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119 Cards in this Set

  • Front
  • Back

Logistics Management

Management of the flow and storage of inventory so that total costs are minimized and customer service is maximized

Supply Chain Management

Integrating business processes between different functions: Operations Management, Distribution Management, Supply Management

Economies of Scale

The higher the volume, the lower the cost. The lower the volume, the higher the cost

Process Improvement and Redesign

Ordered set of activities


Return on Assets = Higher ROA = Better Financial Performance

C's of Competitive Advantage

Customers, Company, Competitor

Cost Advantage

It is possible to identify and predict improvements in the rate of output of workers as they become more skilled in the processes and tasks on which they were working

Value Advantage

Different groups of customers within the total market attach different importance to different benefits


The process of developing relationships with customers through the provision of an augmented offer

Experience Curve

Demonstrates the value of early market share gains -- the higher you share relative to your competitors, the lower your costs should be

Primary Value Chain Activities

Inbound logistics, Operations, Outbound logistics, Marketing, Sales, and Service

Support Value Chain Activities

Infrastructure, Human Resources, Technology Department, and Procurement


Seeks to achieve competitive advantage by identifying world markets for its products and then to develop a manufacturing and logistics strategy to support its marketing strategy


The ability to change logistics and supply chain management activities quickly


The ability to move quickly to meet customer demand sooner. Sense + Response


Being able to execute consistently on an activity or process and maintain a target level of performance


Being able to deal with unexpected disruptions in the supply chain


Being able to manage the connections, interactions, communication, and maintain relationships

Standard Deviation

A measure of uncertainty

Safety Stock

The expected number of units that are on hand just before the replenishment is received and available for sale

Hurdle Rate

The minimum rate of return on investment

Inventory Turns

COGS (Unit Sales)/Inventory

Competitive Advantage

Successful companies will generally be those that deliver more customer value than their competitors


The functionality, performance, and technical specification of the offer


The customer's transaction costs including price and life cycle costs


The time taken to respond to the customer requirements (delivery lead times)


How easy it is for a consumer to investigate products, utilize the website, and learn about company policies or programs


Customer service variables directly involved in performing the physical distribution function


Product Warranty, Parts & Repair Service, Procedures for Customer Complaints, and Product Replacement

80/20 Rule

80% of profits of the business come from 20% of the customers

Fill Item Rate

Percentage of demand fulfilled from on hand inventory

Normal Distribution

Bell Curve, Customer Service, Target Service Level

Optimal Service Level

Produce enough; lose the money put into producing too many. If you don't product enough; lost margin on profit

SCM Metrics

Inventory Turns, GMROI, ROA

Lead Time

The time from when an order is placed to when it's actually received

Lead Time Gap

The time it takes to procure, make and deliver the finished product to a customer is longer than the time the customer is prepared to wait for it

Customer's Order Cycle

The length of time that the customer is prepared to wait, from when the order is placed, through when the goods are received


Products with high amounts of demand during a certain time of year


The demand points around the level that you can't explain (random occurrence)

Level of Demand

How quickly the product sells

Promotional Activity

Can make the product look like a trend when it's not

Pantry Loading

Buying more than they should

Demand Management

The various tools and procedures that enable a more effective balancing of supply and demand to be achieved through a deeper understanding of the causes of demand volatility

Demand Planning

The translation of our understanding of what the real requirement of the market is into a fulfillment program

Sales and Operations Planning (S&OP)

Seeks to ensure that the organization is able to anticipate the real requirement of the market and to react in the most cost-effective way

Qualitative Method

Asking subject matter experts their opinion. Judgmental Method. Market Research

Quantitative Method

Take a Poll. Causal Models (prediction) and Time Series Models (sales history & short term)

Delphi Method

Qualitative. Ask the group for an estimate. Iterative Process

Moving Average

A time series model where you are trying to figure out the level of demand using only the sales history.
More Periods = More Stable
Fewer Periods = More Responsive

Exponential Smoothing Method

Only estimates the level of demand using last period's forecast and forecast error. As you increase alpha, it becomes more reactive

Bias Error

Are we forecasting too high or too low? We want an unbiased forecast


Ignoring the biases and asking how far off you are instead

Forecast Error

The difference between actual demand and the forecast

Mean Absolute Percentage Error (MAPE)

The average percent that the forecast is off. This is the most popular measure used

Standard Deviation of Forecast Error

The key link between management system and inventory system


Assumptions are gathered and validated

Demand Review

Looking only at the demand side: What is going to happen?
Unconstrained View

Supply Review

Looking only at the supply side: What can be produced?
Make Decisions


Make recommendations to the executive team

Executive Review

Review Recommendations and then make a decision based off company strategies and financial goals


We want to run EFFICIENTLY. We want to reduce inventory and waste
High Volume
Low Variability


We want to do things EFFECTIVELY. We want to satisfy the customer needs first
High Variability
Lack of Predictability

Volume Flexibility

Scale production or distribution up and down quickly

Variety Flexibility

Offer a variety of products within our distribution systems

Customization Flexibility

Take core products and customize them

Product Introduction Speed

Introduce new products rapidly into the market

Agility Framework

Sense + Respond


The use of information technology to share data between buyers and suppliers

Process Alignment

Collaborative working between buyers and suppliers


A confederation of partners linked together

Just - In - Time (JIT)

Demand at the end of the pipeline PULLS products towards the market and behind those products the flow of components is also determined by that same demand

Economic Order Quantity (EOQ)

Balances the cost of holding inventory against the costs of placing replenishment orders
How much do I order? (Periodic Review)

Point - Of - Sale (POS)

SKU Specific
Time Specific
Location Specific


The amount of data has grown rapidly


Unstructured Data and Structured Data

Unstructured Data

Twitter and Facebook

Structured Data

Customer Sentiment


The amount of data recorded and available

Functional Awareness

What are they trying to accomplish?
Clear Direction

Integrated Planning

Moving Towards Same Objectives

Volume Flexibility

Able to change volume dramatically

Variety Flexibility

Omni Channel; deliver a wide set of products to a very diverse marketplace.
3D Printing

New Product Flexibility

Maker Movement

Customization Flexibility

Dell and Amazon.
Buy a number of different components and put it together the way you like

Supply Chain Uncertainty

Lead time and demand uncertainty depend on each other

Continuous Review

WHEN to place an order
Time between order changes
Fixed reorder point and order quantity
Requires less safety stock & inventory
More spending on transportation
Protection Period = Lead Time

Periodic Review

HOW MUCH to order
Time between orders is fixed
Order quantity is different
Requires more safety stock
Less spending on transportation
Protection Period = Review Interval

Inventory Policy

HOW MUCH to order (Periodic)

WHEN to place an order (Continuous)

Reorder Point (ROP)

The amount you expect to sell during lead time
When do I order? (Continuous Review)

Demand Rate x Lead Time

Raw Materials

A good going into another finished good being made

Work In Process

Inventory being turned into the final product

Finished Goods

Final product of the production process (more expensive to hold)


Part of the process that is the slowest part

Cycle Stock

Amount of inventory we go through on average between replenishment

Anticipatory Inventory

Some supply of goods that held to buffer against planned disruptions or anticipated demand

Set - Up (Ordering) Costs

Everything that is triggered by placing an order (time, labor, receiving)

Shortage Costs

How much will it cost the company if they stock out

Capital Costs

The biggest cost and is the opportunity cost with carrying inventory

Hurdle Rate

Minimum rate of return on investment

Risk Costs

Damage and Shrink, Obsolescence (fresh produce)


Stolen items; inventory that disappears

Storage Costs

The costs of holding inventory

Service Costs

Taxes, Insurance

Drop Shipping

Ship directly from supplier on behalf of the retailer

Service and Operating Components

Cost, Transit Time, Reliability, Accessibility, Capability, Security, and Fuel Efficiency


Largest mode of transportation in ton-miles in the U.S.

Motor Carriage

Largest share of transportation spending in the U.S.
Largest pure tonnage mover in the U.S.

Truckload (TL)

Taking a shipment from point A to point B
I.e. JB Hunt

Less Than Truckload (LTL)

Break bulk to line haul trucks
Takes a lot of investment to start

Water Transportation

Two types:
Domestic (Coastal, Great Lakes, Inland Water Segments)


Using more than one mode for transportation

Freight Forwarders

Trying to take a bunch of small shipments and combine it into a larger shipment

Freight Brokers

Owner Operator (One)

Large Scale

Linear Ocean Transportation

Follows Routes

Tramps Ocean Transportation

For hire ships that are oil and grain carriers. These ships have a rate per day on ship

Non Vessel Operating Common Carrier (NVOCC)

An intermediary between a ocean shipping company and a shipper
Allows services of ocean carriage without actually owning a ship

Delivery Lead Time

The time between when the order is placed and when it becomes available for use


Import Tax



3D Printing is a form of postponement