Term
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Definition
| that part of supply chain management that plans, implements, and controls the efficient, effective forward and reverse flow and storage of goods, services, and related information between the point of origin and the point of consumption in order to meet customers' requirements |
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Term
| 3 main types of logistics functions |
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Definition
movement - transportation (matching modes of transportation to customers' needs)
storage - you must balance inventory levels, locations, and choice of transport mode to serve your customers
processing - deals with the flow of information and the visibility of shipments during movement and storage |
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Term
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Definition
| delivering the right product to the right customer at the right time in the right condition in the right quantity at the right place for the right cost |
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Term
| definition of supply chain management |
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Definition
| encompasses the planning and management of all activities involved in sourcing and procurement, conversion, and all logistics management activities. It also includes coordination and collaboration with channel partners, which can be suppliers, intermediaries, 3PLs, and customers. In essence, it integrates supply and demand management within and across companies |
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Term
| 5 types of economic utility added by logistics: |
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Definition
1. Possession – created by marketing when it translates customer needs into product and service requirements, promotes the resulting product’s value, and facilitates exchange so the customers can “possess” it. – can only possess it if logistics works properly
2. Form utility – primary responsibility of purchasing and operations managers who acquire inputs and transform them into products or services of greater customer value.
3. Time utility – occurs when a product arrives when it is needed. Just-in-time manufacturing – parts and components are carefully staged with precise delivery times to arrive just when they are needed for assembly or sale.
4. Place utility – delivering an item exactly where it is needed – one of the main reasons you shop online is place utility.
5. Quantity utility – delivering customers the right amount of product – DC’s that do breaking bulk or assorting of products before shipping them to retail stores are helping firms meet customer needs to buy a variety of items at one location |
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Term
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Definition
1. Defects – any work or product that is less than perfect. 2. Overproduction – making more than the customer wants or more than you have known demand for. 3. Waiting – idle/wasted time when resources are not ready/available to use. 4. Not utilizing staff talent – not challenging employees or listening to and encouraging their ideas. 5. Transportation – movement of materials or information that does not add value. 6. Inventory – excess materials that customers or manufacturing don’t currently need. 7. Motion – Movement of people that does not add value.
8. Excess processing - Activities that the customer does not value and is not willing to pay for. |
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Term
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Definition
Event Logistics: The resources (facilities, people, and infrastructures) used to organize, deliver and execute an event from initial schedule through teardown and cleanup.
Passenger Logistics: Moving people
Military Logistics: Moving groups of people and supplies, setting up camps, replenishing supplies and people, breaking camp down again and moving it out.
Service Logistics: All the people, facilities and supplies in place to effectively deliver services to customers.
Humanitarian Logistics: planning the effective flow and storage of goods as well as the exchange of information to alleviate the suffering of people |
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Term
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Definition
1. Sort – eliminate unneeded items from the area, store things not needed now – organize
2. Simplify – Have a logical place where everything belongs – a place for everything and everything in its place
3. Sweep – clean and organize each day as you use things – put them away
4. Standardize – have standardized processes and procedures to maintain workplace order, ease training of new people
5. Sustain – continuously follow this approach and implement it throughout your company |
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Term
| Logistics costs are around ___ % of GDP: |
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Definition
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Term
| Within logistics, what is the single biggest expense category in the US? |
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Definition
| Motor carrier transportation |
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Term
| _____ creates possession utility: |
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Definition
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Term
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Definition
| so do transportation costs, packaging costs, and warehousing costs |
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Term
| what is the waste of motion?: |
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Definition
| movement of people that does not add value |
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Term
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Definition
| an event you hold to introduce lean principles in order to improve processes |
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Term
| - Listening to employee suggestions for improvements is an example of which 5S methodology for eliminating waste? |
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Definition
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Term
| In logistics, which of the following is the top concern related to movement? |
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Definition
| Choosing the right mode of transportation for your needs |
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Term
| The waste of "waiting" refers to: |
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Definition
| staging orders to be shipped in advance of when they are needed |
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Term
| Inventory waste refers to which of the following?: |
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Definition
| excess materials that customers or manufacturing don't currently need |
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Term
| The 5S approach represents: |
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Definition
| a way to organize any process, a way to help you find and eliminate the 8 wastes, and a way to guide kaizen events |
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Term
| As the money we spend on transportation goes up, the company's cost of lost sales: |
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Definition
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Term
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Definition
| A warehouse where materials from multiple suppliers are unloaded, sorted, and shipped to different destinations. Materials flow through the facility with little or no storage. Cross docking improves shipping efficiencies, giving the ability to ship in full truckload quantities—both inbound and outbound. |
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Term
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Definition
| The logistics practice of transferring product from one warehouse to another or from mode to mode of transportation to another in order to fill an order. |
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Term
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Definition
| The logistics practice of shipping an order directly from a manufacturer (or distributor) to a customer, bypassing the retailer. |
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Term
| 5 Operational Targets: (your logistics system needs to provide the following): |
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Definition
Product Availability -
timely delivery -
transparency -
Protection against disruption -
operational efficiency - |
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Term
| Define tailored logistics: |
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Definition
| the logistics process (sequence of activities) responsible for delivering customer orders in a way that meets their needs. |
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Term
| Transactional relationship: |
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Definition
- most customer relationships (80%)
- customers expect low costs and adequate service
- you should offer efficient, hassle-free service
- treat each customer fairly |
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Term
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Definition
represent fewer than 5-10% of companies’ customer relationships, but they account to disproportionate sales and profits.
- customers expect outstanding service - at low costs
- you should have near 100% availability, delivery, transparency |
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Term
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Definition
- AKA the 80/20 rule - 80% of revenues are driven by the most important 20% of customers. Applying it is done in 2 steps:
1. classify companies by sales
2. modify classifications based on strategic issues |
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Term
| define activity-based cost management (ABCM): |
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Definition
| an approach to the costing and monitoring of activities, which involves tracing resource consumption and costing final outputs. Resources are assigned to activities, and activities to cost objects based on consumption estimates. |
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Term
| 3 tradeoffs of timely delivery: |
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Definition
1. Speed - the length of the order cycle
2. Consistency - dependability - you must remove process variability
3. Agility - you adapt to the unexpected - expedited delivery, natural disaster, etc. |
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Term
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Definition
| An order that is received, processed, picked, packed, shipped, documented, and delivered on time without damage |
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Term
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Definition
| Radio frequency identification tags are part of an automatic identification system that uses small tags to track the movement of people or products (or anything else). |
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Term
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Definition
| The process of helping your organization prepare and respond to an unplanned or unusual event. |
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Term
| Service recovery paradox: |
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Definition
| The fact that some companies resolve service failures so effectively that customer satisfaction actually increases following a disruption or service failure. |
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Term
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Definition
| Also called in-transit inventory is the inventory that is being shipped from origin to destination. Thus, you have to pay for it, but it is not yet available to deliver to a customer |
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Term
| Determining what relationships to invest in: |
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Definition
| classify based on sales, then re-classify based on strategic issues |
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Term
| you can improve relationship profitability by: |
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Definition
1. Collaborating to reduce costs of service
2. raising prices
3. firing the customer |
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Term
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Definition
| A periodic call, among company members, to share information and coordinate decision-making. Cadence calls often occur at a set time each week or month. |
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Term
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Definition
- Integrated Business Planning
- A supply chain practice that shares information across functions and supply chain partners to improve the accuracy and timeliness of forecasts. |
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Term
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Definition
| Information collected at the point of sale—typically as a product barcode is scanned at a checkout register. POS information helps track sales and inventory levels. |
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Term
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Definition
| A scorecard documents and communicates a supplier’s performance on key measures a company uses to evaluate performance. |
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Term
| While Logistics influences all five economic utilities, it is primarily responsible for fulfilling which three utilities? |
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Definition
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Term
| True or False: Products for which logistics costs are low (as a percentage of sales) tend to have a higher-than-normal emphasis on service. |
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Definition
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Term
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Definition
| the ability of the supply chain to bounce back after a major disruption. |
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Term
| The four P's of marketing: |
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Definition
| Product, place, price, promotion |
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Term
| 4 parts of risk: (process used to improve resiliency): |
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Definition
1. Risk ID
2. Assessment - can be done with a heat map, showing likelihood and potential impact
3. Prioritization - use FMEA - highest risks require immediate attention
4. Mitigation - mitigation plan should be on a location-by-location basis (more inventory, backup carrier, etc.) |
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Term
| Failure Mode Effects Analysis (FMEA) |
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Definition
The analysis that lets companies assess the priority of the things that could go wrong (failure modes), by factoring in the likelihood, severity, and detectability of each failure mode.
- a tool commonly used to identify, evaluate, and prioritize mistakes and problems that can occur in a business |
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Term
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Definition
• Known-knowns – events with a track record. They occur fairly frequently. You can look at data and assess the probability they will occur and their severity.
• Known-unknowns – events you know can happen, but they don’t have a consistent pattern or history. Assessment is speculative. Lots of “what-if” questions.
• Unknown-unknowns – conceivable but unusual and unexpected (breakup of the Soviet Union, 9/11 attacks, etc.). Sometimes called black swan events. They have a major effect on operations. |
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Term
| The strategic decoupling point: |
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Definition
| Every supply chain has one of these – the point at which the push strategy from upstream supply chain becomes a pull strategy toward the end customers. Inventory is stockpiled at this point in anticipation of demand. The closer this point is to the final customer, the more dependent you are on forecasts and the less coordination you need to manage inventory flows. Moving it upstream makes you more responsive to changing demand but you need tighter coordination. |
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Term
| Hierarchy of business strategy |
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Definition
Corporate Strategy → Marketing Strategy → Supply, Ops and Logistics Strategy
Plan, enable, execute
Supply, Ops and Logistics Strategy = Value Creation |
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Term
| 3 types of distribution strategies: |
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Definition
1. Intensive Distribution – Most companies. They strive to get their products in the hands of every customer possible. Coca-Cola wants their product in every household! These companies produce in multiple locations and then distribute them through networks of distribution centers and retailers.
2. Exclusive Distribution – Most often associated with high-priced goods like Ferraris or Versace. The goal is to create an aura of luxury around their products. Widespread distribution actually hurts the brand because uniqueness is lost.
3. Selective Distribution – Might use fewer retailers than in intensive distribution to cover the same geographic area, or you limit distribution to a few geographic areas. Craft breweries fit this. Most of the time, you do this because of resource limitations/market constraints (i.e. your product is only popular in specific regions). |
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Term
| 4 Pros/cons of fulfillment: (supply chain strategies used to deliver customer value): |
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Definition
Planning Based: Every company in a SC independently forecasts demand of their downstream partner, and react to situations when forecasts are incorrect
Lean: The company replenishes depleted DC stocks, as they are consumed (see Make-To-Stock (MTS) Production Strategy).
Agile: Goal is to be fast in accommodating unique customer demands - seeks to be leaner than "lean" - The company initiates and quickly completes the making of an order and then, without losing any time, goods are sent to customer directly from manufacturer using expedited shipping (See Direct Dist. and Make-To-Order (MTO) Production Strategy).
Leagile: - possible via form postponement - Company pushes semi-finished inventory to DCs where products get customized according to specific customer orders, after the orders come in. |
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Term
| Push-versus-pull fulfillment: |
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Definition
| In a pull system, you only make what is needed as it is needed (versus in planning-based, you make the product based on your long-term forecast and then push it out to customers). Consumer consumption drive replenishment at every level up the SC (when you sell something, you then make its replacement. Also called “Kanban replenishment”). Forecasting does still occur in a lean supply chain, but it doesn’t drive day-to-day execution. Within a pull system there is a two-step process: an initial push of inventory into the market based on a sales forecast, then pull strategies – called a make-to-stock (MTS) production strategy and refer to the original assortment of goods as a “supermarket supply”. |
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Term
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Definition
| If your initial forecasts were really wrong you might produce less going forward or boost demand by lowering the price or offering other incentives. Lean strategies are quick to respond to changes in demand |
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Term
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Definition
| to support a lean fulfillment strategy you must encourage other member of your supply chain to be lean as well. It is not lean to push waste onto your supply chain partners. You must communicate frequently and intensely with partners to keep wastes out of the supply chain |
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Term
| An agile supply chain seeks to |
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Definition
| produce to individual preferences |
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Term
| Which manufacturing strategy supports a leagile supply chain strategy? |
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Definition
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Term
| In FMEA you score risks based on which of the following? |
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Definition
| Severity, probability, and detection |
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Term
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Definition
| a visual signal of consumption and the need to replenish supply |
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Term
| Service as Measured by the Customer (SAMBC) |
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Definition
| The percent of measured customers where a firm is meeting or exceeding service target—as defined and set by the customer. |
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Term
| Available to Deliver vs. Available to Promise (6) |
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Definition
to deliver: A company promises a delivery date based on product on hand to fulfill an incoming customer order.
to Promise: A company promises a delivery date based on when it expects to receive product from an upstream factory or supplier to fulfill an incoming customer order. |
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Term
| Post-Sales customer service consists of: |
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Definition
| Product support, spare parts, and returns |
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Term
| 3 Barriers to Forecasting (Complexity, Ownership, Uncertainty) (6): |
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Definition
Complexity: that is, there are a lot of steps in the process—and they take place at different times and places. Besides, you'll probably have to manage orders for a lot of different SKUs.
Ownership: Many people touch the process, but no one owns the entire order-management process.
Uncertainty: You are making decisions today about demand that may or may not arise in the future. |
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Term
| 3 parts of forecasting: (6): |
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Definition
1.History – forecasts are based on two things: what happened in the past, and knowledge of how a system works helps you interpret data and improve forecasts. Logisticians map out order-fulfillment processes so they can deliver on time and to promise.
2.Accuracy –
3.Confidence – you know that your forecasts are likely wrong – especially long-range. If you do your homework and use good data, making decisions based on a forecast is better than being blind. |
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Term
| 2 types of forecasting:(6): |
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Definition
-Qualitative – Relies on experts’ opinions – your job is to ID the right informants and ask them the right questions. When domain knowledge is critical and pertinent data is scarce, use this.
-Quantitative – Data driven. 2 approaches to this modeling: Correlation and time series models. Use correlational models (like regression) when you can ID variables that predict the behavior you want to understand – need to have accurate and timely data for predictive variables. Use time series models when primary source of data is history of the variable being predicated. Basic time series models (moving averages and exponential smoothing) are easy to use but since they don’t include any contextual analysis, often called naïve models – if the demand pattern you’re forecasting is straightforward, time series methods can be low cost and effective. |
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Term
| Collaborative Planning, Forecasting, and Replenishment (CPFR): (6): |
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Definition
External - helps trading partners build a single forecast. Process:
1. Strategy & planning: kick-off meeting to make ground rules for the relationship and agree to a joint business plan. Answer the following – What products will be sold? Where will they be sold? What strategic initiatives will be pursued?
2.Demand & Supply MGT: Discuss expected demand, share forecasts, talk about upcoming promotions.
3. Execution: Place orders, prepare and deliver shipments, receive and stock products on retail shelves, record transactions and make payments – the fulfillment and delivery cycle discussed earlier in this chapter.
4.Analysis: to help you improve performance and build relationships, perform an after-action report to answer: What worked? What didn’t? what do we need to do differently? |
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Term
| Sales & Operations Planning: (6): |
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Definition
decision-making process that realigns the tactical plans for all business functions in all geographies to support company’s business goals and targets – objective is to reach consensus on a single operating plan to satisfy customers. Relies on 5 monthly meetings:
1.Product Management review – talk about product launches, assortment plans, etc. The goal is to ensure a healthy innovation pipeline so you have the right mix or products to meet customer needs. Product plan will influence demand & supply planning.
2.Demand review – determine how and how much product you are going to sell. Defines how much you will request from the end-to-end supply chain over 18-24-month horizon. Also clarifies assumptions, risks, and opportunities.
3.Supply review – discuss how you will ensure supply. Examine manufacturing capacity, SC inventory, etc. Also develop contingency plans to address demand risks and opportunities identified by the demand review.
4.Integrated reconciliation – Bc each group has different ideas about how the future will turn out & different forecasts, you get together to ID and resolve imbalances identified in the product, demand, and supply reviews. You also build your integrated financial plan including revenue, margin, and other P&L, balance sheet, and cash flow effects. |
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Term
| What are the 5 basic modes of transportation? (7): |
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Definition
| Truck/parcel, rail, water, air, pipeline |
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Term
| Mode of transportation - truck: (7): |
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Definition
popular bc:
fast
flexible - only mode that can pick up and deliver almost anywhere
reliable - carriers can deliver within 15 minute window
Biggest downside is high cost compared to rail |
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Term
| 3 types of trucking operations: (7): |
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Definition
1. TL: direct door-to-door service between locations for a single shipper. Loads are large enough to use most weight/capacity of a trailer
2. LTL:consolidate small loads from several customers to fill trailer for shipping economies. Smaller than 15,000 lbs.
3. Parcel:FedEx, UPS – AKA integrators – very small loads from ind. shippers – they build extensive networks so they can gather a lot of small shipments and consolidate them into larger loads for efficient handling. |
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Term
| Mode of transportation - Rail: (7): |
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Definition
-Preferred when you ship really large volumes over long distances that can’t be reached via waterways
-Advantage is much lower cost-per-ton-mile basis compared to trucking due to large hauling capacities and economies of scale. 2 disadvantages:
1.Access/reach – limited reach. Few companies have a rail spur linking them to the railroad network. No single carrier can move product coast-to-coast
2.Rights of way – railroads own/ maintain their rights of way (the railroad network). Class I railroads invest money to maintain railroad networks – vs trucking using publicly built and maintained roads |
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Term
| Mode of transportation - water: (7): |
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Definition
-Best option when you ship large volumes to points that CAN be reached by water
-Big advantage is cost – the lowest costs per ton-mile of any general mode. 2 major disadvantages:
1.Accessibility – only a viable option if your shipping to a location on a navigable waterway
2.Speed – 5-11 MPH for inland and 20 MPH for ocean. You must plan ahead and use inventory as a buffer. |
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Term
| 2 settings in water transportation: (7): |
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Definition
-Inland – Most common inland waterways use navigable rivers – barges can ship a lot. 2nd type of inland is the laker ship – navigates large lakes like the Great Lakes. Specialize in transporting commodities like grain, coal, etc. among inland port cities
-Ocean – container ship dominates transoceanic shipping – 90% of the world’s manufactured goods. They carry cargo containers that could move by ship, truck, or rail. You may also find the following in oceans: roll on roll off AKA ro-ro (built in ramps so you can roll cargo likes cars or construction equipment), tanker (move liquids like chemicals, oil, natural gas), and bulk freighter (carry unpacked cargo, likely commodities like coal or grain). |
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Term
| Mode of transportation - air: (7): |
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Definition
-Consider this when shipping high-value or perishable items over long distances – when time and speed are critical. By far the fastest mode –but susceptible to delays -Short delays can cause big issues, especially when being used for emergencies
-Biggest drawback is expense – 7-20 times other options. Plane is expensive, but also have costs for jet fuel, maintenance, labor, and landing fees. Two forms of air freight:
1.Dedicated air cargo – all-cargo lines like DHL, FedEx, UPS use specialty freighters to move large volumes on a scheduled basis. Floors are equipped with rollers for easy loading/unloading.
2.Belly hold – airlines make money by selling unused space in cargo bins. |
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Term
| mode of transportation - Pipeline: (7): |
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Definition
-Appropriate when shipping via pipeline offers extremely low cost – can only move fluid commodities
-Pipeline transportation is also slow but the product is fungible (each unit indistinguishable from the next) – so you can mix and match deliveries to customer needs. Also very reliable since they are immune to traffic congestion and bad weather. Some key facts:
•Infrastructure – to operate a pipeline you need to buy the land, install and maintain, and invest in pumping stations to provide propulsion – this expense means private ownership is limited to really big companies
•Regulation – although large energy companies often own the pipelines the govt still regulates them as a form of common carriage
•Visibility – rarely see a pipeline - buried below ground in populated areas. |
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Term
| Intermodal transportation: (7): |
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Definition
-Sometimes the best option is a combo of modes. Two primary reasons:
1.Necessity – only way to get product to destination is by combining modes.
2.Economics – take advantage of the operating characteristics of two modes. Combining truck and rail gives you the low cost of rail for the long-haul portion and the flexibility and reach of truck for pick-up and delivery |
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Term
| 3 drivers of transportation costs: (7): |
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Definition
| Weight, Volume, and Distance |
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Term
| 3 transportation challenges: (7): |
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Definition
1.Aging infrastructure – today much of the US infrastructure is aging badly.
2.Congestion –most of world population live in cities. This leads to clogged roadways which take longer to cover shorter distances. Urban living increases the “friction of distance”
3.Driver shortage – fewer young people entering into driving profession and truckers are aging – leading to major shortage and higher wages for drivers |
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Term
| Fronthaul vs. Backhaul movement: (7): |
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Definition
-If you move a shipment from point A to point B, the subsequent movement from point B back to A is the backhaul
-If you move a shipment from point A to point B, that outbound movement is the fronthaul |
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Term
| Twenty-Foot Equivalent Units (TEUs): (7): |
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Definition
| used to measure the carrying capacity of a ship. This is measuring the amount of 20 foot storage containers it can hold |
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Term
| Define total landed cost: (7): |
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Definition
| total cost of a product upon arrival to customer. Including production cost, transportation fees, taxes&duties. |
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