoka- equipment stops tp prevent defects
Just in time- produce only what is needed
"Lean" is a disciplined approach to eliminating waste in all processes.
What are some examples of waste from a lean perspective?
- -time spent waiting
- -unnecessary transporting of units
- -excessive inventory
What is the objective of Sales & Operations Planning (S&OP)? Howfrequently should it be performed? What are the outputs of the S&OPprocess?
S&OP is a repetitive management process to efficiently match supply and demand, responding to continual change.It is typically performed monthly, but can be updated more frequently.The two outputs are a sales plan and a master production schedule.