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a set of three or more entities (organizations or individuals) directly involved in the upstream and downstream flow of products, services, finances, and/or information from a source to a customer
customers expect their orders to be delivered in a timely, reliable & damage free manner, transportation is critical to this outcome. product flow is 2 way flow b/c of the growing importance of reverse logistics systems for returning products that are unacceptable to the buyer b/c they are damaged, obsolete or worn out. 3PLs specialize in reverse flow
Supply Chain Management
is the art and science of integrating the flow of products/services, information, and finance through the entire supply pipeline from the supplier's supplier to the customer’s customer
Supply Chain Orientation
the recognition by an organization of the systemic, strategic implications of the tactical activities involved in managing the various flows in the supply chain
the par of the supply chain process that plans, implements, and controls the efficient, effective flow and storage of goods, services, and related information from point of origin to point of consumption in order to meet customer requirements
(INBOUND): the movement and management of materials and products from procurement (suppliers) through the production process
(Outbound): the movement and storage functions associated with finished goods from manufacturing plants to warehouses and to customers
a strategy that minimizes risk by delaying further investment into a product until the last possible moment (time, place, and/or form)ex: change color of coffee machine until the end
An external supplier that performs or manages the performance of all or part of a co.’s logistics functions - encompass suppliers of services such as transportation, warehousing, distribution, financial services & so on. Among these multiple logistics activities are included, those that are included are “integrated” or managed together & they provide “solutions” to logistics/s.c. problems.
- a 4PL is often a separate entity that is established as a joint venture or long-term contract between a primary client and one or more partners.
- a 4 PL acts as a single interface between the client and multiple logistics service providers
- All aspects (ideally) of the client's supply chain are managed by the 4PL firm
- it is possible for a major 3PL provider to form a 4PL firm with its existing structure
Bill of Lading
- most important transport document
- provides all info carrier needs for the move
- stipulates the transportation contract terms (ex: liability)
- acts as receipt for goods the shipper tends to the carrier
- in some cases, specifies the certificate of title to the goods
carrier’s invoice for the fees the carrier charges to move a specific shipment. The freight bill lists the shipments, origin and destination, consignee, items, total weight, and total charges
loaded into or onto storage equipment (container or pallet) at the origin and delivered to the destination in or on that same equipment with no additional handling
involves goods that are handled and transferred between transportation equipment multiple times
easily defined with no calculations and with simple dimensions
needs definition, involves calculation or a combination of measurements, and often a ratio
combines two or more SC performance metrics into a single value
- Focused efforts to estimate and manage customers demand, with the intention of using this information to shape operating decisions.
- The essence of demand mgmt. is to further the ability of supply chain member firms to collaborate on activities related to flows of products/services, information and finances.
- numerous ways in which effective demand management will help to unify channel members with the common goal of satisfying customers and solving customer problems
- Demand variability increases as one moves up the s.c. whereby small changes in consumer demands creates large variations in upstream orders.
- Contributing factors: overreaction to backlogs neglecting to order so to reduce inv, lack of s.c. communication and coordination, delayed information and or material flow, ordering batches larger orders mean to more variance, shortage gaming, demand forecast inaccuracies and free returns
- Ranks inventory items in terms of importance
- suggested that classified according to sales volume, cash flows, lead time or stock out cost
- A items are the most important
- B items are of lesser importance
- C items are least important
s used to classify raw materials parts or components for a manufacturing firm it can't be used to classify finished goods inventory is using value and risk to the firm as criteria the value is measured as a value contribution to profit risk is a negative impact of not having the product available when it is needed items with high value high risk to be managed carefully to ensure adequate supply low-risk low value can be managed much less carefully the model combines more than one criterion to group items into a category
Helps to determine the extent to which inventories might be reduced through such a consolidation strategy as soon as total customer demand stays the same the rule estimates the extent to which aggregate inventory need will change as the organization increases or decreases the number of stocking locations the greater the number of stocking locations the greater the amount of inventory needed to maintain customer service levels inventories are consolidated into fewer stocking locations Agric aggregates inventory will decrease total safety stock inventory in a future number of facilities can be approximated by multiplying the total amount of inventory in existing facilities by the square root of the number of future facilities divided by the number of the existing facilities the square root rule is based on many assumptions inventory transfers between stocking locations aren't commonly times do not very and those inventory centralization is not affected by and brown supply uncertainty customer service levels as measured by inventory availability are constant regardless of the number of stocking locations and demand at each location is normally distributed
- involves the receipt of goods from a variety of sources. DC serves as a collection point for product coming from multiple origins and provide required transfers, storage, or processing services. accumulation function allows orgs to consolidate orders and shipments from production and fulfillment processes.
- There are fewer deliveries to schedule & manage
- significant transportation cost savings are achieved through larger, more cost-efficient deliveries
- focuses on assembling like products together for storage in the distribution facility or for transfer to customers. During the receiving process, goods are segmented based on their key characteristics - production lot number, stock-keeping unit SKU number, case pack size, expiration data - and prepared for safe storage in the facility or immediate distribution. proper sortation is essential for the effective management of inventory and fulfillment of customer orders
- if not done correctly can lead to improper inventory rotation & some product spoilage
- improper sortation of SKUs may result in shipping the wrong products to customers.
focuses on matching available inventory to customer orders for SKU. order compared to inventory levels and available units are retrieved from storage according to quantity requested by customer. This break-bulk capacity promoted product availability for multiple customers and allows them to purchase needed quantities rather than excess volume that is not desired
involves the assembly of customer orders for multiple SKUs held in the distribution facility. the facility provides a product mixing capability, allowing customers to quickly order a variety of items from a single location. this avoids expenses related to placing numerous orders and having them shipped from a variety of locations. companies and consumers gain from the assortment/product mixing concept b/c instead of having to go to different places, can just make a single trip to the grocery store saving time & transportation costs.
- placement of product in the facility for purpose of optimizing materials handling and space efficiency. it can account for 60% distribution hours
- 3 criteria are commonly used to slot product within a distribution facility
- locates popular items near the shipping areas and unpopular items away from the shipping area
- unit size
- small size items be located near the shipping area and larger sized items be placed farther away from the shipping area
- variation is unit size in that the items with smaller total cubic space requirements are located near the shipping area
travel time can be accounted for 60% of a daily pickers activity. a good product slotting strategy can reduce travel time, thereby reducing picking labor
by sizing the pick face location based upon a standard unit of measure for the product line in question, you can significantly reduce the labor required to replenish the location
by balancing activities across multiple pick zones you reduce congestion in the zones, improve material flow, and reduce the total response time for a given order or batch of orders
to min product damage, heavy product is located at the beginning of the pick path ahead of crushable products. product may also be located based on case size to facilitate pallet building
similar products are separated to min the op for picking error
high velocity products are placed in a “golden zone” to reduce bending and reaching activity. heavy or oversized items are placed on lower levels in the pick zone or placed in a separate zone where material handling equipment can be utilized
by storing and picking product by family group, you may be able to reduce downstream sorting and consolidation activity. this is particularly important in a retail environment to facilitate efficient restocking at the stores
Customer Relationship Management
is the art & science of strategically positioning customers to improve the profitability of the org & enhance its relationships w/its customer base
- is anything that touches the customer
- this includes all activities that impact info flow, product flow & cash flow b/c the org & its customers
customer service as a philosophy
- elevates customer service to an org-wide commitment to providing customer satisfaction through superior customer service
- this view of customer service is entirely consistent w/many orgs emphasis on value mgmt, elevates it to the strategic level w/in an org & makes it visible to top executive
customer service as performance measures
- emphasizes customer service as specific performance measures such as on-time delivery & percentage of orders filled complete
- these customer service measures pervade all 3 definitions of customer service & address strategic, tactical & operational aspects of order mgmt
finally customer service as an activity
- treats customer service as a particular task that an org must perform to satisfy a customer’s order requirements
- order processing, invoicing, product returns, & claims handling are all typical examples of this definition of customer service.
- Managing broad range of processes associated with acquiring goods/services required to manufacture a product (direct) or to operate the company (indirect).
- Activities are process-oriented and strategic. The process is less transaction-oriented and depends on implementing information systems, and focuses on close relations with few suppliers, while considering sources from around the world.
- Activities associated with acquiring products/services. The activities can vary widely between firms to include all the functions of procurement planning, purchasing, inventory control, traffic, receiving, incoming inspection and salvage.
Total Landed Cost
all the costs associated with making and delivering products to the point where they are needed.