CHAPTER 3 – DIGGING INTO YOUR SUPPLY CHAIN

Question 1

Prioritizing Supply Chain Goals Steps

Answer 1

Step 1: Understand what customers value
Step 2: Recognize Competitors
Step 3: Understand your product or services

Question 2

– the first step in engineering and managing a supply chain

Answer 2

understanding exactly what your customers value.

Question 3

a particular customer (focus in on their specific preferences)

Answer 3

key customer

Question 4

Techniques to help with identifying what customers value:

Answer 4

Quality functional design (QFD) or House of quality (HOQ)
A-B testing

Question 5

looks like a bunch of boxes with a roof on top (interview customers to determine which characteristics or features they value the most)

Answer 5

Quality functional design (QFD) or House of quality (HOQ)

Question 6

give customers a choice between two options. Can also be used in f2f experiments.

Answer 6

A-B testing

Question 7

To understand who your real competitors are, you need to stop thinking about the product or service that you sell and start thinking about the problem that it solves

Answer 7

Recognize Competitors

Question 8

matching your product with a customer’s problem

Answer 8

Jobs to Be Done Theory

Question 9

The easiest way to illustrate this step is to show how different kinds of products need to achieve different goals to deliver the greatest value to their customers.

Answer 9

Understand your product or services

Question 10

Product Types (5)

Answer 10

Commodities
Luxury goods
Fashion goods
Durable goods
Technology

Question 11

need to have high availability, meet minimum quality standards, and be cheap. (low price, high availability, minimum quality standards)

Answer 11

commodity supply chains

Question 12

need to accommodate a wide assortment of products with plenty of protection to keep them safe. (high quality, uniqueness)

Answer 12

supply chains for luxury goods

Question 13

need to focus on speed and flexibility (fast throughput, low inventory, wide variety)

Answer 13

Supply chains for fashion

Question 14

need to balance the cost of keeping inventory available close to where the customers will want it with the cost of transporting the products and keeping them in inventory. (balance between transportation/inventory cost and customer needs)

Answer 14

Supply chains for durable goods

Question 15

need to be fast, flexible, and secure. (speed, flexibility, security)

Answer 15

Supply chains for technology products

Question 16

Cost Drivers (4)

Answer 16

a. Procurement costs
b. Transportation costs
c. Inventory costs
d. Quality Costs

Question 17

– one of the most obvious cost in SC is the amount that you pay for the products you buy
– includes salaries and overhead costs for your procurement team and the information systems that they use.

Answer 17

a. Procurement costs

Question 18

– Moving a product from one place to another costs money

Answer 18

b. Transportation costs

Question 19

bank interest, paying for the building that keep inventory, paying people to move the inventory, and shrinkage

Answer 19

c. Inventory costs

Question 20

risk that products could be lost, damaged or stolen

Answer 20

shrinkage

Question 21

– to have formal inspection and quality assurance processes
– Any product that doesn’t meet the standards costs you money, and the more closely you have to look for quality problems, the more money you spend.

Answer 21

d. Quality Costs

Question 22

– one of the big challenges with supply chains is that things are often interconnected, so making a change in one area to lower costs can cause a change somewhere else that actually increases the cost.

Answer 22

Looking at Cost Drivers

Question 23

– conflicts occur between any two functions in a business, as well as between any two businesses that work together as a part of a supply chain.

Answer 23

Dealing with Trade-offs

Question 24

Six Conflicts or Trade-Offs:

Answer 24

Sales vs operations
Customer vs. supplier
Engineering vs. procurement
Inventory vs. customer service
Inventory vs. Downtime
Procurement vs. Logistics

Question 25

forces the sales and operations teams to coordinate and agree on their goals and targets, usually starts with a sales forecast for a certain planning horizon

Answer 25

Sales and Operations Planning (S&OP) - Sales vs operations

Question 26

companies share information about how much they expect their customers to buy and how much inventory they have on hand so that they can help each other achieve high service levels with lower amounts of inventory

Answer 26

Collaborative planning, forecasting, and replenishment (CPFR) - Customer vs. supplier

Question 27

Engaging procurement professionals during the design phase of a product can help you ensure that you’re considering the costs of each step in a product’s life cycle. Likewise, engaging engineering teams throughout the procurement process can help you ensure that lower-cost options that meet the needs of your company and your customers are properly vetted.

Answer 27

Cross-functional teams - Engineering vs. procurement

Question 28

there is a single contract awarded to a supplier who both designs and makes a product.

Answer 28

Design-build Strategy - Engineering vs. procurement

Question 29

our ability to provide customers with all of the products they want when they order them

Answer 29

service level

Question 30

optimizes inventory; the process in which you try to guess how much product you’re going to sell and when you’re going to sell it.

Answer 30

Forecasting - Inventory vs. customer service

Question 31

degree to which a forecast is wrong

Answer 31

error

Question 32

random and is generally a result of imperfect information.

Answer 32

unbiased error

Question 33

an error that occurs in a pattern

Answer 33

biased error

Question 34

degree of forecast accuracy

Answer 34

Mean Absolute Percentage Error (MAPE)

Question 35

Inventory that provides you with protection from a stockout

Answer 35

Safety Stock

Question 36

help manufacturers minimize the number of unplanned shutdowns caused by inventory stockouts while minimizing the amount of inventory in a supply chain.

Answer 36

Lean Manufacturing - Inventory vs. Downtime

Question 37

a container for inventory, empty ___ are used to trigger inventory replenishment

Answer 37

Kanban (pull strategy)

Question 38

The way to balance the priorities of purchasing and logistics

Answer 38

Total Cost Analysis