Glossary - Supply chain management

Glossary

3Pl provider (third party logistics ) - a company that provides a set of mainly operational logistics services transportation, warehousing, cargo handling, customs clearance, information services, cargo insurance, etc.), using for this purpose own assets or attracting assets on a lease, subcontracting terms.

4Pl provider - the system integrator of the supply chain - an integrating structure that collects resources, characteristics and technologies in their organization and other structures for the development of modern solutions for supply chains and for their subsequent implementation (the definition of the company "Accenture" - accenture.com).

Within the framework of the problems of interorganizational coordination, 4PL providers are a kind of alternative to the independent solution of these tasks by the focus company of the supply chain or the supply chain created by the contractors of the managing structure in the form of a committee, a coordination council, etc. The bottom line is that the focus company or its counterparties may not have sufficient competencies to implement the inter-organizational coordination function (and integration, in particular integrated planning and controlling) in the supply chains. Therefore, they transfer the specified functionality to outsourcing - 4PL-provider.

Supply Chain Adaptability ( adaptability ) - the ability of supply chain counterparts in a cooperative manner to identify changes (often unforeseen ) both in the surrounding business environment and in the chain itself, and rebuild their activities in response to these changes.

The adaptability of the supply chain is more affected by organizational flexibility, namely:

• Speed ​​of decision making;

• the availability of information integration between partners along the chain;

• Process-oriented management;

• continuous improvement of processes both within one counterparty and throughout the supply chain;

• the presence of a corporate culture that is focused on satisfying the end user and seeing it as the main value and meaning of the supply chain.

Benchmarking ( benchmarking ) in the DRM - the procedure for strategic positioning of the supply chain using standard metrics relative to competitors , industry average level or leader in the industry. It is most often used to establish standards for key performance indicators for the supply chain of the KPI system.

Leading logistics operator/provider ( lead logistics provider - LLP ) - 3LL-level company, but it has additional tools to ensure their openness and access to optimization solutions and modeling (for example, inventory management, integrated planning, interorganizational coordination) that allows you to support the decisions you make in the supply chain of customers.

Flexibility of the supply chain (flexibility ) assumes that the supply chain can satisfy individual customer requirements, for example, by the following parameters :

• the size of the schedule line;

• the configuration of the final product;

• the range of each order;

• ensuring special delivery conditions, etc.

Dynamic supply chain ( agility ) - the ability to quickly recover from disturbance, and the formation of such parameters functioning of the supply chain that would best meet the requirements of the changed external environment.

In general, the dynamics of the supply chain is characterized as the ability to respond to customer needs and cope with market turbulence and means the sensitivity and flexibility of production, the organizational structure of supply chain management and its ability to respond quickly to changes in demand, both in volume and in assortment . When assessing the dynamics, the supply chain characteristics, such as reaction speed and flexibility, are used. The assumption is that the disturbing effects are mainly non-goal-oriented and are related to fluctuations in demand, unique customer orders, the complexity of the assortment and the reduction in the life cycle of goods.

Four basic principles of dynamism can be distinguished:

• the orientation of the supply chain to create value for the customer;

• the cooperation of chain contractors to enhance competitiveness;

• the organizational structure of supply chain management that helps to cope with changes;

• maximum involvement of people and use of information.

The signs of dynamic supply chains are sensitivity

to customer requirements, virtual integration, integration of processes and links of the network structure.

Unified information space (EIP) of supply chain contractors - a set of heterogeneous (heterogeneous) information systems of different economic functionality, integrated with each other for the purpose of constant information exchange and intended to create a unified environment for coordination of actions and interactions supply chain counterparties when they implement the main management functions (planning and controlling) in real time.

Identifying risks in the supply chain is based on two approaches:

• Estimate the probability of an adverse event;

• Determine the expected amount of damage/loss from the event.

On the one hand, it is necessary to assess the likelihood of adverse events in the supply chain (malfunctions in the normal operation of business units or the execution of processes), and on the other hand, the expected damage from these failures. It is important to take into account the length of recovery after their onset, which is determined by the rate at which supply chain violations are detected, and the speed at which decisions are taken to eliminate the consequences and restore the normal operation of the supply chain. The latter aspect affects both the features of the organizational functional of the DRM and the information support for monitoring the processes in the supply chain.

Identification of risk events in the supply chain - identification of sources of risks that could damage contractors in the supply chain, their types and list. At the same time, the risk can be considered as a deviation of the actual result from the expected one (for example, in the context of controlling and estimating the KPI supply chain). Risk assessment in the supply chain is based on the calculation of the probability of failure, failure, loss and other undesirable events. With regard to the evaluation of potential sources of risk, they can be expected, for example, the already observed problems with the quality of products from suppliers, the failure of elements of the production and logistics infrastructure, and unexpected - wars, strikes, terrorist acts, etc.

Information integration in the supply chain - the integration of information flows and communication support for supply chains of goods/services, carried out by combining the information resources of the counterparties of the chain on the basis of client-server, open technologies and unified message technologies and data presentation. Information integration is necessary for building a single information space of the supply chain, which allows to ensure the speed, completeness and accuracy of information required for the successful operation of the supply chain required in modern conditions.

The key supply chain business process is an interconnected set of operations and functions that transfer the resources of the chain's counterparties (when managing material, information and financial flows) to the result set by the supply chain strategy.

Configuration of the supply chain network structure (supply chain network) - the structure of the logistic channels and chains, the quantitative and qualitative composition of the supply chain links, Dislocation of production and logistics infrastructure facilities (production sites, own and leased warehouses, terminals, distribution centers, transport units, dispatch centers, road infrastructure, etc.).

Supply Chain Controlling is the functionality of the top management of a focus company or general supply chain management entity, which includes the processing of data (collection, preparation, redirection of production, financial and other accounting information), planning , focused on a common goal, as well as monitoring the achievement of the goal and making management decisions.

The supply chain macroprocess is a strategically aggregated set of business processes that encompasses three parties in the supply chain object view: a focus company, suppliers and consumers.

There are three macroprocesses:

SRM (supplier relationship management ) - managing interactions with suppliers

ISCM (internal supply chain management ) - in-house supply chain management;

CRM (customer relationship management ) - managing customer interactions.

Interorganizational coordination is the coordination of the actions of the focal company of the supply chain, suppliers, consumers and logistic intermediaries (including conflict resolution) to achieve the planned goals of the chain. The main task of interorganizational coordination in supply chains is to divide profits, risks and responsibilities between counterparties of the chain.

Supply Chain Performance Metrics (performance metrics/attributes) are grouped indicators used to set standards and evaluate supply chain performance :

• reliability of supply in the chain while ensuring delivery: the right product, at the right time and place, in proper condition and packaging, the right quantity, with the correct documentation, the right consumer;

• supply chain response - the speed of the goods passing through the supply chain to the consumer;

• maneuverability (dynamism) of the supply chain - the rate at which the supply chain reacts to changes in the market situation in order to obtain or retain competitive advantages;

• supply chain costs - costs associated with operations in the supply chain.

• Asset management in the supply chain - the effectiveness of asset management in meeting demand (includes management of all types of assets: fixed assets, inventory management, working capital).

Model SCOR (supply chain operations reference ) - recommended (reference) model of transactions in supply chains process-oriented model, based on the combination of the principle of continuity of commodity and information flows simultaneously with functional integration in the supply chain. The model unites three popular modern management concepts/technologies - business process reengineering, benchmarking, and the use of best practice (best practice) . Implementing an approach similar to that used in business process reengineering, the SCOR model provides for fixing the current state of the processes, and determines how the processes should look in the future.

In general, the SCOR model assumes that the supply chain counterparties implement the following enlarged process groups:

• Planning for (plan);

• Supply (source);

• production (taka);

• delivery (deliver);

• the organization of the return streams (return).

The model is developed and recommended as an interbranch standard for planning and controlling the processes in supply chains by the Supply Chain Council - SCC (supply-chain.org).

Models complementing SCOR functionality , in terms of such aspects of business activities as marketing and sales, technology research and development, new product development, after-sales service:

DCOR ( design-chain operations reference-model (product design)) is the recommended model for product development and design.

• CCOR - the recommended sales model and their support.

Network Supply Structure Optimization models (NOM) are tools that describe and measure performance indicators for all key operational characteristics of the supply chain through the use of a mechanism to select the optimal sources of materials and infrastructure of production and logistics capacity, process characteristics and flows throughout the chain, taking into account different estimates of future demand, costs, capacities and other external and internal factors.

Supply chain monitoring (SCMo) - a cross-functional concept/technology that allows for transparency information in accordance with the status of contractors in the supply chain. It is in constant monitoring of supply chain processes and the conditions in which they occur, in order to identify their compliance with the desired result and make management decisions. In the key supply chain processes, a comprehensive online monitoring of the expenditure of all resources (material, financial, intellectual, etc.) is required, implemented by means of a single information space and ERP-class systems in the controlling system (MTP/W). It provides the transition from the technology of supply control to the technology of operational supply chain management based on information interaction of supply chain contractors.

Supply chain reliability (reliability) reflects the situation of maintaining the normal functioning of the supply chain, when one of the chain links fails as a result, for example , events such as:

• natural disasters;

• terrorism;

• Theft of cargo;

• failure of production equipment or elements of the logistics infrastructure;

• failures in the information sysme;

• political crises (legislative acts, strikes, etc.

Uncertainty of supply chain demand implied

- IDU) is the uncertainty that occurs in the supply chain, depending both on the objective uncertainty of customer demand and on the part uncertainty of demand, which the supply chain must evaluate by specifying the requirements of customers. Strongly depends on the type and novelty of the product generated by the supply chain.

Process benchmarking (process benchmarking) - learning and applying the successful experience of other organizations, which are based on a deep functional study of the activities of the supply chain focal company and a partner company for benchmarking. At the same time, best practices are adapted and implemented in the company's own processes based on the principles of economic feasibility.

The robustness/robustness of the supply chain ( robustness ) determines the supply chain's non-adherence to external disturbances, negative impact on its effectiveness. Formed at the expense of excess capacity in the supply chain:

• additional warehouses and production sites;

• alternative suppliers;

• insurance stocks;

• Capacity reservations

• Alternative shipping options, etc.

Balanced Scorecard of Supply Scheme - balanced score card - a method for specifying, presenting and implementing a supply chain strategy in the tool-building context an adequate assessment of its functioning. This concept helps to increase the likelihood of implementation of the planned supply chain strategy. Strategic goals are developed on the basis of the vision and strategy available and have the status of critical supply chain objectives. In order to plan and ensure the implementation of the goals, for each of them, appropriate financial and non-financial key performance indicators of the chain (KPI) are developed, which, in turn, determine the target and actual values.

Advanced planning and dispatching systems ( advanced planning & amp; schedule or advanced planning systems - APS) support the planning and configuration of the supply chain network architecture. Advanced Planning in this context is interpreted as a new planning logic, by means of which it is possible to overcome the shortcomings of the traditional planning and management systems of a manufacturing enterprise.

Supply Chain Response Rate (responsiveness) is the rate at which the supply chain serves the end user, expressed in the following metrics:

• the duration of the order execution cycle;

• the duration of the production cycle;

• duration of the logistics cycle.

Collaborative planning, forecasting, and replenishment - - a collaborative process creating a supply chain between two or more partners with different skills and knowledge of a single approach to creating optimal conditions for meeting the needs of customers (definition of the Voluntary Interindustry Commercial Standards - VICS - vics.org).

CPFR consists in combining the efforts of counterparties within the supply chain to meet customer needs by integrating the core marketing and logistics business processes. At the same time, the main condition for the implementation of the CPFR concept is the interaction of the supply chain contractors in two main directions: maximizing the added value of the product and reducing total costs in the supply chain.

The goal of CPFR is to effectively organize the planning process in the supply chain by optimizing data exchange, managing commodity items with unstable and hard-to-forecast demand, establishing, in accordance with established interaction standards, to exclude "narrow" places and overcoming constraints while meeting customer expectations.

Strategic Supply Chain Planning is an integrated, comprehensive and integrated planning process to achieve the competitive advantages of the chain by adding value and improving service parameters that provide the greatest customer satisfaction, anticipating their future service quality requirements and optimally managing resources throughout the supply chain.

Customer Relationship Management customer relationship management - CRM) - a personalized macro process that provides competitive advantages of the supply chain in the current market - the consumer market. The goal of CRM is to ensure the sustainable position of the supply chain in the market and the guaranteed sales volume based on the long-term, confidential and mutually beneficial relationship of the focus company with end-users.

Supplier Relationship Management ( supplier relationship management - SRM) - a coordinated program of actions (macro process), developed jointly by the focal company supply chain and supplier, to improve overall performance indicators and reduce the overall cost of the chain. SRM is the management of a focus company of supplier resources globally, using advanced tools and information technology.

Information companies (system integrators) often use the iterative interpretation of SRM as a sequence of basic steps: sourcing, procurement management and analytics. In this sense, SRM is understood as strategic sourcing, supply and analytics to support comprehensive solutions in the procurement supply chain from the standpoint of choosing a supplier and maintaining a long-term partnership with it.

Supplier management is an aspect of procurement (or supply) related to streamlining the supplier base, selecting them, coordinating their performance, assessing their performance, and building their supply chain capabilities.

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Customer Inventory Management ( vendor managed inventory - VMI) - vertical cooperation with suppliers in the field of management the concept of improving the functioning of the supply chain, when the supplier has access to information about the state of the stock and the current needs (demand) of his client.

It consists in the development of a joint strategy of the supplier and consumer, whose goal is to optimize the level of availability of products (goods) through the method of continuous replenishment of supplies in the supply chain. VMI is a way to optimize the supply chain, in which the supplier is responsible for maintaining the required level of inventory in the consumer.

Synonyms of the VMI concept/technology are considered to be the "Continuous replenishment program (CRP)", "Inventory management with suppliers ( supplier- managed inventory - SMI or supplier assisted inventory management - SAIM ). Some experts suggest that CRP and VMI can be combined in one term - automatic replenishment (ARP), and that this method includes a quick response (quick response ), and for the agricultural industry - an effective response to customer requests (ECR).

Supply Chain Management is the culture of the chain's counterparties (beliefs, values ​​and behaviors), processes and structures that are designed to realize potential opportunities in managing adverse effects in the supply chain (ISO standard 31000 - "General guidelines for the principles and implementation of risk management"). The risks can be insured, assumed, transferred under the contract, risks can be evaded, events can be held to reduce losses, etc.

Managing events in the supply chain (supply chain event management - SCEM). 1. Is the creation and the operation of a specific control mechanism management of events in the supply chain, especially exceptions, in a dynamic environment. This technology supports the operation of supply chains in terms of efficiency, reliability and safety. SCEM is currently perceived as a management concept, information technology and software component in ERP/SCM-class systems.

SCEM is based on three main points. First, event management in supply chains is information systems and technical monitoring tools (sensors, sensors) to identify and transmit current information about the flow of processes in the supply chain, such as, for example, bar-coding , satellite communication and navigation systems ( tracking and tracing systems - T & amp; T), RFID, mobile technologies and many others. Second, is used (as part of controlling) to compare the actual and planned performance of operations in the supply chain. Third, modeling methods in SCEM (for example, event-driven) are used to make decisions to restore the efficiency of processes (operations, operations) in the supply chain.

2. [Information Interpretation] is an application (IT) that supports control processes for managing events inside and between companies in the supply chain. This allows you to track the processes in the supply chain, improving the transparency of the processes, and preventing the counterparties of the chain of possible critical situations (definition of "AMR Research" ("Advanced Market Research GmbH") - amr-research.com).

SCEM systems are designed to detect violations and deviations in the performance of certain processes (operations, operations) in supply chains, related, for example, to a violation of the delivery schedule due to vehicle failure, excess safety stock levels, deviation in the performance of production regulations processes, etc. In the event of a deviation, the SCEM system identifies the emergent non-standard situations in the supply chain and notifies the SC manager of the causes and consequences of the violations.

Supply Chain Management ( supply chain management) is:

1) the organization, planning, control and implementation of the flow of goods, from design and procurement through production and distribution to the end user in accordance with market requirements for cost effectiveness (Terminology in Logistics.) Terms and Definitions/Glossary of Logistics Terms. European Logistics Association, 2005. P. 100.);

2) designing, planning, executing, monitoring, and monitoring supply chain activities to create net worth, build a competitive infrastructure, leverage global logistics, synchronize supply with demand, and measure the performance of the supply chain as a whole;

3) planning and management of all activities (in the supply chain, see below), including sourcing and procurement management, product conversion and management of all types of logistics activities.

It is significant that SCM also includes coordination and cooperation with supply chain partners, which can be suppliers, intermediaries, third-party service providers, and consumers. In essence, SCM is an integrated functional responsible for integrating key business functions and business processes within and between companies into a single perfect business model. SCM includes the management of all types of logistics activities, as well as production operations, sales, product design, finance and information technology (Supply Chain and Logistics Terms and Conditions, 2005. P. 97. - cscmp.com) ;

4) Integration of key business processes starting from the end user and covering all suppliers of goods, services and information, adding value to consumers and other stakeholders.

Composition of key business processes:

1) customer relationship management ( customer relationship management - CRM);

2) customer service (customer service management - CSM);

3) demand management (demand management - DM);

4) fulfilling orders (orderfulfillment - OF);

5) material flow management in manufacturing (manufacturing flow management - MFM);

6) supplier relationship management - SRM

7) development and commercialization of the product (product development and commercialization - PDC);

8) management of returns (return management - RM).

(Definition of the Global Supply Chain Forum (GSCF-model).

Sustainable development of the supply chain (sustainability) - the ability of the supply chain to recover and adapt to changes in the external and internal environment, resulting in the generation of additional value for all stakeholders - end-users, shareholders, the state and society as a whole.

Some indicators from the basic KPI structure proposed by the Supply Chain Council in the strategic SCOR model map can be based on the sustainability assessment, which in turn are broken down into four metrics in accordance with the identified components of the supply chain stability:

• Reliability - RI (reliabilty);

• reaction speed - Rs (responsiveness );

• Flexibility - F (flexibility);

• Adaptability - A (adaptability).

Sustainability of the supply chain ( resilience ) - the ability of the supply chain to respond and adapt to changes in the external environment so that its estimates are in strictly defined acceptable intervals, or return to the original parameters in for a given transition period.

Decision Phases in the Supply Chain - the main decision-making groups in strategic supply chain planning, which include:

• The strategy and network structure of supply chains (supply chain design - SCD);

• supply chain planning - SCP;

• operations in supply chains ( supply chain operations - SCO).

The supply chain (supply chain) is:

1) A global network used to deliver products or services from sources of raw materials and materials to the end user through information flows, physical distribution, and money (APICS Dictionary.) The Industry Standard for More Than 3500 Terms and Definitions/Eleventh Edition. The Association for Operation Management, 2005. P. 113);

2) a) begins with the extraction of raw materials and materials and ends with the use of finished products from the end user, connecting together the interacting companies; b) material and information exchanges in the logistics process, ranging from sources of raw materials to the delivery of finished products to the end user. All suppliers, service providers and consumers are linked to the supply chain (Supply Chain and Logistics Terms and Conditions, 2005. - 96. - cscmp.com);

3) [object approach] The CPU is a threaded business unit structure, united by the "suppliers - focus company - consumers" relationship. in the process of creating and selling goods and services of value to the end user, in accordance with market requirements.

The supply chain is a straight line consisting of a focus company (industrial, commercial or service company), supplier and buyer/consumer involved in the external and/or internal flow of products, services, finance and/information.

The supply chain is expanded includes additional suppliers and second-tier consumers. The extended supply chain is the basis for constructing a reference model of operations in supply chains - the SCOR model.

The supply chain maximum consists of a focus company and all its counterparties on the left (down to the suppliers of raw materials and natural resources) that determine the resources of the focal company at the entrance and the distribution network of the finished product on the right - up to the final (individual) consumers - individuals and (or) to the points of utilization of products;

4) [process approach] The CPU is the associated sequence of flows and processes that take place between different counterparts (links) of the chain and are installed by the focus company in strategic planning to meet customer requirements for goods and services.

Electronic data interchange/documents or electronic document flow (electronic data interchange - EDI ) is the transmission by electronic means of structured, in accordance with agreed standards, messages between the information systems of the supply chain counterparties. In the most general interpretation is a computer information exchange between users (contractors of the supply chain) using a standard data format and serving modern telecommunications technologies.

A message means a set of related data intended for transmission in electronic form, structured in accordance with agreed standards and uniquely automatically processed by the transmitting and receiving information systems.

The Barbidge effect (arbitrary increase in the size of shipments and the consolidation of orders). This is the consolidation of the consignment as a result of unification of the cargo unit, use the vehicle or apply Wilson's formula to calculate the optimal order size. As a rule, customer orders are consolidated up to the size of the minimum lot that can correspond to either the optimal order size or the vehicle loading rate. The larger the size of such an order and the less often the order is made, the greater the degree of its deviation in the supply chain. Thus, the cause of the Barbage effect is the replenishment of stocks in large lots with increased time intervals. The Forrester effect (incorrect interpretation of demand signals) is the so-called limited rationality, i.e. in the suboptimal (seemingly rational) behavior of supply chain counterparties when making inventory management decisions. In the traditional case, companies form a plan of their orders based on customer order data in the previous period. Observing fluctuations in demand in the past period, the company takes them into account in the amount of its insurance reserves with a certain reserve in the event of an even greater increase in demand, therefore, in orders to the supplier, thereby increasing the amplitude of fluctuations in the supplier's expenditure.

The Khaligan Effect (deviations from planned times and volumes of production and supplies). Delays in deliveries push the client to create an additional insurance stock, which in turn, is reflected in the increase in the size of the order to the supplier. The supplier, taking into account in the forecast such fluctuations, creates for them an additional insurance stock, thereby transferring fluctuations to the next participant of the chain in the direction upstream. In addition, increased orders from one part of customers may lead to overloading of capacities and unfulfilled deliveries for other customers who will also take into account such shortages in their insurance stock and increase the size of orders.

The effect of a whip in the supply chain (bullwhip effect ) is when the orders received by the supplier from the buyer have more pronounced fluctuations than the buyer's sales to his customers. Further, these deviations with increasing (in the form of a wave) propagate up the supply chain to its initial level, thereby reducing the stability of the chain in the context of the optimal level of reserves.

There are the following main reasons for the appearance of the whip effect: deviations from planned terms and volumes of production and supply, misinterpretation of demand signals, price fluctuations, arbitrary increase in the size of shipments.

Effective response to customer requests, or effective customer response (effective consumer response - ECR) is a strategic the concept of management, marketing and logistics in a new understanding of integration and interorganizational coordination of counterparties in the supply chain. As part of this new understanding, producers and trading companies work together as partners to rationally and effectively organize a value chain that is tailored to the needs of the client. ECR includes two fundamental aspects: on the one hand, due to integration in the supply chain between producers and trade, effective logistics and SCM solutions must be implemented. On the other hand, thanks to cooperation in marketing, coordinated category management ( category management) should be implemented.

Supply chain efficiency (SC efficiency - SCE) is determined by the total costs in the supply chain from product development to its delivery to the end user and after-sales service.

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