supply chain management Exam 2

Three parts of product-design collaboration

Design, procurement, and manufacturing.

Production execution decisions

Assembly, production layout, and packaging.

Facility layout ideal for high volume and low variety

Product layout.

Make-to-stock (MTS)

A production strategy where goods are manufactured prior to receiving customer orders based on anticipated demand.

Assemble-to-order (ATO)

A strategy where standardized parts and components are held in inventory and assembled only after a customer order is placed.

Make-to-order (MTO)

A manufacturing approach where fabrication and assembly begin exclusively after a confirmed order is received.

Engineer-to-order (ETO)

A production approach where a product is custom-designed and engineered specifically for an individual customer's specifications.

Manufacturing strategy with the longest lead time

Engineer-to-order (ETO), because it requires custom engineering and design work before manufacturing can begin.

Production scheduling

The operational process of assigning available manufacturing capacity and resources to fulfill required workloads.

Economic lot size

The production quantity that optimally balances setup costs against inventory carrying costs.

Run-out time

The estimated length of time before existing inventory is completely exhausted at current consumption rates.

Economies of scale

The cost advantage achieved when increasing output volume causes the average unit cost to decrease.

Production trade-off

A strategic operational compromise where optimizing one objective compromises or diminishes another.

Responsiveness

The speed and agility with which an organization identifies and fulfills shifting customer demands.

Efficiency

The optimal utilization of resources to generate output while minimizing cost, waste, and idle time.

Order management

The administrative practice of tracking and guiding customer orders through entry, fulfillment, and final shipment.

Two phases of order management

Phase 1 (influencing how customers place orders) and Phase 2 (executing and fulfilling received orders).

Order-to-cash (O2C)

The comprehensive business process spanning from initial order receipt through product delivery to final payment collection.

Customer Relationship Management (CRM)

A strategic discipline that manages customer interactions and accounts to maximize satisfaction and customer profitability.

Four steps of CRM

1. Segment the customer base; 2. Identify service packages for each segment; 3. Develop operational processes; 4. Measure performance.

Activity-based costing (ABC)

A costing system that traces overhead and operational expenses to products and customers based on the specific activities they require.

Cost-to-serve

The total operational expenditure required to satisfy the orders of an individual customer, market segment, or distribution channel.

Four customer profitability segments

Protect, Build, Cost Engineer, and Danger Zone.

Least profitable customer segment in CRM

Danger Zone.

Four primary distribution facility functions

Accumulation, sortation, allocation, and assortment.

Accumulation

The distribution function of gathering, consolidating, and staging materials or shipments from multiple sources.

Sortation

The distribution function of categorizing items into distinct groups based on characteristics, destinations, or product types.

Allocation

The distribution function of distributing available quantities of inventory to specific customer orders.

Assortment

The distribution function of compiling a varied mix of distinct products to fulfill the requirements of a particular customer order.

Stock-keeping unit (SKU)

A distinct scannable identification code used to track a specific product variation and its inventory level.

Kitting

The operational procedure of grouping individual complementary components or items together into a single packaged unit.

Postponement

A supply chain technique where final product assembly, packaging, or customization is delayed until verified demand is received.

Redundancy (distribution)

The practice of maintaining backup equipment, systems, or facilities to maintain continuity when primary operations experience failure.

Five primary transportation modes

Motor carrier, rail, air, water, and pipeline.

Fastest transportation mode for long distances

Air transport.

Transportation mode best suited for high-volume land freight

Rail transport.

Intermodal transportation

The movement of freight using two or more distinct transport modes in a continuous journey without handling the goods themselves.

Cross-docking

A logistics practice where incoming freight is transferred directly to outbound transit with little to no intermediate warehouse storage.

Third-party logistics provider (3PL)

An independent contractor hired to handle operational supply chain, warehousing, or freight delivery services on behalf of a business.

Strategic rationale for utilizing 3PLs

Accessing specialized supply-chain expertise and geographic scale without committing significant internal capital investments.

Major challenges in modern production

Managing globalization, maintaining regulatory compliance and traceability, controlling labor and capital costs, and adapting to rapid innovation.

Production process layout

The physical arrangement and workflow design of workstations, equipment, and material paths inside a production facility.

Process layout

A facility configuration where machinery, equipment, and workstations that perform identical or similar tasks are grouped together.

Fixed-position layout

A manufacturing arrangement in which the primary finished product remains in a fixed location while equipment, materials, and labor move to it.

Cellular layout

A production layout that clusters distinct machine types into dedicated self-contained cells to produce families of similar parts.

Inventory carrying costs

The ongoing financial expenditures associated with keeping stock on hand, encompassing storage space, taxes, insurance, depreciation, and capital lockup.

Setup costs

The operational expenditures in labor, tooling, and downtime required to prepare a manufacturing line for a new production batch.

Customer service package (CRM)

A curated blend of services, products, and support options designed to meet the distinct operational expectations of a customer segment.

Inventory visibility

The capability to track, view, and monitor inventory quantities and locations in real time throughout every node of the supply chain.

Quality control (QC)

The operational discipline of evaluating goods against predefined specifications to detect and prevent flaws before shipment.

Returns management

The reverse logistics discipline that processes returned items through inspection, repair, restocking, recycling, or disposal.

Cross-functional trade-off

A corporate decision where balancing conflicting goals or cost centers among different functional business units is required.

Facility-level trade-off

A structural compromise balancing facility count, geographical location, operational costs, and regional customer service levels.

Globalization in production

The coordination of manufacturing facilities, material sourcing, supply partners, and product distribution networks across international boundaries.

Traceability

The technical ability to track and verify the chronological path, processing history, and material origin of goods through the supply chain.

Order fulfillment

The end-to-end operational sequence of receiving, picking, checking, packaging, and staging products for customer delivery.

Transportation consolidation

The aggregation of multiple smaller freight shipments into a single larger load to enhance vehicle fill rates and reduce transportation costs.