Logistics Wordbook

Logistics Glossary

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Here you will find the description of some words and phrases used in the magazine and Waredock Services content. If you want to add another word or expression that we missed, please suggest it here.

Adaptability

The capability of the supply chain to reconfigure its structure in reaction to changes in the market.

Agile supply chain

A supply chain strategy that represents a combination of a risk-hedging strategy and a responsive supply chain strategy.

Agility

The ability to respond quickly to changes in supply and demand, especially during a disruption.

Alignment

Mechanism to help improve overall supply chain performance by incentivizing individual organizations to improve.

Backup supplier

A company that is only used for abnormal and emergency purchase requests.

Bullwhip effect

A phenomenon in which information distortion in the form of order variability increases significantly as orders transfer upstream.

Capacity

The ability of an organization to produce a certain output within a given time period.

Capacity risk

A type of risk associated with not having enough resources on hand to meet demand.

Cash flow

The net flow of cash (and equivalents of cash) into and out of the organization.

Centers for Disease Control and Prevention (CDC)

“The Centers for Disease Control and Prevention is the leading, national public health institute of the United States. It is a United States federal agency, under the Department of Health and Human Services, and is headquartered in Atlanta, Georgia” (cdc.gov)

Complementary relationship

A relationship in which an organization is seeking to combine their core strength/s with the core strength/s of another company for a medium to long term time duration.

Cost leadership

Business strategy in which the company focuses on being a cost leader through large volumes, low product variety, and low price.

Counterfeit supplier

A company that creates products and services that imitates the authenticity of materials provided by a legit company.

COVID-19

An infectious disease that is caused by SARS-CoV-2 (sever acute respiratory syndrome coronavirus 2) and is the latest pandemic.

Customer

An organization or individual that spends money in exchange for a product or service.

Customer relationship management

The process responsible for developing and maintaining appropriate relationships with customers.

Customer service level requirements

Expectations of the supplier by the buyer typically expressed in terms of what should be delivered, how many should be delivered and at what time it should be delivered.

Customer service management

The process that is responsible for communicating information to the customer about product and services they purchased.

Delay risk

A type of risk that is typically caused by capacity and inventory issues within the supply chain.

Demand

The measurable need for a specific material, product, or service.

Demand management

The process that is responsible for balancing supply capabilities with customer demand requirements.

Detection

The action, method, and/or processes involved in identifying the current presence or potential presence of a disruption event.

Differentiation

Business strategy that emphasizes the provision of products and services that provide value to customers that cannot be easily replicated by industry competitors .

Direct cost

A cost that is directly associated with the production of a specific good (product and service).

Disposable surgical mask

Loose-fitting face device that provides a barrier for the nose and mouth of the wearer from air contaminants.

Distributor

An organization that purchases, resells, and transports material from an origin point to a destination point within a supply chain.

Downstream

From the perspective of the focal organization, it is the direction always pointing toward the customer.

Economic cluster

Geographic concentrations of interconnected companies and institutions in a particular field.

Efficient supply chain

The type of supply chain strategy that is meant to manage functional products.

Emergency operations center

Facility that monitors the organization and its supply chain for possible disruption events.

End consumer

The company or individuals who purchase and use the final good.

Facility cost

Costs that are generated in the purchase of new facilities, expansion or closing of existing facilities, and for the regular upkeep and operation of the facility.

Financial flow

This flow is about the financial transactions that take place between supply chain partners.

Finished goods

Items that have passed through manufacturing and inspection processes and are ready to be sold.

Focal organization

The entity in the supply chain from whose perspective a certain analysis or discussion is being conducted.

Focus strategies

Business strategy in which the company seeks to compete by providing products and services to a very specific niche market.

Forecasting risk

A type of risk associated with overestimated or underestimated demand predictions relative to actual demand.

Front-line health worker

Includes individuals in the downstream health supply chain processes who deliver care to sick patients, and includes, but may not be limited to, doctors, nurses, helpers, lab techs, aides ,and medical waste handlers.

Fully integrated firm

Organizations that control the various factors of production (i.e. land, labor, capital and entrepreneurship).

Functional product

A product that has a stable demand nature.

Globalization

The process of offering goods worldwide.

Group purchasing organization (GPO)

GPOs are entities that negotiate contracts with manufacturers and distributors on behalf of healthcare institutions.

Health supply chain

The flow of information, finances, and supplies that are necessary for the movement of goods and services from the supplier (development of care) to end user (delivery of care), that will ultimately strengthen clinical outcomes and control costs.

Information flow

Flow in the form of customer orders that flow upstream from customers to retailers to manufacturers and to suppliers, so that each company can know what to produce and when.

Innovative product

A product that has an unstable demand nature.

Intellectual property risk

A type of risk often associated with the loss of competitiveness due to outsourcing.

Intentional disruption

An event that was planned with a particular purpose. Intentional disruptions to the supply chain can be caused by contamination of inventory, labor strikes, terrorist attacks, and etc.

Inventory

Items used to support general operation and production of product.

Inventory risk

A type of risk associated with having too much inventory or not enough inventory for demand.

Labor cost

Any cost that is in the form of payment to hourly and salaried employees.

Lead time

The time that elapses between placing an order and receiving that order.

Logistics management

A subset discipline and practice of supply chain management, and represents the firm’s cost cutting process of getting goods from the supplier through to the customers.

Manufacturer

An organization that converts raw material into finished goods for sale to a customer.

Manufacturing cost

The cost that is generated as a result of purchasing material and the process responsible for transforming the materials into a final product.

Manufacturing flow management

Concerns the transformation of materials into finished products, and the flexibility needed to move products across the supply chain.

Market mediation cost

The costs that are generated in order for the organization to put supply and demand in balance.

Material cost

The cost generated within the sourcing activity, and mostly deals with obtaining raw materials and components.

MRO

A class of inventory that includes items used to support the operations and maintenance of an organization.

N95 Mask

A respirator that is designed to block 95% of small airborne particles when the person wearing the mask inhales.

Operations

The function and practice of transforming inputs into outputs.

Order fulfillment

Process that handles all activities starting with a customer placing an order and ending with the customer receiving that order. Ultimately, order fulfillment is about making sure inventory is available.

Outsourcing

The process of contracting with a supplier to provide goods and services that were previously performed in-house.

Overestimation (demand)

Predicting customer demand to be higher than what it actually is.

Pandemic

An epidemic that has spread across multiple continents.

Patient

Represents the end consumer of the health supply chain and is an individual who is receiving or scheduled to receive medical care.

Perfect Order

An order in which a supplier has satisfied all of the supply chain “rights” for the customer.

Physical (material) flow

This flow is about the movement of raw materials, work in process inventory, and finished products across the supply chain, ultimately so that they can be purchased and consumed by the customer.

Physical cost

Cost generated for procuring material, manufacturing the product, shipping product and holding the product until it is sold.

Playbook

A risk management tool in which the organization defines a set of best practices when managing a specific type of disruption event based on past experiences of that event.

Personal protective equipment (PPE)

Personal protective equipment is designed to protect the wearer from exposure to illnesses and infections. PPE includes face masks, respirators, goggles, face shields, helmets, gloves, clothing, and etc.

PPE burn rate

The rate at which a certain type of PPE is being consumed in the hospital.

Preparation

The phase of disruption management that connects the learning outcomes of a previous disruption experience to the next disruption experience.

Procurement

The functional area responsible for the planning, purchase, and receipt of inventory.

Product development and commercialization

Concerns the collaboration between supply chain partners to develop and bring products and services to market.

Product life cycle (lifespan)

This pertains to the evolution of stages a product goes through from the time it first reaches the market until the time it exists in the market.

Profit

The financial gain realized when the sum of costs, expenses, and taxes are less than the revenue that was generated from a business activity.

Public health

“Public health is the science of protecting and improving the health of people and their communities. This work is achieved by promoting healthy lifestyles, researching disease and injury prevention, and detecting, preventing, and responding to infectious diseases.” (cdcfoundation.org/what-public-health)

Raw material

The inventory that has been purchased by the company to use during the conversion process, but has not yet been used in the process.

Receivables risk

A type of risk associated with the potential for loss if payments owed to the organization cannot be collected.

Recovery

The phase of disruption management that enables the organization (or supply chain) to begin operation after a disruption event.

Regionalization

Strategy that entails bringing supply chain partners within closer geographic proximity of the focal organization.

Response

Phase of disruption management that involves designing a set of strategies and practices to best handle the outcomes causes by a disruption.

Responsive supply chain

Strategy designed to manage products that have unstable demand nature and a stable supply source.

Retailer

A company that purchases products and resells them to the end consumer.

Retooling

The act of adapting or altering the machines and technology in a facility for a current and new purpose.

Returns management

The process responsible for handling customer returns and the reverse logistics process.

Risk category (low probability to high impact)

Concerns considering the probability of a disruption event and the impact severity of the disruption event. An event can be categorized as low-probability, low-impact ,to high-probability, high-impact category and everything in between.

Risk event

A distinct incident that has already occurred and can negatively affect the typical operation of a supply chain.

Risk mitigation

The act of lessening the impact of a risk event.

Risk pooling

Tactic that involves aggregating demand and having a single pool of inventory to serve multiple locations or customers.

Risk response plans

Concerns the development of methods and practices aimed at reducing, minimizing, or eliminating the negative impact of a disruption event.

Risk-hedging supply chain

A strategy that is designed for the management of products that have stable demand nature and unstable supply source.

Shipping cost

The expenses that are generated when products and other physical assets are moved from one place to another.

Sourcing flexibility

The speed at which an organization can change suppliers and react to changes in supply.

Stock level performance (also referred to as inventory performance)

Refers to the probability that inventory is available to customers when they are ready to purchase product.

Stockout

A situation where there is a lack of supply to meet demand.

Stockpiling

Building up inventory and using it to satisfy demand if a disruption occurs.

Supplier

An organization that provides goods and services to other organizations.

Supplier relationship management

Similar to CRM, supplier relationship management is about building and maintaining relationships with suppliers.

Supply

The amount of goods that are available for sale by a supplier.

Supply base

The set of suppliers that a focal organization actively manages, develops, and purchases supply from.

Supply chain complexity

The degree to which a focal organization’s supply chain has different types of partners, and also considers the overall number of partners and the interdependencies between them.

Supply chain disruption

The worst type of supply chain risk, and is characterized by significant breakdowns that take place at certain parts of the supply chain, or across the entire supply chain, as a result of things including, but not limited to, labor disputes, war, terrorism, natural disasters, fires, and pandemics.

Supply chain management

Concerns the efficient coordination of suppliers, manufacturers, warehouses, distributors, retailers, and more so that goods are produced, distributed, and consumed at the right locations, in the right quantities, and at the right time, and to do so in a way that minimizes network costs while satisfying customer service-level requirements.

Supply Chain Operations Reference Model (SCOR Model)

The SCOR Model was developed by ASCM (formerly APICS) to identify and describe the key supply chain activities concerned with meeting consumer desires, and also helps organizations analyze, quantify, and benchmark supply chain performance. The SCOR activities include plan, source, make, deliver, return, and enable.

Supply chain redundancies

The use of extra suppliers and/or geographic areas in a supply chain system for the purpose of increasing supply chain reliability.

Supply chain resilience

The capability to return the function of the supply chain back to its pre- disruption state after suffering a supply chain risk.

Supply chain rights

Refers to the supply chains ability to – at the very least – get the right products and services to the right place, at the right time, in the right quantities, with the right documentation, and with the right quality.

Supply chain risk

Potential loss and the perception of the potential loss that is associated with a particular type of risk event (such as a type of disruption risk event) that could originate internally or externally to the supply chain network and could negatively impact the operations of the supply chain.

Supply chain risk assessments

The process of identifying specific risks, evaluating the potential impact that the risk poses to the supply chain, and mapping these risks to the probability of occurrence and/or the impact of the occurrence.

Supply chain risk management

Involves the development and use of various practices, methods, assessments ,and tools through which an organization can manage various risks and risk events across their supply chain.

Supply chain strategy

A plan that involves development of upstream and downstream relationships, performance goals, and operational objectives for the purpose of meeting customer demands.

Supply chain visibility

The ability that a focal organization has to be able to see the flow of information, financial and physical material flows across its entire supply chain network.

Supply network

The set of suppliers that reside outside of the managerial purview of the focal organization.

Synergistic relationship

A partnership that is characterized by long-term contracts that are strategic and mutually beneficial.

Systems risk

A type of risk associated with a malfunction or security threats of information systems infrastructure in a supply chain.

Third-party logistics (3PL)

An organization that specializes in the provision of multiple logistics services for customers.

Transactional relationship

A type of supply chain relationship that focuses on low cost transactions and distant relationships.

Transportation

The supply chain function that is responsible for the use of transportation assets in order to move materials and product from one place to another.

Uncertainty

The lack of sureness about the future state of something.

Unconventional supply chain partnership

Supply chain relationships that are developed between organizations whose core line of work is in significantly different industries.

Underestimation (demand)

Predicting customer demand to be less than what it actually is.

Unintentional disruption

An event that was unplanned, but caused a supply chain disruption. Unintentional disruptions to the supply chain can be caused by natural disasters, fires, health crisis, and etc.

Upstream

From the perspective of the focal organization, it is the direction always pointing toward the suppliers.

Vendor managed inventory

An agreement established between a customer and its supplier in which the customer gives access to inventory records to the supplier, who then manages the inventory for the customer.

Ventilator

A machine that helps a patient breathe by moving air in and out of the lungs.

Warehouse

A facility that is responsible for receipt, storage, and shipment of product and materials.

Work-in-process

A category of inventory items that has entered the first step of production and are awaiting further processing and final inspection.

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