Forecasting miscalculations can be costly pull pros

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forecasting miscalculations can be costly Pull Pros - low inventories, low holding costs, decreased handling, make only what is required, minimize waste, higher customer satisfaction, closer supplier ties are developed Cons - high inventory costs, lead times may be long, tougher sell, the customer needs to be more educated about what they are buying, forecasting miscalculations can be costly Lean Manufacturing (JIT Manufacturing is the same) Differences between “Old School American” business philosophy and Lean Manufacturing philosophies
Explain basic elements of Lean manufacturing Primary Goals Minimize Inventory Eliminate all Types of Waste LOOK AT SLIDES 11-15 IN MODULE 06 Explain relationship between lean manufacturing and Japan Lean manufacturing was developed in Japan. Japan was low on space and needed to have small inventories. Japan is more about “we”, whereas America is more about the “me” Supply Chain Strategy Trade Offs How are the drawings used in lecture helpful in understanding the tradeoffs of each strategy depicted It helped to show problems that each tradeoff created. Understand how Time, Flexibility, Quality, and Cost are traded in any supply chain strategy. Time - Amount of Automation? Maximum Output/Capacity Required? Line Balancing, Bottlenecks, Lead Times Flexibility - Volume flexibility vs. Customization flexibility? Automation and/or Workforce Capabilities - Postponement Quality - Consistency and High Performance - Training, Automation. Jidoka - Everyone is Responsible for Quality Cost - Inventory, Defects, Loss, Damage, Labor, Facilities, Packaging… Product, Service, Support system Define Postponement. How can it be helpful to companies? Relationship to push and pull systems Combination of push and pull strategies. It delays the final assembly of the end item. Push through the standardized portions. Pull the customization options offered. Computer power cord example from class. Supply Chain Strategy and Solutions Impact of shrinkage and other operational shortcomings on supply chains. Shrinkage starts at the front end of the supply chain and moves upstream progressively. Be able to calculate the number of items required to account for losses throughout the supply chain. PROs and CONs of centralizing your warehouses. Pros - Lower required stock levels. Less likely to stock out. Warehouse operating costs decrease. Cons - Distance/Responsiveness, Transportation costs Understand the square-root rule calculation. Be able to do problems using the square root formula. Bullwhip effect - Define/explain. Causes. How can it be minimized? Very high and very low supply levels despite fairly consistent demand levels. Causes Poor forecasting, analysis, and communication Order Batching - trying to place large orders Price Fluctuations - promotions, quantity discounts, special pricing
Rationing - demand higher than supply. Promotes rationing by the distributor. Retailers can get less than they ordered

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