Need a Rewrite unit 3 homework
Unit 3: Homework Assignment
Submit Assignment
· Due Sunday by 11:59pm
· Points 25
· Submitting a file upload
Introduction
Each chapter of your textbook has a list of study questions. Check your understanding of the concepts by completing the selected study questions.
Requirements
· Each question response should be 50-100 words.
Due Date
· Submit by Sunday, 11:59 p.m., CST.
Homework Assignment Questions
· Chapter 6, Page 199, Questions # 1, 2, 4, 5, 6, 10, 11, 12
1. Discuss the role of distribution in the supply chain. Provide examples of how distribution operations can positively and negatively affect supply chain performance.
1. Distribution is an integral part of the supply chain management. It encompasses the steps required to deliver the product to either customer or retailers. Effective distribution helps in keeping the costs of supply chain minimum. The basic goal of distribution strategy is to serve the inventory in supply chain quickly and effectively. The different structural options for distribution are:
· The distribution channel from the producer to the customer
· Pros
· The products get handled properly and delivered to customer in time
· This channel facilitates consumer convenience
· Quality adherence is high
· Cons
· Can be time consuming
· Turnaround time is quite huge
· The distribution channel between the producer and retailer
· Pros
· Consumer convenience is facilitated
· Turnaround time is quite low
· Cons
· Quality levels can be tampered
· Product handling may go wrong
2. Describe the major challenges faced by production managers in the current environment.
2. Supply chain management tries to facilitate the interaction and collaboration of the company with its associate partners like manufacturers, suppliers, distributors, etc. The major challenges witnessed in doing the same are:
· How to reduce of supply chain cost
· How to meet the continuously changing demands of consumers
· How to win new customers
These challenges make the implementation of SCM in a company difficult.
4. Outsourcing has been a popular supply chain strategy. Discuss the reasons for and against an organization outsourcing its production processes.
Outsourcing production process has its pros and cons .
The Pros of Outsourcing are:
· It prevents the huge capital investment required and hence saves the fixed cost.
· It reduces the maintenance costs, labor costs and several other variable costs and along with that a lot of administration costs are also saved.
· The risk is hedged if multiple partners are on board and the facilities are decentralized.
· Benchmarking and having penalty clauses for quality lapses can help contain quality levels from dropping.
· Advanced contracts will lead to lower costs during inflation.
The Cons of Outsourcing are:
· The dependability is high on third party leading to higher uncertainity.
· The variable costs per unit are generally higher than when the production is inhouse.
· There is less control, due to contractual obligations, it affects more in case low demand.
· Quality needs to be audited regularly as less control on it.
· Advanced contracts might lead to higher costs during deflation.
5. Discuss the reasons why U.S.-based organizations are considering a nearshoring or re-shoring strategy.
·
· Following are some of the reasons why U.S. based organizations are considering a near-shoring or re-shoring strategy:
· Change in consumer attitude
6. Describe the differences between capacity planning and material planning.
· Capacity planning; focuses on determining the appropriate production levels that the company is capable of completing.
· Material Planning; in general focuses on balancing of future supply demand. It involves managing sales forecast, creating master schedules, and running materials requirement planning tools. (Page 184-185).
· In recent years, consumer attitude towards the goods and services they consume is changing. A majority of Americans are willing to pay extra for products that are manufactured in the United States.
· Changing political climate
· Political climate in many foreign countries is becoming volatile and untenable. This combined with the rise of a hyper nationalist government in the U.S. has provided an impetus to manufacturers to shift their operations closer home. President Trump's campaign slogan in the recent election was "Making America great again" and his policies are increasingly geared towards it. This combined with the increasing costs of doing business overseas is encouraging manufacturers to return their operations to the US.
· Product quality issues
· There is anecdotal evidence of the role of product quality in U.S. manufacturers’ decisions to reassess where they are producing or sourcing. The risk of product failure is real. Many companies have experienced product quality and safety concerns as a result of offshored manufacturing and supply operations. Increasingly, customers are asking for smaller, more frequent, more customized orders; transportation costs and commodity prices are rising, and exchange rate pressures are increasing.
· Time zone and geographic proximity
· Time zone and physical proximity of Latin America to the United States provides a significant advantage over more distant locations, such as Asia. Many early adopters of offshoring have found managing operations that were so distant and with significant time zone disparities to be both challenging and a strain on their workforce. One of the biggest challenges that Asia locations are facing is retaining personnel, especially in the overnight shifts that are crucial to supporting customers in the United States. In contrast, Latin America has the ability to offer real-time service, which provides employees the advantage of working during standard business hours. Time and geographic proximity also enable a much more collaborative operating model.
10. Discuss how packaging affects manufacturing and supply chain operations.
Packaging is the act of designing and producing the wrapper or container of a commodity.
Packaging affects manufacturing and supply chain operations in the following ways
Ease in handling
If packing is convenient and durable enough it becomes easy to carry the lots during supply.
Less spoilage
A good packing such as that of a toothpaste which involves three levels of packaging helps to prevent its spoilage during logistics. A toothpaste has primary package that is its immediate container then second level packaging that is its cardboard cover and the third level packaging consists of corrugated boxes which can hold 20 or 50 units during transportation.
Reduces cost
Since manufacturing gets easy if packaging is same for all units as it leads to one fit size for all leading to less manufacturing and labor cost.
Identification of the product
Packaging helps in the identification of the product. In big stores one easily identifies its product keeping packaging details in mind.
Weight efficiency
The weight of packaging should not be too much so as to cause inconvenience to customers and causing high transportation cost by exceeding weight limit.
11. Describe how organizations can be more environmentally conscious in their use of packaging.
· In a perfect world, all packaging would be sourced responsibly, designed to be effective and safe throughout its life cycle, meet market criteria for performance and cost, be made entirely using renewable energy, and once used, be recycled efficiently to provide a valuable resource for subsequent generations. That’s the vision of the Sustainable Packaging Coalition (SPC) a true closed loop system for all packaging materials that collects and recovers material at the highest value that is economically feasible. How should companies foster sustainability in the packaging area? The most common sustainable packing trends include:
· Reduced packaging size and weight
· Increased recycling and waste recovery
· Increased use of recycled content
· Increased use of renewably sourced materials
· Improvement in packaging and logistical efficiency
Examples of these efforts include European beer maker Carlsberg recently worked with its global suppliers to develop the next generation of packaging that is optimized for recycling and reuse. One example is using recyclable plastic kegs instead of stainless-steel kegs. (Page 193).
12. Describe the characteristics of good production metrics and the types of KPIs that companies should monitor.
The use of measurements and key performance indicators (KPIs) that do not support operational strategies, organizational objectives, or customer requirements should avoid the following mistakes when establishing production metrics for the organization:• Using KPIs that are too narrow—Limit the use of metrics that focus on discrete events and isolated points as indicators of overall success of the process.
• Encouraging wrong outcomes—Eliminate measurements that promote activity rather than needed output.
• Focusing on issues that are not key priorities—Avoid the development of internally focused, myopic production goals that are disconnected from the overall strategy of the organization. Total CostThe most meaningful measurement of the total cost is on a cash basis. All money spent on manufacturing must be summarized and the total compared to the previous period, rather than to a flexible budget or a plan. Total Cycle TimeTotal cycle time is a measure of manufacturing performance that is calculated by studying major purchased components and determining the total days on hand of each one. Delivery PerformanceDelivery performance is the percentage of customer orders shipped when the customer requested them to be shipped
The definition of quality will vary by company, but it must focus on quality from the perspective of the customer.
Safety
The standard metrics of accident/incident frequency, severity, and cost are important to monitor, with continuous improvement (i.e., reduction) as the goal
· Chapter 7, Page 228, Questions # 1, 2, 3, 5, 6, 8
Chapter 7
1. What are the differences and similarities between outbound and inbound logistics systems? Which types of industries would place heavier emphasis on outbound systems? On inbound systems? Explain your choices.
Outbound logistics has to do with the storage and transportation of the finished goods. Inbound logistics has to do with the storage and transportation of raw materials. Both focus on having low inventory and getting the product at the right place at the right time. I will use my spouse’s employer as an example of inbound logistics. They are a grain company and concentrate on delivering corn and distillers to companies that produce feed for cattle. The outbound logistics works for the feed company, Herdsman Feed to store and transport the bags of finished feed.
2. How do outbound logistics systems relate directly to the needs of the customer?
Outbound logistics refer to product from the seller’s standpoint. The idea is to have the product ready and available to move at any moment. Meeting the supply and demand for customers is crucial to the outbound logistics.
3. How can demand management help to unify channel members, satisfy customers, and solve customer problems?
The main aspect of the demand management is to boost the capability of the organization in the entire supply chain especially in case of production and with the help of collaborating the different tasks and activities which are connected to the different types of flows such as product, information, capital, and information. The expected result of all these activities will be to have greater customer satisfaction and value creation and in fact, it is the customer for whom the different activities of supply chain are managed and arranged. The below-mentioned list can provide the various methods through which the effective demand management will help in unifying the different members of the supply chain and help in having greater satisfaction of the customers=
• Collecting and evaluating the different customer information, their issues, and unsatisfied requirements
Looking for the various supply chain partners who can manage the different activities of the demand chain
Assigning the activities to the different channel partners who can manage these activities efficiently
Sharing the different customer data and information to the different players of the supply chain
Producing the products that can fulfill the expectations and requirements of the customers
Devising the different types of transportation, distribution and logistics methods so that the products can be delivered to the customers as per their desired mode
5. What are the basics types of forecasts? What are their strengths and weaknesses?
There are basically 2 types of forecasting methods:
1. Qualitative Forecasting - This is subjective take on forecasting which involves personal judgment, intuition, experiences, emotion etc. There is no mathematics involved and does not rely on any basic techniques. The strength of this type of forecasting is that the person's experience will be taken into account and it can be very important. Humans are sometimes able to factor in some specific factor which cannot be accounted for by calculations. The disadvantage is that this forecasting technique is more of a gut feel. In case other people in the team disagree with the same, conflicts can happen. The chance that the forecaster is wrong is of higher probability.
2. Quantitative Forecasting - This type of forecasting is done entirely based on calculations. There are different types of quantitative forecasting methods available which predict the values for future based on some models. These tend to be accurate in most of the cases. But, the disadvantage is that sometimes there is a human element which is required and that cannot be factored in.
6. What are the basic elements of the S&OP process? How do marketing, logistics, finance, and manufacturing contribute to each element?
The basic steps to the S&OP process are as follows: run forecast reports, demand planning phase, supply planning phase, pre-S&OP meeting, and the executive S&OP meeting. Forecasting reports can contribute to the costs of each of these. The demand planning phase requires the marketing to review the forecast and make changes if needed. This forecast will be in both units and dollars to satisfy the manufacturing operations and the finance departments. The supply planning phase requires that the manufacturing and logistics analyze to see if the demand can be handled. In the pre-meeting, people from all these departments are asked to go over the reports again to make sure the supply and demand can be balanced. In the final meeting, this is where the decisions are made with members from each of the departments and they agree to turn the forecast report into an operating plan for the organization.
1. You have been hired to design the distribution network for Chips that will allow it to operate in both the “brick-and-mortar” and “click-and-mortar” markets. Your recommendations should address both the start-up of the Web operations as well as its ongoing operations. Chips has asked you to determine the following:
• The pros and cons of using an integrated versus a dedicated network;
• Whether or not the Internet warehousing and/or the store warehousing should be outsourced;
• The feasibility of using store fulfillment or flow-through fulfillment to complement warehouse fulfillment; and
• The mechanics of implementing a “free shipping” policy.
Since CHIPS already has a network, having an internet presence will allow the network to service both the store and the internet. They do not need an additional distribution center specifically for the internet business. It would also prevent duplicated inventory. Outsourcing the internet orders will maintain low startup costs. Rather than worry about transportation, the product will be shipped directly to the consumer from the distribution center. Store fulfillment reduces costs by sending the internet orders to the closest store and allowing the customer to pick it up there if they choose. Inventory is already in place and this has a shorter lead time for the consumer.
2. You have also been asked to investigate the pros and cons of using an established Internet fulfillment house not only to host the Chips Web site but also to house the inventory and perform the shipping. Companies like Amazon perform these services for other companies. What would your recommendation be for using a company like Amazon to run Chips’ online business?
By using a company like Amazon.com, CHIPS gives customers the ability to buy more products and this could lead to lower transportation costs for them. Amazon.com already has established practices regarding their picking and shipping of individual units. Using a popular company like Amazon.com will lead to increased profits for CHIPS
8. What are the differences and similarities between outbound logistics systems? Which types of industries would place heavier emphasis on outbound systems? On inbound systems? Explain your choices.
In an effort to better serve their customers, many organizations place significant emphasis on what might be termed their outbound-to-customer logistics systems. Also referred to as physical distribution, this essentially refers to the processes, systems, and capabilities that enhance an organization’s ability to serve its customers.
Correspondingly, the topic of inbound-to-operations logistics systems refers to the activities and processes that precede and facilitate value-adding activities such as procurement, manufacturing, and assembly. Other terms that focus on these elements of the supply chain include materials management and physical supply. Although many of the principles of inbound logistics are conceptually similar to those of outbound logistics, some important differences must be recognized.
Chapter 8, Page 282, Questions # 1, 2, 3, 4, 5, 6
Chapter 8
1. Explain how order management and customer service are related.
How an organization receives an order (electronically versus manually), how it fills an order (inventory policy and number and location of warehouses), and how it ships an order (mode choice and its impacts on delivery times) are all dictated by how an organization manages an order.
Customer service, on the other hand, is anything that touches the customer. This includes all activities that impact information flow, product flow, and cash flow between the organization and its customers. Customer service can be described as a philosophy, as performance measures, or as an activity. Customer service as a philosophy elevates customer service to an organization-wide commitment to providing customer satisfaction through superior customer service. This view of customer service is entirely consistent with many organizations’ emphasis on value management, elevates it to the strategic level within an organization, and makes it visible to top executives.
Most organizations employ all three definitions of customer service in their order management process. Figure 8-1 shows one way in which order management and customer service are related. As this figure shows, customer service is involved in both influencing a customer’s order as well as in executing the customer’s order. The topics in this figure will be discussed in more detail in this chapter. (Pages 268-269)
2. Describe the two approaches to order management. How are they different? How are they related?
The order management system represents the principal means by which buyers and sellers communicate information relating to individual orders of product. Effective order management is a key to operational efficiency and customer satisfaction. To the extent that an organization conducts all activities relating to order management in a timely, accurate, and thorough manner, it follows that other areas of company activity can be similarly coordinated. In addition, both present and potential customers will take a positive view of consistent and predictable order cycle length and acceptable response times. By starting the process with an understanding of customer needs, organizations can design order management systems that will be viewed as superior to competitor firms.
There are two phases of order management. First is influencing the order, the phase where an organization attempts to change the manner by which its customers place orders. Second is order execution, the phase that occurs after the organization receives the order. (Pages 269-270)
3. What is the role of activity-based costing in customer relationship management? In customer segmentation?
Figure 8-5 shows one method to classify customers by profitability. The vertical axis measures the net sales value of the customer, while the horizontal axis represents the cost to serve. Those customers who fall into the “Protect” segment are the most profitable. Their interactions with the shipper provide the shipper with the most cost efficiencies. Those customers who are in the “Danger Zone” segment are the least profitable and are more than likely incurring a loss for the shipper. For these customers, the shipper has three alternatives: (1) change the manner in which the customer interacts with the shipper so the customer can move to another segment; (2) charge the customer the actual cost of doing business (this would more than likely make the customer stop doing business with the shipper—this is usually not an acceptable strategy employed by most shippers); or (3) switch the customer to an alternative distribution channel (for example, the shipper might encourage the customer to order through a distributor or wholesaler rather than buying direct from the shipper). The customers who fall into the “Build” segment have a low cost to serve and a low net sales value. The strategy here is to maintain the cost to serve but build net sales value to help drive the customer into the “Protect” segment. Finally, the customers who are in the “Cost Engineer” segment have a high net sales value and a high cost to serve. The strategy here is to find more efficient ways for the customer to interact with the shipper. This might include encouraging the customer to order in tier quantities rather than in case quantities. This switch in ordering policy would reduce the operating cost of the shipper and possibly move the customer into the “Protect” segment.
Combining ABC, customer profitability, and customer segmentation to build profitable revenue is a strategy being utilized by an increasing number of organizations today. This strategy helps define the true cost of dealing with customers and helps the shipper influence how the customer interacts with the shipper to provide the highest level of cost efficiency for the shipper. Combining these three tools with CRM allows the shipper to differentiate its offerings to its different customer segments, resulting in maximum profit for the shipper and maximum satisfaction for the customer. (Page 273)
4. Compare and contrast the concepts of order-to-cash cycle time and order cycle time.
When referring to outbound-to-customer shipments, the term order to cash (or order cycle) is typically used. The term replenishment cycle is used more frequently when referring to the acquisition of additional inventory, as in materials management. Basically, one organization’s order cycle is another’s replenishment cycle. Traditionally, organizations viewed order management as all of those activities that occur from when an order is received by a seller until the product is received by the buyer. This is called the order cycle. The OTC cycle is all of those activities included in the order cycle plus the flow of funds back to the seller based on the invoice. The OTC concept is being adopted by many organizations today and more accurately reflects the effectiveness of the order management process. (Pages 273-275)
5. Explain the impacts of order cycle time length and variability on both buyers and sellers.
While interest has traditionally focused more on the overall length of the OTC cycle, recent attention has been centered on the variability or consistency of this process. Industry practices have shown that while the absolute length of time is important, variability is more important. A driving force behind the attention to OTC cycle variability is safety stock. The absolute length of the order cycle will influence demand inventory. The concept of the order cycle is used here because the focus is on the delivery of product to the buyer and not on the flow of cash to the supplier. For example, assume that the order cycle (time from order placement to order receipt) takes 10 days to complete and the buyer needs five units per day for its manufacturing process. Assuming the basic economic order quantity (EOQ) model is being used by the buyer, the buyer will place an order when it has 50 units of demand inventory on hand. Assuming that the supplier has been able to reduce the order cycle to eight days, the buyer will now place an order when it has 40 units of demand inventory on hand. This is a reduction of 10 units of demand inventory on hand during lead time for the buyer. (Pages 280-281)
6. Customer service is often viewed as the primary interface between logistics and marketing. Discuss the nature of this interface and how it might be changing.
Customer service is often the key link between logistics and marketing within an organization. If the logistics system, particularly outbound logistics, is not functioning properly and a customer does not receive a delivery as promised, the organization could lose both current and future revenue. Manufacturing can produce a quality product at the right cost and marketing can sell it, but if logistics does not deliver it when and where promised, the customer will not be satisfied.
Figure 8-8 represents the traditional role of customer service at the interface between marketing and logistics. This relationship manifests itself in this perspective through the “place” dimension of the marketing mix, which is often used synonymously with channel-of-distribution decisions and the associated customer service levels provided. In this context, logistics plays a static role that is based upon minimizing the total cost of the various logistics activities within a given set of service levels, most likely determined by marketing.