Question on l&Scm (Camad)

8/16/2019 Question on l&Scm (Camad)

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1. Write down the process for calculation of customer profitability Analysis and

Direct Product Profitability.

The significance of these costs that occur as a result of servicing customers can

be profound in terms of how logistics strategies should be developed.

Customer profitability analysis will often reveal a proportion of customers who

make a negative contribution. The reason for this is very simply

that the costs of servicing a customer can vary considerably – even between two

customers who may make equivalent purchases from us.

10


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The idea behind DPP is that in many transactions the customer will incur costs

other than the immediate purchase price of the product. ften this is termed the

total cost of ownership. !ometimes these costs will be hidden and often they can

be substantial – certainly big enough to reduce or even eliminate net profit on a

particular item.

". Define shareholders values and explain its drivers.

The five basic drivers of enhanced shareholder value are shown in #igure. They

are revenue growth$ operating cost reduction$ fi%ed capital efficiency$ working

capital efficiency and ta% minimi&ation. 'll five of these drivers are directly and

indirectly affected by logistics management and supply chain strategy.

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3/20

Define concept of marketing logistic and explain how firm can achieve

competitive advantages. 10

(arket logistics involves planning$ implementing$ and controlling the physical

flows of materials and final goods from points of origin to points of use to meet

customer requirements at a profit.

)otler identified four ma*or decisions in market logistics 1. rder processes +

,ow should orders be handled- ". arehousing + here stocks should be

located- /. 0nventory + ,ow much stocks should be held- . Transportation +

,ow should goods be transported-


4/20

hen a firm sustains profits that e%ceed the average for its industry$ the firm is

said to possess a competitive advantage over its rivals. The goal of much of

business strategy is to achieve a sustainable competitive advantage.

(ichael Porter identified two basic types of competitive advantage2

• cost advantage

• differentiation advantage

/. a. Define supply chain management. xplain in detail seven principles of

supply chain management.

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' system whose constituent parts include material suppliers$ production facilities$

distribution services and customer linked together by feed forward flow of

materials and feedback flow of information.

!" #$% P&'()'P*+ ,- +)

1. /roup customer by needs 3ffective !C( groups customers by distinct

service needs and tailors services to these particular segments.. )ustomie the logistics network 4eed to focus on the service requirement

and profit potential

2. *isten to signals of market demand 3 plan accordingly 4eed to monitor

the entire !C to detect early warning signals of changing customer demands

and needs.

4. Differentiate the product closer to the customer 'llows supply chains to

respond quickly and cost effectively to changes in customer needs.

5. +trategically manage the sources of supply ork closely with suppliers

to reduce the cost in in situation for all involved.

6. Develop a supply chain wide technology strategy 3mploy 0T to support

multiple levels of decision making. 0t should also afford a clear view and

ability to measure the flow of products$ services and information.

$. Adopt channel spanning performance measures 3%cellent supply chain

performance measurement systems do more than *ust monitor internal

functions. They apply performance criteria to every link in the supply chain –

criteria that embrace both service and financial metrics

b. Define 7'!. xplain the operation of kanban philosophy. 10

50T can be defined as an integrated set of activities designed to achieve high+

volume production using minimal inventories 6raw materials$ work in process$and finished goods7. 50T also involves the elimination of waste in production

effort. 50T also involves the timing of production resources 6i.e.$ parts arrive at

the ne%t

There are two types of )anban cards2

– a conveyance card 6C+)anban7


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– a production card 6P+)anban7 !ignals come in many forms other than cards$

including2

– an empty crate

– an empty designated location on the floor

"ow 8anban ,perates hen a worker at downstream ork Center 8"

needs a container of parts$ she does the following2

– !he takes the C+)anban from the container she *ust emptied

– !he finds a full container of the needed part in storage – !he places the C+)anban in the full container and removes the P+)anban

from the full container and places it on a post at ork Center 81

– !he takes the full container of parts with its C+)anban back to ork Center

8"

. What is benchmarking9 "ighlight its advantages in context of (epal. Andexplain benchmarking the logistics process.

9:enchmarking is the process of measuring an organi&ation:s internal processes

then identifying$ understanding$ and adapting outstanding practices from other

organi&ations considered to be best+in+class. 0t an ngoing process of measuring

products$ services$ practices ; processes against the best that can be identified in

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7/20

order to2

< =earn about ; improve best practice.

< 'chieve realistic targets.

< 0ntegrate improvements into your strategy.

< >se best practice as inspiration for innovation.< ?e e%ternally focused.

< ?e purposeful about improvement.

< (easure improvement.

@. *ogistic performance indicators

This comprehensive recommendation defines A indicators 63D0 Precision B

Delivery 'ccuracy B endor (anaged 0nventory B (aterial ,andling ;

0dentification B Production Disruptions B !upplier Communication ;Cooperation7 as well as their ratings.

#ive of these indicators are used by at least " companies who participated in the

work group2

• 3D063lectronic Data 0nterchange7 precision2 P!'$ enault

• Delivery 'ccuracy2 P!'$ 4issan$ enault

• (aterial ,andling ; 0dentification2 ?osch$ !4P$ 4issan$ enault

• Production disruptions2 4issan$ enault

• !upplier Communication ; Cooperation2 ?osch$ 4issan

;endor anaged 'nventory

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8/20

endor (anaged 0nventory or (0 is a process where the vendor creates orders

for their customers based on demand information that they receive from the

customer. The vendor and customer are bound by an agreement which determines

inventory levels$ fill rates and costs.

This arrangement can improve supply chain performance but reducing

inventories and eliminating stock+out situations.

ne of the benefits of (0 is that the vendor is responsible for supplying the

customer when the items are needed. This removes the need for the customer to

have significant safety stock. =ower inventories for the customer can lead to

significant cost savings. The purpose of 50T chain is to reduce inventory at all

places in the supply chain. 0nventory is considered a waste because inventory is

created by using materials$ machines and efforts of persons. 'll of these resources

which have already been used up and that portion of it which is not consumed

and send up the value chain cause a drag on the system. ,owever inventories are

inevitable because uncertainties e%ist at every stage$ making it necessary to

provide a buffer so that demands do not go unfilled. The challenge is to keep it to

the minimum.


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1. a. "ow is competitive advantage achieved through the effective logistics

management9

(arket logistics involves planning$ implementing$ and controlling the physical

flows of materials and final goods from points of origin to points of use to meet

customer requirements at a profit.

)otler identified four ma*or decisions in market logistics 1. rder processes +,ow should orders be handled- ". arehousing + here stocks should be

located- /. 0nventory + ,ow much stocks should be held- . Transportation +

,ow should goods be transported-

hen a firm sustains profits that e%ceed the average for its industry$ the firm is

said to possess a competitive advantage over its rivals. The goal of much of

business strategy is to achieve a sustainable competitive advantage.

(ichael Porter identified two basic types of competitive advantage2

• cost advantage

• differentiation advantage

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". a. 's it possible to apply 7'! logistics in current (epalese business

environment9


volume production using minimal inventories 6raw materials$ work in process$

and finished goods7. 50T also involves the elimination of waste in production

effort. 50T also involves the timing of production resources 6i.e.$ parts arrive at the

ne%t.

Advantages of 7'!

– 0ncreases Productivity – educes perating costs

– 0mproves performance the throughput

– 0mproves quality

– 0mproves deliveries

– 0ncrease #le%ibility and innovativeness

10

10


11/20

b. xplain the linkage between logistic and supply chain management

=ogistics management is term used to describe the planning$ implementation$ and

movement of goods$ services and related information from the point of origin to

the point of consumption. 0ncreasingly$ in the modern business environment

logistics management involves supply chain management 6!C(7$ for the purpose

of this paper we shall attempt to demonstrate the concept of supply chain and

competitive performance and how it relates to logistics.


12/20

/. a. Define service standard and its characteristics. 's it necessary to provide

standard service9 Why9 +upport this statement.

' service standard is a public commitment to a measurable level of performance

that clients can e%pect under normal circumstances.

+ervice standards serve two key purposes<

• To provide staff with performance targets 69Phone must be answered within

three rings97E and

• To inform clients what to e%pect 69aiting time is less than 1F minutes97

)haracteristics of a /ood +ervice +tandard

• &elevant to the client2 !ervice standards are consistent with client priorities

and address aspects of the service they value most within available resource

allocations.

• :ased on consultation< !ervice standards are developed in consultationwith clients$ managers$ staff$ and other partners in service delivery to ensure

that they are meaningful and match the organi&ation:s mandate.

• easurable< !ervice standards are quantifiable and linked to monitoring

activities.

• )onsistent across government< !ervice standards should be consistent

throughout federal organi&ations providing similar services. ,aving similar

service standards across government for similar services helps both clients

and government. Clients will find it easier to deal with different organi&ations$

and the organi&ations themselves will find it easier to share best practices and

adopt common approaches.

• Ambitious but realistic< !ervice standards are realistic$ based on analysis

and consistent with ob*ectives$ yet sufficiently challenging to service

providers.

• ndorsed by management< !ervice standards are understood and endorsed

by senior management.

b. What is benchmarking9 Why organiations need to perform

benchmarking9 xplain its logistic process

9:enchmarking is the process of measuring an organi&ation:s internal processes

then identifying$ understanding$ and adapting outstanding practices from other

organi&ations considered to be best+in+class. 0t an ngoing process of measuring

products$ services$ practices ; processes against the best that can be identified in

10


13/20

order to2

< =earn about ; improve best practice.

< 'chieve realistic targets.

< 0ntegrate improvements into your strategy.

< >se best practice as inspiration for innovation.< ?e e%ternally focused.

< ?e purposeful about improvement.

< (easure improvement.

. a

@. rite short notes on6 Any two72

a. *ead time gap

The problem was that often it would be the GwrongH inventory2 for e%ample$ si&es$

colors or styles that were not those actually demanded. ,ighlights the problems

of the lead+time gap which in the fashion industry was traditionally measured in

months rather than weeks

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14/20

!ime :ased )ompetition

The term time=based competition came into use with its appearance in a 1IJJ

,arvard ?usiness eview article entitled 9Time+The 4e%t !ource of Competitive'dvantage9 by Keorge !talk$ 5r. 0t was further defined in a series of articles and

books written by consultants from the ?oston Consulting Kroup.

Time+based competition is a broad+based competitive strategy which emphasi&es

time as the ma*or factor for achieving and maintaining a sustainable competitive

advantage. 0t seeks to compress the time required to propose$ develop$

manufacture$ market and deliver its products.


15/20

xplain logistic performance indicators. What are some of the indicators

that company has identified key indicator of their companies9

This comprehensive recommendation defines A indicators 63D0 Precision B

Delivery 'ccuracy B endor (anaged 0nventory B (aterial ,andling ;

0dentification B Production Disruptions B !upplier Communication ;Cooperation7 as well as their ratings.

#ive of these indicators are used by at least " companies who participated in the

work group2

• 3D063lectronic Data 0nterchange7 precision2 P!'$ enault

• Delivery 'ccuracy2 P!'$ 4issan$ enault

• (aterial ,andling ; 0dentification2 ?osch$ !4P$ 4issan$ enault

• Production disruptions2 4issan$ enault

• !upplier Communication ; Cooperation2 ?osch$ 4issan


16/20

1. >+upply chain becoming value chain.? 7ustify this statement.

The idea of the value chain is based on the process view of organi&ations$ the idea

of seeing a manufacturing 6or service7 organi&ation as a system$ made up of subsystems each with inputs$ transformation processes and outputs. 0nputs$

transformation processes$ and outputs involve the acquisition and consumption of

resources + money$ labor$ materials$ equipment$ buildings$ land$ administration

and management.

10

". a. Define logistic information system in detail. What does the role of

information plays in an organiation9

The outputs of a logistics information system include2 !ummary reports of cost

or performance statistics$• !tatus reports of inventories or order progress$•

3%ception reports that compare desired performance• with actual performance$

and eports that initiate action. utput can also be in the• form of documents

such as transportation bills of lading and freight bills. 0t is the management of the flow of information$ including customer orders$ billing$ inventory levels$

and customer data.

10

10


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b. What are the production strategies for @uick response9

Luick esponse (anufacturing 6L(7 is a companywide strategy to cut leadtimes in all phases of manufacturing and office operations. 0t can bring your

products to the market more quickly and help you compete in a rapidly changing

manufacturing arena. 0t will increase profitability by reducing cost$ enhance

delivery performance and improve quality.

• The 'lignment of rgani&ational 'ctivity to Demand

• =inkages between Demand and !upply

• Demand relationship

/. a. xplain the operation of kanban regarding as 7apanese Philosophy.

There are two types of )anban cards2

– a conveyance card 6C+)anban7

– a production card 6P+)anban7 !ignals come in many forms other than cards$

including2

– an empty crate

– an empty designated location on the floor

"ow 8anban ,perates hen a worker at downstream ork Center 8"

needs a container of parts$ she does the following2

– !he takes the C+)anban from the container she *ust emptied

– !he finds a full container of the needed part in storage

– !he places the C+)anban in the full container and removes the P+)anban

from the full container and places it on a post at ork Center 81

– !he takes the full container of parts with its C+)anban back to ork Center

8"

10

10


18/20

Differentiate innovation and benchmarking.

. What is 7'!9 xplain seven wastes to be eliminated by 7'!.


volume production using minimal inventories 6raw materials$ work in process$

and finished goods7. 50T also involves the elimination of waste in production

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19/20

effort. 50T also involves the timing of production resources 6i.e.$ parts arrive at the

ne%t.

Advantages of 7'!

– 0ncreases Productivity

– educes perating costs

– 0mproves performance the throughput

– 0mproves quality

– 0mproves deliveries – 0ncrease #le%ibility and innovativeness

+even Wastes to be eliminated according to 7'! are

!'W,,DB


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0n cost+volume+profit 6breakeven7 analysis$ the total cost• curve is composed of

total fi%ed and variable costs per unit multiplied by the number of units provided.

?reakeven quantity occurs where the total cost curve and total sales revenue

curve intersect. !ee2 break+even chart$ break+even point. 0n inventory theory$ the

total cost curve for an inventory• item is the sum of the costs of acquiring and

carrying the item. 0n supply chain management$ the total cost of ownership• of

the supply delivery system is the sum of all the costs associated with every

activity of the supply stream. The main insight that TC offers to the supply

chain manager is the understanding that the acquisition cost is often a very small

portion of the total cost of ownership.

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