CSOWM flashcards

40 cards. Read the term and the definition here. The deck at the top of this page is optional.

Total landed cost

Sum of unit price, freight, duties, insurance, handling, inventory carrying cost, and risk cost. It is the correct basis for comparing sourcing or network options, not unit price alone.

Center of gravity method

Locates a facility at the volume-weighted centroid of demand and supply points using X and Y averages. It is a starting point, later adjusted for roads, labor, and land cost.

Postponement

Delaying product differentiation until customer orders arrive. It reduces finished-goods SKU inventory and forecast risk but raises per-unit configuration and assembly cost.

Push-pull boundary

The point in the supply chain where forecast-driven production ends and order-driven fulfillment begins. A longer push segment means greater exposure to forecast error.

Perfect order rate

Percentage of orders delivered complete, on time, damage-free, and with correct documentation. Because components multiply, any single failure makes the whole order imperfect.

Simple exponential smoothing

Forecast formula F(t+1) = alpha times actual(t) plus (1 minus alpha) times forecast(t). A higher alpha makes the forecast respond faster to recent demand changes.

Mean absolute deviation

Average of absolute differences between actual and forecast values. It expresses forecast error in the same units as demand and feeds the tracking signal calculation.

MAPE

Mean absolute percentage error, computed as the average of absolute error divided by actual, times 100. It is undefined or unreliable when actual demand is zero or near zero.

Tracking signal

Running sum of forecast errors divided by mean absolute deviation. Values outside roughly plus or minus four indicate systematic bias and a model that needs refitting.

Holt's trend method

Exponential smoothing extended with a trend component that updates each period. It suits series with a persistent upward or downward trend but no strong seasonality.

Winter's seasonal method

Triple exponential smoothing adding a seasonal index with its own smoothing constant. Use it when seasonality repeats with a stable pattern and amplitude across cycles.

Kraljic matrix

Segments purchased items by profit impact and supply risk into leverage, strategic, bottleneck, and non-critical quadrants. Each quadrant calls for a different sourcing approach.

Total cost of ownership

All costs of acquiring and using a purchase: price, freight, duties, inspection, rework, warranty, inventory, and disposal. Lowest bid rarely equals lowest ownership cost.

Early supplier involvement

Bringing suppliers into product design before specifications are frozen. Changes made earlier cost far less than changes made after tooling and production start.

Purchase price variance

Actual price minus standard price, multiplied by quantity purchased. It measures only price performance and ignores quality, delivery, and inventory consequences.

Economic order quantity

Order size minimizing the sum of ordering and holding costs: square root of two times annual demand times order cost, divided by annual holding cost per unit.

Safety stock formula

Safety stock equals the service-level z factor multiplied by the standard deviation of demand over lead time. Higher target service levels require larger z values.

Reorder point

Inventory level that triggers a new order in continuous review. It equals expected demand during lead time plus safety stock for the target service level.

Inventory turnover

Cost of goods sold divided by average inventory value. Its reciprocal, multiplied by 365, gives days of supply on hand.

Cycle service level versus fill rate

Cycle service level is the probability of no stockout in a replenishment cycle. Fill rate is the fraction of demand actually satisfied from available stock.

Bullwhip effect

Upstream order variability that exceeds downstream demand variability. Causes include forecast distortion, order batching, promotions, and shortage gaming during tight supply.

Golden zone slotting

Placing high-frequency pick items at waist-to-shoulder height and near dispatch. This reduces bending, reaching, and travel, which dominate picking labor time.

Cube utilization

Occupied storage volume divided by total available storage volume. It measures how well vertical space is used and guides rack height and beam placement decisions.

Forward pick area

Reserve-free picking locations sized to a few days of demand. Too large wastes space; too small forces frequent, costly replenishment from reserve storage.

Cross-docking

Flow-through handling where inbound freight is staged and reloaded to outbound trailers with little or no put-away. It cuts storage and handling time for eligible shipments.

Directed put-away

The system assigns each receipt a specific storage location based on rules and capacity. It improves control and space use but depends on accurate location master data.

Wave picking

Releasing groups of orders for picking in scheduled waves aligned to carrier cutoffs. It balances workload and consolidates picks but requires disciplined release timing.

Cycle counting

Counting a rotating subset of locations instead of a full physical inventory. High-value A items are counted more often, and variances trigger root-cause investigation.

Units per labor hour

Total units handled divided by total labor hours in a period. It is a core warehouse productivity measure and should be compared only against similar operations.

LTL versus truckload

Truckload uses a full trailer for one shipper. LTL consolidates multiple shippers' freight through terminals, adding handling, transit time, and accessorial charges.

Freight density

Weight divided by volume for a shipment. Higher density usually lowers cost per unit weight because trailers reach weight limits before cubing out.

Incoterms risk transfer

Under FOB and CIF, risk passes to the buyer when goods are loaded on the vessel. Under DDP, the seller bears cost, risk, duty, and delivery to destination.

WMS versus TMS

A warehouse management system executes receiving, put-away, picking, and shipping inside a facility. A transportation management system plans, tenders, and tracks freight movements.

EDI 856 transaction

The advance ship notice, sent by supplier to buyer before delivery. It lists shipment contents, cartons, and tracking identifiers, enabling receipt planning and faster receiving.

Passive RFID tag

A tag with no internal battery that draws power from the reader's electromagnetic field. It supports bulk, non-line-of-sight reads but has a short read range.

Control tower

A visibility layer combining carrier, supplier, and internal event data into exception alerts. Its value comes from managing exceptions, not from raw tracking volume.

Hierarchy of controls

Safety precedence: elimination, substitution, engineering controls, administrative controls, then personal protective equipment. PPE is the last line of defense, not the first.

Recovery time objective

The maximum acceptable time to restore a critical logistics process or system after disruption. It drives continuity planning and backup capacity decisions.

Scope 3 emissions

Indirect greenhouse gas emissions from the value chain, including purchased goods and outsourced transport. They usually dominate a logistics organization's total footprint.

Residual risk

The risk remaining after controls and mitigations are applied. It is compared against the organization's risk tolerance to decide whether further action is needed.