SCMG

Supply chain management

Coordinates sourcing and procurement, conversion or production, logistics, and relationships with suppliers, intermediaries, service providers, and customers

Economies of value/scale

High volume spreads fixed cost over more units which can improve operational efficiency. More of the product makes more money.

Market value/scope

Combining different products or services creates a useful assortment. More variety makes more money.

Relevancy value

Customization or services fit a particular customer need beyond a basic product.

Competitive advantage

Lower cost, differentiated offering, or focus on a particular market or customer group

Global sourcing

Provides access to resources, lower cost inputs, more customers, and larger operating scale. Also has negatives like longer replenishment time, border processes, geopolitical risk, etc.

Forecast

Estimates what customers are likely to buy and how much.

Quantitative evidence

Includes historical sales, trend, and seasonality.

Qualitative Evidence

Customer and sales team insight, promotions, stockouts, and unusual events can distort historical observations.

Bullwhip effect

When there is a lag between ordering and receiving the product, and it is not clear what the demand is. Arises from a disconnect which distorts demand. 

Sales and Operations Planning (S&OP)

Compares the demand plan with supply, inventory, and capacity; then aligns functions on a feasible plan.

Collaborative planning, forecasting and replenishment (CPFR)

Extends coordination with trading partners.

Leading indicators

Help anticipate future results

Lagging indicators

Report results already idealized.

Inventory

Average number of low units inside the process

Flow rate

Average units leaving the process per time period

Flow time

Average elapsed time from entry to exit within the defined boundary

Processing time

How long does a resource work on one flow unit

Flow time

how long a flow time unit spends in the define process

Cycle time

How much time passes between successive completed units. Cycle time = 1/R

Lead time

How long from order placement until receipt.

Setup time

How long does a resource prepare or change over before running a batch

Capacity

how many flow units can be processed per unit of time.

Actual Flow Rate

Take the smallest value out of available input rate, customer demand rate, process capacity.

Utilization (different for each step)

actual flow rate / the step’s capacity

Demand Constrained

When process capacity exceeds demand.

Capacity-constrained

demand exceeds supply and the flow rate is equal to capacity rate. 

Demand rate

The number of flow units customers want per unit of time.