Early supplier involvement
Soliciting input from vendors in the product design and development stages to reveal cost-saving ideas before decisions by others (such as the buyer and the ultimate customer) limit the supplier into suboptimal processes, systems or infrastructure.
Electronic data interchange (EDI) transaction sets
Standardised sets of data that are transmitted, usually between a buyer and a seller, to indicate any number of supply chain events. Advance shipping notices (transaction set 856) and commercial invoices (transaction set 810) are two common EDI transaction sets.
Gain sharing
Splitting benefits achieved (often cost savings beyond a benchmark or target level) with workers, suppliers or customers.
Inventory
Stock. Buffers of raw material, work in process, or finished material designed to hedge against uncertain or erratic demand or supply so as to avoid stock-outs.
Kaizen
Japanese word for continuous improvement achieved through employee involvement.
Landed (delivered) cost
Cost of obtaining a product at its point of use, including transportation, customs duties and fees, insurance, interest and storage.
Lean
Containing no or little waste. Alternatively, a shorthand term referring to an approach towards eliminating waste from production and distribution through the active involvement and motivation of workers and a focus on value to the customer.
Lifts, empty lifts
Taking loaded or unloaded containers (respectively) off a vehicle, usually a ship or train.
Logistics
Co-ordination of flows of funds, information and goods from a supplier to a customer to maximise availability while minimising operating costs.
Make to order
Production system that produces only in response to a customer order.
Make to stock
Production system that replenishes a buffer of inventory independently of customer orders.
Mindshare
Presence of the brand in the mind of the customer, as defined by the proportion of the top customers’ attention that is devoted to his or her relationship with the supplier’s company.
Offshoring
Producing or sourcing from overseas.
Operations management
Maximising throughput from a dynamic system within constraints (usually time and cost) by adjusting demand and capacity at work centres.
Outsourcing
Contracting of a third party to manufacture or deliver a product or service.
Partnering
Collaboration with suppliers or customers that adds value to each partner’s processes, projects or strategy.
Picking and packing
Selecting material from warehouse shelves, wrapping it and palletising it (usually in shrink-wrap or with a band to hold it together). “Pick-pack-ship” includes loading onto vehicles for delivery.
Postponement
Shifting the point of differentiation closer to the point of consumption to reduce out-of-stocks and inventory costs, and increase opportunities for customisation.
Product life-cycle management
Software application that is used to process engineering change orders (formal changes to the design specifications of products) and to maintain and update bills of material that define the composition of products or services. Alternative meaning: modulating the level of activity and resources devoted to SCM activities (such as R&D, engineering, production, logistics and customer service) during product introduction, growth, maturity and decline.
Public–private partnership
Joint investment by governmental and private-sector interests, usually in infrastructure.
Pull system
Resupply arrangement whereby replenishment is triggered by customer usage or purchases.
Put-away
Storing incoming material on warehouse shelves.
Responsive order fulfilment
Delivery arrangements that acknowledge customers’ wishes and satisfy them because they are adapted to their preferences and lifestyle.
Revenue management
Using the profitability of individual customers and transactions to decide how to respond to and prioritise orders.
Service chain management
Engineering and management of a flow of services (intangible products) and funds so as to maximise customer loyalty. No goods are involved.
Shipment consolidation (deconsolidation)
Aggregation (or disaggregation) of cargo according to its destination (or origin) at a point between the origin and the destination.
Should-cost
Price that the product would cost if all supply chain strategies were properly employed.
Six Sigma
Form of statistical process control designed to ensure the ability of a process to repeatedly deliver output within a prescribed range of tolerance.
SKU rationalisation
Reducing the number of stock-keeping units (SKUs) to minimise the supply chain cost and complexity (for example, inventory carrying, obsolescence and order management costs).
Stock-out (or “out of stock”)
Lack of materials, components, or finished goods that are needed.
Stovepipe fashion
Functionally separated into vertical silos with limited communication between each other.
Supplier consolidation
Reducing the number of vendors by offering more attractive economies of scale to improve negotiating leverage and increase supplier commitment and involvement through a deeper relationship with fewer partners.
Supplier kaizen
Introducing continuous improvement initiatives into supplier organisations to synchronise supply chain goals and operations between two trading partners.
Supplier pre-packaging
Boxing, labelling and loading by a supplier in the order of delivery or consumption rather than the order of production to facilitate quicker and easier unloading and to eliminate intermediate offloading until the smallest units reach their final customer.
Supply chain
Set of activities involved in moving a product (such as a vehicle) and its associated services (such as service parts) from the ultimate supplier to the ultimate customer.
Supply chain management
The co-ordination of the set of activities involved in moving a product (such as a vehicle) and its associated services (such as service parts) from the ultimate supplier to the ultimate customer so as to maximise economic value added (EVA).
Supply management
The process of getting goods and services from the supplier to the point of production on time and within budget to minimise the total life-cycle cost to the organisation. Includes at a minimum the identification of sources, contracting and purchasing.
Tier-skipping
Voluntary disintermediation by the buyer forwards or backwards in the supply chain to gain the benefits of a more direct relationship with remote supply chain partners by eliminating the profit margins of middlemen and forming a more intimate customer relationship.
Total cost of ownership
The direct and indirect expense associated with owning a product from its purchase until its retirement. This equals the supply chain cost, plus the acquisition cost itself, minus the cost of SCM failure.
Total quality management
The engagement of a workforce in ensuring that quality problems are continuously eradicated through the use of process analysis tools.
Up-selling
Offering a customer or prospective customer a more expensive or higher-margin product or service than what they currently purchase or are interested in purchasing.
Value analysis
The process of decomposing a product or process to its elemental usefulness to the customer, and then eliminating any non-essential steps in designing, producing, or delivering it. Understanding customers’ underlying needs
based on their preferences.
Value engineering
The redesign of products or processes to optimise the ratio of customer desires to the cost of satisfying them.
Vendor managed inventory
Mode of inventory management in which a supplier monitors the amount of inventory at a customer’s location and replenishes it as needed to keep supply and demand in balance.
Warehouse slotting
Assigning storage spaces to material coming into a warehouse. Storage spaces can be assigned statically (space is dedicated for specific material) or dynamically (space is allocated to material depending on availability at the time).
Yield pricing
Process of adjusting pricing to influence demand and thereby increase sales and margins.
Index
Page numbers in italic refer to figures, tables and boxes
3PL (third-party logistics) 8, 49, 71, 72, 101, 200, 201–2
5S approach 58–9, 75, 76–7
7-Eleven 20
“5 whys” 75, 79–80, 80
A
“A” operations 51, 52
ABB 167–8
ABC (activity-based costing) 180, 182
acquisition cost 65
activity-based costing see ABC
advanced planning and scheduling see APS
AEC (Advanced Electronics Company) 202
Ahold 23, 92, 106, 134–5
air transportation 7, 7, 88
aircraft 52, 103
airlines 21, 31, 48, 68, 81, 136, 138, 167
RFID use 178
yield pricing 114
airports 73–4, 85, 178, 208
Amazon 57–8, 179–80, 181
AMD 153
American Airlines 68, 136
AMR 68
anchor players 96, 110–12, 205, 233
Ann Taylor 159–60
APL Logistics 27, 27–8, 142
APM Terminals 62
Apple 50, 59
APS (advanced planning and scheduling) systems 29, 162, 170, 171, 172, 175–6, 182, 183
Aramex 182
Asia 7–8, 8, 14, 200, 201–2
sourcing from 14, 42, 48, 122, 202
Asian Development Bank 47–8
asset management 55–6, 171, 171–2
asset turnover 91, 92
ATO (assemble to order) 51, 52, 104, 139, 139
ATP (available to promise) 125, 130, 142
auctions 43, 45, 155, 170, 171
reverse auctions 174, 235
automotive industry 12–13, 20, 101–2, 106, 141
B
Baker Petrolite 202
Baran, Roger 133, 143
Barilla Pasta 19
BASF 105, 197–9
batching 19, 90
“beer game” 9, 20
beer and wine supply chain 11–12
benchmarking 229–30
Benetton 102
Beretta 123–5
best practices 231, 231, 232
Bethlehem Steel 233
Bich, Marcel 87
BlackBerry PDAs 59–60, 127, 145, 177
Blyth 122, 153
BNSF Railroad 97–8, 208
Bose 153
Boston Strategies International 44–6, 47, 54, 70–1, 121, 156, 197
“bottleneck” categories 68, 69, 69
bottlenecks 61, 96–8, 96, 101, 171, 207, 208
BPO see business process outsourcing
BPR see business process re-engineering
brand awareness 128, 130, 153–4, 188
Brandyberry, Gregg 235
Brennan, David 88
Bristol Myers Squibb 68
Brock, Andrew 193
Brown Shoe 135
bullwhip effect 9, 15–17, 16–17, 18–20, 92, 115, 193
avoiding 46, 106, 109
causes 19, 90, 110, 179
eliminating 29, 90, 91, 209
mitigating 66, 70, 189–90
quantifying 19, 109
reducing 69, 90, 91, 110, 112, 203, 205
business cycles 19, 46, 209–10
business process outsourcing (BPO) 235
business process re-engineering (BPR) 227, 230–1
business strategies 51, 53, 54, 54
“butterfly effect” 17–18, 18
C
C-level leaders 2–3, 159–60, 193, 196, 205–6
CAD/CAM (computer-aided design and manufacturing) 162, 170, 171–3, 171, 172
call centres 130, 176, 183
capacity management 96, 113–14
capacity planning 37, 61
capacity throughput analysis 96–8, 96
cargo screening 22–3, 123
Carolina Biological 42
Carranza Torres, Octavio 16
Carrefour 20, 22
cash-flow performance 92, 93
Caterpillar 202
cellular manufacturing 58–9, 75, 79
centralisation 70, 107–8, 157
cereal supply chain 12
certification programmes 1, 165, 166
CEVA Logistics 102–3
Champy, James 230
Chandler, Alfred DuPont 155
chaos theory 17–18, 18
Charles River Laboratories 235
chemicals industry 13, 20, 52
China 8, 47, 178, 201, 202
cargo screening 22–3, 88
infrastructure 47, 49, 62, 178
service sector 203, 204
sourcing from 23–4, 42, 58, 86, 153, 202, 235
Christmas Tree Shops 152
Christopher, Martin 106, 184
Chrysler 68
CLP Power 153
Cochlear 181–2
Cohen, Shoshanah 36, 155, 230
collaboration 34, 35, 43, 110–13, 175, 206, 230–1, 230
benefits 60
for innovation 151, 152–3, 183
see also partnerships
collaborative inventory management 96, 109–10, 156
Colliss, Tony 21
Cominco 167–8
commoditisation 126–7, 131, 203
communication 123, 124–5
competition 7, 7, 234–6
competition sourcing strategy 69, 69
competitive advantage 2, 4, 20, 51, 53, 207, 209
competitive bidding 174, 235
competitiveness, national 47, 209
compliance 23, 43
computer-aided design and manufacturing see CAD/CAM
Con Way 28
configure to order see CTO
congestion 118, 208–9
consignment inventory 67, 87, 174–5
consumer packaged goods see CPG
The Container Store 141
containers 8–9, 22–3, 28, 35, 61–2
contingency planning 116, 123
continuous flow 51, 52, 139, 140
cost applications 180
cost leverage factor 63–7, 65
cost of quality 77
Costco 58
costs 10, 20–1, 21, 33, 120, 173
end-of-life 66, 67
low 43, 63
reducing 20, 58, 155–6, 207
supply chain 65–7
CPG (consumer packaged goods) 10–11, 14–15, 26, 52
Crain, Bruce 153
Crawford, Ian 86, 142
CRM (customer relationship management) 10, 26, 133, 201
IT systems 162, 171, 171, 172, 179–80, 182
cross-docking 15, 67, 83, 156, 173, 207, 228
Georgia Pacific 84–5, 182
cross-selling 10, 42, 143
CTO (configure to order) 52
customer data 130, 133–5, 202
customer feedback 143, 147, 150, 158–9, 160–1, 173
customer knowledge management 44, 130, 133–4, 205
customer loyalty 90, 145
customer mindshare 56, 142, 188, 203
customer profitability management 130, 135–8
customer relationship manag
ement see CRM
customer relationships 130, 130–1, 202, 204
customer satisfaction 129–30, 138–9, 146, 192
customer service 25, 33, 43, 90, 126, 130–1, 158, 227–8
place in organisation 155, 156, 156, 157
customer-specific costing 135–6
customer-specific pricing 136–8
customerisation 126
customers 9–11, 42, 118
data on 9, 130, 133–5, 202
relationships with 130, 130–1, 202, 204
voice of 130, 131–3, 132
customisation 10–11, 36, 36, 55, 56–7, 56, 126–7, 203, 205
benefits 44, 45, 126, 128–30, 129, 138, 185, 186
and business strategy 54, 54
customer relationship management 179–80
for economic growth 61, 61, 62
elements of strategy 34, 38–9, 40, 44, 130–45
information systems 171–3, 172, 173, 175, 179, 180, 181, 182
in integrated strategy 56, 57, 59–60, 60–1
metrics 186, 188, 190–1, 195
Netflix 145–6
organisation 159–61, 160
success factors 128, 128
and value chain role 53, 53
see also mass customisation; personalisation
CVS/pharmacy 133, 175
cycle time for orders 114, 146
cyclical trends 90, 189–90, 190
D
Dana-Farber Cancer Institute 71
Dartnell, Lewis 18
data 110, 206
collection 10, 131, 179–80, 202–3, 206
exchange 35, 87–8, 170, 181, 202–3
on transactions 87–8, 131, 179–80
see also data protocols; EDI
data mining 40, 133, 134, 202
data protocols 87–8, 170, 181, 206
see also EDI
DB Schenker 201–2
DC (distribution centre) bypass 67, 83, 85, 86, 100–1, 228
Deere & Company 145
delivery 100–1, 127, 128, 130, 228
times 10, 30, 100–1, 128, 128