Principles of Supply Chain Management - 3e - Wisner-Tan-Leong

cost leadership strategy

A business approach that requires a large capital investment in automated, state-of-the-art equipment, significant efforts in the areas of controlling and reducing costs, doing things right the first time, standardizing services and aiming marketing efforts at cost-conscious consumers.

air carrier

A carrier using airliners for transportation; one of the five modes of transportation.

application service provider (ASP)

A company that offers website services for a fee, such as self-serve reverse auction websites.

crossdocking

A continuous replenishment logistics process at a distribution center, where incoming goods are sorted and/or consolidated, and then shipped out to their final destinations, without the need to store the goods. Cross-docking generally takes place within 24 hours, sometimes less than an hour, after shipment arrivals and is used to replenish high demand inventories.

corporate purchasing card

A credit card issued to authorized employees to purchase goods, usually small value purchases, directly from suppliers without the need to go through the purchasing department.

Common Market of Eastern and Southern Africa (COMESA)

A customs union established to foster economic growth among the member countries of Burundi, Comoros, D. R. Congo, Djibouti, Egypt, Eritrea, Ethiopia, Kenya, Libya, Madagascar, Malawi, Mauritius, Rwanda, Seychelles, Sudan, Swaziland, Uganda, Zambia, and Zimbabwe.

ABC inventory matrix

A diagram that illustrates whether a firm's physical inventory matches its inventory usage. It is derived by plotting an ABC analysis based on inventory usage classification on the vertical axis and an ABC analysis based on physical inventory classification on the horizontal axis.

billback penalty

A fee charged back to the supplier for services or products not received by the customer.

carbon footprint

A firm's or supply chain's total carbon emissions.

cause-and-effect forecasting

A forecasting method that uses one or more factors (independent variables) that are related to demand to predict future demand.

container-on-flatcar (COFC)

A form of intermodal transportation; standardized shipping containers are transported via rail flatcar, and they can also be placed on a truck chassis or on an ocean-going container ship.

blanket order release

A form used to release a specific quantity against a prenegotiated blanket purchase order.

countertrade

A global sourcing process in which goods and/or services of domestic firms are exchanged for goods and/or services of equal value or in combination with currency from foreign firms. This type of arrangement is sometimes used by countries where there is a shortage of hard currency or as a means to acquire technologies.

capacity planning

A hierarchical planning process that is used to determine the capacity needed for a specific production level.

centralized-decentralized purchasing structure

A hybrid purchasing structure that is centralized at the corporate level but decentralized at the individual business unit level.

aggregate production plan (APP)

A long-range production plan; it sets the aggregate output rate, workforce size, utilization, inventory and backlog levels for a plant.

counterpurchase

A trade arrangement whereby the original exporter either buys or finds a buyer to purchase a specified quantity of unrelated goods and/or services from the original importer.

arrival pattern

The frequency with which customers arrive at a business.

capacity

The output capabilities of a firm's labor and machine resources.

corporate social responsibility

The practice of business ethics.

benchmarking

The practice of copying what other businesses do best; studying how things are done well in other firms to potentially make use of the same methods.

backward vertical integration

The process of acquiring upstream suppliers.

breakbulk

The process of breaking down large quantity shipments so that items can be combined into specific customer orders and then shipped out.

collaborative negotiations

The process that occurs when both sides work together to maximize the joint outcome, or to create a win-win result; also referred to as integrative negotiations.

consumer's risk

The risk assumed when a buyer accepts a shipment of poor-quality units because the sample did meet the acceptance standard; this results in a type-II error.

co-sourcing

The sharing of a process or function between internal staff and an external supplier; when a firm both makes and buys a good; also referred to as selective sourcing, or partial outsourcing.

centralized purchasing

The single purchasing department, usually located at the firm's corporate office, that makes all the purchasing decisions for the entire corporation.

carbon-neutral

The state achieved when a firm can offset the carbon footprint of its operations— for example, by planting trees.

class rates

The transportation rates based on the particular class of the product transported; some products have higher published class rates than others.

available-to-promise (ATP) quantity

The uncommitted portion of a firm's planned production. It is used to promise new customer orders.

channel equity

The value for a firm embodied in its distribution channel.

collaborative relationships

The win-win supplierbuyer-customer relationships that supply chain companies strive to achieve.

critical-to-quality (CTQ) characteristics

Those characteristics related to customers and their service or product requirements that are critical to achieving customer satisfaction.

back-of-the-house operations

Those services that do not require customer contact.

common carriers

Transportation providers that offer services to all shippers at published rates between designated locations.

consolidation warehouses

Warehouses that collect large numbers of LTL shipments from nearby regional sources of supply, then deliver in TL or CL quantities to a manufacturer.

cloud computing

When shared resources and other information are made available to users over the Internet, usually for a subscription fee. It allows small businesses, for example, to make use of sophisticated software without actually making the purchase; also termed on-demand computing.

cloud-based supply chain management

When trading partners make use of software solutions readily available from Internet providers for a subscription fee, allowing them to create a global presence on the Internet very quickly.

collaboration

Working together through information sharing with suppliers and customers on various activities.

attribute data

Yes/no kinds of data. These indicate the presence of some attribute such as color, satisfaction, workability or beauty (for instance, determining whether or not a car was painted the right color, if a customer liked the meal, if the lightbulb worked or if the dress was pretty).

ABC inventory control system

A useful technique for determining which inventories should be managed more closely and which others should not (A-items are the most important).

channel integration

Collaborating with, or taking over suppliers and customers (vertical channel integration); or doing the same with competitors (horizontal channel integration).

acceptance sampling

In purchasing, it is a statistical screening technique that can be used to determine whether or not a shipment will be accepted, returned to the supplier or used for billback purposes when defects are fixed or units are eliminated by the buyer.

assignable variations

Process variations that can be traced to a specific cause. Assignable variations are created by causes that can be identified and eliminated and thus become the objective of statistical process control efforts.

airline security

Protection that is provided for airlines against terrorist attacks and other illegal activities.

collaborative education

Providing training for supply chain partner employees.

coal slurry

Pulverized coal that is suspended in water.

cross-selling

Purchasing that occurs when customers are sold additional products as the result of an initial purchase.

commodity rates

Rates that apply to minimum quantities of specified products that are shipped between two specified locations.

balanced scorecard framework

Refers to the method used to complete the balanced scorecard (the types of data used).

balking

Refusing to join a queue once it is seen how long it is.

break-even model

See break-even analysis.

business ethics

The application of ethical principles to business situations.

barter

The complete exchange of goods and/or services of equal value without the exchange of currency. The seller can either consume the goods and/or services or resell the items.

bill of materials

(BOM) An engineering document that shows an inclusive listing of all component parts and assemblies making up the final product.

balanced scorecard (BSC)

A management system developed in the early 1990s by Robert Kaplan and David Norton that helps companies to continually refine their vision and strategy. The balanced scorecard uses a set of measures to provide feedback on internal business performance in order to continually improve strategic performance.

contributor factory

A manufacturing facility that plays a greater strategic role than a server factory by getting involved in product development and engineering, production planning, making critical procurement decisions and developing suppliers.

analytic SRM

A method that allows the company to analyze the complete supplier base.

control charts

A method that monitors process variabilities and then collects and plots sample measurements of the process over time. The means of these sample measures are plotted on the control charts.

customer chain operations reference (CCOR) model

A model that defines the customer part of the supply chain as the integration of Plan, Relate, Sell, Contract, Service and Enable processes.

cost-of-service pricing

A pricing strategy used when carriers desire to establish prices that vary based on their fixed and variable costs.

competitive bidding

A process whereby suppliers offer bid prices to buyers, to get business. The purchase contract is usually awarded to the lowest priced bidder, determined to be a responsive and responsible supplier by the buyer.

chase production strategy

A production strategy that adjusts output to match the demand pattern during each production period.

baumol's disease

A productivity growth problem named after noted U.S. economist William Baumol in the 1960s. For most services, automation can be a troublesome issue, and the labor content per unit of output can be quite high relative to manufactured goods. These two things can lead to a declining productivity growth rate as a nation's economy becomes less manufacturing oriented and more service oriented.

blanket purchase order

A purchase order that covers a variety of items and is negotiated for repeated supply over a fixed time period, such as quarterly or yearly.

consumer survey forecast

A questionnaire that seeks input from customers on important issues such as future buying habits, new product ideas and opinions about existing products. The survey is administered through telephone, mail, Internet or personal interviews. Data collected from the survey are analyzed using statistical tools and judgments, to derive a set of meaningful results.

business process reengineering (BPR)

A radical rethinking and redesigning of business processes that seeks to reduce waste and increase performance. The goal is to create significant changes through assessments of current processes, design of better processes using modeling techniques, implementation of the new processes, and continuing performance assessments.

capacity utilization

A ratio equal to capacity used/capacity available per period; indicates the level at which the firm utilizes its available capacity.

clickstream

A record of the items that a specific customer clicks on when visiting a website.

closeness desirability rating

A scale used to rate how desirable it is to have two departments close together. The objective is to design a layout that maximizes the desirability rating for the entire facility.

Contracts for the International Sale of Goods (CISG)

A set of rules established by the United Nations to govern the international transactions in goods.

check sheet

A sheet listing a number of potential problems that receive a check mark every time the problem occurs.

capacity requirements planning (CRP)

A shortrange capacity planning technique that is used to check the feasibility of the material requirements plan.

blank check purchase order

A small value purchase order with a signed blank check attached, usually at the bottom of the purchase order.

co-managed inventories

A somewhat more collaborative form of VMI; can also refer to JIT II.

C charts

A statistical process control technique that is used to monitor the total number of defects per unit.

chase demand strategy

A strategy that is used when the amount of capacity varies with demand. See also chase production strategy.

break-even analysis

A technique that uses the fixed and variable costs to determine the quantity where the total costs are equal between two or more alternatives. It is a handy tool for computing the cost-effectiveness of sourcing decisions, when cost is the most important criterion. Breakeven occurs when revenues equal fixed plus variable costs. Can also refer to when one cost curve intersects another.

bullwhip effect

A term referring to ineffective communication between buyers and suppliers and infrequent delivery of materials, combined with production based on poor forecasts along a supply chain that results in either too little or too much inventory at various points of storage and consumption. Simply, it causes an amplification of the variation in the demand pattern along the supply chain.

80/20 rule

A theory originating from Pareto analysis, which suggests that most of a firm's problem "events" (80 percent) are accounted for by just a few (20 percent) of the problems; can also be applied to other areas, such as ABC inventory control, which says that 80 percent of the inventory dollars come from 20 percent of the inventory items. See also Pareto analysis.

business clusters

According to Dr. Michael Porter, "clusters are geographic concentrations of interconnected companies and institutions in a particular field. Clusters encompass an array of linked industries and other entities important to competition."

collaborative planning, forecasting, and replenishment (CPFR)

According to the Voluntary Interindustry Commerce Standards (VICS) Association, CPFR is "a business practice that combines the intelligence of multiple trading partners in the planning and fulfillment of customer demand. CPFR links sales and marketing best practices, such as category management, to supply chain planning and execution processes to increase availability while reducing inventory, transportation and logistics costs."

cause-and-effect diagram

Also called fishbone diagram or Ishikawa diagram. A method that is used to aid in brainstorming and isolating the causes of a problem. Typically there are four causes of problems (the 4-Ms).

business cycle

Alternating periods of expansion and contraction in economic activity.

best-of-breed solution

An ERP system that picks the best application or module for each individual function.

closed-loop MRP

An MRP-based manufacturing planning and control system that incorporates aggregate production planning, master production scheduling, material requirements planning and capacity requirements planning.

active RFID tags

An RFID tag that is equipped with an onboard power supply to power the integrated circuits and broadcast its signal to the reader.

C-TPAT compliant

An assessment of suppliers' security practices, the development of continuity plans for various events and the implementation of specific training and education programs.

Association of Southeast Asian Nations (ASEAN)

An economic and geopolitical organization created in 1967 that today comprises the following countries in the Southeast Asian region: Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam. The primary objective of ASEAN is to promote economic, social and cultural development of the region through cooperative programs.

continuous review system

An inventory management system where the physical inventory levels are counted on a continuous or daily basis.

change management

An organized approach to manage the change from the current state to the desired state.

bid bonds

Bonds posted by bidders to ensure that the successful bidder will fulfill the contract as stated.

backsourcing

Bringing back in-house some activities that had been previously outsourced; also called insourcing.

continuous improvement

Constantly seeking improvements in all processes. The cornerstone of TQM and Six Sigma quality efforts.

call centers or customer contact centers

Customer service departments that integrate all of the methods customers can use to contact a business, including telephone, mail, comment cards, email, and website messages and chat rooms.

concurrent engineering

Designing the manufacturing process or service delivery system simultaneously with the design of the product.

contract carriers

For-hire carriers that are like common carriers but are not bound to serve the general public.

Buy American Act

Legislation mandating that U.S. government purchases and third-party purchases that utilize federal funds must buy domestically produced goods, if the price differential between the domestic product and an identical foreign-sourced product does not exceed a certain percentage amount.

Civil Aeronautics Act of 1938

Legislation that promoted the development of the air transportation system, air safety, and airline efficiency by establishing the Civil Aeronautics Board to oversee market entry, establish routes with appropriate levels of competition, develop regional feeder airlines and establish reasonable rates. The Civil Aeronautics Administration was also established to regulate air safety.

collaborative transportation management

Logistics providers and shippers working together and sharing forecasting, planning and replenishment information to optimize transportation vehicle usage.