Supply Chain Definitions

Supply Chain Definitions

Supply Chаin definition: the movement of mаteriаls аs they flow from their source to the end customer. Supply Chаin includes purchаsing, mаnufаcturing, wаrehousing, trаnsportаtion, customer service, demаnd plаnning , supply plаnning аnd Supply Chаin mаnаgement.  It is mаde up of the people, аctivities, informаtion аnd resources involved in moving а product from its supplier to customer.

Customer Service definitions

Call Center - Often used by mail order catalogs, telemarketers, help desks or many large customer service operations. It is a place where a large volume of customer telephone calls  are handled.

Customer Service - the department that handles inquiries and addresses the various needs of it's customers. 

Inside Sales - a department that performs a sales function via phone and computer contact. (as opposed to the traditional face to face contact)

Distribution Definitions

Hub & Spoke - a distribution model.  Stock is held at the Hub location and then sent out to the Spoke locations (DC's) when needed. This model usually allows for reduced overall inventory because the Safety Stock is mostly held at the Hub, rather than at numerous spokes. 

Logistics - managing and controlling the flow of goods from the source of the production to the marketplace.

Forecasting Definitions:

Demand Curve - a chart that shows the relationship between price and quantity.  The horizontal axis shows the Quantity Demanded of a product. The vertical axis shows the Price.

Demand Planning - a business-planning process that enables sales teams to develop demand forecasts as input to service-planning processes, production, inventory planning and revenue planning

Forecast - an estimation of the future demand for a product. It is usually stated as a quantity (or value) over a specific time period. There are a number of inputs into a forecast, such as: historical data, market trends, marketing data and sales force feedback.

Forecast Error - a comparison between actual demand and forecasted demand. It is usually stated as a percentage.

POS (Point of Sale Data) - data that shows the actual units sold.  Usually tracked by bar code scanning.

Inventory Definitions:

ABC Classification - a method of classifying inventory into groups. A typical method is to multiply the Unit Price by the annual Expected Volume. This will give you the expected annual dollar volume. The next step is to rank the products in descending order. The first group "A" should represent approximately 50% to 70% of the projected dollar volume. This is usually 10% -20% of the of the number of items. The second group "B" should represent about 20% of the next dollar volume, which should be about 20% of the items. The remaining group "C" should be the remaining 10% to 30% of the expected total volume (or 60% to 70% of the products).

Pull System - a system for replenishing distribution center inventories where the inventory decisions are made at the distribution center and "pulled" from the manufacturing plant. (decentralized decision making)

Push System - a system for replenishing distribution center inventories where the inventory decisions are made at the manufacturing location. The stock is then "pushed" out to the distribution centers. (centralized decision making)

Manufacturing Definitions

Capacity:  work that can be done over a specified period of time. Can be calculated at the Work Center, Work Area or Plant Level. It is usually stated in hours.   Capacity = (number of machines) X (utilization) X (efficiency)  per time period.

Economies of Scale:  the most efficient operating level. The point where it costs less per unit to produce.

Finished Goods - are goods that have completed the manufacturing process but have not yet been sold or distributed to the end user

Load: the number of hours of work assigned to a facility or work area.

Raw Materials - is the basic material from which goods, finished products or intermediate materials that are also feedstocks are manufactured or made.

Routing File:  detailed requirements of equipment and labor to complete a production order.

Takt Time:  Available Time/Sold Units.  840 minutes/42 units = 20 minutes per unit.

Planning Definitions

Capacity Requirements Planning (CRP):  a process for projecting resource requirements, for both labor and machines, for key work areas. It helps you compare available capacity to required capacity.
Inputs include open orders, planned order releases and routing files. Output includes the number of hours of work by work center (load profile).

Demand Planning - a business-planning process that enables sales teams to develop demand forecasts as input to service-planning processes, production, inventory planning and revenue planning

Lead Time - the time between the need for goods and the receipt of the goods. This time can be made up of order prep time, manufacturing time, transportation time, receiving time and quality check time.

Maximum Stock - The amount of inventory which should not be exceeded. The limit is normally determined after considering storage space of the facilities, how quickly inventory is sold or used, cost of insurance on inventory, and the risk of inventory becoming outdated before it is used. Some businesses use a formula to calculate the maximum stock level:
Order Point System:  an inventory/planning method. A replenishment order is placed once the the inventory drops below a predetermined Reorder Point.

Planned Order Release:  data from Material Requirements Planning that tells when a production order should start (it is offset by the appropriate lead time).

Planning Time Fence (PTF): a period of time in the planning horizon that is used for planning purposes. MRP runs will create planned orders just outside of the planning time fence. If an order was placed within the planning time fence it would adversely effect component schedules, capacity plans and other orders.

Production Planning - The administrative process that takes place within a manufacturing business and which involves making sure that sufficient raw materials, staff and other necessary items are procured and ready to create finished products according to the schedule specified. A typical large manufacturing business engaging in production planning will aim to maximizeprofitability while maintaining a satisfied consumer base.
Reorder Point (ROP) : a pre-determined number usually calculated based on a number of factors. Once the inventory drops below the ROP, a replenishment order is created. 

Rough Cut Capacity Planning(RCCP):  a type of capacity planning. It compares requirements to the available capacity at key work centers or critical bottlenecks. it attempts to balance workloads broadly. It often takes into account the areas of labor, machinery, storage space, and suppliers capacity.

Supply Planning - is the component of supply chain management (SCM) involved with determine how best to fulfill the requirements created from the Demand Plan. Its objective to to balance supply and demand in a manner that achieves the financial and service objectives of the enterprise. A supply plan is another feeder in the Sales and Operations Planning (S&OP)process.

Safety Stock: stock held a distribution center that is in excess of the what the company expects to sell. The purpose of Safety Stock is to act as buffer inventory to account for unexpected customer orders, longer than expected manufacturing or transportation time.

Transportation Definitions

Assessorials: Extra charges for transportation services such as packing, unpacking, long haul fees and extra pick-ups. Freight carriers may charge extra fees for trailer detention/demurrage, re-delivery, fuel increases, and other expenses or extra services. 

Accessorials as percent of total freight: Calculated by dividing accessorial and surcharges by total freight expenditures for the period.

Demurrage - additional fees charged by a carrier when rail freight cars and ships are held beyond a pre-agreed to time.

Freight bill accuracy.  Calculated by dividing the number of error-free freight bills by the total number of freight bills in the period. Errors can include incorrect pricing, incorrect weights, incompleteinformation,etc.  Generally measured in total and for each carrier.

Freight cost per unit shipped: Calculated by dividing total freight costs by number of units shipped per period.  Useful in businesses where units of measure are standard (e.g., pounds).  Can also be calculated by mode (barge, rail,ocean, truckload, less-than-truckload, small package, air freight, intermodal, etc.)

Inbound freight costs as percentage of purchases.  Calculated by dividing inbound freight costs by purchase dollars.  It is important to understand the underlying detail.  The measurement can vary widely, depending on whether raw materials are purchased on a delivered, prepaid, or collect basis.

Mode selection vs. optimal:  This is calculated by dividing the number of shipments sent via the optimal mode by the total number of shipments for the period.  To measure this, each traffic lane must have a designated optimal mode, based on freight costs and customer service requirements.

Number of carriers per mode: Calculated by counting the total number of freight carriers used in a given period, by mode (ocean, barge, rail, intermodal, truckload, LTL, small package, etc.).  This is an indication of your volume leverage and control over the transportation function.
On-time pickups: Calculated by dividing the number of pick-ups made on-time (by the freight carrier) by the total number of shipments in a period. This is an indication of freight carrier performance, and carriers' affect on your shipping operations and customer service.

Outbound freight costs as percentage of net sales:  Calculated by dividing outbound freight costs by net sales.  Most accounting systems can separate "freight in" and "freight out."  Percentage can vary with sales mix, but is an excellent indicator of the transportation financial performance.

Percent of truckload capacity utilized:  Generally used for shipments over 10,000 lbs.  Calculated by dividing the total pounds shipped by the theoretical maximum.  For example, assume your trucks can hold 40,000 lbs. of product.  During the prior month, there were 675 shipments totaling 22.95MM lbs.  The percentage utilization was 85%.  The 15% unused capacity is an opportunity for more efficiency.

Shipment visibility/traceability percent:  Calculated by dividing the total number of shipments via carriers with order tracking systems, by the total number of shipments sent during a period.  This is an indicator of the relative sophistication of your carrier base, and one measure of the non-price value available from your carrier base.

Transit time:  Measured by the number of days (or hours) from the time a shipment leaves your facility to the time it arrives at the customer's location.  Often measured against a standard transit time quoted by the carrier for each traffic lane.  Unless you are integrated into your customers' systems, you will have to rely on freight carriers to report their own performance.  This is often an important component of leadtime. Transit times can vary substantially, based on freight mode and carrier systems.
Truck turnaround time:  This is calculated by measuring the average time elapsed between a truck's arrival at your facility and its departure. This is an indicator of the efficiency of your lot and dock door space, receiving processes, and shipping processes.  This also directly affects freight carrier profits on your business.

Warehousing Definitions

DC - Distribution Center

NDC - National Distribution Center

RDC - Regional Distribution Center

VAS Codes (Value Added Service) - the "extras" that are sometimes done for a customers order. This may include special labeling or packing. 

warehouse	A Warehouse is a location stocked with goods and products to be distributed to retailers, wholesalers, and/or consumers.
Warehouse adjustment transactions	Warehouse adjustment transactions correct inventory records to match actual inventory levels.
warehouse and distribution	Warehouse and distribution is the process of storing, selling and distributing goods to retailers, other business, or consumers.
warehouse control software	Warehouse control software is software designed to control and manage inventory and warehouse operations as well as order entry, procurement, picking and shipping.
warehouse control system	A Warehouse control system is a system for maximizing warehouse control by integrating inventory management, warehousing, and other business management activities.
warehouse distribution management	Warehouse distribution management includes the management of acquisition, manufacturing, warehousing & distribution activities.
warehouse distribution software	Warehouse distribution software is software designed for distribution businesses to manage distribution, warehouse and business activities.
warehouse inventory	Warehouse inventory includes the products, raw materials, work-in-process goods and finished goods that make up the inventory that is or will be for sale by a company.
warehouse inventory control	Warehouse inventory control is the process of maintaining the right amount of warehouse inventory to maximize sales without oversupply.
warehouse inventory control software	Warehouse inventory control software is software designed for businesses to maintain warehouse inventory control.
warehouse inventory management	Warehouse inventory management combines inventory management and warehousing software, processes and procedures to ensure the correct quantities of are ordered and maintained to satisfy customer demand.
warehouse inventory management software	Warehouse inventory management software is software designed to improve inventory control by tracking and managing inventory items throughout the warehouse and business more efficiently & accurately.
warehouse inventory management system	A Warehouse inventory management system is an inventory system for small to mid size businesses to handle sales, purchasing, inventory management, warehousing, and customer service.
warehouse inventory management systems	Warehouse inventory management systems are designed to maximize inventory control by maintaining the right amount of inventory to maximize sales without oversupply.
warehouse inventory program	A Warehouse inventory program is inventory software program that unites warehousing, inventory control procedures, inventory software and oversight to create a system to effectively manage inventory for a business.
warehouse inventory software	Warehouse inventory software is software designed to maximize inventory control by integrating inventory management, warehousing, purchasing and other business management activities across the company.
warehouse inventory system	A Warehouse inventory system is a system designed to manage the inventory, warehousing, supply chain and business management functions of a company.
warehouse inventory systems	Warehouse inventory systems are designed to maximize inventory control by maintaining the right amount of inventory to maximize sales without oversupply.
warehouse location	A Warehouse location can be a physical location, logical division of inventory or a financial segmentation.
warehouse management	Warehouse management includes the control of inventory across one location or many and the associated warehouse management tasks.
warehouse management software	Warehouse management software combines the use of warehouse and inventory management software, personnel and procedures to maintain inventory control.
warehouse management software system	A Warehouse management software system is a warehouse and inventory system for small to mid size businesses to handle sales, purchasing, inventory management, warehousing, and customer service.
warehouse management solution	A Warehouse management solution monitors and manages warehousing, inventory, purchasing, sales, customer service, picking, and shipping activities across the entire business.
warehouse management system	A Warehouse management system is designed to efficiently manage warehouse tasks, control inventory across one location or many, and provide instant visibility into the process.
warehouse management system software	Warehouse management system software enables small and mid-size businesses to gain control of inventory and warehouse management and improve overall business operations and profitability.
warehouse management system wms	A Warehouse management system, or WMS, controls the movement and storage of inventory within a warehouse and associated supply chain and business management processes.
warehouse management systems	Warehouse management systems manage inventory movement, adjustments, inventory statuses, warehouse locations and types of ownership.
warehouse organization	Warehouse organization increases efficiencies by utilizing strategic warehouse capabilities such as flexible warehouse configuration, location management and inventory labeling.
warehouse program	A Warehouse program, or warehouse software, provides advanced warehouse management capabilities for businesses with inventory, warehousing, purchasing and business management needs.
warehouse software	Warehouse software is software created to solve the warehouse and inventory management, purchasing, operations, barcoding and business management needs of businesses.
warehouse software system	A Warehouse software system provides important functions for warehouse management, barcode tracking, and integrated business management across the company.
warehouse system	A Warehouse system with warehouse management, inventory control, and advanced business management tools provides a complete system for managing warehouse and business functions.
warehouse systems	Warehouse systems provide the foundation for quality and efficiency and enable strategic warehouse, inventory and business management.
warehouse tracking software	Warehouse tracking software is software that connects warehouse management, inventory control, and business management to effectively manage warehousing and inventory for a business.
warehouse transfer	A Warehouse transfer records the transfer of inventory to a new location within a warehouse, from a warehouse to another location, or between warehouses within a company.
warehouse zoning	Warehouse zoning, also called zone picking is a warehouse practice where orders are picked according to warehouse zones or sections, then grouped together for final order picking and fulfillment.
warehousing & distribution	Warehousing and distribution is the process of warehousing, marketing and distributing goods to retailers, other business, or consumers.
warehousing management system	A Warehousing management system is designed to efficiently manage warehouse tasks, control inventory across one location or many, and provide instant visibility into the process.
warehousing software	Warehousing software is software created to help inventory-centric organizations manage their warehousing operations and connect warehousing with the entire company.
warehousing solution	A Warehousing solution brings warehouse control and management to organizations of all sizes requiring warehousing solutions ranging from simple to complex.
warehousing solutions	Warehousing solutions increase inventory accuracy, reduce warehousing labor costs, increase business visibility and improve customer satisfaction.
warehousing system	A Warehousing system automates, integrates, controls and improves accuracy of warehousing, inventory and business activities.
warehousing systems	Warehousing systems enable strategic warehousing and inventory storage decisions with the flexibility to accommodate numerous inventory statuses, warehouses, locations and types of ownership.
wholesale distribution software	Wholesale distribution software is software created to enable wholesale and distribution businesses to gain better control of business operations, cut costs and increase efficiencies.
wholesale dropshipping	Wholesale dropshipping, or drop shipping, is a distribution method where the seller does not keep goods in stock, placing the order with the manufacturer or distributor at the time of the customer order, with the goods shipped directly to the customer.
wine inventory software	Wine inventory software is software designed for the beverage industry with inventory management, lot number traceability, sales management, tiered pricing, importing, and route delivery.
WIP	WIP, or work in process, includes unfinished items in a production process.
wireless barcode	Wireless barcode or mobile solutions enable the use of barcodes using wireless technologies for such applications as outside sales orders or route delivery.
wireless barcode reader	A Wireless barcode reader, or wireless barcode scanner, is a wireless barcode solution used by external groups such as outside sales, tradeshows and route delivery and more.
wms software	WMS software, or warehouse management software, provides important functions for warehouse management, barcode tracking, and integrated business management across the company.
wms system	A WMS system, also called a warehouse management system, is designed to efficiently manage warehouse tasks, control inventory across one location or many, and provide instant visibility into the process.
wms systems	WMS systems, or warehouse management systems, with warehouse management, inventory control, and advanced business management tools provide a complete system for managing warehouse and business functions.
wms warehouse management system	A WMS warehouse management system, or warehouse management system, controls the movement and storage of inventory within a warehouse and associated supply chain and business management processes.
work in process	Work in process, or WIP, includes unfinished items in a production process.
work in process tracking	Work in process tracking tracks items in real time as they move through the manufacturing process.
work order	A Work order, also called a production work order, is an order that initiates the manufacturing process.
workflow management	Workflow management tracks the movement of products and tasks throughout your business with workflow management and barcoding.

Sources:

http://en.wikipedia.org/wiki/Main_Page

http://www.supplychaindefinitions.com/

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