Supply Chain Design

Outsourcing

Paying suppliers and distributors to perform processes and provide needed services and materials.

Channel assembly

Process of using members of the distribution channel as if they were assembly stations in the factory.

Efficient supply chains

Supply chains which focus on cost reduction and minimizing resource waste on non-value-added activities.

Responsive supply chains

Supply chains which focus on reacting quickly to changing market requirements.

Weeks of supply

The value of all items held in inventory for the company expressed in the number of weeks it can supply.

Average aggregate inventory value

The value of all items held in inventory for the company measured at cost.

Modular design

A design concept in which a final service or product can be assembled from a set of standardized modules economically and quickly in response to a customer order.

Assemble-to-order

A production strategy in which a product is built to customer specifications from a stock of existing components.

Make-to-order

A production strategy in which the production of an item that has a standard design begins only after a customer order is received.

Postponement

A production strategy whereby some of the final activities in the provision of a service or product are delayed until the orders are received.

Inventory turnover

A ratio showing how many times a company replaced inventory to make the annual sales.

Mass customization

A strategy whereby a firm's highly divergent processes generate a wide variety of customized services or products at reasonably low costs.

Next-shoring

A supply chain strategy that involves locating processes in close proximity to customer demand or product R&D.

Offshoring

A supply chain strategy that involves moving processes to another country.

Make-to-stock

A traditional production strategy that is used to build products to meet consumer demand forecasts.