scm exam 2

week 8-12

Inventory Management

The process of ensuring products are available through inventory administration.

Postponement

Delaying further investment in a product until the latest possible point to reduce risk.

Inventory Carrying Cost (ICC)

The annual cost of holding inventory compared with the value of the item.

Cost of Goods Sold (COGS)

The cost of purchasing or producing inventory, including costs to get it ready for sale.

Capital Cost

The cost of money tied up in inventory and the opportunity to invest that money elsewhere.

Storage Space Cost

The cost of facilities and resources used to store and handle inventory.

Inventory Service Cost

Inventory-related costs such as insurance and taxes.

Inventory Risk Cost

Potential costs from inventory damage, theft, obsolescence, or quality problems.

FOB Origin

Ownership transfers at the shipping point; the buyer generally pays transportation.

FOB Destination

Ownership transfers at the destination; the seller generally pays transportation.

Anticipatory Stock

Extra inventory held for expected delays or higher-than-expected demand.

Safety Stock

Extra inventory held for unexpected delays or changes in demand.

Demand Management

Estimating and managing customer demand to guide operating decisions.

Independent Demand

Demand for a finished product that comes from customers.

Dependent Demand

Demand for parts or materials that depends on the need for another product.

S&OP (Sales and Operations Planning)

An internal process for coordinating sales and operations plans.

CPFR (Collaborative Planning, Forecasting, and Replenishment)

A process where supply chain partners work together on forecasts and replenishment.

Random Variation

Unpredictable changes in demand.

Trend Variation

A longer-term increase or decrease in demand.

Seasonal Patterns

Recurring changes in demand during certain times of the year.

Business Cycles

Changes in demand related to economic expansions and slowdowns.

External Balancing Methods

Methods that influence customer demand to help balance supply and demand.

Internal Balancing Methods

Methods that adjust company operations or inventory to help balance supply and demand.

Price (Law of Demand)

Reducing price can increase demand when inventory is high.

Lead Time

The expected time between ordering and receiving a product; increasing it can reduce demand when supply is short.

Production Flexibility

The ability to change production schedules or lines as demand changes.

Inventory Flexibility

Using inventory, including safety stock, to manage changes in demand or lead time.

Strategic Sourcing

A long-term purchasing approach that considers value, total cost, supplier relationships, quality, reliability, and risk.

Inventory Classification

Grouping inventory items to help guide inventory-management decisions.

A Items

The most important items in ABC analysis; they generally need closer attention.

B Items

Items of moderate importance in ABC analysis.

C Items

The least important items in ABC analysis; companies often simplify how they manage and reorder them.

Profit Impact

The extent to which an item or service affects an organization’s financial performance.

Supply Risk Impact

How difficult it is to source an item or service at the needed cost, time, quality, and quantity.

Leverage Items

High profit impact and low supply risk; use buying power and competitive bidding.

Strategic Items

High profit impact and high supply risk; build supplier partnerships and protect supply continuity.

Non-Critical Items

Low profit impact and low supply risk; simplify and automate purchasing.

Bottleneck Items

Low profit impact and high supply risk; plan for supply problems and find alternative sources.

Fixed Order Quantity (Certainty)

Orders the same quantity each time and uses a reorder point; suited to steady, predictable demand.

Fixed Order Quantity (Uncertainty)

Orders the same quantity each time while keeping safety stock for uncertainty.

Fixed Order Interval

Reviews inventory at set intervals; the order quantity depends on how much stock remains.

Economic Order Quantity (EOQ)

The order quantity that minimizes the combined annual ordering and carrying costs.

Ordering Cost (OC)

The cost of placing and processing inventory orders.

Total Annual Costs (TAC)

The annual ordering costs plus annual inventory carrying costs.

Right-of-Way

The infrastructure or route used by transportation equipment, such as roads, rail tracks, or air corridors.

Drayage

Short-distance truck movement to or from an intermodal hub, such as a port or rail terminal.

Intermodal Transportation

Moving goods using two or more modes while keeping the cargo in the same container or loading equipment during mode changes.

Land Bridge

Moving freight across a large landmass to connect ocean ports.

Containerized Freight

Freight loaded into a container or other equipment at origin and delivered in that equipment without extra handling.

Bill of Lading

A shipping document that gives shipment information, contract terms, and a receipt for goods; it may also serve as a document of title.

Freight Bill

The carrier’s invoice for moving a shipment.

Claims Form

A form used to request compensation for shipment loss or damage.

Truckload (TL)

A motor-carrier option that uses the trailer’s full capacity for a shipment.

Less-Than-Truckload (LTL)

A motor-carrier option that combines smaller shipments through a hub-and-spoke network.

Short Line

A rail carrier that provides local or regional connections to the larger rail network.

Line Haul

A rail service that moves freight between major markets.

Combination Carrier

An air carrier that transports freight along with passengers.

Integrated Carrier

An air cargo carrier that offers door-to-door service, including scheduled pickup and delivery.

Nonintegrated Carrier

An air cargo carrier that provides airport-to-airport service; the customer or a third party handles local pickup and delivery.

Liner Carrier

A water carrier that uses set routes and published schedules.

Charter Carrier

A water carrier that leases ships to customers for a chosen time period or voyage.

Time Charter

A contract to use a ship for an agreed time period.

Voyage Charter

A contract for a single voyage.

Accessibility

A mode’s ability to reach the shipment’s origin and destination.

Capacity

The weight or volume a transportation mode can carry.

Cost

The rate charged to move freight from origin to destination.

Transit Time

The total time a shipment takes to travel from origin to destination.

Reliability

The consistency of transportation time.

Product Safety

The likelihood that products arrive in the same condition in which they were shipped.

Distribution

Moving materials from a source to a destination.

Accumulation

Collecting goods from different sources at one location.

Assortment

Combining different products to fill customer orders.

Sortation

Separating items according to their destination.

Allocation

Matching available inventory to customer orders.

Breaking-Bulk

Splitting a large shipment so customers can buy the quantities they need.

Product Kitting

Combining products into a set to meet customer requirements.

Sub-Assembly

Performing limited assembly before a product goes into final production.

Production Sequencing

Preparing picked or assembled items in the order they are needed.

Product Attributes

Product characteristics that should guide how a distribution facility stores and handles items.

Receiving

Accepting and inspecting incoming goods and checking their quantities.

Slotting (Putting Away)

Choosing where to store products to use space and handling resources efficiently.

Order Picking

Retrieving products from storage to fill customer orders.

Piece Picking

Picking one customer order at a time.

Batch Picking

Picking items for several orders at the same time.

Zone Picking

Assigning pickers to specific areas of a warehouse.

Dispatch

The final warehouse processes before orders leave for delivery.

Product Handling

Short-distance movement and storage of products within a facility.

Corporate Organizational Change

A company change, such as downsizing, that may lead it to review its supply chain network.

Ownership Change

A merger, acquisition, or divestiture that may require a network review.

Customer Service Requirements

The service needs a company must meet, which can change over time.

Shifting Locations of Customers

Changes in where customers live or do business that can affect facility locations.

Competitive Capabilities

New transportation options or logistics networks that may change how a company competes.

Electric Vehicle Fleets

Vehicle fleets that may require charging infrastructure and route changes.

Closed-Loop Supply Chain

A supply chain that includes reverse flows, such as returns, recycling, or refurbishing.

Company Preferences

Company or leadership preferences that may influence facility-location decisions.

Labor Climate

Regional labor factors such as unionization, skill levels, and unemployment.

Quality of Life

Regional conditions that can affect employees’ well-being and a company’s ability to attract and retain workers.

Supplier Parks

Locations where suppliers operate near a main manufacturer to support coordination and reduce transportation costs.

Agglomeration

The clustering of firms or facilities near one another.

Land and Utilities

Facility-location considerations involving land cost and availability, and access to needed utilities.