9.6 Key Terms

Key Terms

Collaborative Planning, Forecasting, and Replenishment (CPFR): A practice whereby supply chain partners share information and coordinate their operations. 9.2

Cross-Docking: Cross-docking involves trucks that arrive at a warehouse and have their goods unloaded, and after being sorted, loaded directly into another truck docked on the opposite side of the facility. There is no actual storage involved in cross-docking. 9.3 

Demand Planning: The process of estimating how much of a good or service customers will buy from you. 9.2

Distribution Centre: A warehouse or storage facility where the emphasis is on processing and moving goods on to wholesalers, retailers, or consumers. 9.3

Electronic Data Interchange (EDI): A special electronic format that companies use to exchange business documents from computer to computer. 9.3

Electronic Product Code (EPC): It is similar to a barcode, only better, because the number on it is truly unique. Electronic product codes make it possible to distinguish between two identical packs of gum. The codes contain information about when the packs of gum were manufactured, where they were shipped from, and where they were going to. 9.2

Environmental Sustainability: The idea that firms should engage in business practices that have the least impact on the environment so that it’s sustained for future generations. 9.1

Freight Forwarders: Their duties include negotiating rates for shipments and booking space for them on transportation vehicles and in warehouses. A freight forwarder also combines small loads from various shippers into larger loads that can be shipped by more economically. However, it doesn’t own its own transportation equipment or warehouses. 9.1

Insourcing: A process when firms that can’t resolve their supplier problems, they find other suppliers to work with or they move the activities back in-house. 9.1

Intermodal Containers: Consumer goods are often shipped in intermodal containers. Intermodal containers are metal boxes. The largest containers are fifty-three feet long and one hundred inches tall. The biggest cargo ships are huge and carry as many 15,000 containers. 9.3

Inventory Control: The process of ensuring your firm has an adequate supply of products and a wide enough assortment of them meet your customers’ needs. 9.1

Just-in-Time Inventory Systems: To lower the amount of inventory and still maintain they stock they need to satisfy their customers, some organizations use just-in-time inventory systems in both good times and bad. Firms with just-in-time inventory systems keep very little inventory on hand. Instead, they contract with their suppliers to ship them inventory as they need it 9.2

Lead Time: The amount of time it takes for a customer to receive a good or service once it’s been ordered. 9.2

Logistics: The physical flow of materials in the supply chain. 9.3

Outsource:  If a firm can find a company that can add more value than it can to a function, it will often outsource the task to that company. 9.1

Offshoring: Outsourcing work to companies abroad. 9.1

Mass Customization: A production process in which dell’s inventory and production system allows customers to get their computers built exactly to their specifications. 9.2

Procurement: The process of actually purchasing those goods and services. 9.1

Production Scheduling: The management of the resources, events, and processes need to create an offering. 9.1

Radio-Frequency Identification (RFID) Tag: Emits radio signals that can record and track a shipment as it comes in and out of a facility. 9.2

Safety Stock: Backup inventory that serves as a buffer in case the demand for a product surges or the supply of it drops off for some reason. 9.2

Shrinkage: A term used to describe a reduction or loss in inventory due to shoplifting, employee theft, paperwork errors, or supplier fraud. 9.2

Social Responsibility: The idea that companies should manage their businesses not just to earn profits but to advance the well-being of society. 9.1

Sourcing: The process of evaluating and hiring individual businesses to supply goods and services to your business. 9.1

Stockout: Occurs when you run out of a product a customer wants to buy. 9.2

SKU (Stock-Keeping Unit): The manufacturer gives it its own identification number to product to he;p distinguish it. 9.3

Demand-Planning Software: A software that can synthesize a variety of factors to better predict a firm’s demand. 9.2

Reverse Logistics: The process in which firms run products and materials such as these backward through the supply chain to extract value from them. 9.4

Supply Chain Visibility: The trend is clearly toward more shared information, or what business people refer to as supply chain visibility. 9.2

Third-Party Logistics (3PLs) Firms: A 3PL is a one-stop shipping solution for a company that wants to focus on other aspects of its business. Firms that receive and ship products internationally often hire 3PLs so they don’t have to deal with the headaches of transporting products abroad and completing import and export paperwork for them. Example FedEx and UPS. 9.1

Track and Trace Systems: Electronically record the paths shipments take and able to help trace products helps a company anticipate events that could disrupt the supply chain, including order shipping mistakes, bad weather, and accidents so they can be averted. 9.4

Vendor-Managed Inventory (VMI): A practice in which firms contract with their suppliers to ship them inventory as they need it—and even sometimes manage their inventory for them. 9.2


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