- CSCP
- Certified Supply Chain Professional — ASCM's (formerly APICS) credential covering end-to-end global supply chain strategy, from suppliers to customers.
- ASCM
- Association for Supply Chain Management — the body that owns the CSCP, CPIM, and CLTD credentials (formerly APICS).
- Supply chain
- The global network used to deliver products and services from raw materials to end customers through an engineered flow of information, physical distribution, and cash.
- Supply chain management
- The design, planning, execution, control, and monitoring of supply chain activities to create net value, build a competitive infrastructure, and synchronize supply with demand.
- CSCP vs. CPIM
- CSCP covers the entire end-to-end, cross-company global supply chain (supplier→customer). CPIM focuses on internal production and inventory management within the firm.
- Value chain
- The full range of activities a firm performs to bring a product from conception to end use, each adding value the customer is willing to pay for (Porter).
- Competitive advantage
- The edge a firm gains over rivals — typically through cost leadership, differentiation, or responsiveness — that the supply chain is designed to support.
- Order qualifiers
- The minimum characteristics a product or supplier must have to be considered by a customer at all.
- Order winners
- The characteristics that cause a customer to choose one product or supplier over the competing qualified alternatives.
- Efficient vs. responsive supply chain
- Efficient chains minimize cost for stable, predictable (functional) products; responsive chains prioritize speed and flexibility for uncertain (innovative) products.
- Functional vs. innovative products
- Functional products have stable, predictable demand and low margins; innovative products have volatile demand and higher margins — each needs a different supply chain.
- Supply chain strategy alignment
- The supply chain strategy must support the competitive (business) strategy — design, sourcing, and logistics decisions all flow from how the firm chooses to compete.
- Total cost of ownership (TCO)
- The full cost of a product across its life — acquisition, transportation, operation, maintenance, quality, and disposal — not just the purchase price.
- Cash-to-cash cycle time
- Days inventory outstanding + days sales outstanding − days payables outstanding; the time cash is tied up before it returns. Lower is better.
- Return on supply chain fixed assets
- A SCOR asset-management metric: the return an organization receives on the capital invested in supply chain fixed assets.
- Working capital
- Current assets minus current liabilities; reducing inventory and shortening the cash-to-cash cycle frees working capital.
- Stakeholders
- Any group with an interest in the supply chain — customers, suppliers, employees, shareholders, communities, regulators — whose needs strategy must balance.
- Macro environment (PESTLE)
- Political, Economic, Social, Technological, Legal, and Environmental forces a global supply chain must scan and adapt to.
- Globalization
- Expanding supply chains across borders for lower cost, new markets, and resources — adding complexity in logistics, currency, culture, and regulation.
- Trade-off analysis
- Weighing the competing costs of supply chain decisions (e.g., inventory vs. transportation, cost vs. service) to optimize the total system rather than one part.
- SCOR model
- The Supply Chain Operations Reference model — a cross-industry framework defined by ASCM around six core processes: Plan, Source, Make, Deliver, Return, and Enable.
- SCOR — Plan
- The SCOR process that balances aggregate demand and supply to develop courses of action that best meet sourcing, production, and delivery requirements.
- SCOR — Source
- The SCOR process of procuring goods and services to meet planned or actual demand.
- SCOR — Make
- The SCOR process that transforms product to a finished state to meet planned or actual demand.
- SCOR — Deliver
- The SCOR process providing finished goods and services to customers — order management, warehousing, and transportation.
- SCOR — Return
- The SCOR process of receiving products back from customers or returning products to suppliers (reverse flow).
- SCOR — Enable
- The SCOR process covering supporting activities that govern the chain: business rules, master data, contracts, performance, and regulatory compliance.
- SCOR performance attributes
- Reliability, Responsiveness, Agility (customer-facing) and Cost and Asset Management Efficiency (internal-facing) — the dimensions SCOR metrics measure.
- Perfect order fulfillment
- A SCOR reliability metric: the percentage of orders delivered complete, on time, damage-free, and with correct documentation. Missing any element = a failed order.
- SCOR reliability
- The performance attribute measuring whether the chain performs tasks as expected — right product, place, time, condition, quantity, and documentation.
- SCOR responsiveness
- The speed at which a supply chain provides products to the customer (e.g., order fulfillment cycle time).
- SCOR agility
- The ability to respond to external marketplace changes — upside/downside flexibility and adaptability.
- Demand management
- Recognizing and managing all demands for products to ensure the master scheduler is aware of them — forecasting, order entry, and demand prioritization.
- Demand forecasting
- Predicting future demand from historical data, market intelligence, and judgment to drive planning across the supply chain.
- Qualitative forecasting
- Judgment-based methods used when little historical data exists — e.g., Delphi method, market research, expert opinion, panel consensus.
- Quantitative forecasting
- Data-driven methods using historical demand — time-series (moving average, exponential smoothing) and causal/regression models.
- Delphi method
- A qualitative technique using structured, anonymous rounds of expert input that converge toward consensus, avoiding dominant-personality bias.
- Moving average
- A time-series forecast that averages demand over a fixed number of recent periods to project the next period; smooths out random variation.
- Exponential smoothing
- A time-series forecast that weights recent demand more heavily using a smoothing constant (alpha); reacts faster than a simple moving average.
- Forecast error (MAD)
- Mean Absolute Deviation — the average of the absolute differences between forecast and actual demand; a core accuracy measure.
- Tracking signal
- The running sum of forecast errors divided by the MAD; signals bias when it moves outside control limits.
- Aggregation (forecast accuracy)
- Forecasting at the product-family level is more accurate than at the SKU level because individual item variations partially offset (pooling/risk pooling).
- Bullwhip effect
- The amplification of demand variability as orders move upstream from customer to supplier, causing excess inventory, stockouts, and inefficiency.
- Causes of the bullwhip effect
- Demand-signal processing, order batching, price fluctuation (forward buying), and rationing/shortage gaming. Sharing demand data dampens it.
- Forward buying
- Buying ahead during a price promotion, then stopping afterward — creating artificial demand peaks and troughs that feed the bullwhip effect.
- Push system
- A make-to-stock approach that produces to forecast and pushes product downstream before demand is known.
- Pull system
- A make-to-order approach that produces in response to actual demand signals, limiting inventory and overproduction (kanban is a pull tool).
- Push-pull boundary
- The point in the supply chain where production shifts from forecast-driven (push) to demand-driven (pull); also called the decoupling point.
- Postponement
- Delaying final product differentiation (assembly, packaging, labeling) until customer demand is known, moving the push-pull boundary downstream to cut inventory.
- Risk pooling
- Aggregating demand across locations or products so variability offsets, reducing the safety stock needed (centralization, postponement).
- Make-to-stock (MTS)
- Producing finished goods to forecast and holding inventory for immediate fulfillment — fast delivery, demand risk.
- Make-to-order (MTO)
- Producing only after a customer order is received — low finished-goods inventory, longer lead time.
- Engineer-to-order (ETO)
- Designing and producing a unique product to a specific customer's order — longest lead time, highly customized.
- Assemble-to-order (ATO)
- Assembling finished product from stocked components after the order arrives — balances responsiveness with limited finished-goods inventory.
- Network design / configuration
- Deciding the number, location, and capacity of facilities (plants, DCs) and the flow between them to balance cost and service.
- Centralization vs. decentralization
- Centralized inventory/facilities cut total safety stock and overhead (risk pooling) but may raise transport cost and lengthen delivery vs. decentralized.
- Master data
- The consistent, governed core data (items, customers, suppliers, locations) that the SCOR Enable process maintains for reliable supply chain transactions.
- GS1 standards
- Global standards for identifying and capturing supply chain data — GTIN (product), GLN (location), SSCC (shipment) — enabling interoperability.
- EDI
- Electronic Data Interchange — the computer-to-computer exchange of standardized business documents (orders, invoices, ASNs) between trading partners.
- Strategic sourcing
- A continuous, data-driven process of analyzing spend and aligning suppliers and contracts to total value and long-term enterprise goals — beyond one-off buying.
- Spend analysis
- Reviewing what an organization buys and from whom to find savings, consolidation, and standardization opportunities — the start of strategic sourcing.
- Category management
- Treating each related group of purchased goods or services as a managed business unit with its own strategy, suppliers, and goals.
- Make-or-buy decision
- Choosing whether to produce a good or service in-house or purchase it externally, judged on cost, capability, capacity, and strategic risk.
- Outsourcing
- Contracting a process or function to an external provider to gain cost, capability, or focus — while accepting added dependency and coordination risk.
- Insourcing
- Bringing a previously outsourced process back in-house to regain control, protect IP, or cut total cost.
- Kraljic matrix
- A purchasing portfolio model classifying items by profit impact and supply risk into leverage, strategic, non-critical, and bottleneck categories — each with a sourcing strategy.
- Request for proposal (RFP)
- A solicitation inviting suppliers to propose solutions, pricing, and terms for a defined need — used when requirements are complex or not fully specified.
- Request for quotation (RFQ)
- A solicitation asking suppliers to price a clearly specified product or service — used when requirements are well defined.
- Total cost of ownership (sourcing)
- Evaluating suppliers on the full life-cycle cost — price plus logistics, quality, inventory, risk, and end-of-life — not lowest unit price.
- Supplier selection
- Choosing suppliers against weighted criteria — cost, quality, delivery, capability, financial stability, and risk — often via a scorecard.
- Single vs. sole vs. multiple sourcing
- Single = one chosen supplier among several available; sole = only one supplier exists; multiple = several suppliers for one item to reduce risk and add competition.
- Supplier relationship management (SRM)
- A systematic approach to assessing, segmenting, and developing supplier relationships to maximize the value each supplier delivers.
- Supplier segmentation
- Classifying suppliers (e.g., strategic partners, preferred, transactional) so relationship investment and management style match each supplier's value and risk.
- Strategic supplier partnership
- A long-term collaborative relationship with joint improvement, shared roadmaps, and executive-level ownership — reserved for the most critical suppliers.
- Supplier scorecard
- A structured tool that objectively measures and communicates supplier performance over time across quality, delivery, cost, and responsiveness.
- Supplier certification
- A formal program verifying a supplier consistently meets quality and process requirements, often reducing incoming inspection.
- Early supplier involvement (ESI)
- Bringing key suppliers into product design early to improve manufacturability, cost, and time-to-market.
- Vendor-managed inventory (VMI)
- The supplier monitors and replenishes the customer's stock based on actual usage, owning the replenishment decision.
- Collaborative Planning, Forecasting & Replenishment (CPFR)
- A framework where trading partners jointly plan, forecast, and replenish — sharing demand data to reduce the bullwhip effect and improve availability.
- Customer relationship management (CRM)
- Managing the full set of interactions and value delivered across the customer base to win, serve, and retain customers profitably.
- Customer lifetime value (CLV)
- The total profit expected from a customer over the whole relationship — used to differentiate service and investment by customer value.
- Customer segmentation
- Grouping customers by value, needs, or behavior so service levels and supply chain investment are tailored to each segment.
- Service level agreement (SLA)
- A contract that defines the performance (e.g., fill rate, lead time, uptime) a provider commits to, with metrics and remedies.
- Contract types (fixed vs. cost-plus)
- Fixed-price puts cost risk on the supplier; cost-plus reimburses cost plus a fee and shifts risk to the buyer — choice depends on scope certainty.
- Incoterms (contract role)
- Standard trade terms that define when cost and risk transfer between buyer and seller in a sales contract for international shipments.
- Procure-to-pay (P2P)
- The end-to-end process from requisition and purchase order through receipt, three-way match, and supplier payment.
- Three-way match
- Confirming the purchase order, receiving record, and invoice all agree before an invoice is paid — a procurement control.
- Supplier development
- Working with a supplier to build its capability (quality, capacity, processes) when no qualified alternative exists.
- Tier 1 / Tier 2 suppliers
- Tier 1 supplies the focal firm directly; Tier 2 supplies the Tier 1 supplier. Visibility beyond Tier 1 is key to managing upstream risk.
- Sales & operations planning (S&OP)
- A cross-functional process that balances demand and supply at an aggregate level over a planning horizon, aligning operations with the business plan.
- Aggregate planning
- Setting overall production, inventory, and workforce levels for product families over the medium term to meet forecast demand at lowest cost.
- Master production schedule (MPS)
- A time-phased plan of what end items to build, in what quantity, and when — the driver of detailed material and capacity planning.
- Material requirements planning (MRP)
- A planning logic that explodes the MPS through the bill of materials to schedule component orders by netting requirements against inventory and lead times.
- MRP II
- Manufacturing Resource Planning — extends MRP with capacity, financial, and business planning to integrate the whole manufacturing operation.
- Bill of materials (BOM)
- The structured list of all components, subassemblies, and quantities needed to build a parent item.
- Distribution requirements planning (DRP)
- Applies MRP time-phased logic to a distribution network, planning replenishment from central to regional warehouses based on downstream demand.
- Capacity planning
- Determining whether available capacity (people, machines, time) can meet the production plan, then adjusting plan or capacity.
- Theory of constraints (TOC)
- A management philosophy focused on identifying and managing the system bottleneck (constraint), since throughput is limited by it.
- Constraint / bottleneck
- The resource with the least capacity relative to demand; it sets the throughput of the whole system, so improving non-constraints alone won't help.
- Drum-buffer-rope
- A TOC scheduling method: the constraint (drum) sets the pace, a time buffer protects it, and the rope ties material release to the constraint's rate.
- Lean
- A philosophy of maximizing customer value while systematically eliminating waste (muda) to improve flow, quality, and cost.
- Seven (eight) wastes
- Overproduction, waiting, transportation, over-processing, inventory, motion, and defects — plus underused talent — the targets of lean.
- Just-in-time (JIT)
- Producing or receiving items only as needed, in the quantity needed, to minimize inventory and expose problems.
- Kanban
- A visual signal that authorizes production or replenishment in a pull system; the number of cards caps work-in-process.
- Takt time
- Available production time divided by customer demand for the period — the rhythm at which each unit must be completed to match demand.
- Heijunka
- Production leveling — smoothing the volume and mix of production over a period to reduce unevenness (mura) and stabilize flow.
- Poka-yoke
- Mistake-proofing — designing a process so errors are prevented or made immediately obvious.
- CONWIP
- Constant Work-In-Process — a pull control that caps the total WIP across an entire production line at a set limit.
- 5S
- Sort, Set in order, Shine, Standardize, Sustain — a workplace-organization method that underpins lean visual control.
- Six Sigma / DMAIC
- A data-driven improvement method to reduce variation and defects; DMAIC = Define, Measure, Analyze, Improve, Control.
- Inventory (functions)
- Stock held to decouple operations, buffer variability, smooth seasonality, and gain economies — at the cost of capital, space, and obsolescence.
- Cycle stock
- The portion of inventory that varies with order quantity, consumed between replenishments.
- Safety stock
- Buffer inventory held to protect against variability in demand and supply lead time, preventing stockouts.
- Anticipation inventory
- Stock built ahead of expected demand peaks, promotions, or shutdowns.
- Pipeline (in-transit) inventory
- Inventory in motion between locations; grows with longer lead times and distances.
- Economic order quantity (EOQ)
- The order quantity that minimizes total ordering plus carrying cost; balances setup/ordering cost against holding cost.
- Reorder point (ROP)
- The inventory level that triggers a replenishment order: expected demand over lead time plus safety stock.
- ABC analysis
- Classifying items by annual usage value into A (few, high value, tight control), B (moderate), and C (many, low value, loose control) tiers.
- Cycle counting
- Counting a rotating portion of inventory continuously to maintain record accuracy, rather than one large annual physical count.
- Inventory turnover
- Cost of goods sold divided by average inventory; how many times stock is used and replaced. Higher (within reason) means leaner inventory.
- Carrying (holding) cost
- The cost of holding inventory: capital, storage, insurance, taxes, obsolescence, and shrinkage — often 20–30% of value per year.
- Fill rate
- The percentage of demand satisfied from on-hand stock without a backorder or stockout — a customer-service inventory metric.
- Days of supply
- Average on-hand inventory expressed as the number of days of demand it covers.
- Lot sizing (POQ)
- Period Order Quantity holds the number of periods of net requirements covered per order constant, unlike a fixed-quantity rule.
- Regenerative vs. net change MRP
- Regenerative recalculates the whole plan periodically; net change recalculates only records affected by recent transactions, enabling more frequent updates.
- Scheduled receipt vs. planned order
- A scheduled receipt is an open order already released; a planned order receipt is one MRP suggests but has not yet released.
- Available-to-promise (ATP)
- Uncommitted inventory and planned production available to promise to new customer orders.
- Logistics
- The part of supply chain management that plans, implements, and controls the efficient flow and storage of goods, services, and information from origin to consumption.
- Incoterms 2020
- ICC standard trade terms defining the responsibilities of buyer and seller for delivery, cost, risk, and insurance in international sales.
- FOB (Free On Board)
- Under Incoterms 2020, risk transfers from seller to buyer when the goods are loaded onto the vessel at the named port of shipment (sea/inland waterway).
- DDP (Delivered Duty Paid)
- The Incoterm placing maximum responsibility on the seller — delivering goods cleared for import and ready for unloading at the buyer's named place, all cost and risk borne to that point.
- EXW (Ex Works)
- The Incoterm of minimum seller obligation — goods made available at the seller's premises; the buyer bears all cost and risk from there.
- Landed cost
- The total cost of getting a product to its final destination — product price plus freight, insurance, duties, taxes, and handling.
- Modes of transport
- Truck (flexible, fast short-haul), rail (low cost, bulk), water/ocean (lowest cost, slow), air (fast, costly), and pipeline (continuous bulk liquids/gas).
- Intermodal transport
- Moving freight in the same container across two or more modes (e.g., ship-rail-truck) without handling the goods themselves.
- Third-party logistics (3PL)
- An external provider that operates logistics functions — warehousing, transportation, picking, packing, shipping — on a company's behalf.
- Fourth-party logistics (4PL)
- An integrator that manages and coordinates a company's entire logistics network, often directing multiple 3PLs.
- Warehouse management system (WMS)
- Software that directs and tracks receiving, put-away, storage, picking, and shipping within a facility.
- Transportation management system (TMS)
- Software that plans, executes, and optimizes the movement of freight — carrier selection, routing, and freight audit.
- Cross-docking
- Transferring received goods directly from inbound to outbound transport with little or no storage, cutting holding cost and speeding throughput.
- Distribution center (DC)
- A facility focused on rapid product flow and order fulfillment rather than long-term storage, often serving a region.
- Drop shipping
- A fulfillment model where the manufacturer or wholesaler holds inventory and ships directly to the end customer on the retailer's behalf.
- Order fulfillment cycle
- The activities from receipt of a customer order through picking, packing, and shipping until the customer receives the goods.
- Reverse logistics
- Managing the movement of goods from the point of consumption back upstream for returns, repair, recycling, remanufacturing, or disposal.
- Closed-loop supply chain
- A chain designed to recover value from returned products through reuse, refurbishment, remanufacturing, or recycling.
- Warehouse functions
- Receiving, put-away, storage, order picking, packing, and shipping — plus value-added services like kitting and labeling.
- Picking methods
- Discrete, batch, zone, and wave picking — strategies that trade off travel time, accuracy, and throughput in order fulfillment.
- Freight consolidation
- Combining several small shipments into one larger load to lower transportation cost per unit.
- Customs / trade compliance
- Meeting import/export regulations, documentation, duties, and security programs (e.g., C-TPAT) for cross-border movement.
- Advanced shipping notice (ASN)
- An electronic notice sent ahead of a shipment detailing contents and timing, enabling the receiver to prepare (often via EDI).
- Hub-and-spoke network
- A distribution design routing flows through central hubs to outlying spokes — consolidating volume to lower cost.
- Last-mile delivery
- The final leg of delivery to the end customer — often the most costly and service-sensitive part of logistics.
- Supply chain risk management
- A structured process of identifying, assessing, prioritizing, and mitigating threats to the flow of goods, services, and information across the supply chain.
- Risk assessment
- Evaluating each identified risk by its probability of occurrence and severity of impact to prioritize mitigation of the most significant exposures.
- Risk identification
- Systematically uncovering potential threats — supply, demand, operational, financial, geopolitical, and environmental — before they occur.
- Concentration risk
- Exposure created when many tier-one suppliers depend on the same single tier-two source, so one disruption can affect them all at once.
- Risk mitigation strategies
- Avoid, accept, transfer (insurance/contract), or reduce (control) — actions that lower a risk's likelihood or impact.
- Supply chain resilience
- The ability to anticipate, withstand, and recover quickly from disruptions while maintaining continuity of operations.
- Business continuity plan (BCP)
- A documented plan to keep critical operations running and recover after a disruption.
- Redundancy vs. flexibility
- Redundancy holds extra capacity/inventory/suppliers as backup; flexibility builds the ability to reconfigure quickly — both reduce disruption impact.
- Supply chain mapping
- Documenting the multi-tier supplier and flow network to reveal hidden dependencies and concentration risks.
- Safety stock as risk control
- Holding extra stock of a critical component to buffer supply disruption, trading carrying cost for continuity.
- Triple bottom line (TBL)
- Evaluating performance against three dimensions — People, Planet, and Profit — so social and environmental costs are weighed alongside financial results.
- Sustainability
- Meeting present needs without compromising the ability of future generations to meet theirs — economically, environmentally, and socially.
- Green supply chain management
- Reducing the environmental impact of supply chain activities — emissions, energy use, waste, and packaging — across the life cycle.
- Corporate social responsibility (CSR)
- An organization's commitment to conduct operations ethically and consider its impact on workers, communities, and the environment, extended to its suppliers.
- Sustainable sourcing
- Selecting and developing suppliers on environmental and social criteria — emissions, waste, labor practices — alongside cost and quality.
- Carbon footprint
- The total greenhouse gas emissions caused by supply chain activities, measured to set and track reduction targets.
- Circular economy
- An economic model that designs out waste and keeps materials in use through reuse, repair, remanufacturing, and recycling.
- Life-cycle assessment (LCA)
- Evaluating the environmental impact of a product across its entire life, from raw material to disposal.
- Continuous improvement (kaizen)
- An ongoing effort to incrementally improve processes, products, and services through small, frequent changes by everyone.
- PDCA cycle
- Plan-Do-Check-Act — an iterative method for continuous improvement and controlled change.
- Benchmarking
- Comparing performance and practices against best-in-class organizations to set improvement targets and reveal gaps.
- Key performance indicators (KPIs)
- Quantified metrics tied to objectives that track supply chain health — e.g., perfect order, fill rate, cash-to-cash, cost-to-serve.
- Balanced scorecard
- A measurement framework tracking financial, customer, internal-process, and learning-and-growth perspectives, aligned to strategy.
- Cost-to-serve
- The total cost of serving a specific customer or channel, including order, logistics, and service costs — used to assess profitability.
- Supply chain visibility
- The ability to track and access real-time information about orders, inventory, and shipments across the chain.
- Blockchain (supply chain)
- A distributed, tamper-evident ledger that can improve traceability, provenance, and trust between trading partners.
- Internet of Things (IoT)
- Connected sensors and devices that capture real-time data (location, condition, usage) to improve visibility and decision-making.
- Advanced analytics / AI
- Using big data, machine learning, and prescriptive analytics to improve forecasting, planning, and risk detection.
- ERP system
- Enterprise Resource Planning — integrated software unifying finance, operations, and supply chain data on a single platform.
- Maturity model
- A staged framework (e.g., from functional to integrated to collaborative) used to assess and advance supply chain capability.
- APICS Dictionary
- ASCM's authoritative glossary of supply chain terms (16th ed.); the CSCP expects precise definitional knowledge drawn from it.
- Upstream vs. downstream
- Upstream is toward suppliers and raw materials; downstream is toward distribution and the end customer.
- Supply chain integration
- Coordinating processes, information, and decisions across functions and partners so the chain operates as one synchronized system.
- Vertical integration
- Owning more stages of the supply chain (suppliers or distributors) to gain control, vs. relying on independent partners (horizontal).
- Plan-Source-Make-Deliver-Return-Enable
- The six SCOR process categories that describe every supply chain at a high level — the framework's backbone.
- Strategic / tactical / operational
- Three planning horizons: strategic (long-term direction), tactical (medium-term S&OP/aggregate), operational (short-term execution).
- Cost of goods sold (COGS)
- The direct cost of producing the goods a company sells; supply chain efficiency directly affects it and gross margin.
- Return on assets (ROA)
- Net income divided by total assets; cutting inventory and supply chain assets can improve it.
- Gross margin / contribution margin
- Gross margin = revenue minus COGS; contribution margin = revenue minus variable cost. Lowering supply cost raises both.
- DuPont / financial leverage of SCM
- Supply chain choices flow into the income statement and balance sheet — affecting margin, asset turnover, and ultimately return on equity.
- S&OP (sales & operations planning)
- A cross-functional process that reconciles demand and supply plans at an aggregate level over a horizon and aligns them with the business plan.
- Executive S&OP
- The leadership step of S&OP where senior management reviews and approves the reconciled demand/supply/financial plan.
- Independent vs. dependent demand
- Independent demand comes from outside (customer orders, forecast); dependent demand is derived from a parent item via the BOM (MRP-driven).
- Four Ps (marketing mix)
- Product, Price, Place, Promotion — the marketing levers used to influence and shape demand.
- Product life cycle
- Introduction, growth, maturity, and decline — each stage changes demand patterns and the supply chain strategy needed.
- MAPE
- Mean Absolute Percentage Error — average absolute forecast error as a percentage of actual demand; a scale-free accuracy measure.
- Forecast bias
- A consistent tendency to over- or under-forecast; detected by a non-zero running sum of errors (tracking signal).
- Causal / regression forecasting
- A quantitative method relating demand to explanatory variables (price, promotions, economy) to predict future demand.
- Seasonality & trend
- Repeating demand patterns by period (seasonality) and a long-term upward/downward movement (trend) that forecasts must capture.
- Demand sensing vs. shaping
- Sensing uses near-real-time signals to refine short-term forecasts; shaping uses pricing/promotions to influence demand itself.
- Decoupling point
- The point separating order-driven (pull) from forecast-driven (push) activity; where strategic inventory is held.
- End-to-end visibility
- The ability to see orders, inventory, and shipments across the whole chain — a prerequisite for synchronized planning and risk response.
- Offshoring vs. nearshoring
- Offshoring moves sourcing to a distant low-cost country; nearshoring moves it to a nearby country to cut lead time and risk.
- Reshoring
- Returning previously offshored production or sourcing to the home country, often to reduce risk, lead time, or total cost.
- Supply base rationalization
- Reducing the number of suppliers to a manageable, high-performing set to gain leverage, quality, and efficiency.
- Blanket purchase order
- A long-term agreement to buy at agreed terms with releases drawn against it over time, reducing transaction cost.
- E-procurement
- Using online systems and catalogs to automate requisitioning, sourcing, and purchasing.
- Reverse auction
- An online bidding event where qualified suppliers compete by lowering price for a defined contract.
- Supplier qualification
- Assessing a potential supplier's quality, capacity, financial health, and compliance before awarding business.
- Voice of the customer (VOC)
- Capturing customer needs, expectations, and preferences to design products, services, and service levels.
- Order fill rate vs. line fill rate
- Order fill = % of orders shipped complete; line fill = % of order lines filled — both measure availability to the customer.
- On-time in-full (OTIF)
- A delivery metric: the share of orders delivered both on time and complete — a stricter cousin of fill rate.
- Bullwhip mitigation (CPFR/info sharing)
- Sharing point-of-sale demand and collaborating on forecasts/replenishment (CPFR) reduces the demand distortion of the bullwhip effect.
- Capacity requirements planning (CRP)
- Detailed planning that checks whether available work-center capacity can execute the MRP plan, then adjusts.
- Rough-cut capacity planning (RCCP)
- A mid-level check of whether key resources can support the master production schedule before detailed CRP.
- Master scheduling
- Translating the aggregate plan into a specific build schedule of end items (the MPS), balancing demand and capacity.
- Lead time (components)
- The total time to fulfill — order, queue, setup, run, wait, and move time; shrinking it improves responsiveness and cuts inventory.
- Throughput (TOC)
- The rate at which the system generates money through sales; TOC maximizes it by managing the constraint.
- Five focusing steps (TOC)
- Identify, exploit, subordinate to, elevate the constraint, then repeat — TOC's continuous-improvement loop.
- Value stream mapping
- A lean tool that diagrams material and information flow to expose waste and improvement opportunities.
- Single-minute exchange of die (SMED)
- A lean method to drastically cut changeover/setup time, enabling smaller lot sizes and smoother flow.
- Standard work
- Documented best-known method for a task — the baseline lean uses to stabilize and then improve a process.
- Carrying cost rate
- The annual cost of holding inventory as a percentage of its value (capital, storage, risk) — a key input to EOQ.
- Periodic vs. perpetual review
- Periodic review reorders at fixed time intervals; perpetual (continuous) review reorders when stock hits the reorder point.
- Two-bin system
- A simple visual reorder system: when the first bin empties, reorder while consuming the second (reserve) bin.
- Obsolescence & shrinkage
- Inventory value lost to becoming outdated/unsellable (obsolescence) or to theft, damage, or error (shrinkage).
- MRO inventory
- Maintenance, Repair, and Operating supplies — items consumed in operations but not part of the finished product.
- Chain of custody / traceability
- The documented ability to track a product's path and handling through the supply chain — vital for recalls and compliance.
- Root cause analysis
- Identifying the underlying cause of a problem (e.g., 5 Whys, fishbone) so corrective action prevents recurrence.
- CIF (Cost, Insurance and Freight)
- An Incoterm (sea/inland waterway) where the seller pays cost, insurance, and freight to the destination port, but risk transfers at loading.
- CPT / CIP
- Incoterms for any mode: Carriage Paid To (seller pays carriage to destination) and Carriage and Insurance Paid To (adds insurance).
- FCA (Free Carrier)
- An Incoterm where the seller delivers cleared-for-export goods to a carrier named by the buyer; flexible across modes.
- Free-trade / foreign-trade zone
- A designated area where goods can be imported, handled, and re-exported with deferred or reduced duties.
- Bill of lading
- A transport document that acts as a receipt for goods, a contract of carriage, and (when negotiable) a document of title.
- Common vs. contract carrier
- A common carrier serves the public under published rates; a contract carrier serves specific shippers under negotiated terms.
- Less-than-truckload (LTL) vs. truckload (TL)
- LTL consolidates multiple shippers' freight in one truck (smaller loads); TL dedicates a full truck to one shipment.
- Deconsolidation
- Breaking a large inbound shipment into smaller outbound loads at a facility for regional delivery.
- Slotting (warehouse)
- Assigning products to storage locations to minimize travel and handling during picking.
- Returns management (RMA)
- The process governing customer returns via a Return Merchandise Authorization — gatekeeping, disposition, and refund/replacement.
- Remanufacturing
- Restoring used products to like-new condition for resale — a high-value form of reverse logistics.
- Recycling vs. disposal
- Recovering materials for reuse (recycling) vs. discarding end-of-life product (disposal); reverse logistics prefers value recovery.
- Distribution channel
- The path products take from producer to end customer — direct, retailer, wholesaler, or e-commerce — shaping logistics design.
- Risk matrix / heat map
- A grid plotting risks by probability against impact to visualize and prioritize them.
- Contingency planning
- Pre-defined actions to take if a specific risk event occurs, so response is fast and coordinated.
- Risk transfer
- Shifting financial impact of a risk to a third party via insurance or contractual terms.
- Risk avoidance vs. acceptance
- Avoidance eliminates the activity causing an unacceptable risk; acceptance knowingly retains a low or unavoidable risk.
- Single point of failure
- A node whose disruption halts the whole chain; mapping and redundancy reduce this exposure.
- Dual / multi-sourcing (resilience)
- Using more than one supplier for a critical item to reduce dependence and disruption risk.
- Cyber / IT supply chain risk
- Threats to the digital systems and data that run the supply chain — breaches, ransomware, and vendor software vulnerabilities.
- Geopolitical risk
- Disruption from tariffs, sanctions, conflict, or regulation that affects cross-border sourcing and logistics.
- Global Reporting Initiative (GRI)
- A widely used standard for sustainability reporting that helps organizations disclose environmental, social, and governance impacts.
- UN Global Compact
- A voluntary initiative for businesses to align operations with principles on human rights, labor, environment, and anti-corruption.
- ISO 14001 / 9001
- ISO 14001 sets requirements for an environmental management system; ISO 9001 for a quality management system.
- Scope 1/2/3 emissions
- Greenhouse-gas categories: direct (1), purchased energy (2), and value-chain/supplier (3) emissions — most supply chain impact is Scope 3.
- Reverse logistics & sustainability
- Recovering, reusing, and recycling returned products reduces waste and supports the circular economy and TBL goals.
- Network optimization
- Using models and analytics to redesign facility locations, capacity, and flows to minimize total cost while meeting service goals.
- Digital supply chain / Industry 4.0
- Connecting the chain with IoT, AI, cloud, and automation for real-time, intelligent, self-optimizing operations.
- Control tower
- A centralized hub that uses end-to-end data and analytics to monitor, predict, and orchestrate supply chain decisions.
- Demand-driven supply chain
- Designing the chain to respond to actual demand signals (pull) rather than long forecasts, improving service and cutting inventory.
