Supply Chain & Inventory Management Key Terms
Understanding essential terminology is crucial for effective supply chain and inventory management. This resource defines key concepts for businesses aiming to optimize operations and enhance efficiency.
Inventory Turnover
An indication of inventory efficiency, calculated by dividing the cost of goods sold by the average inventory.
Supply Chain Management (SCM)
The coordination of all supply activities of an organization, from its suppliers and partners to its customers.
Upstream Supply Chain
Transactions between an organization and its suppliers and intermediaries, equivalent to buy-side e-commerce.
Downstream Supply Chain
Transactions between an organization and its customers and intermediaries, equivalent to sell-side e-commerce.
Supply Chain Network
The links between an organization and all partners involved in multiple supply chains.
Efficient Consumer Response (ECR)
ECR is focused on demand management aimed at creating and satisfying customer demand by optimizing product assortment strategies, promotions, and new product introductions. It creates operational efficiencies and cost savings in the supply chain through reducing inventories and deliveries.
Vendor-Managed Inventory (VMI)
Supply chain partners manage the replenishment of parts or items for sale through sharing information on variations in demand and stocking levels for goods used for manufacture or sale.
Inbound Logistics
The management of material resources entering an organization from its suppliers and other partners.
Outbound Logistics
The management of resources supplied from an organization to its customers and intermediaries.
Push Supply Chain
A supply chain that emphasizes distribution of a product to passive customers.
Pull Supply Chain
An emphasis on using the supply chain to deliver value to customers who are actively involved in product and service specification.
Value Chain (VC)
A model that considers how supply chain activities can add value to products and services delivered to the customer.
Value Stream
The combination of actions required to deliver value to the customer as products and services.
External Value Chain or Value Network
The links between an organization and its strategic and non-strategic partners that form its external value chain.
Virtual Organization
An organization which uses information and communications technology to allow it to operate without clearly defined physical boundaries between different functions.
Virtualization
The process of a company developing more of the characteristics of the virtual organization.
Vertical Integration
The extent to which supply chain activities are undertaken and controlled within the organization.
Virtual Integration
The majority of supply chain activities are undertaken and controlled outside the organization by third parties.
Information Supply Chain
An information-centric view of the supply chain which addresses the organizational and technological challenges of achieving technology-enabled supply chain management efficiency and effectiveness.
Information Asymmetry
Imperfect information sharing between members of a supply chain which increases uncertainty about demand and pricing.
Radio-Frequency Identification (RFID)
Microchip-based electronic tags are used for monitoring anything they are attached to, whether inanimate products or animate (people).
The Internet of Things (IoT)
Objects are uniquely identified and tagged through technologies such as RFID and made accessible through Internet-like addresses.
Machine-to-Machine (M2M) Applications
Objects are uniquely identified and tagged through technologies such as RFID and made accessible through Internet-like addresses.
Supply Chain Visibility
Access to up-to-date, accurate, relevant information about supply chain processes to different stakeholders.
Electronic Procurement (e-Procurement)
The electronic integration and management of all procurement activities, including purchase request, authorization, ordering, delivery, and payment, between a purchaser and a supplier.
Electronic Procurement Systems (EPS)
An electronic system used to automate all or part of the procurement function.
MRO
Maintenance, repairs, and operations of manufacturing facilities.
Punchout Catalogue
A purchasing company accesses a dynamic real-time catalogue hosted by a supplier or intermediary containing detailed product information, pricing, and product images.
B2B Electronic Marketplaces, Exchanges, and Hubs
Virtual locations with facilities to enable trading between buyers and sellers.
Private B2B Exchanges
A manufacturer or major supplier to different manufacturers creates a portal which is used for managing all aspects of procurement.
Metamediaries
Third parties that provide a single point of contact and deliver a range of services between customers and suppliers.
Software (Intelligent) Agents
Software programs that assist humans by automatically gathering information from the Internet or exchanging data with other agents based on parameters supplied by the user.