CSCM flashcards

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

Bullwhip effect

Amplification of demand variability as orders move upstream in a supply chain, caused by forecast updating, order batching, price fluctuations, and rationing; mitigated by information sharing and shorter lead times.

Strategic fit

Alignment between a firm's competitive strategy (cost vs. responsiveness) and its supply chain strategy so that supply chain capabilities match the implied demand uncertainty of targeted customers.

Total landed cost

Sum of unit price, freight, duties, insurance, handling, inventory carrying cost, and quality/risk cost; used to compare sourcing options beyond unit price alone.

Cash-to-cash cycle

Days inventory outstanding plus days sales outstanding minus days payables outstanding; measures how long cash is tied up in operations; lower values indicate better working capital efficiency.

Moving average forecast

Forecast equal to the average of the most recent n periods of actual demand; larger n smooths noise more but reacts more slowly to trend changes.

Exponential smoothing

Forecast method where F(t+1) = α·A(t) + (1−α)·F(t); the smoothing constant α (0–1) determines how much weight is placed on the most recent actual demand.

Mean absolute deviation

MAD = Σ|A−F|/n, the average absolute difference between actual demand and forecast over n periods; a common measure of forecast accuracy in units.

Tracking signal

Running sum of forecast errors divided by MAD; values outside roughly ±4 to ±6 indicate the forecast model is biased or out of control and should be revised.

Delphi method

Qualitative forecasting technique using anonymous, iterative rounds of expert opinion with controlled feedback; useful for new products or when historical data are unavailable.

Kraljic matrix

Procurement portfolio tool classifying purchases by spend and supply risk into leverage, strategic, bottleneck, and non-critical categories, each with a recommended sourcing approach.

Three-way match

Accounts payable control that verifies the purchase order, receiving report, and supplier invoice agree on quantity, price, and terms before payment is released.

Supplier scorecard

Structured evaluation of suppliers using metrics such as on-time delivery, defect rate, lead time, responsiveness, cost performance, and compliance; used for selection and performance reviews.

Total cost of ownership

All costs of acquiring and using an item over its life, including purchase, freight, installation, operating, maintenance, disposal, and risk costs; supports long-term sourcing decisions.

Sales and operations planning

Monthly cross-functional process that reconciles demand and supply plans over an 18–24 month horizon through demand review, supply review, reconciliation, and executive approval.

Material requirements planning

System that uses the master production schedule, bill of materials, and inventory records to calculate planned orders and order releases for components and materials.

Theory of constraints

Management philosophy holding that system throughput is limited by its bottleneck; steps are identify, exploit, subordinate, elevate the constraint, then repeat.

Economic order quantity

EOQ = √(2DS/H), where D is annual demand, S is order cost, and H is annual holding cost per unit; the order size that minimizes total ordering and holding costs.

Reorder point

Inventory level at which a new order is placed; equals expected demand during lead time plus safety stock in a continuous-review system.

Safety stock

Buffer inventory held to protect against demand and lead-time variability; calculated as z times the standard deviation of demand over lead time for a target service level.

ABC inventory classification

Ranking SKUs by annual dollar value: A items are high value and tightly controlled, B moderate, C low value and loosely controlled; focuses management effort where it matters most.

Newsvendor critical ratio

Optimal service level for single-period inventory = Cu/(Cu+Co), where Cu is underage cost (lost margin) and Co is overage cost (markdown or disposal loss).

Incoterms

Standard international trade terms (e.g., EXW, FOB, CIF, DDP) defining where cost and risk transfer from seller to buyer during transport.

Cross-docking

Distribution practice of moving goods directly from inbound to outbound vehicles with little or no storage, requiring synchronized schedules and accurate labeling.

FOB origin

Freight term where the buyer pays transportation and assumes ownership and risk of goods at the seller's shipping point; buyer files any loss or damage claims.

Last-mile delivery

Final leg of delivery from a distribution center or hub to the customer; often 30–50% of total logistics cost and a major driver of customer satisfaction.

Slotting

Assigning SKUs to warehouse storage locations based on velocity, size, and cube; fast movers go in the golden zone near shipping to reduce pick travel time.

AS/RS

Automated storage and retrieval system using computer-controlled cranes or shuttles to store and retrieve loads in high-density racks, improving space use and accuracy.

Perfect order rate

Percentage of orders delivered complete, on time, damage-free, and with correct documentation; a key customer service metric in order management.

Available to promise

ATP; the uncommitted inventory or planned production that can be promised to a customer for a specific delivery date, used in order promising and scheduling.

Customer lifetime value

Expected net profit from a customer over the entire relationship; often estimated as average order value times purchase frequency times retention duration times margin.

Time-to-recover

Resilience metric measuring how long a supply chain takes to return to normal performance after a disruption; shorter TTR indicates greater resilience.

Scope 3 emissions

Indirect greenhouse gas emissions in a company's value chain, including suppliers and customers; often the largest share of a supply chain's carbon footprint.