Supply Chain Management Overview

A company that focuses on reselling or reusing products, rather than producing them for end consumption. Think of companies like eBay or thrift stores.

An individual who buys products for their own personal use or consumption. Think of someone buying groceries or clothes.

A network of organizations involved in the process of creating and delivering a product or service to the final customer. Think of the journey from raw materials to a store shelf.

Businesses that create or assemble products, either from scratch or using pre-made components. They can be manufacturers who make new products (e.g., car factories) or assemblers who put together components (e.g., electronics assembly)

When a company hires another company to perform certain tasks or functions that are not done in-house. Think of a company outsourcing its customer service.

When a company performs all tasks or functions internally, without outsourcing. Think of a company handling all aspects of production in-house.

A type of transaction between two businesses, often involving the sale of raw materials, intermediate products, or services. Think of a car manufacturer buying tires from a tire supplier.

The difference between the actual demand for a product and the amount of product that is available. Think of running out of popular toys during the holiday season or having too many of a certain type of clothing in stock.

The demand for a product decreases as the distance between the supplier and the customer increases. This is because transportation costs increase with distance, making the product more expensive for the customer.

Disasters, such as natural disasters or pandemics, can cause significant disruptions to supply chains and lead to shortages of essential products. The demand for these products can skyrocket during such events, making it difficult for businesses to keep up.

The online marketplace has significantly increased demand for products globally. However, it has also introduced challenges, such as fake demand and surplus inventory, for suppliers working through online platforms.

Promotions often result in a temporary spike in demand, followed by a decline as the promotional period ends. This can lead to a depletion of inventory during the promotion and surplus inventory after it ends.

Each product has a lifecycle, with a beginning, a middle (maturity), and an end. During the early stages of the lifecycle, demand is typically higher, but decreases as the product ages.

The ability of a supplier to consistently deliver materials at the promised time.

The time between placing an order and receiving the materials. A shorter lead time means less safety stock is needed.

The quantity of materials kept on hand to ensure that production doesn't stop due to unexpected delays in supply.

The ability of a supplier to change or adapt quickly to meet changing demands.

The ability of a supplier to provide goods at a competitive price, often through discounts or early payment incentives.

A supplier who consistently delivers high quality products, resulting in less maintenance and replacements.

The rate at which inventory is sold and replaced. A higher inventory turnover means less money tied up in storage.

The amount of material required to assure that the supplied quantities meet the demanded quantities, not the ending inventory.

A vertical and horizontal system that manages the entire manufacturing process, including planning, controlling, and integrating with the supply chain.

A long-term plan that aligns sales & operations with the overall business strategy, focusing on demand forecasting and resource allocation.

A detailed schedule that outlines production quantities for each product over a specific time period.

A hybrid planning approach that combines elements of push and pull systems to optimize inventory levels based on forecasted demand and distribution requirements.

A process that plans for the efficient distribution of finished goods inventory, ensuring timely and cost-effective delivery to customers.

A planning technique that focuses on balancing demand and supply to ensure efficient production and prevent capacity bottlenecks.

A planning approach that focuses on managing resources, such as labor, equipment, and materials, to support the overall production plan.

A planning tool that helps businesses estimate the capacity required for each production step and identify potential bottlenecks.

A process that helps companies determine the resources needed to meet demand at all levels of their operations.

A process that involves monitoring the input and output of a production or service system to ensure that resources are being used effectively.

A long-range planning process that connects business planning to tactical planning and balances supply and demand at a family level.

A planning process for finished goods inventory, connecting S&OP, MPS, and order releases to the factory.

A planning process that focuses on meeting the capacity requirements of a specific production period, taking into account available resources.

The cost of holding the product in a warehouse before shipping.

The cost of keeping the product on the shelves of a distributor or retailer.

Material Requirement Planning (MRP) is a crucial system that optimizes material usage by calculating needs based on production plans and product demands. It ensures the right amount of raw materials are available when needed.

Just-in-Time (JIT) inventory management focuses on minimizing waste by receiving materials only when they are needed for production. This method reduces storage costs and minimizes the risk of obsolete stock.

Economic Order Quantity (EOQ) is a model that calculates the optimal quantity of an inventory to order at a time, balancing ordering and holding costs to ensure the most cost-effective inventory management.

Program Evaluation and Review Technique (PERT) is a project management tool that helps plan, analyze, and manage complex projects by breaking them down into smaller tasks and visualizing their dependencies.

Point of Sale (POS) systems are used at retail locations to process transactions and manage inventory. They can also be used to track sales data for analysis.

Business Intelligence System (BIS) is a sophisticated system gathering data on market trends, customer behavior, and sales performance. It provides insights to make strategic decisions.

Structure A in SCM refers to placing the SCM function at the same level as other departments like marketing and manufacturing, emphasizing its strategic importance.

Structure B in SCM positions the purchasing or procurement function within the manufacturing or marketing department, highlighting its emphasis on operational efficiency.