Logistics and Supply Chain Management Flashcards

What is Supply Chain Management (SCM)?

SCM is the planning, coordination, and management of sourcing, procurement, production, and logistics activities among suppliers, service providers, and customers to deliver value efficiently across the supply chain.

How is logistics defined in relation to SCM?

Logistics is a component of SCM that focuses on planning, implementing, and controlling the efficient flow and storage of goods, services, and information, managing both forward and reverse flows between the point of origin and the point of consumption.

What is the trade-off between effectiveness and efficiency in SCM?

Improving customer service levels (effectiveness) often increases costs, while reducing costs (efficiency) can negatively affect customer service, requiring a balance between the two.

What is the definition of lead time?

The total time it takes from when an order is placed until delivery.

What is the difference between efficiency and effectiveness?

Efficiency is about achieving a goal with as little waste of resources as possible, while effectiveness is about achieving the goal as much as possible.

What does the Customer Order Decoupling Point (CODP) indicate?

The CODP indicates how far upstream in a supply chain's production or distribution process a customer order penetrates.

What is CODP1 (Make to stock - Local)?

A strategy where the CODP is at the very end of the logistics chain, closest to the customer, often applied to consumer goods such as those in Lidl or Aldi.

What is CODP3 (Assemble to order)?

A strategy where raw materials and semi-finished products are kept in stock, which the customer can freely combine into a finished product, such as Dell computers.

What is CODP5 (Purchase and make to order)?

A variant where no inventory is kept, and the purchase of raw materials and components begins only after the customer order is received, such as an "ideal bike to size."

What is the ROI formula mentioned in the notes?

$$\text{Return on investment} = \frac{\text{Investment revenue} - \text{Cost of investment}}{\text{Cost of investment}} \times 100$$

According to DuPont Analysis, what are the four levers for increasing profitability?

1. Market expansion, 2. Cost reduction, 3. Inventory turnover, 4. Outsourcing logistics activities.

What is the formula for Turnover ratio (Asset turnover)?

$$\text{Turnover ratio} = \frac{\text{Revenue}}{\text{Total assets}}$$