SLLC Intermediate flashcards

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

Supply chain surplus

The difference between the value the final customer obtains from a product and the total cost the supply chain incurs to produce and deliver it. Strategy is aligned when surplus is maximized.

Strategic fit

The consistency between a firm's competitive strategy and its supply chain strategy, and between the supply chain strategy and functional strategies in sourcing, production, and distribution.

Postponement

Delaying final product differentiation until customer demand is known, typically by holding generic components and assembling or labeling late. It cuts finished-goods safety stock while improving responsiveness.

Bullwhip effect

The amplification of demand variability as orders move upstream from retailer to manufacturer to supplier. Causes include order batching, price promotions, and shortage gaming.

Total landed cost

The full cost of acquiring goods delivered to a point: unit price, freight, duties and tariffs, insurance, inventory carrying cost, and quality or risk costs.

Center of gravity method

A location technique that computes a weighted average of demand or volume coordinates to find a facility point minimizing transport distance, ignoring capacity and fixed costs.

Exponential smoothing

A forecasting method where the next forecast equals alpha times current demand plus one minus alpha times the previous forecast. Alpha controls responsiveness versus stability.

Mean absolute deviation

The average of the absolute differences between actual demand and forecast over n periods. It expresses forecast error in the same units as demand.

MAPE

Mean absolute percentage error: the average of absolute forecast errors divided by actual demand, multiplied by 100. It allows comparison across products with different volumes.

Tracking signal

The running sum of forecast errors divided by MAD. Values outside a control limit, commonly plus or minus four, indicate persistent forecast bias.

Winter's method

Triple exponential smoothing that maintains level, trend, and seasonal index components. It suits demand with both trend and repeating seasonal patterns of known period length.

Kraljic matrix

A procurement segmentation tool plotting profit impact against supply risk. It yields four categories: non-critical, leverage, bottleneck, and strategic items, each with a distinct sourcing approach.

Total cost of ownership

A supplier evaluation approach summing price, freight, inventory carrying, inspection, defects, rework, and switching costs over the life of the purchase rather than comparing unit price alone.

Three-way match

A control that reconciles the purchase order, the goods receipt, and the supplier invoice before payment is released, preventing payment for undelivered or mispriced goods.

Early supplier involvement

Bringing suppliers into product design before specifications are frozen. Because most product cost is committed at design, this reduces later engineering changes and total cost.

Economic order quantity

The order size that minimizes the sum of annual ordering cost and annual holding cost, calculated as the square root of twice annual demand times order cost divided by holding cost per unit.

Safety stock

Inventory held to cover demand and lead-time variability. It equals the service-level z-factor times the standard deviation of demand during lead time.

Reorder point

The inventory level that triggers a replenishment order. It equals average demand during lead time plus safety stock for the target service level.

Newsvendor critical ratio

The optimal in-stock probability for a single-period order equals underage cost divided by the sum of underage and overage costs. It balances leftover and shortage costs.

ABC classification

Ranking inventory items by annual usage value. Class A items, a small share of SKUs but most of the value, receive tight counting and control; class C items receive loose control.

MRP net requirement

Gross requirements minus scheduled receipts and on-hand inventory, plus safety stock. The planned order release is that quantity offset earlier by the item's lead time.

Golden zone

The storage area between waist and shoulder height closest to the pick path. High-frequency, low-cube items are slotted there to minimize picking travel and time.

Cross-docking

A flow where inbound goods move directly to outbound vehicles with little or no storage. It requires synchronized arrivals, accurate labeling, and reliable supplier schedules.

Cycle counting

A continuous inventory audit that counts a rotating subset of SKUs on a scheduled basis instead of a full annual physical count, allowing fast root-cause correction of record errors.

Cube utilization

The ratio of occupied storage volume to total available storage volume. It measures how fully warehouse space is used, distinct from the share of locations occupied.

Incoterms

Standard international trade terms defining which party pays freight, insurance, and duties, and where risk of loss transfers from seller to buyer.

Freight consolidation

Combining multiple smaller shipments into a larger load, or pooling buyers' orders, to obtain lower truckload or volume rates and reduce handling.

Milk run

A routing pattern in which one vehicle collects goods from several suppliers on a single tour, reducing transport cost when pickups are geographically dense and time windows permit.

Last-mile delivery

The final leg from a distribution point to the customer. It carries the highest cost per unit because drop density is low and failed delivery attempts are frequent.

Perfect order rate

The percentage of orders delivered complete, on time, damage free, and with correct documentation. It is a stricter measure than fill rate because all conditions must hold.

OTIF

On time in full: the percentage of orders delivered within the promised window and in the ordered quantity. It is a common retail supplier service metric.

Cost to serve

The total cost allocated to a customer or channel, including order handling, transport, returns, and inventory. It reveals accounts that appear profitable on gross margin but are not.

Control tower

A central visibility capability that aggregates multi-party supply chain data to detect exceptions and support decisions. Its value depends on data latency and master data accuracy.

Advance ship notice

An EDI transaction, standard 856, sent by a supplier before delivery. It lists shipment contents, quantities, and carton identifiers so the buyer can plan receiving.

Prescriptive analytics

The analytics tier that recommends a specific action, such as an optimized replenishment or routing decision, using optimization or simulation on top of predictive models.

Time to recover

The period a supply chain node needs to restore full output after a disruption. Resilience requires it to be shorter than the time the business can survive without that node.

Scope 3 emissions

Indirect greenhouse gas emissions from the value chain, including purchased goods, upstream transport, business travel, and product use. They usually dominate a firm's carbon footprint.

HS tariff classification

The harmonized system code assigned to a traded product, which determines duty rate and import controls. Misclassification creates compliance and financial exposure.

Dual sourcing

Splitting volume between two qualified suppliers to reduce single-source disruption risk. It usually raises unit cost slightly in exchange for supply continuity.