SC Exam 2

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Industrial Engineering

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Dec 6, 2023

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Jack Poliviou Intro to Supply Chain Exam #2 1. The Cause-and-Effect chart, also called the Ishikawa diagram, is used in the quality management process as a way to see all possible causes of a problem to determine which may be the most important underlying problem. For example, if a company was having issues generating customers, they could use the chart to find out the main problem. This chart is useful because it makes you identify all possible causes from: Equipment, Process, People, Materials, Environment, & Management. By identifying all possible causes of the problem, it makes it easier to see the whole picture. 2. Procurement, the process of identifying, comparing, and ultimately choosing a supplier that gives the best overall benefit, can have a positive effect on the Return on Assets metric. By comparing suppliers and choosing the one which will give you a lower price for materials, a company is able to lower their COGS, which if we look at the ROA matrix, lowering the COGS increases the return on assets by a pretty sizable margin. For example, lowering the COGS by 10% can increase ROA by 20%, while increasing sales by that same 10% only causes an 11% ROA increase, showing the importance of procurement. 3. I might be asked to perform a Spend Analysis if my company was looking for ways to analyze their expenditure data to reduce overall costs and improve efficiency and quality. Some sources of information I would look into in order to reduce costs could be expenditures by Suppliers, division, department, or users. I would definitely analyze historic spending data and see if there were any changes/increases in spending throughout months or years and try to figure out why. Looking into future demand projections could also help. 4. A company may implement a Supplier Development Program with one of its vendors to achieve lower total supply chain cost, to increase the quality of products being delivered, or just to simply increase profitability for all parties involved. In return, a company should expect near perfect delivery times in each point in its’ supply chain, and even possibly access to Suppliers’ knowledge and technologies to help both parties. 5. People involvement is one of the most important aspects for a firm implementing Six Sigma because without everyone at the company buying in to the ideals and methodologies of the Six Sigma, it won’t be a success. Assigning well-defined roles and involving all employees by providing opportunities and incentives is one of the most important aspects of the Six Sigma.

6. The difference between centralized and decentralized purchasing is that in centralized purchasing, the purchasing department is located physically at the firm or company’s office, and this is the department making all purchasing decisions. In decentralized purchasing, however, individual, local purchasing departments at multiple levels make their own purchasing decisions. Each option has its own pros and cons, but you might use decentralized purchasing maybe if additional knowledge is required for each different type of purchasing, and each department had more knowledge than a central office would. On the other hand, you may use centralized purchasing to simply standardize the purchasing so a problem or solution would be easier to locate, or simply to avoid competition between units. 7. Reverse auction is a process, or sourcing technique where pre-identified suppliers enter a website to try to underbid competitors to win the buyer’s contract or business. These reverse auctions are generally used by private companies, public sector agencies, and non-profit organizations. These reverse auctions often cause suppliers to drive down the price of their service, helping the buyer. 8. Strategies that help move items/materials from the bottleneck quadrant to the non- critical quadrant include: Maintaining safety and strategic stock for the item in case any disruptions occur, Developing contingency plans for these disruptions, strengthening supplier relationships, and searching for alternative suppliers as a back-up plan. 9. The main benefits of choosing a single, or dedicated supplier include being able to establish a strong relationship with that supplier and lowering the cost and quality variability of the product being purchased. Another reason one may choose a single supplier could be because the product is proprietary, or there aren’t too many options. 10. A company may want to implement LEAN and Six Sigma if they needed/wanted to eliminate waste, improve efficiency, reduce defects, and reduce product variations. To successfully start this process, a company should first start with LEAN, which attempts to reduce waste and use mapping to set up the workplace as efficiently as possible. After successfully implementing techniques for LEAN, you could then progress by implementing more specific, technical Six Sigma statistical tools to resolve more complex process problems. Following this order is key to a successful implementation.

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