DELIVER EXAM 2

sourcing

Deciding where and from whom to obtain products, materials, or components.

transportation

Moving goods through the supply chain efficiently and cost-effectively.

planning

Coordinating timing, inventory, and resources to meet demand.

supply chain tradeoff

Decisions in sourcing, transportation, and planning impact each other and affect cost, service levels, and resilience.

country of origin (COO)

The nation where a product is manufactured, affecting tariffs, logistics routes, and compliance.

nearshoring

Moving production closer to the end market.

reshoring

Bringing production back to the company’s home country.

economic order quantity (EOQ)

Ideal order size that minimizes total inventory costs.

minimum order quantity (MOQ)

Smallest quantity a supplier will sell.

first cost

Price paid to the supplier for a product.

landed cost

Total cost including first cost, freight, duties, insurance, and customs fees.

ad valorem tariff

Tariff calculated as a percentage of the product’s value.

specific tariff

Fixed amount charged per unit of product.

mixed tariff

Combination of ad valorem and specific tariffs.

HS code (harmonized system code)

International classification system used to determine tariff rates.

made in USA

Product must be all or virtually all produced in the United States according to FTC standards.

made in America

Broader term that may include products assembled in North America.

benefits of domestic production

Faster lead times and reduced disruption risk.

challenge of domestic production

Higher labor and manufacturing costs.

outsourcing

Hiring an external company to perform business functions that could be done internally.

3PL (3rd party logistics provider)

A company that provides outsourced logistics services such as transportation, warehousing, and distribution

benefits of 3PL

• Reduce capital investment

• Access logistics expertise

• Increase flexibility

• Focus on core competencies

common 3PL services

• Transportation management

• Warehousing

• Freight forwarding

• Inventory management

• Order fulfillment

• Customs clearance

transportation

Movement of freight by truck, rail, air, or ocean.

warehousing

Storage and inventory management of goods.

order fulfillment

Picking, packing, shipping, and returns processing.

freight forwarding

Arranging international transportation and documentation.

customers brokerage

Managing import/export compliance and customs paperwork.

freight broker

Intermediary that connects shippers with carriers and earns a margin

freight forwarder (NVOCC)

Arranges international transportation across multiple modes.

customs broker

Specialist in import regulations and customs documentation.

lead logistics provider (4PL)

Coordinates multiple logistics providers and manages entire supply chain.

contract logistics

Long-term outsourced logistics operations.

asset based provider

Owns trucks, warehouses, or transportation equipment.

non asset based provider

Does not own equipment but coordinates transportation through a network of carriers. (ex: uber freight)

spot rate

Market price for a one-time shipment based on current supply and demand.

contract rate

Pre-negotiated rate between shipper and carrier for a fixed period.

dedicated contract carriage

Carrier provides trucks and drivers dedicated to one customer.

minimum volume commitment

Lower shipping rate in exchange for guaranteeing a certain shipment volume.

pure competition

Many sellers, no single company controls price.

monopoly

One seller controls the market.

oligopoly

Few large sellers dominate the market.

monopolistic competition

Many sellers with differentiated services.

price elasticity

Measure of how sensitive demand is to price changes.

elastic demand

Demand changes significantly when price changes.

inelastic demand

Demand changes little even when price changes.

factors influencing elasticity

• Product type

• Market competition

• Customer requirements

front haul (head haul)

Primary trip where a load moves from origin to destination.

back haul

Return trip after delivering freight.

deadhead

Truck traveling empty with no cargo.

surcharge

Additional fee added to base rate (fuel, equipment, peak season).

demurrage

Fee when cargo remains at a port or terminal longer than allowed.

detention

Fee when containers are held outside the terminal too long before being returned.

supply chain interdependence

Decisions in sourcing, transportation, and planning affect each other and create cost, service, and risk tradeoffs.

mode selection

Choosing the transportation mode (truck, rail, air, ocean) based on cost, speed, and reliability.

transit time

The time it takes for goods to move from origin to destination.

lead time

Total time from order placement to delivery.

working capital in supply chains

Money tied up in inventory while goods are in production or transit.

drayage

Short-distance transport of containers between ports, rail yards, and warehouses.

terminal operator

Organization that manages port terminals and loads/unloads ships.

fulfilment center

Warehouse designed for picking, packing, and shipping customer orders.

reverse logistics

Handling returned products and moving them back through the supply chain.

dimensional weight

Pricing method used in air freight that accounts for both weight and volume.

fuel surcharge

Additional transportation fee that adjusts for fuel price fluctuations.

line haul rate

Base transportation cost excluding surcharges.

rate stability

Advantage of contract rates providing predictable transportation costs.

market volatility

Fluctuations in transportation capacity and pricing.

capacity constraints

Limited transportation availability due to high demand.

omnichannel retail

Seamless integration of multiple sales channels (online, in-store, mobile) to create a unified customer experience

single channel retail

Selling through one primary channel with simple logistics and limited customer touchpoints.

multi-channel retail

Selling through multiple channels that operate independently with separate inventories and systems.

customer-centric approach

Focus on convenience, speed, and consistency across all touchpoints.

integrated systems

Shared inventory, order management, and customer data across all channels in real time.

flexible fulfillment

Multiple delivery options like BOPIS, ship-from-store, and home delivery.

ship from distribution center (DC)

Orders fulfilled from centralized warehouses; high accuracy but longer delivery times.

ship-from-store

Orders fulfilled from store inventory to reduce delivery time.

BOPIS - buy online, pick up in store

Customers order online and pick up in-store; eliminates last-mile shipping cost.

curbside pickup

Store staff delivers orders directly to the customer’s vehicle.

drop shipping (DSV)

Supplier ships directly to the customer while the retailer controls pricing and customer relationship.

third-party marketplace fulfillment

Products sold via platforms (e.g., Amazon) that handle logistics and fulfillment.

B2B (business to business)

Shipments between businesses (e.g., DC to store).

B2C (business to consumer)

Shipments directly to the end customer.

FTL (full truck load)

Shipping method used for large shipments filling an entire truck.

LTL (less than truckload)

Shipping method for smaller shipments that don’t fill a full truck.

last mile delivery

Final step of delivery to the customer; often the most expensive and complex.

hub and spoke model

Central hub distributes goods to regional locations (spokes); reduces cost but increases lead time.

direct fulfillment model

Products ship directly from storage location to the customer; faster but more expensive.

centralized fulfillment center

Few large DCs handle all orders; lower cost but slower delivery.

regional fulfillment center

Multiple DCs closer to customers; faster delivery but higher cost.

store based fulfillment

Retail stores act as mini-warehouses for online orders.

micro fulfillment centers (MFCs)

Small automated facilities near customers for very fast delivery.

reverse logistics

Movement of goods from customers back to retailer for returns, repairs, or recycling.

return rate

Percentage of products returned by customers; impacts profitability.

cost vs. service level trade-off

Balancing fast delivery expectations with transportation and fulfillment costs.

centralized inventory

Inventory stored in few locations; lower cost but slower delivery.

decentralized inventory

Inventory spread across multiple locations; faster delivery but more complex.

AOV (average order value)

Average amount spent per order. Total Revenue ÷ Number of Orders

MOV (minimum order value)

Minimum purchase required for benefits like free shipping.

CLV (customer lifetime value)

Total profit from a customer over time.

CAC (customer acquisition cost)

Cost to acquire a new customer.