Supply Chain Management and Operations Review

Comprehensive vocabulary flashcards covering the core concepts of supply chain management, operations performance, forecasting, and sustainability strategies.

Supply Chain

The network involved in producing and delivering a product/service from suppliers to the final customer, such as the path from coffee farms to Starbucks stores.

Operations

The function of producing goods or services, such as the process of assembling bicycles.

Logistics

The process of moving and storing goods, such as delivering Amazon packages.

Supply Chain Management (SCM)

Managing the whole network by coordinating suppliers, factories, and transport.

Standardisation

Offering the same product globally to achieve lower costs and easier operations, such as Coca-Cola branding.

Adaptation

Changing a product per market for a better local fit and more flexibility, such as the McDonald’s India menu.

Customer Order Decoupling Point (CODP)

The point where production changes from forecast-driven to customer-order-driven.

Make-to-stock

A production type where goods are produced before an order is placed, such as supermarket milk.

Assemble-to-order

A production type where components are assembled after a customer order is received, such as a custom PC.

Make-to-order

A production type where the actual production starts only after an order is placed, such as custom furniture.

Engineer-to-order

A production type where the product is fully designed and produced specifically for a customer, such as a large construction project.

Functional Layout

A layout where machines are grouped by function, such as radiology and surgery departments in a hospital.

Product Layout

A layout where equipment is arranged in the sequence of production, such as a car assembly line.

Business Process Reengineering (BPR)

The radical redesign of business processes to improve cost, speed, quality, and service, such as automating loan approvals.

Qualitative Forecasting

Forecasting based on opinions and judgement, such as surveys or expert panels, best for new products with little historical data.

Time Series Forecasting

A quantitative forecasting method that uses past demand patterns, such as moving averages or exponential smoothing.

Causal Forecasting

A quantitative forecasting method based on relationships between variables, such as ice cream sales increasing with temperature.

Moving Average Formula

$$\text{Moving Average} = \frac{\text{Sum of previous periods}}{\text{Number of periods}}$$

Exponential Smoothing

A forecasting method that uses the previous forecast, actual demand, and a smoothing constant.

CPFR

Collaborative Planning, Forecasting and Replenishment; a process where companies collaborate to improve forecasting and inventory management.

Productivity Formula

$$Productivity = \frac{Outputs}{Inputs}$$

Multifactor Productivity Formula

$$\text{Multifactor Productivity} = \frac{Output}{Labour + Materials + Overhead}$$

Efficiency Formula

$$Efficiency = \frac{\text{Actual Output}}{\text{Standard Output}} \times 100$$

Cycle Time

The total time needed to complete a process, from the initial order to final delivery.

Percentage Value-Added Time Formula

$$\frac{\text{Value Added Time}}{\text{Total Cycle Time}} \times 100$$

Benchmarking

The practice of comparing performance metrics with best practices or competitors, such as an airline comparing punctuality.

Swim Lane Process Map

A visual representation of workflow that shows activities, departments, and responsibilities across different roles.

Ishikawa / Fishbone Diagram

A cause-effect analysis tool used to identify the root causes of problems, such as late deliveries.

Pareto Diagram

A tool based on the 80/20 rule, suggesting that 80% of problems come from 20% of causes.

Balanced Scorecard (BSC)

A strategic management framework developed by Kaplan & Norton that looks at four perspectives: Financial, Customer, Internal Processes, and Learning & Growth.

Leading KPI

A key performance indicator that predicts future performance, such as training investment or advertising spend.

Lagging KPI

A key performance indicator that measures past results, such as revenue or sales growth.

Operational Excellence

A strategy focusing on low cost and efficiency, exemplified by companies like Ryanair.

Product Leadership

A strategy focusing on innovation and high quality, exemplified by companies like Apple.

Customer Intimacy

A strategy focusing on strong customer relationships and service, exemplified by the Ritz-Carlton.

Porter’s Value Chain

A framework to identify primary and support activities that create value and competitive advantage.

Value Engineering

The process of reducing costs while maintaining customer value, such as using cheaper packaging without lowering quality.

Bill of Materials (BOM)

A comprehensive list of all materials and components required to create a product.

Kraljic Matrix - Strategic Category

Items characterized by high value and high risk, such as hotel locations.

Kraljic Matrix - Leverage Category

Items characterized by high value and low risk, such as furniture suppliers.

ESG

A framework measuring Environmental, Social, and Governance factors, such as carbon emissions and labour conditions.

GRI (Global Reporting Initiative)

An international standard that measures a company's economic, environmental, and social impact.

Materiality

The principle of identifying issues most important to company success, stakeholders, and society.

Porter Value Chain: Five primary activities

Inbound logistics, Operations, Outbound logistics, Marketing & Sales, Service

BSC perspectives: Four perspectives of Balanced Scorecard

Financial, Customer, Internal Process, Learning & Growth

Supply Chain Definition

The network involved in producing and delivering a product/service from suppliers to the final customer.

Operations vs Logistics vs SCM

Operations focuses on producing goods/services, logistics involves transportation/storage, while SCM encompasses the entire supply chain process.

Performance Objectives

Key goals in operations management, including cost, quality, speed, flexibility, and dependability.

Cross-Border Issues

Challenges faced by supply chains operating across countries, including tariffs, regulations, and logistics.

Layout types in Operations

Different organizational structures in production environments, including functional and product layouts.

Standardisation vs Adaptation

Standardisation offers the same product globally, while adaptation customizes products for local markets.

Customer Order Decoupling Point (CODP)

The point where production transitions from being forecast-driven to customer-order-driven.

Make-to-Stock

Production method where items are manufactured based on predicted demand before orders are placed.

Make-to-Order

Production method where items are made only after an order is received.

Qualitative Forecasting

Forecasting technique based on opinions and judgment rather than historical data.

Quantitative Forecasting

Forecasting method utilizing numerical data to predict future outcomes.

Time Series Forecasting

A quantitative method analyzing past demand patterns to forecast future sales.

Causal Forecasting

Forecasting based on the relationship between variables to predict outcomes.

Moving Average

A technique used in time series forecasting that smoothes data by averaging different subsets.

Weighted Moving Average

A forecasting method that averages past data points with different weights based on their importance.

Exponential Smoothing

Forecasting technique that applies decreasing weights to past observations.

Collaborative Planning, Forecasting and Replenishment (CPFR)

A collaborative process between companies to enhance forecasting and inventory strategies.

Single-Factor Productivity

Productivity measurement considering one input versus output.

Multifactor Productivity

Productivity assessment using multiple inputs to measure output.

Efficiency

How well inputs are converted into outputs, typically measured as a percentage.

Cycle Time

The total time from the beginning to the end of a process.

Value-Added Time

The portion of cycle time that adds value to the product.

Benchmarking

Comparing performance metrics with best practices or competitors for improvement.

Primary Processes

Core processes directly involved in creating products/services.

Support Processes

Processes that support primary activities, such as IT and HR.

Development Processes

Processes focused on innovation and improvement of existing products/services.

Swim Lane Map

A visual process mapping tool that delineates responsibilities across different roles.

Fishbone Diagram

A cause-and-effect tool used to identify root causes of a problem.

Why-Why Analysis

A problem-solving technique that repeatedly asks 'why' to uncover the root cause.

Pareto Principle

A concept indicating that 80% of outcomes come from 20% of efforts.

Balanced Scorecard Perspectives

Four viewpoints: Financial, Customer, Internal Process, Learning & Growth.

Key Performance Indicator (KPI)

A measurable value that demonstrates how effectively a company is achieving its key business objectives.

Leading KPI

Indicators that predict future performance, such as training investments.

Lagging KPI

Indicators that measure past performance, like sales growth.

Strategy Map

A visual representation of the relationships between strategic objectives.

Treacy & Wiersema Value Disciplines

Three focus areas for competitive strategy: Operational Excellence, Product Leadership, Customer Intimacy.

Porter’s Value Chain - Primary Activities

Includes Inbound Logistics, Operations, Outbound Logistics, Marketing & Sales, and Service.

Porter’s Value Chain - Support Activities

Comprises Firm Infrastructure, Human Resource Management, Technology Development, Procurement.

Starbucks Value Chain Example

Focus on quality sourcing, customer experience, and efficient operations.

Value Engineering

A process aimed at improving the value of a product by reducing costs and improving functions.

Bill of Materials (BOM)

A detailed list of materials and components needed to create a product.

Make vs Buy

Decision-making process in sourcing, evaluating whether to produce internally or purchase externally.

Outsourcing

Utilizing external sources for services or products that could be performed internally.

Offshoring

Moving business processes or services to a different country to reduce costs.

Kraljic Matrix - Strategic Category

Items categorized as high value and high risk requiring careful management.

Tendering

The process of soliciting bids for a project or contract.

Environmental, Social, Governance (ESG)

Framework assessing the ethical impact and sustainability practices of a business.

Global Reporting Initiative (GRI)

Standard for sustainability reporting, evaluating a company's impact on economy, environment, and society.

Materiality

Principle of prioritizing issues that significantly affect the company's success and stakeholders.