SCMT 3443 Exam 3

Shrinkflation

also known as package downsizing or weight-out, is the process of items shrinking in size or quantity while the prices remain the same.

Measure

Concrete or objective attribute—often a single item or data point.

Metric

A relative attribute—often a combination of two or more measures, a percentage, or a comparison over time.

KPI

Key Performance Indicator: A metric viewed as particularly important to evaluate business performance.

Difference between Measure, Metric, and KPI

metric is usually multiple measures, and a KPI is a metric that businesses use to analyze things

Formula for Total Cost

First Cost+Landed Cost

Fill Rate

the percentage of orders that you can ship from your available stock without any lost sales, backorders, or stockouts.

On-Time Delivery

the ratio of customer order lines shipped on or before the requested delivery date / customer promised date versus the total number of order lines.

Order Cycle Time

the time it takes for a company to complete the order fulfillment process

Complete Orders

an Order that has been provisioned and for which all other related work has been carried out

Inventory Turns

a measure of the number of times inventory is sold or used in a time period such as a year. (you want this to be high)

Inventory Obsolescense

stock a business doesn't believe it can use or sell due to a lack of demand

Inventory Days Supply

an efficiency ratio measuring the average amount of time in days that a company or warehouse holds inventory before selling or shipping it.

Inventory Carrying Cost

the total of all expenses related to storing unsold goods.

Total Landed Cost

the total price of a product or shipment once it has arrived at a buyer's doorstep

Units Shipped per Employee

how many units each employee ships during a set period of time

Damage Frequency

how often products get damaged in the shipping process

Picking/Shipping Accuracy

total number of correct picks divided by total number of picks

Document/Invoicing Accuracy

accurate invoices/total number of invoices

OTIF

“On Time in Full”-combination of fill rate and on time delivery; commonly used metric at Walmart

Fixed Assets

things such as trucks, warehouses, and stores

What is owning your inventory considered?

an asset

S of SMART Acronym

Specific-Clearly defined and targeted to avoid misinterpretation

M of SMART Acronym

Measurable-Can be quantified for analysis, comparison, and tracking

A of SMART Acronym

Attainable-Reasonably achievable based on the situation

R of SMART Acronym

Relevant-Is directly related to desired performance/results

T of SMART Acronym

Timely-Provides prompt feedback, and can be done with the time frame given

Additional Qualities of a Good Metric

Concise, Minimize Effort, Avoid Conflict, Consistent

Profit-Leverage Effect

translates the cost savings in logistics to the sales equivalent required to have the same profit impact.

SCOR

Supply Chain Operations Reference Model-a "process reference" model that is used globally to measure supply chain activities across industries. It measures performance metrics in five categories: reliability, responsiveness, agility, cost, and asset management efficiency.

Showrooming

going to a bricks-and-mortar store like Best Buy to physically check out your purchase options and then using an online app or going home to use your computer so that you can find your selected item for a lower price online.

Webrooming

the opposite of showrooming. You go online to do your product research and comparison shopping. Then you head to the store to make your final decision and buy the product.

Distribution Channel

a set of interdependent organizations used by a selling organization to provide its products or services to the marketplace

Scenario Analysis

a systematic process for analyzing possible decisions by considering the outcomes under different sets of assumptions

Pilot Project

a small-scale preliminary study conducted to evaluate feasibility, duration, cost, adverse events, and improve upon the study design prior to performance of a full-scale research project.

Fulfillment Network

another way to say distribution channel, typically used in omnichannel and e-commerce networks

Digital Marketplace

a platform that facilitates electronic trade between buyers and sellers.(essentially just another word for e-commerce)

Difference between multichannel and omnichannel

In multichannel, a company has multiple means of getting products to customers, but the product will come from different sources. In omnichannel, a company has multiple ways to get a customer a product all from the same source. (Example. a store having separate apps for grocery and pharmacy would be multichannel and everything being on the same app would be omnichannel.)

The Strategic Profit Model(also known as the DuPont Model)

Multi-Channel Distribution

involves a business using more than one type of distribution channel. Ex. a clothing brand that sells its products through its physical stores, an online website, and a mobile shopping app.

Omnichannel Distribution

an approach to distribution that enables customers to buy and receive products from multiple sales channels that are seamlessly integrated. Regardless of the channel they’re on, your team or your products are only a click, an email, a direct message, or a phone call away. Ex. Amazon

OPD

Online Pickup or Delivery: inventory usually ordered on a mobile app that will either be picked up or delivered

DSV

Drop Ship Vendor-asking a vendor to hold inventory at a warehouse and fulfill orders for your company

Marketplace

giving a vendor/supplier a platform to sell; usually the company running the website earns only commission on these sales

Production Economies of Scale

when companies produce large amounts of products to store until the customer wants it

Form Postponement

a strategy that involves delaying giving a product its final form until the exact customer order comes in

Transportation Economies of Scale

You can ship in full truckloads. Inbound shipments are broken down and stored at the warehouse; outbound shipments are consolidated and shipped at the warehouse.

Warehouse

Facilities where raw materials, semi-finished goods or finished goods are stored for a short term or long term until they are ready to be used

Raw Materials

The individual materials used to create products before they are actually created

Picking List

Created by a WMS, a list that documents all cases or items that need to be picked from the warehouse shelves for specific orders

Value-Added Services a Warehouse can Provide

Mass Customization, Final Assembly, Product Repair

Distribution Centers

Combine inventory from multiple locations to mix and match to fulfill customer orders

Cross-Docking Facility

like DCs, act as mixing facilities. However, in a cross-dock operation, the goal is to keep the products moving—from inbound dock to outbound dock. In many instances, product is only in the cross-dock facility for two or three hours. Thus, cross-docks are often called "flow-through" warehouses.

Duties

a tariff or tax imposed on goods when transported across international borders.

AMR

Autonomous Mobile Robots: the robots found in warehouses that assist with moving freight around the building

Difference between a Public and Private Warehouse

private warehouses are typically owned by the company that operates out of them, and public warehouses typically have a landlord from a third party

What happens when you increase the amount of warehouses that you own?

most of your operating costs will increase

Tasks associated with the Arrival function of a warehouse

Receiving and Unloading, Storage Placement(putaway)

Tasks associated with the Shipment function of a warehouse

Order Selection(picking), Final Processing/Packaging, Checking and Verifying Orders, Consolidating and Staging, Loading and Shipping

Tasks associated with the Always/Day-to-day function of a warehouse

Administrative, Facility Maintenance, Equipment Maintenance

What does Receiving do in a WMS?

Confirms receipt, creates putaway label, directs stock to active reserve location

What does Order Picking do in a WMS?

Prioritizes orders, prints pick tickets for best sequence, prints labels for packing operations

What does Verification do in a WMS?

Uses bar code scanning, prints labels for shipping contents

What does Shipping do in a WMS?

Suggests shipping routes, creates shipping documents, calculates shipping costs

Reasons why a company puts a warehouse in a certain location

Transportation Access(Truck, Rail, Water, etc.), Availability of Workforce, Freeway Access, Land Cost and Taxes

5S Method

Sort, Set in Order, Shine, Standardize, Sustain

5S: Sort

Clearly separate necessary items from unnecessary; abandon the unnecessary

5S: Set in Order

Neatly arrange and identify things for ease of use

5S: Shine

Always maintain tidiness and cleanliness. Regularly scheduled clean-ups

5S: Standardize

Constantly maintain the 3Ss mentioned above

5S: Sustain

Create vehicles to enforce the above rules

Six Sigma

a set of management techniques intended to improve business processes by greatly reducing the probability that an error or defect will occur.

DMAIC

Define, Measure, Analyze, Improve, Control: a methodology used within Six Sigma to improve a company’s operations

Perfect Order

Orders delivered without changes, damage, or invoice errors

Carbon Footprint

The total sets of greenhouse gas emissions caused by an organization, event, product, or person

Ecological Footprint

The amount of the environment necessary to produce the goods and services necessary to support a particular lifestyle

Greenhouse Gases

the gases in the atmosphere that raise the surface temperature of planets such as the Earth.

Ways companies are trying to lower their emissions

moving towards electric vehicles, trying to avoid moving trucks with empty trailers, and not letting trucks sit with the engine idling while loading and unloading

Which is the most sustainable form of transportation

Ships

Which is the least sustainable form of transportation

Air(also most expensive)

Empty Backhaul

Moving a trailer back to point A from point B with no freight on board

Some ways to reduce transportations’ environmental impact

Better equipment planning, better training and habits, new technology

Cradle to Grave

considering the environmental impact of the product from the earliest supplier through to disposal.

Supply Chain Strategy of the Maturity stage of the product lifecycle

Minimize distribution costs and assure on-time delivery to a larger market.

Supply Chain Strategy of the Decline stage of the product lifecycle

Minimize distribution costs and plan for reverse logistics.

Sustainability Strategy of the Maturity stage of the product lifecycle

Minimize logistics and manufacturing footprint by reconsidering packaging, transportation modes, manufacturing and DC locations, and inventory levels

Sustainability Strategy of the Decline stage of the product lifecycle

Execute reverse logistics, re-use, and recycling. Minimize inventory to avoid obsolescence and disposal.

Scope 1

Emissions your company directly produces.

Scope 2

Emissions from purchased energy such as electricity and heating and cooling.

Scope 3

Emissions from everything else in the organization and its supply chain. This includes business travel and commuting, waste disposal, environmental impact of products sold, and purchased transportation and logistics services

Pros of E-Commerce Sustainability

Less driving to stores, reduces the waste of printed catalogues, reduces the amount of retail spaces and associated energy use, up-to-date inventory and tracking so you know item availability without going to a store, saving gas

Cons of E-Commerce Sustainability

Numerous deliveries to a remote location may be worse than one trip to the city to shop, more returns because we buy products without trying them on, damage in handling during shipping creating more waste, If few DCs, distance to deliveries may be very long, one package at a time: more pollution

Which metrics fall under the Customer Service category

• Fill Rate

• On-time delivery

• Order cycle time

• Complete orders

• Customer complaints

Which metrics fall under the Asset Management category

• inventory turns

• Inventory obsolescence

• Return on assets

• Inventory days' supply

• Economic value added

Which metrics fall under the Cost category

• Inventory carrying cost

• Total landed cost

• Outbound freight

• Warehousing labor costs

• Administrative

Which metrics fall under the Productivity category

• Units shipped per employee

• Equipment downtime

• Order productivity

• Warehouse labor productivity

• Transportation labor productivity

Which metrics fall under the Quality category

• Damage frequency

• Order entry accuracy

• Picking/shipping accuracy

• Document/invoicing accuracy

• Number of customer returns

Which metrics are found on the Income Statement(Revenue)

• Order fill rate

• Order cycle time

• On-time delivery

Which metrics are found on the Income Statement(Cost of Goods Sold)

• Inbound transportation

• Inventory obsolescence

• Inventory damage

• SMI/Consignment costs of suppliers

Which metrics are found on the Income Statement(Other Operating Costs)

• Warehousing cost

• Transportation cost

• Logistics administration

• Technology cost