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Commonly used SCM Jargons

Posted on November 26th, 2007 by Sanjit Anand ||Email This Post Email This Post

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Commonly used SCM Jargons.

  • Lead Time – is the time between the initiation of any process of production and the completion of that process. E.g. lead time for ordering a new car from a manufacturer may be anywhere from 2 weeks to 6 months. In SCM, lead time reduction is an important part of most of the manufacturing companies.
  • Cycle-Time – The time elapsing between a particular point in one cycle or production and the same point in the next cycle
  • Safety Stock / Buffer Stock – is a term used to describe a level of stock that is maintained below the cycle stock to buffer against stock-outs. Safety Stock or Buffer Stock, exists to counter uncertainties in supply and demand
  • Advanced Ship Notice (ASN) – is the notification the supplier sends the manufacturer in reaction to the pull signal notifying the material in on the way and confirming inventory will be replenished to meet the requirement.
  • Electronic Data Interchange (EDI) – is the exchange of electronic data between business partners who use a number of different hardware and software solutions. The exchange can involve documents such as sales orders, invoices, and advanced shipping notices (ASN).
  • Vendor-managed inventory (VMI) – is a family of business models in which the buyer of a product provides certain information to a supplier of that product and the supplier takes full responsibility for maintaining an agreed inventory of the material, usually at the buyer’s consumption location
  • Logistics Management :The management of transportation operations of all types,including tracking and managing every aspect of vehicle
    maintenance, fuel costing, routing and mapping, warehousing,communications, EDI implementations, traveler and cargo handling, carrier selection and management, accounting.

    • Logistics is –
      • Key to Supply Chain Management
      • Often performed by a 3PL or 4PL
      • Begin to contribute large portion to the organization costs
  • 3PL (Third Party Logistics) – is a outsourced or “third party” logistics services to a company for part, or sometimes all of their supply chain management function. Third party logistics providers typically specialize in integrated warehousing and transportation services that can be scaled and customized to customer’s needs based on market conditions and the demands and delivery service requirements for
    their products and materials
  • Lot Sizing – is simply a size or quantity in a lot. But plays a very important role in a supply chain. One key decision of production planning is the batch or lot size
  • Inventory Turns – often referred to as stock turns, turns, and stock turnover. This measures the number of times invested in goods to be sold or used over in a period
  • Replenishment Time – is time required to replace the consumed stock.
  • Supply Planning – is the ability to use the distribution plan, inventory plan, sourcing plan, and materials plan to determine the best way to meet demand. Supply planning encompasses the allocation and deployment of resources, as well as facilitating order promising.
  • Production Planning – Planning is the ability to create a plan of record from the requirements of the demand, supply and capacity plans. Production planning (PP) encompasses the allocation and deployment of resources to optimize plant capabilities
  • Demand Planning – is simply put is foreseeing the actual demand or requirement of the market. It is used to monitor & make sure the “health” of a supply chain
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