You are on page 1of 29

SCRC Articles Library: (SCM) Supply Chain Management

Terms & Definitions

(SCM) Supply Chain Management Terms & Definitions

Activity-Based Cost Accounting (ABC) (https://scm.ncsu.edu/scm-articles/article/activity-based-cost-


accounting-abc)

By: SCRC Staff Posted 01-13-2011

A cost accounting system that accumulates costs based on activities performed and then uses cost drivers to
allocate these costs to products or other bases, such as customers, markets, or projects. It is an attempt to allocate
overhead costs on a more realistic basis than direct labor or machine hours. Source: http://www.apics.org/ (10th
ed.)

Categories:

SCM Supply Chain Management Definitions & Terms (https://scm.ncsu.edu/scm-articles/all-articles/category/scm-


terms) Information Flows (https://scm.ncsu.edu/scm-articles/all-articles/category/information-flows)

Activity-Based Management (ABM) (https://scm.ncsu.edu/scm-articles/article/activity-based-management-


abm)

By: SCRC Staff Posted 01-13-2011

The use of activity-based costing information about cost pools and drivers, activity analysis, and business
processes to identify business strategies; improve product design, manufacturing, and distribution; and remove
waste from operations. Source: http://www.apics.org/ (10th ed.)

Categories:

SCM Supply Chain Management Definitions & Terms (https://scm.ncsu.edu/scm-articles/all-articles/category/scm-


terms) Information Flows (https://scm.ncsu.edu/scm-articles/all-articles/category/information-flows)

Agreements (https://scm.ncsu.edu/scm-articles/article/agreements)

By: SCRC Staff Posted 01-13-2011

An agreement should clearly state what you are buying and its cost. Delivery terms and responsibility,
Installation related issues, if applicable, an acceptance provision detailing how and when the buyer will accept
the products, warranty issues, and your remedial actions should be clearly spelled out in the agreement.
Arbitration and conflict resolution mechanisms should also be included in the contract because even the best
written agreements are subject to misinterpretation. A well-developed agreement can provide adequate
protection against economic opportunism between parties and lead to a positive relationship. Effective long-term
agreements generally have specific, measurable objectives stated in them, including

Categories:

SCM Supply Chain Management Definitions & Terms (https://scm.ncsu.edu/scm-articles/all-articles/category/scm-


terms) Relationships (https://scm.ncsu.edu/scm-articles/all-articles/category/relationships)

Business-to-Business Commerce (B2B) (https://scm.ncsu.edu/scm-articles/article/business-to-business-


commerce-b2b)

By: SCRC Staff Posted 01-13-2011

Business being conducted over the Internet between businesses. The implication is that this connectivity will
cause businesses to transform themselves via supply chain management to become virtual organizations,
reducing costs, improving quality, reducing delivery lead time, and improving due-date performance.

Categories:

SCM Supply Chain Management Definitions & Terms (https://scm.ncsu.edu/scm-articles/all-articles/category/scm-


terms) Information Flows (https://scm.ncsu.edu/scm-articles/all-articles/category/information-flows)

Capacity – Information Flows (https://scm.ncsu.edu/scm-articles/article/capacity-information-flows)

By: SCRC Staff Posted 01-14-2011

Capacity is the capability of a worker, machine, work center, plant, or organization to produce output per time
period. Information aids us in addressing capacity availability, unused capacity and performance issues that
impact a business’s revenue and productivity as well as its image and reputation Source: http://www.apics.org/
(10th ed.)

Categories:

SCM Supply Chain Management Definitions & Terms (https://scm.ncsu.edu/scm-articles/all-articles/category/scm-


terms) Information Flows (https://scm.ncsu.edu/scm-articles/all-articles/category/information-flows)

Capacity – Physical Flows (https://scm.ncsu.edu/scm-articles/article/capacity-physical-flows)

By: SCRC Staff Posted 01-19-2011

1) The capability of a system to perform its expected function. 2) The capability of a worker, machine, work
center, plant, or organization to produce output per time period. Capacity required represents the system
capability needed to make a given product mix (assuming technology, product specification, etc.). As a planning
function, both capacity available and capacity required can be measured in the short term (capacity requirements
plan), intermediate term (rough-cut capacity plan), and long term (resource requirements plan).

Categories:

SCM Supply Chain Management Definitions & Terms (https://scm.ncsu.edu/scm-articles/all-articles/category/scm-


terms) Physical Flows (https://scm.ncsu.edu/scm-articles/all-articles/category/physical-flows)

Capacity Management (https://scm.ncsu.edu/scm-articles/article/capacity-management)

By: SCRC Staff Posted 01-19-2011

The function of establishing, measuring, monitoring, and adjusting limits or levels of capacity in order to
execute all manufacturing schedules; i.e., the production plan, master production schedule, material
requirements plan, and dispatch list. Capacity management is executed at four levels: resource requirements
planning, rough-cut capacity planning, capacity requirements planning, and input/output control.

Categories:

SCM Supply Chain Management Definitions & Terms (https://scm.ncsu.edu/scm-articles/all-articles/category/scm-


terms) Physical Flows (https://scm.ncsu.edu/scm-articles/all-articles/category/physical-flows)

Capacity Planning (https://scm.ncsu.edu/scm-articles/article/capacity-planning)

By: SCRC Staff Posted 01-19-2011

The process of determining the amount of capacity required to produce in the future. This process may be
performed at an aggregate or product-line level (resource requirements planning), at the master-scheduling level
(rough-cut capacity planning), and at the material requirements planning level (capacity requirements planning).

Categories:

SCM Supply Chain Management Definitions & Terms (https://scm.ncsu.edu/scm-articles/all-articles/category/scm-


terms) Physical Flows (https://scm.ncsu.edu/scm-articles/all-articles/category/physical-flows)

Capacity Requirements Planning (https://scm.ncsu.edu/scm-articles/article/capacity-requirements-planning)

By: SCRC Staff Posted 01-19-2011

The function of establishing, measuring, and adjusting limits or evels of capacity. The term capacity
requirements planning in this context refers to the process of determining in detail the amount of labor and
machine resources required to accomplish the tasks of production. Open shop orders and planned orders in the
MRP system are input to CRP, which through the use of parts routings and time standards translates these orders
into hours of work by work center by time period. Even though rough-cut capacity planning may indicate that
sufficient capacity exists to execute the MPS, CRP may show that capacity is

Categories:

SCM Supply Chain Management Definitions & Terms (https://scm.ncsu.edu/scm-articles/all-articles/category/scm-


terms) Information Flows (https://scm.ncsu.edu/scm-articles/all-articles/category/information-flows)
Capacity Strategy (https://scm.ncsu.edu/scm-articles/article/capacity-strategy)

By: SCRC Staff Posted 01-19-2011

One of the strategic choices that a firm must make as part of its manufacturing strategy. There are three
commonly recognized capacity strategies: lead, lag, and tracking. A lead capacity strategy adds capacity in
anticipation of increasing demand. A lag strategy does not add capacity until the firm is operating at or beyond
full capacity. A tracking strategy adds capacity in small amounts to attempt to respond to changing demand in
the marketplace.

Categories:

SCM Supply Chain Management Definitions & Terms (https://scm.ncsu.edu/scm-articles/all-articles/category/scm-


terms) Physical Flows (https://scm.ncsu.edu/scm-articles/all-articles/category/physical-flows)

Capacity Utilization (https://scm.ncsu.edu/scm-articles/article/capacity-utilization)

By: SCRC Staff Posted 01-19-2011

A measure (usually expressed as a percentage) of how intensively a resource is being used to produce a good or
service. Utilization compares actual time used to available time. Traditionally, utilization is the ratio of direct
time charged (run time plus setup time) to the clock time available. Utilization is a percentage between 0% and
100% that is equal to 100% minus the percentage of time lost due to machine, tool, worker, etc., unavailability.

Categories:

SCM Supply Chain Management Definitions & Terms (https://scm.ncsu.edu/scm-articles/all-articles/category/scm-


terms) Physical Flows (https://scm.ncsu.edu/scm-articles/all-articles/category/physical-flows)

Channel management (https://scm.ncsu.edu/scm-articles/article/channel-management1)

By: SCRC Staff Posted 01-20-2011

p. The management of firms or individuals that participate in the flow of goods and services from the raw
material supplier and producer to the final user or customer. p. Source: http://www.apics.org/ (10th ed.)

Categories:

SCM Supply Chain Management Definitions & Terms (https://scm.ncsu.edu/scm-articles/all-articles/category/scm-


terms) Information Flows (https://scm.ncsu.edu/scm-articles/all-articles/category/information-flows)

Collaboration (https://scm.ncsu.edu/scm-articles/article/collaboration)

By: SCRC Staff Posted 01-19-2011

Collaboration is defined as the process by which partners adopt a high level of purposeful cooperation to
maintain a trading relationship over time. The relationship is bilateral; both parties have the power to shape its
nature and future direction over time. Mutual commitment to the future and a balanced power relationship are
essential to the process. While collaborative relationships are not devoid of conflict, they include mechanisms
for managing conflict built into the relationship. Sources: Monczka, R., Trent, R., & Handfield, R. (1998).
Purchasing and Supply Chain Management. Cincinnati, OH: South Western College Publishing.

Categories:

SCM Supply Chain Management Definitions & Terms (https://scm.ncsu.edu/scm-articles/all-articles/category/scm-


terms) Relationships (https://scm.ncsu.edu/scm-articles/all-articles/category/relationships)

Commodity Strategy Development (https://scm.ncsu.edu/scm-articles/article/commodity-strategy-development)

By: SCRC Staff Posted 01-19-2011

The purchasing plan for a family of items. This would include the plan to manage the supplier base and solve
problems. Source: http://www.apics.org/

Categories:

SCM Supply Chain Management Definitions & Terms (https://scm.ncsu.edu/scm-articles/all-articles/category/scm-


terms) Relationships (https://scm.ncsu.edu/scm-articles/all-articles/category/relationships)

Continuous Improvement (https://scm.ncsu.edu/scm-articles/article/continuous-improvement)

By: SCRC Staff Posted 01-19-2011

A never-ending effort to expose and eliminate root causes of problems; small step improvement as opposed to
big step improvement. Source: http://www.apics.org/

Categories:

SCM Supply Chain Management Definitions & Terms (https://scm.ncsu.edu/scm-articles/all-articles/category/scm-


terms) Relationships (https://scm.ncsu.edu/scm-articles/all-articles/category/relationships)

Contract (https://scm.ncsu.edu/scm-articles/article/contract)

By: SCRC Staff Posted 01-19-2011

An agreement between two or more competent persons or companies to perform or not to perform specific acts
or services or to deliver merchandise. A contract may be oral or written. A purchase agreement when accepted
by a supplier, becomes a contract. Acceptance may be in writing or by performance, unless the purchase order
requires acceptance in writing. Source: http://www.apics.org/

Categories:

SCM Supply Chain Management Definitions & Terms (https://scm.ncsu.edu/scm-articles/all-articles/category/scm-


terms) Relationships (https://scm.ncsu.edu/scm-articles/all-articles/category/relationships)

Contract Management (https://scm.ncsu.edu/scm-articles/article/contract-management)

By: SCRC Staff Posted 01-19-2011


Contract management is a strategic management discipline employed by both buyers and sellers whose
objectives are to manage customer and supplier expectations and relationships, control risk and cost, and
contribute to organizational profitability/success. For successful service contract administration, the buyer needs
to have a realistic degree of control over the supplier’s performance. Crucial to success in this area is the timely
availability of accurate data including the contractor’s plan of performance and the contractor’s actual progress.
Sources: http://www.ncmahq.org/cmi/research.html Dobler, D.W., & Burt, D.N. (1996). Purchasing and Supply
Management. (6th ed.).

Categories:

SCM Supply Chain Management Definitions & Terms (https://scm.ncsu.edu/scm-articles/all-articles/category/scm-


terms) Relationships (https://scm.ncsu.edu/scm-articles/all-articles/category/relationships)

Cost (https://scm.ncsu.edu/scm-articles/article/cost1)

By: SCRC Staff Posted 01-20-2011

p. See: Activity-based Cost Accounting, Activity-based Management, Cost System Design, Target Costing, Total
Costs, Total Cost of Ownership

Categories:

SCM Supply Chain Management Definitions & Terms (https://scm.ncsu.edu/scm-articles/all-articles/category/scm-


terms) Information Flows (https://scm.ncsu.edu/scm-articles/all-articles/category/information-flows)

Cost Management (https://scm.ncsu.edu/scm-articles/article/cost-management)

By: SCRC Staff Posted 01-19-2011

In terms of activity-based cost accounting, cost management involves control of activities to eliminate waste,
improve cost drivers, and plan operations. This process should influence the organization’s strategy setting
process. Factors such as product pricing, introduction of new products, and distribution of existing products are
examples of strategic decisions that are affected by cost management.

Categories:

SCM Supply Chain Management Definitions & Terms (https://scm.ncsu.edu/scm-articles/all-articles/category/scm-


terms) Information Flows (https://scm.ncsu.edu/scm-articles/all-articles/category/information-flows)

Cost System Design (https://scm.ncsu.edu/scm-articles/article/cost-system-design)

By: SCRC Staff Posted 01-19-2011

An intelligent cost system design is one that is simple while still providing managers with information they need
to make decisions. As most manufacturing processes were labor intensive at the turn of the century, a majority of
cost management systems relied on direct labor to assign indirect costs to products and services. Indirect or
overhead costs are costs that are associated with or caused by two or more operating activities jointly but are not
traceable to each of them individually. Direct costs, on the other hand, are specifically traceable to or caused by a
specific project or production operation. The

Categories:
SCM Supply Chain Management Definitions & Terms (https://scm.ncsu.edu/scm-articles/all-articles/category/scm-
terms) Information Flows (https://scm.ncsu.edu/scm-articles/all-articles/category/information-flows)

Currency Conversions (https://scm.ncsu.edu/scm-articles/article/currency-conversions)

By: SCRC Staff Posted 01-19-2011

Issues with currency conversion add complexity to the global sourcing process. The absence of fixed exchange
rates can be a problem. Fluctuations in exchange rates can have a significant impact on the costs and profits
made by the buyer and the seller. U.S. purchasing departments are particularly at a disadvantage. Their
unfamiliarity in dealing with foreign currencies leads to higher costs in two ways: 1) the buyers attempt to put all
currency risk on the supplier which causes the supplier to include charges for hedging; 2) In an attempt to avoid
dealing with foreign currency, buyers’ use U.S. subsidiaries who

Categories:

SCM Supply Chain Management Definitions & Terms (https://scm.ncsu.edu/scm-articles/all-articles/category/scm-


terms) Information Flows (https://scm.ncsu.edu/scm-articles/all-articles/category/information-flows)

Customer Relationship Management (CRM) (https://scm.ncsu.edu/scm-articles/article/customer-relationship-


management-crm)

By: SCRC Staff Posted 01-19-2011

A marketing philosophy based on putting the customer first. It involves the collection and analysis of
information designed for sales and marketing decision support to understand and support existing and potential
customer needs. It includes account management, catalog and order entry, payment processing, credits and
adjustments, and other functions.

Categories:

SCM Supply Chain Management Definitions & Terms (https://scm.ncsu.edu/scm-articles/all-articles/category/scm-


terms) Information Flows (https://scm.ncsu.edu/scm-articles/all-articles/category/information-flows)

Customer Value (https://scm.ncsu.edu/scm-articles/article/customer-value)

By: SCRC Staff Posted 01-19-2011

The customer value approach focuses on how people choose among competing suppliers, customer attraction
and retention, and market-share gains. Answering three customer value questions is important in order to
determine a company’s customer value proposition: • What are the key buying factors that customers’ value
when they choose among a business and its toughest competitors? • How do customers rate a company’s
performance versus its competitors’ performance on each key buying factor? •What is the percentage importance
of each of these components of customer value? By highlighting the best performer on each key buying factor,
marketers obtain a market derived,

Categories:

SCM Supply Chain Management Definitions & Terms (https://scm.ncsu.edu/scm-articles/all-articles/category/scm-


terms) Information Flows (https://scm.ncsu.edu/scm-articles/all-articles/category/information-flows)
Customer/Order Fulfillment Process (https://scm.ncsu.edu/scm-articles/article/customer-order-fulfillment-
process)

By: SCRC Staff Posted 01-19-2011

A series of customers’ interactions with an organization through the order filling process, including
product/service design, production and delivery, and order status reporting. Source: http://www.apics.org/

Categories:

SCM Supply Chain Management Definitions & Terms (https://scm.ncsu.edu/scm-articles/all-articles/category/scm-


terms) Relationships (https://scm.ncsu.edu/scm-articles/all-articles/category/relationships)

Demand Management (https://scm.ncsu.edu/scm-articles/article/demand-management)

By: SCRC Staff Posted 01-19-2011

The function of recognizing all demands for goods and services to support the market place. It involves
prioritizing demand when supply is lacking. Proper demand management facilitates the planning and use of
resources for profitable business results. Source: http://www.apics.org/ (10th ed.)

Categories:

SCM Supply Chain Management Definitions & Terms (https://scm.ncsu.edu/scm-articles/all-articles/category/scm-


terms) Information Flows (https://scm.ncsu.edu/scm-articles/all-articles/category/information-flows)

Distribution Channel (https://scm.ncsu.edu/scm-articles/article/distribution-channel)

By: SCRC Staff Posted 01-19-2011

The distribution route, from raw materials through consumption, along which products travel.

Categories:

SCM Supply Chain Management Definitions & Terms (https://scm.ncsu.edu/scm-articles/all-articles/category/scm-


terms) Physical Flows (https://scm.ncsu.edu/scm-articles/all-articles/category/physical-flows)

Distribution Channel Design (https://scm.ncsu.edu/scm-articles/article/distribution-channel-design)

By: SCRC Staff Posted 01-19-2011

The planned channels of inventory disbursement from one or more sources to field warehouses and ultimately to
the customer. There are several levels in the distribution network structure. Source: APICS (8th edition)

Categories:
SCM Supply Chain Management Definitions & Terms (https://scm.ncsu.edu/scm-articles/all-articles/category/scm-
terms) Physical Flows (https://scm.ncsu.edu/scm-articles/all-articles/category/physical-flows)

Facility Location (https://scm.ncsu.edu/scm-articles/article/facility-location)

By: SCRC Staff Posted 01-19-2011

Location decisions are a basic determinant of profitability in international logistics. Decisions on where to
manufacture, to assemble, to store, to transship and to consolidate can make the difference between profit and
loss. Because of international differences in basic factor costs and because of exchange rate movements, location
decisions are very important. Also, these decisions involve substantial involvement in fixed assets in the form of
facilities and equipment. Location decisions, therefore, can have a continuing impact over time on the
company’s financial and competitive position. As movement towards global manufacturing increases,
organizations should consider location decisions through total cost

Categories:

SCM Supply Chain Management Definitions & Terms (https://scm.ncsu.edu/scm-articles/all-articles/category/scm-


terms) Physical Flows (https://scm.ncsu.edu/scm-articles/all-articles/category/physical-flows)

Forecast Error (https://scm.ncsu.edu/scm-articles/article/forecast-error)

By: SCRC Staff Posted 01-19-2011

The difference between actual demand and forecast demand, stated as an absolute value or as a percentage. E.g.,
average forecast error, forecast accuracy, mean absolute deviation, tracking signal. There are three ways to
accommodate forecasting errors: One is to try to reduce the error through better forecasting. The second is to
build more visibility and flexibility into the supply chain. And the third is to reduce the lead time over which
forecasts are required. Source: http://www.apics.org/ (10th ed.)

Categories:

SCM Supply Chain Management Definitions & Terms (https://scm.ncsu.edu/scm-articles/all-articles/category/scm-


terms) Information Flows (https://scm.ncsu.edu/scm-articles/all-articles/category/information-flows)

Forecast Sharing (https://scm.ncsu.edu/scm-articles/article/forecast-sharing)

By: SCRC Staff Posted 01-19-2011

A supply partnership between a buyer and supplier is based on mutual interdependency and respect and calls for
information sharing between the involved parties. By sharing its demand forecast with the supplier, the buyer
benefits in two ways: 1) the partner becomes familiar with the buyer’s needs, and 2) the buyer develops a
dependable supply source. Forecast sharing allows the supplier to plan for and schedule production efficiently.
Source: Dobler, D.W., & Burt, D.N. (1996). Purchasing and supply management. (6th ed.). New York: McGraw
Hill.

Categories:
SCM Supply Chain Management Definitions & Terms (https://scm.ncsu.edu/scm-articles/all-articles/category/scm-
terms) Information Flows (https://scm.ncsu.edu/scm-articles/all-articles/category/information-flows)

Forecasting (https://scm.ncsu.edu/scm-articles/article/forecasting)

By: SCRC Staff Posted 01-19-2011

The business function that attempts to predict sales and use of products so they can be purchased or
manufactured in appropriate quantities in advance. Source: http://www.apics.org/ (10th ed.)

Categories:

SCM Supply Chain Management Definitions & Terms (https://scm.ncsu.edu/scm-articles/all-articles/category/scm-


terms) Information Flows (https://scm.ncsu.edu/scm-articles/all-articles/category/information-flows)

Forecasting Methods (https://scm.ncsu.edu/scm-articles/article/forecasting-methods)

By: SCRC Staff Posted 01-19-2011

Qualitative forecasting techniques An approach to forecasting that is based on intuitive or judgmental


evaluation. It is used generally when data are scarce, not available, or no longer relevant. Common types of
qualitative techniques include: personal insight, sales force estimates, panel consensus, market research,
visionary forecasting, and the Delphi method. Examples include developing long-range projections and new
product introduction. Quantitative forecasting technique An approach to forecasting where historical demand
data is used to project future demand. Extrinsic and intrinsic techniques are typically used. p. Graphical
forecasting methods The use of visual information to predict sales patterns typically involves plotting
information

Categories:

SCM Supply Chain Management Definitions & Terms (https://scm.ncsu.edu/scm-articles/all-articles/category/scm-


terms) Information Flows (https://scm.ncsu.edu/scm-articles/all-articles/category/information-flows)

Global Logistics, Q&A with John Camp, Lenovo (https://scm.ncsu.edu/scm-articles/article/global-logistics-qa-


with-john-camp-lenovo)

By: Robert Handfield, Ph.D. Posted 07-30-2013

Questions and Answers on Global Logistics, with John Camp, Lenovo Big Issues in Global Logistics Rob
Handfield (Co-Director of SCRC): Hi, I’m here with John Camp, director of logistic solutions and
transformation at Lenovo. John manages a lot of the logistics for Lenovo globally and is clearly exposed to a lot
of the issues that we’ve been talking about at this conference. John, what do you see as the big challenges, the
big issues in global logistics today for Lenovo as you continue to operate globally in all the different markets
that you do? John Camp (Lenovo): One

Categories:
Logistics (https://scm.ncsu.edu/scm-articles/all-articles/category/logistics) Global Logistics (https://scm.ncsu.edu/scm-
articles/all-articles/category/global-logistics) SCM Features (https://scm.ncsu.edu/scm-articles/all-articles/category/scm-
features) Lessons Learned (https://scm.ncsu.edu/scm-articles/all-articles/category/lessons-learned) SCM Insights Videos
(https://scm.ncsu.edu/scm-articles/all-articles/category/scm-insights-videos) SCM Resources (https://scm.ncsu.edu/scm-
articles/all-articles/category/scm-resources) SCM Supply Chain Management Definitions & Terms
(https://scm.ncsu.edu/scm-articles/all-articles/category/scm-terms) Information Flows (https://scm.ncsu.edu/scm-articles
/all-articles/category/information-flows) SCM Topics (https://scm.ncsu.edu/scm-articles/all-articles/category/scm-topics)

Globalization (https://scm.ncsu.edu/scm-articles/article/globalization)

By: SCRC Staff Posted 01-20-2011

See: Currency Conversion, Language

Categories:

SCM Supply Chain Management Definitions & Terms (https://scm.ncsu.edu/scm-articles/all-articles/category/scm-


terms) Information Flows (https://scm.ncsu.edu/scm-articles/all-articles/category/information-flows)

Inbound Logistics (https://scm.ncsu.edu/scm-articles/article/inbound-logistics)

By: SCRC Staff Posted 01-19-2011

Following the receipt of materials, parts or resale products from external suppliers, the subsequent storage,
handling, and transportation requirements to facilitate either manufacturing or market distribution constitute
inbound logistics. Source: Bowersox, D.J., Closs, D.J., & Cooper, B.M. (2002). Supply Chain Logistics
Management. Burr Ridge, Boston: McGraw Hill. See: Interplant Transfer, Outbound Logistics

Categories:

Logistics (https://scm.ncsu.edu/scm-articles/all-articles/category/logistics) Logistics Definition (https://scm.ncsu.edu/scm-


articles/all-articles/category/logistics-definition) SCM Supply Chain Management Definitions & Terms
(https://scm.ncsu.edu/scm-articles/all-articles/category/scm-terms) Physical Flows (https://scm.ncsu.edu/scm-articles/all-
articles/category/physical-flows)

Industry Standards (https://scm.ncsu.edu/scm-articles/article/industry-standards)

By: SCRC Staff Posted 01-19-2011

An industrial standard is a uniform identification that is agreed on. Industrial standardization can be defined as
the process of establishing agreement on uniform identifications for definite characteristics of quality, design,
performance, quantity, service, etc. Source: Dobler, D.W., & Burt, D.N. (1996). Purchasing and Supply
Management. (6th ed.). New York: McGraw Hill.

Categories:

SCM Supply Chain Management Definitions & Terms (https://scm.ncsu.edu/scm-articles/all-articles/category/scm-


terms) Relationships (https://scm.ncsu.edu/scm-articles/all-articles/category/relationships)

Information Sharing (https://scm.ncsu.edu/scm-articles/article/information-sharing)

By: SCRC Staff Posted 01-19-2011

A strategic partnering relationship between suppliers and buyers is characterized by a willingness to be open,
and to share forecasted demand and cost data as well as the benefits resulting from the information sharing. Both
parties in the relationship generally follow a continuous improvement philosophy towards total cost of material
acquisition and ownership along with quality and service. Cost, quality and schedule information that is
confidential is shared both ways between firms during the early and ongoing stages of design and during the
production life-cycle of the supplying relationship. This openness exists because of the high degree of trust
earned

Categories:

SCM Supply Chain Management Definitions & Terms (https://scm.ncsu.edu/scm-articles/all-articles/category/scm-


terms) Information Flows (https://scm.ncsu.edu/scm-articles/all-articles/category/information-flows)

Information Technology (https://scm.ncsu.edu/scm-articles/article/information-technology)

By: SCRC Staff Posted 01-19-2011

The technology of computers, telecommunications, and other devices that integrate data, equipment, personnel,
and problem-solving methods in planning and controlling business activities. Information technology provides
the means for collecting, storing, encoding, processing, analyzing, transmitting, receiving, and printing text,
audio, or video information. Hardware: In the context of information technology, the computer and its
peripherals constitute the hardware. Software: The programs and documentation necessary to make use of a
computer constitute the software. Source: http://www.apics.org/ (10th ed.)

Categories:

SCM Supply Chain Management Definitions & Terms (https://scm.ncsu.edu/scm-articles/all-articles/category/scm-


terms) Information Flows (https://scm.ncsu.edu/scm-articles/all-articles/category/information-flows)

Insource vs Outsource (https://scm.ncsu.edu/scm-articles/article/insource-vs-outsource)

By: SCRC Staff Posted 01-19-2011

The act of deciding whether to produce an item internally or buy it from an outside supplier. Factors to consider
in the decision include costs, capacity availability, proprietary and/or specialized knowledge, quality
considerations, skill requirements, volume, and timing. Source: http://www.apics.org/ (10th ed.)

Categories:

SCM Supply Chain Management Definitions & Terms (https://scm.ncsu.edu/scm-articles/all-articles/category/scm-


terms) Relationships (https://scm.ncsu.edu/scm-articles/all-articles/category/relationships)

Interplant Transfer (https://scm.ncsu.edu/scm-articles/article/interplant-transfer)


By: SCRC Staff Posted 01-19-2011

The shipment of a part or product by one plant to another plant or division within the corporation. Source:
http://www.apics.org/ (10th ed.)

Categories:

SCM Supply Chain Management Definitions & Terms (https://scm.ncsu.edu/scm-articles/all-articles/category/scm-


terms) Physical Flows (https://scm.ncsu.edu/scm-articles/all-articles/category/physical-flows)

Inventory (https://scm.ncsu.edu/scm-articles/article/inventory)

By: SCRC Staff Posted 01-19-2011

1) Those stocks or items used to support production (raw materials and work-in-process items), supporting
activities (maintenance, repair, and operating supplies), and customer service (finished goods and spare parts).
Demand for inventory may be dependent or independent. Inventory functions are anticipation, hedge, cycle (lot
size), fluctuation (safety, buffer, or reserve), transportation (pipeline), and service parts. 2) In the theory of
constraints, inventory is defined as those items purchased for resale and includes finished goods, work in
process, and raw materials. Inventory is always valued at purchase price and includes no value-added costs, as
opposed to the traditional cost accounting practice of adding

Categories:

SCM Supply Chain Management Definitions & Terms (https://scm.ncsu.edu/scm-articles/all-articles/category/scm-


terms) Physical Flows (https://scm.ncsu.edu/scm-articles/all-articles/category/physical-flows)

Inventory Management Systems (https://scm.ncsu.edu/scm-articles/article/inventory-management-systems)

By: SCRC Staff Posted 01-19-2011

Software applications that permit monitoring events across a supply chain. These systems track and trace
inventory globally on a line-item level and notify the user of significant deviations from plans. Companies are
provided with realistic estimates of when material will arrive.With Inventory visibility, organizations are able to
make decisions that optimize supply chain performance. Information is available to reduce costs by removing
inventory from the supply chain, reducing obsolescence, decreasing operational assets, lowering network
operations cost, and decreasing transportation costs. Visibility also increases competitiveness by improving
customer satisfaction and market responsiveness. Source: http://www.apics.org/ (10th ed.) See:

Categories:

SCM Supply Chain Management Definitions & Terms (https://scm.ncsu.edu/scm-articles/all-articles/category/scm-


terms) Information Flows (https://scm.ncsu.edu/scm-articles/all-articles/category/information-flows) SCM Topics
(https://scm.ncsu.edu/scm-articles/all-articles/category/scm-topics) Inventory Management Supply Chain
(https://scm.ncsu.edu/scm-articles/all-articles/category/inventory-management-supply-chain)

Inventory Positioning (https://scm.ncsu.edu/scm-articles/article/inventory-positioning)

By: SCRC Staff Posted 01-19-2011

Inventory positioning refers to the selective location of various items in the product line in plant, regional, or
field warehouses. Inventory positioning has a bearing on facility location decision, and therefore, must be
considered in the logistics strategy. Source: Ballou, R.H. (1999). Business Logistics Management. (4th ed.).
Upper Saddle River, New Jersey: Prentice Hall.

Categories:

SCM Supply Chain Management Definitions & Terms (https://scm.ncsu.edu/scm-articles/all-articles/category/scm-


terms) Physical Flows (https://scm.ncsu.edu/scm-articles/all-articles/category/physical-flows)

Joint Venture (https://scm.ncsu.edu/scm-articles/article/joint-venture)

By: SCRC Staff Posted 01-19-2011

An agreement between two or more firms to risk equity capital to attempt a specific business objective. Source:
http://www.apics.org/

Categories:

SCM Supply Chain Management Definitions & Terms (https://scm.ncsu.edu/scm-articles/all-articles/category/scm-


terms) Relationships (https://scm.ncsu.edu/scm-articles/all-articles/category/relationships)

Language (https://scm.ncsu.edu/scm-articles/article/language)

By: SCRC Staff Posted 01-19-2011

Differences in culture, language, dialects or terminology may result in miscommunication and cause problems.
While both parties may think that they understand what the other party has said, a true agreement may be
missing. A simple word like “plant,” for instance, can be a source of confusion – in the Far East, the word
“plant” is interpreted to mean only a living organism, not a physical facility. Source: Dobler, D.W., & Burt, D.N.
(1996). Purchasing and Supply Management. (6th ed.). New York: McGraw Hill.

Categories:

SCM Supply Chain Management Definitions & Terms (https://scm.ncsu.edu/scm-articles/all-articles/category/scm-


terms) Information Flows (https://scm.ncsu.edu/scm-articles/all-articles/category/information-flows)

Lead Times/Cycle Times (https://scm.ncsu.edu/scm-articles/article/lead-times-cycle-times)

By: SCRC Staff Posted 01-19-2011

1) A span of time required to perform a process (or series of operations). 2) In a logistics context, the time
between recognition of the need for an order and the receipt of goods. Individual components of lead time can
include order preparation time, queue time, processing time, move or transportation time, and receiving and
inspection time. Source: http://www.apics.org/ (10th ed.)
Categories:

SCM Supply Chain Management Definitions & Terms (https://scm.ncsu.edu/scm-articles/all-articles/category/scm-


terms) Information Flows (https://scm.ncsu.edu/scm-articles/all-articles/category/information-flows)

Lean Manufacturing (https://scm.ncsu.edu/scm-articles/article/lean-manufacturing)

By: SCRC Staff Posted 01-19-2011

A philosophy of production that emphasizes the minimization of the amount of all the resources (including time)
used in the various activities of the enterprise. It involves identifying and eliminating non-value-adding activities
in design, production, supply chain management, and dealing with the customers. Lean producers employ teams
of multiskilled workers at all levels of the organization and use highly flexible, increasingly automated machines
to produce volumes of products in potentially enormous variety. It contains a set of principles and practices to
reduce cost through the relentless removal of waste and through the simplification of all manufacturing and
support processes. Source:

Categories:

SCM Supply Chain Management Definitions & Terms (https://scm.ncsu.edu/scm-articles/all-articles/category/scm-


terms) Physical Flows (https://scm.ncsu.edu/scm-articles/all-articles/category/physical-flows)

Legal Issues (https://scm.ncsu.edu/scm-articles/article/legal-issues)

By: SCRC Staff Posted 01-19-2011

Purchasing law has been primarily developed from laws regarding contracts. In order for a contract to be valid,
four conditions must be present: 1) Parties with full contractual capacity should willfully and in the absence of
fraudulent activity have signed the contract; 2) the underlying purpose for the agreement must be legal; 3) all
conditions regarding the offer and acceptance of the contract must be met; 4) the contract should have an
element of mutual obligation; that is both parties must agree to do something they otherwise would not be
required to do. Another topical area of commercial law that is relevant to purchasing

Categories:

SCM Supply Chain Management Definitions & Terms (https://scm.ncsu.edu/scm-articles/all-articles/category/scm-


terms) Relationships (https://scm.ncsu.edu/scm-articles/all-articles/category/relationships)

Logistics Information Systems (https://scm.ncsu.edu/scm-articles/article/logistics-information-systems)

By: SCRC Staff Posted 01-19-2011

Converting data to information, portraying it in a manner useful for decision making, and interfacing the
information with decision-assisting methods are considered to be at the heart of an information system. Logistics
information systems are a subset of the firm’s total information system, and it is directed to the particular
problems of logistics decision making. There are three distinct elements that make up this system: the input the
database and its associated manipulations and the output Logistics: The Inputs The inputs are data items needed
for planning and operating logistics system obtained from sources like customers, company records, and

Categories:
Logistics (https://scm.ncsu.edu/scm-articles/all-articles/category/logistics) Logistics Definition (https://scm.ncsu.edu/scm-
articles/all-articles/category/logistics-definition) SCM Supply Chain Management Definitions & Terms
(https://scm.ncsu.edu/scm-articles/all-articles/category/scm-terms) Information Flows (https://scm.ncsu.edu/scm-articles
/all-articles/category/information-flows)

Logistics Management (https://scm.ncsu.edu/scm-articles/article/logistics-management)

By: SCRC Staff Posted 01-19-2011

Logistics management is the process of strategically managing the procurement, movement and storage of
materials, parts and finished inventory (and the related information flows) through the organization and its
marketing channels in such as way that current and future profitability are maximized through the cost-effective
fulfillment of orders. Source: Christopher, M. (1998). Logistics and Supply Chain Management: Strategies for
reducing cost and improving service, (2nd Ed.). New York: Prentice Hall.

Categories:

Logistics (https://scm.ncsu.edu/scm-articles/all-articles/category/logistics) Logistics Definition (https://scm.ncsu.edu/scm-


articles/all-articles/category/logistics-definition) SCM Supply Chain Management Definitions & Terms
(https://scm.ncsu.edu/scm-articles/all-articles/category/scm-terms) Information Flows (https://scm.ncsu.edu/scm-articles
/all-articles/category/information-flows)

Maintenance (https://scm.ncsu.edu/scm-articles/article/maintenance)

By: SCRC Staff Posted 01-19-2011

See: Preventative Maintenance, Total Product Maintenance (TPM)

Categories:

SCM Supply Chain Management Definitions & Terms (https://scm.ncsu.edu/scm-articles/all-articles/category/scm-


terms) Physical Flows (https://scm.ncsu.edu/scm-articles/all-articles/category/physical-flows)

Manufacturing (https://scm.ncsu.edu/scm-articles/article/manufacturing)

By: SCRC Staff Posted 01-19-2011

See: Lean Manufacturing, Manufacturing Layout Strategy, Reverse Logistics, Order Management, Scheduling

Categories:

SCM Supply Chain Management Definitions & Terms (https://scm.ncsu.edu/scm-articles/all-articles/category/scm-


terms) Physical Flows (https://scm.ncsu.edu/scm-articles/all-articles/category/physical-flows)

Manufacturing Layout Strategy (https://scm.ncsu.edu/scm-articles/article/manufacturing-layout-strategy)


By: SCRC Staff Posted 01-19-2011

An element of manufacturing strategy. It is the analysis of physical capacity, geography, functional needs,
corporate philosophy, and product-market/process focus to systematically respond to required facility changes
driven by organizational, strategic, and environmental considerations. Source: http://www.apics.org/ (10th ed.)

Categories:

SCM Supply Chain Management Definitions & Terms (https://scm.ncsu.edu/scm-articles/all-articles/category/scm-


terms) Physical Flows (https://scm.ncsu.edu/scm-articles/all-articles/category/physical-flows)

Market Analysis (https://scm.ncsu.edu/scm-articles/article/market-analysis)

By: SCRC Staff Posted 01-19-2011

See: Business-to-Business, Channel Management, Customer Relationship Management (CRM), Customer


Value, Promotions

Categories:

SCM Supply Chain Management Definitions & Terms (https://scm.ncsu.edu/scm-articles/all-articles/category/scm-


terms) Information Flows (https://scm.ncsu.edu/scm-articles/all-articles/category/information-flows)

Negotiation (https://scm.ncsu.edu/scm-articles/article/negotiation)

By: SCRC Staff Posted 01-19-2011

Negotiation is a process of formal communication where two or more people come together to seek mutual
agreement over an issue or issues. Negotiation is particularly appropriate when issues besides price are important
for the buyer or when competitive bidding will not satisfy the buyer’s requirements on those issues. Source:
Monczka, R., Trent, R., & Handfield, R. (1998). Purchasing and Supply Chain Management. Cincinnati, OH:
South Western College Publishing.

Categories:

SCM Supply Chain Management Definitions & Terms (https://scm.ncsu.edu/scm-articles/all-articles/category/scm-


terms) Relationships (https://scm.ncsu.edu/scm-articles/all-articles/category/relationships)

New Product Development (https://scm.ncsu.edu/scm-articles/article/new-product-development)

By: SCRC Staff Posted 01-19-2011

See: Lead Times/Cycle Times, Supplier Integration in New Product Development

Categories:

SCM Supply Chain Management Definitions & Terms (https://scm.ncsu.edu/scm-articles/all-articles/category/scm-


terms) Relationships (https://scm.ncsu.edu/scm-articles/all-articles/category/relationships)

Operating Policies and Procedures (https://scm.ncsu.edu/scm-articles/article/operating-policies-and-


procedures)

By: SCRC Staff Posted 01-19-2011

Definitive statements of what should be done in the business, and a formal organization and indexing of a firm’s
procedures. They are usually outlined in manuals which are printed and distributed to the appropriate functional
areas. Source: APICS (8th ed.)

Categories:

SCM Supply Chain Management Definitions & Terms (https://scm.ncsu.edu/scm-articles/all-articles/category/scm-


terms) Information Flows (https://scm.ncsu.edu/scm-articles/all-articles/category/information-flows)

Order management (https://scm.ncsu.edu/scm-articles/article/order-management)

By: SCRC Staff Posted 01-19-2011

Order management involves the seamless integration of orders from multiple channels with inventory databases,
data collection, order processing including credit card verification, fulfillment systems and returns across the
entire fulfillment network. For proper execution the process involves real-time visibility into the entire order
lifecycle starting from the placement of order and ensuring that orders (SKUs) are not lost, delayed, or corrupted
during the fulfillment process. The system may also comply with and support parcel carriers and provide
sophisticated, centralized freight management and tracking/tracing capabilities. Clients, Customer service
representatives account managers and suppliers will thus have the ability to track

Categories:

SCM Supply Chain Management Definitions & Terms (https://scm.ncsu.edu/scm-articles/all-articles/category/scm-


terms) Information Flows (https://scm.ncsu.edu/scm-articles/all-articles/category/information-flows)

Outbound Logistics (https://scm.ncsu.edu/scm-articles/article/outbound-logistics)

By: SCRC Staff Posted 01-19-2011

The process related to the storage and movement of the final product and related information flows from the end
of the production line to the end user. Sources: Christopher, M. (1998). Logistics and Supply Chain
Management: Strategies for reducing cost and improving service, (2nd Ed.). New York: Prentice Hall.
http://www.esri.com/industries/logistics/glossary.html#f-l

Categories:

Logistics (https://scm.ncsu.edu/scm-articles/all-articles/category/logistics) Logistics Definition (https://scm.ncsu.edu/scm-


articles/all-articles/category/logistics-definition) SCM Supply Chain Management Definitions & Terms
(https://scm.ncsu.edu/scm-articles/all-articles/category/scm-terms) Physical Flows (https://scm.ncsu.edu/scm-articles/all-
articles/category/physical-flows)

Packaging (https://scm.ncsu.edu/scm-articles/article/packaging)

By: SCRC Staff Posted 01-19-2011

Packaging has a significant impact on the cost and productivity of logistics. Inventory control depends upon the
accuracy of manual or automatic identification systems keyed by product packaging. Order selection speed,
accuracy and efficiency are influenced by package identification, configuration, and handling ease. Handling
efficiency is affected by package design, unitization capability and techniques, and communication or
information transfer between channel partners. Transportation and storage costs are driven by package size and
density. Customer service depends upon packaging to allow quality control during distribution to provide,
customer education and convenience, and to comply with environmental regulations. Given the increasing length

Categories:

SCM Supply Chain Management Definitions & Terms (https://scm.ncsu.edu/scm-articles/all-articles/category/scm-


terms) Physical Flows (https://scm.ncsu.edu/scm-articles/all-articles/category/physical-flows)

Performance Measurement (https://scm.ncsu.edu/scm-articles/article/performance-measurement)

By: SCRC Staff Posted 01-19-2011

Supplier performance measurement and evaluation includes the methods and techniques used to collect
information that can be used to measure, rate or rank supplier performance on a continuous basis. The
measurement system is a crucial part of supplier management and development. Source: Monczka, R., Trent, R.,
& Handfield, R. (1998). Purchasing and Supply Chain Management. Cincinnati, OH: South Western College
Publishing.

Categories:

SCM Supply Chain Management Definitions & Terms (https://scm.ncsu.edu/scm-articles/all-articles/category/scm-


terms) Relationships (https://scm.ncsu.edu/scm-articles/all-articles/category/relationships)

Preventative Maintenance (https://scm.ncsu.edu/scm-articles/article/preventative-maintenance)

By: SCRC Staff Posted 01-19-2011

The activities, including adjustments, replacements, and basic cleanliness, that forestall machine breakdowns.
The purpose is to ensure that production quality is maintained and that delivery schedules are met. In addition, a
machine that is well cared for will last longer and cause fewer problems. Source:http://www.apics.org/ (10th ed.)

Categories:

SCM Supply Chain Management Definitions & Terms (https://scm.ncsu.edu/scm-articles/all-articles/category/scm-


terms) Physical Flows (https://scm.ncsu.edu/scm-articles/all-articles/category/physical-flows)
Program Management (https://scm.ncsu.edu/scm-articles/article/program-management)

By: SCRC Staff Posted 01-19-2011

The coordinated management of a portfolio of projects to achieve a set of business objectives is called program
management. Or, a program might refer to an ongoing set of activities internal to the organization, for example, a
Total Quality Management program, workplace safety program, supplier development program, etc. Source:
http://www.mapnp.org/library/prog_mng/prog_mng.htm

Categories:

SCM Supply Chain Management Definitions & Terms (https://scm.ncsu.edu/scm-articles/all-articles/category/scm-


terms) Relationships (https://scm.ncsu.edu/scm-articles/all-articles/category/relationships)

Project Management (https://scm.ncsu.edu/scm-articles/article/project-management)

By: SCRC Staff Posted 01-19-2011

Project management is the application of knowledge, skills, tools and techniques to a broad range of activities in
order to meet the requirements of the particular project. A project is a temporary endeavor undertaken to achieve
a particular aim. Project management knowledge and practices are best described in terms of their component
processes. These processes can be placed into five Process Groups: Initiating, Planning, Executing, Controlling
and Closing. – and nine Knowledge Areas – Project Integration Management, Project Scope Management,
Project Time Management, Project Cost Management, Project Quality Management, Project Human Resource
Management, Project Communications Management, Project Risk Management, and Project Procurement

Categories:

SCM Supply Chain Management Definitions & Terms (https://scm.ncsu.edu/scm-articles/all-articles/category/scm-


terms) Relationships (https://scm.ncsu.edu/scm-articles/all-articles/category/relationships)

Promotions (https://scm.ncsu.edu/scm-articles/article/promotions)

By: SCRC Staff Posted 01-19-2011

One of the four P’s (product, price, place, and promotion) that constitute the set of tools used to direct the
business offering to the customer. Promotion is the mechanism whereby information about the product offering
is communicated to the customer and includes public relations, advertising, sales promotions, and other tools to
persuade customers to purchase the product offering. Source: http://www.apics.org/ (10th ed.)

Categories:

SCM Supply Chain Management Definitions & Terms (https://scm.ncsu.edu/scm-articles/all-articles/category/scm-


terms) Information Flows (https://scm.ncsu.edu/scm-articles/all-articles/category/information-flows)

Purchase Requirements (https://scm.ncsu.edu/scm-articles/article/purchase-requirements)

By: SCRC Staff Posted 01-19-2011

See: Specifications, Industry Standards, Statement of Work, Service Level Agreement


Categories:

SCM Supply Chain Management Definitions & Terms (https://scm.ncsu.edu/scm-articles/all-articles/category/scm-


terms) Relationships (https://scm.ncsu.edu/scm-articles/all-articles/category/relationships)

Quality (https://scm.ncsu.edu/scm-articles/article/quality)

By: SCRC Staff Posted 01-19-2011

Conformance to requirements or fitness for use. Quality can be defined through five principal approaches: (1)
Transcendent quality is an ideal, a condition of excellence. (2) Product-based quality is based on a product
attribute. (3) User-based quality is fitness for use. (4) Manufacturing-based quality is conformance to
requirements. (5) Value-based quality is the degree of excellence at an acceptable price. Also, quality has two
major components: (1) quality of conformance—quality is defined by the absence of defects, and (2) quality of
design—quality is measured by the degree of customer satisfaction with a product’s characteristics and features.

Categories:

SCM Supply Chain Management Definitions & Terms (https://scm.ncsu.edu/scm-articles/all-articles/category/scm-


terms) Physical Flows (https://scm.ncsu.edu/scm-articles/all-articles/category/physical-flows)

Quality Programs (https://scm.ncsu.edu/scm-articles/article/quality-programs)

By: SCRC Staff Posted 01-19-2011

Some of quality programs that are currently used include: Total Quality Management (TQM): TQM is a
management approach to long-term success through customer satisfaction. TQM is based on the participation of
all members of an organization in improving processes, goods, services, and the culture in which they work.
Total Quality Engineering (TQE): TQE is the discipline of designing quality into the product and manufacturing
processes by understanding the needs of the customer and performance capabilities of the equipment. Total
Quality Control (TQC): TQC is the process of creating and producing the total composite good and service
characteristics by marketing, engineering,

Categories:

SCM Supply Chain Management Definitions & Terms (https://scm.ncsu.edu/scm-articles/all-articles/category/scm-


terms) Physical Flows (https://scm.ncsu.edu/scm-articles/all-articles/category/physical-flows)

Relationship Management (https://scm.ncsu.edu/scm-articles/article/relationship-management)

By: SCRC Staff Posted 01-19-2011

See: Agreements, Collaboration, Contract, Joint Venture, Strategic Alliance, Supplier-Customer Partnership
Categories:

SCM Supply Chain Management Definitions & Terms (https://scm.ncsu.edu/scm-articles/all-articles/category/scm-


terms) Relationships (https://scm.ncsu.edu/scm-articles/all-articles/category/relationships)

Reverse Logistics (https://scm.ncsu.edu/scm-articles/article/reverse-logistics)

By: SCRC Staff Posted 01-19-2011

A supply chain that is dedicated to the reverse flow of products and materials for returns, repair, remanufacture,
and/or recycling. Source: http://www.apics.org/ (10th ed.)

Categories:

Logistics (https://scm.ncsu.edu/scm-articles/all-articles/category/logistics) Logistics Definition (https://scm.ncsu.edu/scm-


articles/all-articles/category/logistics-definition) SCM Supply Chain Management Definitions & Terms
(https://scm.ncsu.edu/scm-articles/all-articles/category/scm-terms) Physical Flows (https://scm.ncsu.edu/scm-articles/all-
articles/category/physical-flows)

Scheduling (https://scm.ncsu.edu/scm-articles/article/scheduling)

By: SCRC Staff Posted 01-19-2011

Scheduling involves taking decisions regarding the allocation of available capacity or resources (equipment,
labor and space) to jobs, activities, tasks or customers over time. Scheduling thus results in a time-phased plan,
or schedule of activities. The schedule indicates what is to be done, when, by whom and with what equipment.
Scheduling seeks to achieve several conflicting objectives: high efficiency, low inventories and good customer
service. Scheduling can be classified by the type of process: line, batch and project. Source:
http://www.apics.org/ (10th ed.)

Categories:

SCM Supply Chain Management Definitions & Terms (https://scm.ncsu.edu/scm-articles/all-articles/category/scm-


terms) Information Flows (https://scm.ncsu.edu/scm-articles/all-articles/category/information-flows)

Service Level Agreement (https://scm.ncsu.edu/scm-articles/article/service-level-agreement)

By: SCRC Staff Posted 01-19-2011

Service-level agreements (SLAs) are contracts between service providers and customers that define the services
provided, the metrics associated with these services, acceptable and unacceptable service levels, liabilities on the
part of the service provider and the customer, and actions to be taken in specific circumstances. Source: Dobler,
D.W., & Burt, D.N. (1996). Purchasing and Supply Management. (6th ed.). New York: McGraw Hill.

Categories:

SCM Supply Chain Management Definitions & Terms (https://scm.ncsu.edu/scm-articles/all-articles/category/scm-


terms) Relationships (https://scm.ncsu.edu/scm-articles/all-articles/category/relationships)

Six Sigma (https://scm.ncsu.edu/scm-articles/article/six-sigma)

By: SCRC Staff Posted 01-19-2011

See: Quality Programs

Categories:

SCM Supply Chain Management Definitions & Terms (https://scm.ncsu.edu/scm-articles/all-articles/category/scm-


terms) Physical Flows (https://scm.ncsu.edu/scm-articles/all-articles/category/physical-flows)

Sourcing Strategy (https://scm.ncsu.edu/scm-articles/article/sourcing-strategy)

By: SCRC Staff Posted 01-19-2011

A successful sourcing strategy requires a thorough understanding of a company’s business strategy, the resources
required to deliver that strategy, the market forces and the unique risks within the company associated with
implementing specific approaches. A periodic review of the sourcing strategy ensures achievement of desired
results and continued alignment with business objectives. Some of the sourcing strategies that are used in supply
chain management today include: Single sourcing: A method whereby a purchased part is supplied by only one
supplier. A JIT manufacturer will frequently have only one supplier for a purchased part so that close
relationships can

Categories:

SCM Supply Chain Management Definitions & Terms (https://scm.ncsu.edu/scm-articles/all-articles/category/scm-


terms) Relationships (https://scm.ncsu.edu/scm-articles/all-articles/category/relationships)

Specifications (https://scm.ncsu.edu/scm-articles/article/specifications)

By: SCRC Staff Posted 01-19-2011

Specifications are the most detailed method of describing requirements. Various types of design specifications
are the detailed descriptions of the materials, parts, and components to be used in making a product. Hence, they
are the descriptions that tell the seller exactly what the buyer wants to purchase. Source: Dobler, D.W., & Burt,
D.N. (1996). Purchasing and Supply Management. (6th ed.). New York: McGraw Hill.

Categories:

SCM Supply Chain Management Definitions & Terms (https://scm.ncsu.edu/scm-articles/all-articles/category/scm-


terms) Relationships (https://scm.ncsu.edu/scm-articles/all-articles/category/relationships)

Standard/Compatibility (https://scm.ncsu.edu/scm-articles/article/standard-compatibility)

By: SCRC Staff Posted 01-19-2011

1) An established norm against which measurements are compared. (APICS 10th ed.) 2) The Internet has
transformed supply chain management into something closer to an exact science. However for information to be
shared, systems, both hardware and software, must be able to communicate and be compatible so that all supply
chain activities can be optimized across company boundaries. Standards promote interoperability and
compatibility among operating environments.

Categories:

SCM Supply Chain Management Definitions & Terms (https://scm.ncsu.edu/scm-articles/all-articles/category/scm-


terms) Information Flows (https://scm.ncsu.edu/scm-articles/all-articles/category/information-flows)

Statement of Work (S.O.W) (https://scm.ncsu.edu/scm-articles/article/statement-of-work-s.o.w)

By: SCRC Staff Posted 01-19-2011

The most critical ingredient of a successful procurement of services is the development and documentation of
the requirements – the statement of work. The S.O.W. identifies what the contractor is to accomplish. It first
clearly identifies the primary objective and then the subordinate objectives. One of the goals of the S.O.W. is to
gain understanding and agreement with a contractor about the specific nature of the technical activity to be
performed. The S.O.W. also impacts the administration of the contract by defining the scope of the contract, that
is, what the contractor is supposed to

Categories:

SCM Supply Chain Management Definitions & Terms (https://scm.ncsu.edu/scm-articles/all-articles/category/scm-


terms) Relationships (https://scm.ncsu.edu/scm-articles/all-articles/category/relationships)

Statistic Quality Control (https://scm.ncsu.edu/scm-articles/article/statistic-quality-control)

By: SCRC Staff Posted 01-19-2011

See: Quality Programs

Categories:

SCM Supply Chain Management Definitions & Terms (https://scm.ncsu.edu/scm-articles/all-articles/category/scm-


terms) Information Flows (https://scm.ncsu.edu/scm-articles/all-articles/category/information-flows)

Strategic Alliance (https://scm.ncsu.edu/scm-articles/article/strategic-alliance)

By: SCRC Staff Posted 01-19-2011

A relationship formed by two or more organizations that share (proprietary), participate in joint investments, and
develop linked and common processes to increase the performance of both companies. Many organizations form
strategic alliances to increase the performance of their common supply chain. Source: http://www.apics.org/

Categories:

SCM Supply Chain Management Definitions & Terms (https://scm.ncsu.edu/scm-articles/all-articles/category/scm-


terms) Relationships (https://scm.ncsu.edu/scm-articles/all-articles/category/relationships)
Supplier Development Training (https://scm.ncsu.edu/scm-articles/article/supplier-development-training)

By: SCRC Staff Posted 01-19-2011

Education and training is the most common approach to supplier development and improvement. A purchaser
may provide training in statistical process control, quality improvement techniques, just-in-time delivery or any
other crucial performance area. In order for purchasing to adequately assess and aid suppliers in improving
quality, purchasers need to become familiar with the important components of quality management. In many
organizations, purchasing may request the assistance of quality and engineering departments in assisting with the
supplier quality training. Purchasing companies emphasize four areas of quality training with their suppliers: 1)
Total quality management and quality improvement training, 2) statistical quality control techniques

Categories:

SCM Supply Chain Management Definitions & Terms (https://scm.ncsu.edu/scm-articles/all-articles/category/scm-


terms) Relationships (https://scm.ncsu.edu/scm-articles/all-articles/category/relationships)

Supplier Integration in New Product Development (https://scm.ncsu.edu/scm-articles/article/supplier-


integration-in-new-product-development)

By: SCRC Staff Posted 01-19-2011

Supplier integration into new product/process/service development suggests that suppliers are providing
information and directly participating in decision making for purchases used in the new product/process/service.
This integration can occur during idea generation, preliminary business/technical assessment, product/process
/service concept development, product/process/service design and development and prototype build, test or
production ramp up. Source: Handfield, R.B., Ragatz, G.L., & Monczka, R.M. (1999). Involving suppliers in
New Product Development. California Management Review, 42(1), 59-82.

Categories:

SCM Supply Chain Management Definitions & Terms (https://scm.ncsu.edu/scm-articles/all-articles/category/scm-


terms) Relationships (https://scm.ncsu.edu/scm-articles/all-articles/category/relationships)

Supplier Intelligence (https://scm.ncsu.edu/scm-articles/article/supplier-intelligence)

By: SCRC Staff Posted 01-19-2011

Supplier Intelligence is the purposeful, coordinated and ethical monitoring of strategic suppliers, within a
specific marketplace.

Categories:

SCM Supply Chain Management Definitions & Terms (https://scm.ncsu.edu/scm-articles/all-articles/category/scm-


terms) Relationships (https://scm.ncsu.edu/scm-articles/all-articles/category/relationships)

Supplier Performance Evaluation (https://scm.ncsu.edu/scm-articles/article/supplier-performance-evaluation)

By: SCRC Staff Posted 01-19-2011


The main objective of the supplier evaluation process is to reduce purchase risk and maximize the overall value
of the purchaser. It typically involves evaluating, at a minimum, supplier quality, cost competitiveness, potential
delivery performance and technological capability. Some of the other criteria used in the preliminary evaluation
of suppliers include financial risk analysis, evaluation of previous performance, and evaluation of supplier
provided information. Source: Monczka, R., Trent, R., & Handfield, R. (1998). Purchasing and Supply Chain
Management. Cincinnati, OH: South Western College Publishing.

Categories:

SCM Supply Chain Management Definitions & Terms (https://scm.ncsu.edu/scm-articles/all-articles/category/scm-


terms) Relationships (https://scm.ncsu.edu/scm-articles/all-articles/category/relationships)

Supplier-Customer Partnership (https://scm.ncsu.edu/scm-articles/article/supplier-customer-partnership)

By: SCRC Staff Posted 01-19-2011

A long-term relationship between a buyer and a supplier characterized by teamwork and mutual confidence. The
supplier is considered an extension of the buyer’s organization. The partnership is based on several
commitments. The buyer provides long-term contracts and uses fewer suppliers. The supplier implements
quality assurance processes so that incoming inspection can be minimized. The supplier also helps the buyer
reduce costs and improve product and process designs. Sources: Monczka, R., Trent, R., & Handfield, R. (1998).
Purchasing and Supply Chain Management. Cincinnati, OH: South Western College Publishing.

Categories:

SCM Supply Chain Management Definitions & Terms (https://scm.ncsu.edu/scm-articles/all-articles/category/scm-


terms) Relationships (https://scm.ncsu.edu/scm-articles/all-articles/category/relationships)

Supply Chain Design (https://scm.ncsu.edu/scm-articles/article/supply-chain-design)

By: SCRC Staff Posted 01-19-2011

Supply chain design involves the determination of how to structure a supply chain. Design decisions include the
selection of partners, the location and capacity of warehouse and production facilities, the products, the modes of
transportation, and supporting information systems. Source: http://www.apics.org/ (10th ed.)

Categories:

SCM Supply Chain Management Definitions & Terms (https://scm.ncsu.edu/scm-articles/all-articles/category/scm-


terms) Physical Flows (https://scm.ncsu.edu/scm-articles/all-articles/category/physical-flows)

Supply Chain Inventory Visibility (https://scm.ncsu.edu/scm-articles/article/supply-chain-inventory-visibility)

By: SCRC Staff Posted 01-19-2011

Software applications that permit monitoring events across a supply chain. These systems track and trace
inventory globally on a line-item level and notify the user of significant deviations from plans. Companies are
provided with realistic estimates of when material will arrive. Source: http://www.apics.org/ (10th ed.) See:
Inventory Management Systems

Categories:
SCM Supply Chain Management Definitions & Terms (https://scm.ncsu.edu/scm-articles/all-articles/category/scm-
terms) Information Flows (https://scm.ncsu.edu/scm-articles/all-articles/category/information-flows)

Target Costing (https://scm.ncsu.edu/scm-articles/article/target-costing)

By: SCRC Staff Posted 01-20-2011

It is the process of designing a product to meet a specific cost objective. Target costing involves setting the
planned selling price, subtracting the desired profit as well as marketing and distribution costs, thus leaving the
required manufacturing or target cost. Source for above definitions: http://www.apics.org/ (10th ed.)

Categories:

SCM Supply Chain Management Definitions & Terms (https://scm.ncsu.edu/scm-articles/all-articles/category/scm-


terms) Information Flows (https://scm.ncsu.edu/scm-articles/all-articles/category/information-flows)

Total Cost of Ownership (TCO) (https://scm.ncsu.edu/scm-articles/article/total-cost-of-ownership-tco)

By: SCRC Staff Posted 01-20-2011

In supply chain management, the total cost of ownership of the supply delivery system is the sum of all the costs
associated with every activity of the supply stream. The main insight that TCO offers to the supply chain
manager is the understanding that the acquisition cost is often a very small portion of the total cost of ownership.
Source: http://www.apics.org/ (10th ed.)

Categories:

SCM Supply Chain Management Definitions & Terms (https://scm.ncsu.edu/scm-articles/all-articles/category/scm-


terms) Information Flows (https://scm.ncsu.edu/scm-articles/all-articles/category/information-flows)

Total Costs (https://scm.ncsu.edu/scm-articles/article/total-costs)

By: SCRC Staff Posted 01-20-2011

The sum of the variable, fixed and semivariable costs (costs that cannot be classified as variable or fixed )
comprises total costs. As the volume of production increases, total costs increase. However, the cost to produce
each unit of product decreases. This is because the fixed costs do not increase, they are simply spread over a
larger number of units of products. Source: Dobler, D.W., & Burt, D.N. (1996). Purchasing and Supply
Management. (6th ed.). New York: McGraw Hill.

Categories:

SCM Supply Chain Management Definitions & Terms (https://scm.ncsu.edu/scm-articles/all-articles/category/scm-


terms) Information Flows (https://scm.ncsu.edu/scm-articles/all-articles/category/information-flows)

Total Productive Maintenance (TPM) (https://scm.ncsu.edu/scm-articles/article/total-productive-maintenance-


tpm)

By: SCRC Staff Posted 01-20-2011

Preventive maintenance plus continuing efforts to adapt, modify, and refine equipment to increase flexibility,
reduce material handling, and promote continuous flows. It is operator-oriented maintenance with the
involvement of all qualified employees in all maintenance activities. Source: http://www.apics.org/ (10th ed.)

Categories:

SCM Supply Chain Management Definitions & Terms (https://scm.ncsu.edu/scm-articles/all-articles/category/scm-


terms)

Training (https://scm.ncsu.edu/scm-articles/article/training)

By: SCRC Staff Posted 01-20-2011

Managers must ensure that appropriate personnel receive periodic training with respect to the organization’s
ethical and professional standards. Supply managers should ensure that their personnel receive training on
current thinking and techniques in the areas of requirements planning, source selection, pricing, cost analysis,
negotiation and supply management as well as ethical and professional standards. Some examples of types of
training in organizations: Cross-Training: The providing of training or experience in several different areas, e.g.,
training an employee on several machines rather than one. Cross-training provides backup workers in case the
primary operator is unavailable. On-the-Job Training (OJT): Learning

Categories:

SCM Supply Chain Management Definitions & Terms (https://scm.ncsu.edu/scm-articles/all-articles/category/scm-


terms) Relationships (https://scm.ncsu.edu/scm-articles/all-articles/category/relationships)

Warehouse Management Layouts (https://scm.ncsu.edu/scm-articles/article/warehouse-management-layouts)

By: SCRC Staff Posted 01-19-2011

This refers to the configuration of the warehouse site with lines, storage areas, aisles, etc. Layout or storage plan
of a warehouse should be planned to facilitate product flow. Special attention should be given to location,
number, and design of receiving and loading docks. Source: http://www.apics.org/ (10th ed.) Bowersox, D.J.,
Closs, D.J., & Cooper, M.B. (2002). Supply Chain LogisticsManagement. Burr Ridge, Boston: McGraw Hill.

Categories:

SCM Supply Chain Management Definitions & Terms (https://scm.ncsu.edu/scm-articles/all-articles/category/scm-


terms) Physical Flows (https://scm.ncsu.edu/scm-articles/all-articles/category/physical-flows)

What is Supply Chain Management (SCM)? (https://scm.ncsu.edu/scm-articles/article/what-is-supply-chain-


management)
By: SCRC Staff Posted 04-02-2017

What is Supply Chain Management (SCM)? Supply chain management (SCM) is the active management of
supply chain activities to maximize customer value and achieve a sustainable competitive advantage. It
represents a conscious effort by the supply chain firms to develop and run supply chains in the most effective &
efficient ways possible. Supply chain activities cover everything from product development, sourcing,
production, and logistics, as well as the information systems needed to coordinate these activities. The concept
of Supply Chain Management (SCM) is based on two core ideas: The first is that practically every product that
reaches an end

Categories:

SCM Resources (https://scm.ncsu.edu/scm-articles/all-articles/category/scm-resources) SCM Basics (https://scm.ncsu.edu


/scm-articles/all-articles/category/scm-basics) SCM Supply Chain Management Definitions & Terms
(https://scm.ncsu.edu/scm-articles/all-articles/category/scm-terms)

Supply Chain View from the Field Blog - Robert Handfield (https://scm.ncsu.edu/blog)

Supply Chain Management Articles Library (https://scm.ncsu.edu/scm-articles)

Supply Chain Executive Training (http://poole.ncsu.edu/index-exp.php/home-executive-education/custom-programs/supply-chain-1/)

You might also like