SCM Fundamentals - Summary book and articles

Chapter 0 – Scientific Foundations
0.1 Defining a Supply Chain
- Supply chain
o A goal-oriented network of processes and stockpoints used to
deliver goods and services to customers
 Processes
 The individual activities involved in producing and
distributing goods and services
 The flow of goods and services
 Stockpoints
 Locations in the supply chain where inventories are
held
 The result of policy decisions or problems in the system
 Network
 The various paths by which goods and services can
flow through a supply chain
 Goal oriented
 Supply chains exist to support business activities
 Contribution to long term profitability
o Supply chain science is a description of the
strategic objectives a system should support

- Supply chains and production operations are structurally similar
o Production operations also consist of a network of processes and
stockpoints


0.2 Starting with Strategy
- A business unit is evaluated in term of;
o Cost
o Quality
 Quality versus Cost
o Speed
 Speed versus Cost
 Buying directly from the manufacturer might be
cheaper but lead times might be longer
o Service
 Service versus Cost
o Flexibility
 Flexibility versus Cost
 Frequent changeovers

- Supply chain design consists of two parts;
o Ensuring operational fit with strategic objectives
o Achieving maximal efficiency within the constraints established by
strategy

- Benchmarking
o Copying best practices

, o Only partially ensures that an operations system fits its strategic
goals

0.3 Setting Our Goals
- By describing how a system works, a supply chain science offers the
potential to;
o Identify the areas of greatest leverage (hefboomwerking van
strategieën)
o Determine which policies are likely to be effective in a given system
o Enable practices and insights developed for one type of environment
to be generalized to another environment
o Make quantitative trade-offs between the costs and benefits of a
particular action
o Synthesize the various perspectives of a manufacturing or service
system, including those of logistics, product design, human
resources, accounting and management strategy


0.4 Structuring Our Study
- Station Science
o Station
 The single process fed by a single station
o The operational behaviour of an individual process and the
stockpoint from which it receives material
o The factors that serve to delay the flow of entities and hence causes
a buildup of inventory in the inbound stockpoints

- Line Science
o Line/Routing
 A sequence of stations used to generate a product or service
o The operational behaviour of process flows consisting of logically
connected processes separated by stockpoints
o The issues that arise due to the coupling effects between processes
in a flow

- Supply Chain Science
o Operational issues that cut across supply chains consisting of
multiple products, lines and levels
o The coordination of supply chains that are controlled by multiple
parties

, Chapter 1 – Station Science – Capacity
1.1 – Introduction
- The fundamental activity of any operations system centers around the flow
of entities through processes
o Flows follow routings that define the sequences of processes visited
by the entities

- Performance measures
o Throughput
 The rate at which entities are processed by the system
 Cost of goods sold in a year
 Over the long run, average throughput of a process is always
strictly less than capacity
o Work in Process (WIP)
 The number of entities in the system
 Physical units or financial units
 The dollar value of the average amount of inventory held in
the system
o Cycle time
 The time it takes an entity to traverse the system
 Including rework, restarts due to yield loss or other
disruptions

- Efficiency
o Inventory turns = throughput/WIP
 ROI
 How efficiently an operation converts inventory into
output


1.2 – Measuring Capacity
- Capacity determines the throughput, WIP, cycle time and inventory turns
o Process capacity = base capacity – detractors
 Base capacity = the rate of the process under ideal conditions
 Detractors = represent anything that slows the output of the
process

- Bottleneck
o The process that constraints the capacity of the overall system
o Measured by utilization
 Utilization = rate into station / capacity of station
 Capacity of station = 1/processing time
o Definition
 The bottleneck of a routing is the process with the highest
utilization


1.3 – Limits on Capacity
- Capacity