Supply Chain and Logistics

Flashcards of vocabulary terms related to Supply Chain and Logistics.

Supply Chain

Focuses on processes from procurement, production, and delivery of raw materials to products to the customer.

Core business

The company’s reason for existing- what it was created to do and what brings the most value. It involves:

• A systematic analysis of all business activities

• Checking if each activity truly adds value

  Focuses the business on what matters most for success and customer satisfaction.

Logistics

Focuses on efficiently managing product flows from transportation, storage, and distribution.

Value Chain

Describes the entire process of creating a product or service, from raw material acquisition to delivery to customers.

Value Chain Activities

Involves inbound logistics, operations, outbound logistics, marketing, and service, along with support activities such as procurement, technology development, human resource management, and firm infrastructure.

Value Chain

Tool to optimize processes efficiently, increase production and build customer loyalty.

Degree of integration (competitive advantage)

Activities carried out in the company.

Industrial panorama (competitive advantage)

Defines the market and the sectors related to the company.

Segment panorama (competitive advantage)

Refers to the variations that can affect the product and buyers.

Geographical panorama (competitive advantage)

Encompasses the countries, cities, or regions in which the company operates.

Logistics (main circle in the diagram)

• Inventory Management

• Inbound Transportation

• Supply and demand Planning

• Outsourcing management

• Fleet Managment

Procurement (middle circle)

• Sourcing

• Supplier Management

• Contract Management

• Catalogue Management

Purchase (little circle)

• Pricing

• Ordering

• Receiving

• Invoicing

• Paying

SCOR Model

Management supply chain model used to address, improve, and communicate decisions related to supply chain management within a company and with its suppliers and customers.

• Supply

• Chain

• Operations

• Reference

SCOR Model Level 1

Defining the scope, including the context and geographies.

SCOR Model Level 2

Configuring the supply chain, including geographies, products, and segments.

SCOR Model Level 3

Processing element details and identifying the key business activities within the supply chain.

1. Plan: Supply and Demand Planning

Creating a balance between the resources and demand requirements and establishing communication throughout the chain.

2. Source Component

Acquiring materials and sourcing infrastructure, such as inventory, supplier agreements, networks and performance.

Efficient Supply Chains (primary, goal, product design, strategy)

Supply demand at the lowest cost. Maximize performance at minimum cost

Responsive Supply Chains (primary, goal, product design, strategy)

Respond quickly to demand.

Efficient supply chains (pricing strategy)

Lowe margins because price is a prime customer driver

Responsive supply chain (pricing strategy)

Higher margins due to flexibility and responsiveness to customer demands, allowing for premium pricing.

Efficient supply chains (manufacturing strategy)

Lower costs through high utilization

Responsive supply chain (manufacturing strategy)

Maintain capacity flexibility to buffer against demand/supply uncertainty

Efficient supply chains (Inventory strategy)

Minimize inventory to lower cost

Responsive supply chains (Inventory strategy)

Maintain buffer inventory to deal with demand/supply uncertainty

Efficient supply chains (lead time strategy)

Reduce, but not at the expense of costs.

Responsive supply chains (lead time strategy)

Reduce aggressively, even if the costs are significant.

Efficient supply chains (supplier strategy)

Select based on cost and quality.

Responsive supply chains (supplier strategy)

Select based on speed, flexibility, reliability and quality.

Lean (purpose)

Using fewer resources (reduce waste) in order to increase value.

Agile (purpose)

Market sensitive in order to gain a competitive advantage.

Lean (origin)

Toyota 1936-Kaizen, JIT and Toyota production system developed

Agile (origin)

1990’s rise of information tech

Lean (methodology)

• Identify customer value

• Identify value stream

• Flow. reduced lead time

• Demand pull system

• Kaizen

Agile (methodology)

• Implement an information based supply chain

• Make it market sensitive

• Improve network

• Infrastructure

• Involve suppliers, buyers in process

Lean (goal)

Reduce waste

Agile (goal)

Responsiveness

Agile Supply Chain

Built to be highly flexible for the purpose of being able to quickly adapt to changing situations.

Lean Supply Chain

Management is about reducing costs and lowering waste as much as possible.

ISO Standards

A set of internationally recognized standards that help companies maintain consistency in:

• Management

• Service quality

• Product development

  They ensure companies meet global practices.

Customer Service Level (CSL)

The overall level of responsiveness and care a company gives to its customers. It depends on:

• Type of service you offer

• The needs of each customer

  Higher CSL = better customer satisfaction and loyalty.

Omnichannel

Combines all sales and delivery channels into one connected system. It provides:

• Real time inventory

• Flexible delivery or pickup

• A seamless customer experience

  Goal: serve customers anytime, anywhere

Logistics KPI

A measurable value that tracks all relevant aspects of storing, transporting, and delivering goods and services.

Order Cycle Time (OCT)

The time from when an order is placed to when it is delivered.

Order Fill Rate (OFR)

Measures the percentage of customer orders that are fulfilled entirely from stock.

Backorder Rate (BR)

The percentage of orders that cannot be filed when promised due to inventory shortages.

Perfect Order Rate (PO)

The percentage of orders that are error-free, delivered on time, complete, and in perfect condition.

Demand Planning

A supply chain process that predicts what the company plans to sell in the future. It includes:

• Estimating demand for each product

• Creating plans to ensure inventory and production match that demand

  Helps avoid overstock or stockouts by aligning supply with forecasted sales.

Supply and demand

The theory that prices are determined by the relationship between supply and demand. If the supply of a good or service outstrips the demand for it, prices will fall. If demand exceeds supply, prices will rise.

Inventory Accuracy (IA)

Measures how accurately recorded inventory levels match physical counts.

Inventory Turnover (IT)

Shows how efficiently a company sells and replaces its inventory in a given period.

Inventory to Sales Ratio (ISR)

Compares the value of inventory held to the sales made.

Days of Inventory on Hand (DOH)

Calculates the average number of days inventory stays before it's sold.

Customer Relationship Management (CRM)

A strategy and technology used by organizations to manage interactions with current and potential customers.

Data Management

CRM systems collect and organize customer information such as contact details, purchase history, and preferences, allowing businesses to better understand their customers.

Sales Management

CRM tools help track sales leads, opportunities, and pipeline activities, enabling sales teams to manage their efforts more effectively.

Customer Service

CRM systems facilitate improved customer support by providing agents with access to customer history and preferences, allowing for personalized interactions and quicker problem resolution.

B2Me Marketing

Is the term used when a message is personalized by placing the product, service or experience in the specific context of each customer's needs.

Intermodal Transport

Combines multiple modes (e.g., truck and rail) to optimize cost and efficiency, enhancing flexibility in supply chains. Requires coordination between different carriers and handling facilities.

Multimodal Transport

• Multiple transport modes under one contract

• Single contract for the entire journey

• Single operator responsible

• Integrated logistics

Intermodal Transport

• Multiple modes with separate contracts

• Separate contracts for each transport mode

• Different carriers for each segment

• Use of standardized containers

Type of product

Different modes are suited for various types of goods. Fragile items, perishables, or high-value products may require air transport for increased speed and safety, while bulk materials might be best suited for rail or sea.

Volume and weight

Larger volumes or heavier shipments can influence the choice. For instance, rail transport is often more cost-effective for bulk goods, while smaller or lighter shipments may be suitable for road transport.

Distance

Short distances may favor road transport for quick deliveries, while longer distances might benefit from rail or sea transport for cost efficiency.

Accessibility

The destination’s infrastructure, including the availability of ports, rail terminals, and road access, can determine which modes are viable.

Shipping costs

Evaluate not only the transportation costs but also any associated costs, such as loading and unloading, handling, and customs fees.

Budget Constraints

Choose a mode that fits within budgetary limits while still meeting service requirements.

Urgency

Air transport is the fastest option, ideal for time-sensitive shipments, while sea transport may be more suitable for non-urgent deliveries that allow for longer transit times.

Lead Time

Consider how lead times align with customer expectations and inventory management strategies.

Tracking and Visibility

Some modes offer better tracking capabilities and visibility throughout the supply chain, which can be critical for time-sensitive shipments.

Historical Performance

Assess the reliability of the mode based on historical delivery performance.

Sustainability

Consider the carbon footprint and environmental impact of the chosen transport mode, especially for companies aiming for sustainable practices.

Regulations

Compliance with environmental regulations may influence the choice of transport mode.

Special Handling

Certain goods may require specialized handling or conditions (e.g., temperature-sensitive products), influencing the choice of transport.

Regulatory Compliance

Ensure that the chosen mode complies with relevant regulations, including customs and safety standards.

Network optimization

Focusing on improving the efficiency, cost-effectiveness, and reliability of transportation networks.

Key concepts of transport modeling

1. Network representation

2. Demand forecasting

3. Cost factors

4. Routing optimization

5. Mode selection

6. Capacity planning

7. Simulation and scenario analysis

8. Performance metrics

Tools and techniques

• Optimization software

• Geographic information systems

• Predictive analysis

Vehicle Routing Problem (VRP)

Is a combinatorial optimization problem that focuses on determining the optimal set of routes for a fleet of vehicles delivering goods to a set of customers

Variants of VRP

•Capacitated VRP: Considers vehicle capacity limitations.

•VRP with Time Windows: Requires deliveries to be made within specified time frames.

•Split Delivery VRP: Allows deliveries to be split across multiple routes.