exam 2 Flashcards
a committee for apply standardization should include which groups?
supply management, engineering, sales, operations, finance, reps from supplier and customer
founded 1901
non-regulatory federal agency within the department of commerce’s technology administration
promote innovation an industrial competitiveness by advancing measurement science, standards, and technology in ways that enhance economic security and improve quality of life
The National Institute of Standards and Technology (NIST)
defines voluntary European standards for fields including chemicals, consumer products, energy, healthcare, and air and space
European Committee for Standardization (CEN)
identifies voluntary standards for the electrotechnical filed to help facilitate trade, create new markets, and reduce compliance costs
European Committee for Electrotechnical Standardization
largest standards settings organizations for materials, products, systems, and services
not for profit
voluntary standards are used in contracts, laboratories, architectural plans, and offices
ASTM International
ISO 9000
fundamentals and vocabulary of quality management
ISO 9001
Quality management systems, requirements
ISO 9004
guidelines for performance improvements
ISO 19011
guidelines for auditing quality
ISO 20400
sustainable procurements
ISO 28000
set of standards that address potential security issues at all stages of procurement process, which targets threats such as terrorism, fraud, and piracy
ISO 14000
environmental standards
ISO 17799 and 27001
guidelines for implementing and information security management system
ISO 37001
help organizations fight bribery and promote ethical business practices
enables better spend analysis using the five-level hierarchy system for more than 20,000 categories of products and services
United Nations Standard Products and Services Code (UNSPSC)
umbrella organization that issues national standards based on consensus by all stakeholder organizations
American National Standards and Institute (ANSI)
foster technological innovation and excellence for the benefit of humanity
Institute for Electrical and Electronic Engineers (IEEE)
help procurement professionals make decisions and set a course of action that maintains a high level of integrity, adds value for employers and creates loyalty
Principles and Standards of Ethical Supply Management Conduct
an organizations expense for creating a new product or service
Development Cost
relationship between data sets and their relative clustering or dispersion within the sample or population. the smaller the ___, the more tightly the numbers will cluster around a central value
Variability
the process of agreeing on a common specification. improves quality and leads to efficiencies and cost savings
Standardization
basic system used to determine the quantity and timing requirements of dependent demand materials used in a manufacturing operation
master production schedule, BOM, and current inventory levels
Materials Requirements Planning
time based demand from the distribution center to balance customer fill rate against inventory investment
informs organization about what products are on hand to fulfill existing orders
Distribution Requirements Planning (DRP)
time-phased computerized inventory system to replenish inventory in multi-echelon warehousing system
plans for warehouse space, manpower requirements, transportation alternatives and financial flows
DRP II
computer software designed specifically for managing the movement and storage of materials throughout the warehouse
Warehouse Management System (WMS)
plan optimal transportation strategies based on projected expenditures, shipping routes, modes, and lead time
Transportation Management System (TMS)
reverse logistics process
Returns Management System (RMS)
process of establishing, measuring and adjusting the levels of capacity in an organization within the context of manufacturing resource planning (MRPII)
Capacity Requirements Planning (CRP)
a physical stock checking system in which the inventory is divided into groups which are physically counted at predetermined intervals, depending on their ABC classification. thus, the physical inventory counting goes on continuously without interrupting operations or storeroom activities
Cycle Counting
the function of identifying demands for products and services to support the marketplace. ___ encompasses the activities of forecasting, order planning and determining outside warehouse requirements, production balancing and spare parts
Demand Planning
derived from or contingent upon the demand for another component or a finished product (the demand for axles used in assembly is dependent on the demand for the finished automobiles
Dependent Demand
usually refers to a particular type of computer software package that integrates various functions within an organization. it may be used to enable processes such as forecasting, materials management, and purchasing
Enterprise Resource Planning (ERP)
a plan outlining the mix of end products to be produced during a given week
Master Production Schedule (MPS)
the ___ is a forward-looking plan for production or manufacturing. it includes a forecast over defined time periods (dates), plus customer orders, projected available balance, available-to-promise, and the master production schedule. a ___r uses the forecast, production plan and other considerations such as backlog, availability of materials, availability of capacity and management policies and goals to establish a ___
Master Schedule
an order is placed whenever a withdrawal brings inventory position to a predetermined reorder point level
Reorder Point System
items inventory position is reviewed on a schedule periodic basis rather than continuously
risk of stockouts
Fixed Order Point System
replenishment system where the size of the order remains fixed, while the time interval between them changes, depending on how quickly items are consumed
Fixed Order Quantity
model that can be used to determine the quantity of an item to be ordered or manufactured that minimizes total acquisition and inventory carrying costs. most common in independent demand items managed in an order-point management system
Economic Order Quantity (EOQ)
organizations inventory values are kept continuously in line with its actual inventory on hand
after each purchase records are updated and if they fall below a certain point more will be ordered
Perpetual Inventory
transactions are recorded as purchases are made. inventory only reviewed on a periodic basis
Periodic inventory
in the context of inventory, this assign an inventory value for an item at the average cost paid
Average Costing
demand based manufacturing strategy where items are pulled through coordinated manufacturing process based on the ongoing monitoring of customer demand
Flow Manufacturing
a philosophy of operation which focuses on minimization of resources (including time) used in an enterprise. it employs a set of principles and practices to reduce cost through the relentless removal of waste through the simplification of all processes
Lean Production
predetermined level that triggers an order. the level provides adequate inventory to be anticipated demand during the time it takes to receive the order
Reorder Point
a measure of dispersion of data. ___ is calculated by finding the difference between the average and each actual observation, squaring each difference, summing all squared differences, dividing that by n-1 (n is the number of observations) and taking the square root of the results
Standard Deviation
inventory management system that holds a supplier responsible for ensuring that stock is maintained at appropriate levels at the purchasers facility and for replenishing items when levels drop
Supplier-Managed Inventory (SMI)
the ___ asserts that every entity in a system is a constraint, but only one can be defined as the critically constrained resource (CCR). all other entities or constraints are noncritically constrained resources (NCCR). the CCR controls the system. if an action reduces time at the CCR to less than the time at a NCCR, then the NCCR becomes the new CCR. this is true for any process until absolute line balance is achieved, one can think of the workstation/cell/process as a CCR or NCCR to the bigger system and repeat analytical ____ thought process for the larger system
Theory of Constraints
a change in data caused by one of four: special cause, common cause, tampering or structural ___
Variation
inventory management system that holds a supplier responsible for ensuring that stock is maintained at appropriate levels in the purchasers facility and for replenishing items when levels drop
Vendor Managed Inventory (VMI)
the body of regulations used by all US federal executive agencies in the acquisition of supplies and services with appropriate funds. the ___ are compilation of all laws and policies governing the federal procurement process
Federal Acquisition Regulations (FAR)
extends the principles of S&OP throughout the supply chain, product and customer portfolios, customer demand, and strategic planning to deliver one seamless management process and improve business performance
Integrated Business Process
proactive compilation of requirements information regarding demand (from customers, sales, marketing, and finance), and the organizations capabilities from supply side such as supply, operations, and logistics management
Demand Management
cross-functional, horizontal process led by senior management that works with internal business units to forecast anticipated demand, inventory, supply, and customer lead times based on the sales forecast, actual demand, capacity forecast, and the organizations business objectives
Sales and Operations Planning (S&OP)
a collaborative process between buyer and seller involving the exchange of jointly developed sales forecast, inventory replenishment schedules, and promotion plans
Collaborative planning, forecasting, and replenishment (CPFR)
formula for forecast error
forecast error=actual demand-forecast demand
the average of the absolute values over a given number of time periods
Mean Absolute Deviation (MAD)
standard deviation of the sampling distribution of the mean
measure of the uncertainty of a given forecast and can be used to create confidence intervals
Standard Deviation
checked each time period to determine whether it falls outside some preset control limit
if equal to 0, forecast is equal to actual demand
greater than 0 indicates the actual demand exceeds the forecast
less than 0 indicates the actual demand is less than the forecast
Tracking Signal
an average of the squared errors
taking the square of each error prevents positive and negative errors from canceling out each other, and amplifies the effect of large errors
Mean Squared Error (MSE)
the process of anticipating future capacity requirements
Capacity Forecast
setting the long-term direction of an organization. to be successful, an organization must approach ___ on three levels: (1) corporate: decisions and plans that answer the questions of “what business are we in?” and “how will we allocate our resources among these businesses”; (2) unit: these decisions mold the plans of a particular business unit, as necessary to contribute to the corporate strategy; (3) function: these plans concern the “how” of each functional area’s contribution to the business strategy and involve the allocation of internal resources
Strategic Planning
the network of entities providing materials or services and transforming them into a product or service used by a consumer. there is no unique ___ that fits across all organizations and industries. rather ___s will be designed to meet the needs of the organization
Supply Chain
businesses that sell to other businesses and not to the general public. typically they sell products in large commercial quantities
Wholesaler
all labor, goods, services, and capital are free from any government restrictions or trade barriers so they can move freely across national borders
Pure market economy
country severely limits trade with the outside world, and relies on its own resources to support production and trade
Closed Economy
mix of state-owned and private enterprises. most industrialized nations
Mixed Economy
government interface with the free flow of goods and services that is considered harmful to the domestic economy
Protectionism
exists when one of the trading companies can produce a unit of the good involved with less resources than the other, or when only one country has a particular resource
Absolute Advantage
selling a product in other countries at price below those in the home market. illegal in most importing countries, US
Dumping
what are the 5 phases of the business cycle?
the highest point of output before a down turn
recession or shrinkage of the economy
recession trough or lowest point in economic activity
recovery or resuming growth path
expansion (prosperity), beyond a previous high point
measure of economic activity that changes before the business cycle does and thus indicates its future direction
Leading
confirms a change has occurred in the economy and tends to follow changes in the economy
Lagging
measure of economic activity that changes concurrently with changes in the business cycle
Coincident
replaced GATT in 1995
164 member nations
be more open to trade by lowering trade barrier such as customs duties (or tariffs) and discourage measures such as import bans or quotas that restrict quantities
discourages unfair practices such as export subsidies, product dumping
World Trade Organization (WTO)
What are Porter’s 5 forces?
the extent and intensity of direct competition threat of entrants threat of substitute product or service power of buyers power of suppliers
the process and result of gathering an analyzing information about aggregate forces (including economics) at work in trade and commerce in a specific service or commodity
Market Intelligence
taking out an investment that will specifically reduce or cancel out the risk in another investment
Hedging
a contract to exchange one form of currency for another at a specified exchange rate on some future date
Forward Exchange Contracts
gives an organization the right to buy a given amount of currency at a specified exchange rate on or before a specified date, but do not require the organization to buy at the end of the period. gives some flexibility but are more expensive then forward exchange contracts
Currency Options
family of indexes published by many nation agencies (US bureau of labor statistics)
measure the average change over time in the prices received by domestic producers of goods and services
based on selling price rather than on actual cost to produce an item
Producer Price Index (PPI)
popular measure of price inflation for retail goods and services
published monthly by US department of labor and other national agencies
measure average change in retail prices over time for a basket of eight major groups with more than 200 categories of various goods and services
Consumer Price Index (CPI)
a repetitive pattern of demand from year to year that indicates quantitative differences based on regular marketing and production cycles, model changeovers, seasonal discounts, and holidays
Seasonality
value that allows data to be measured overtime in terms of some base period
Deflator
measure of inflation, a factor used to eliminate prices changes in computing a nation’s real changes in output
Implicit price deflator
professional tool that organizations use to measure, investigate, and control price and cost changes within their own organizations
Custom Indexing
the difference between the value of a nations exports to all other countries and the value of all imports from all other countries over a given time period
Balance of Merchandise Trade
measure for the difference in the flow of funds across a nations boundaries
Balance of Payments
a written instrument executed by a bidder or contractor (the principal) and a second party (the surety) to assure fulfillment of the principals obligation to a third party. Types of ___s include performance ___s, payment ___s, and bid ___s
Bond
the value of goods or services received from suppliers and other creditors for which invoices have been received but not yet paid by the buying organization. also that branch of an organization which receives invoices and processes payments to suppliers and creditors
Accounts Payable
(1) a situation in which the capacity to accommodate products is less than what is needed to ensure smooth flow through the system; (2) in a kraljic matrix or quadrant analysis, the ___ quadrant represents items that are low-value high-risk. items in this category are generally purchased in large quantities and inventory levels are monitored closely to avoid interruptions in supply
Bottleneck
(1) any tangible good that can be bough, sold, or bartered, such as gold, silver, natural gas and oil or a bulk food product like grain, oats, corn, beef, pork bellies and coffee. currently, the term includes investment vehicles such as ___ futures. a ___ is traded on a commodities exchange that facilitates the trade and establishes and enforces rules and regulations about the trading process. Depending on its use and trading purpose a ___ may come in two types- cash and spot. a cash ___ is an actual ___ that is under a futures contract. a ___ is one that is traded on a spot market, pending delivery; (2) in supply management, the term ___ often refers to any good or services that is bought and sold in any trading arena
Commodity
the reduction in average unit costs experienced as organization’s volume increase
Economies of Scale
the price of a currency as it is being exchanged for another
Exchange Rate
a measure of a nations total output, which is the total value of all finished goods and services produced anywhere in the world by its agencies and firms during a certain time period (typically one calendar year)
Gross National Product (GNP)
a comprehensive study of feasibility or viability of a new concept or idea, usually undertaken before entry into the marketplace
Market Analysis
a tax imposed on imports and exports
Tariff
in finance, the total number of shares, units or contracts traded in a security or market during a specified period of time
Volume
system developed jointly by the US, Canada, and Mexico to classify business activity across North America. ___ is expected to replace the US Standard Industrial Classification (SIC) System
North American Industry Classification System (NAICS)
comparison of prices in one year to a base year
Price Indices
professional tool that organizations use to measure, investigate, and control price and cost changes within their own organization
Custom Indexing
calculates the proportion of plant and equipment used in the manufacturing, mining, and electric and gas utility industries. represents the ratio of the industrial production index to plan and equipment capacity
Federal Reserve Board
measure of a nations domestic output, which is the total value of all finished goods and services produced within a country within a given time period
general measure of economic activity
Gross Domestic Product (GDP)
exchange rates imposed by a country’s government that differ, depending on the nature of the goods or services imported
Differential Exchange Rates
currency exchange rate set and maintained by a government
Fixed Exchange Rate
currency exchange rate determined by market forces rather than government decisions
Floating Exchange Rate
measure statistical, but not causal, relationship between two variables
Regression Analysis
used to describe the degree of relationship between two data series
Correlation
method for examining the factors that influence changes in data series over time
Time Series
weights the observations being averaged to give more weights to the most recent data
Exponential Smoothing
interdependent decisions under uncertain conditions
maps alternative courses of action and their consequences
Decision Tree Analysis
linear regression but more complex
used when data in a time series are stationary or can be transformed into a stationary series
Box-Jenkins Method
a numerical modeling procedure using random or sample data to discover solutions to problems
helps in decision making when there is a high level of uncertainty in the environment
simulations developed using computer software and incorporated factors are considered innately unpredictable
software provides a range of possible outcomes and the probability they will occur
Monte Carlo Methods
calculates the average of the most current ‘n’ periods. in each recalculation the most current period’s data is added and the oldest data is removed
Data summed and then divided by the number of time periods used in the calculation
Simple Moving Average
standardized protocols and data structures defined for each software or computer application that can be used to facilitate communication between software or computer applications
Application Program Interface (API)
a monthly index issued by the US Federal Reserve Board that calculates capacity utilization in the manufacturing, mining, and electric and gas utilities industries. this index represent the ratio of industrial production index and equipment capacity
Capacity Utilization Index
a statistical concept which defines the average of a distribution. normally measure by mean, median, and mode
Central Tendency
a trend is general movement upward or downward. studying data to reveal such movement may lead to better decision-making. Factors that can create trends include changes in population, productivity, technology, supply/demand, price or costs
Trend Analysis
buying on “spot” or open market for immediate delivery
Spot Buying
buying more product than is required due to potential supply constraints or inflationary markets
Forward Buying
purchases in excess of current and future known requirements with the intention of profiting from price movement and resale
Speculative Buying
contracts established by buying organization to meet requirements for significant quantities of specific products or commodities with the primary objectives of ensuring supply, consolidating requirements to maximize purchasing leverage, and eliminating the carrying costs associated with bringing the entire required quantity into inventory at one time
price negotiated based on the total number of items to be purchased or the total dollar amount to be spent with the supplier over a defined time period
Volume Purchase Agreements (VPA)
award contracts to suppliers of raw materials or components for the life of the product
Life-of-Product Supply
an agreement with a supplier to stock goods at a customer’s location with the goods remaining the property of the supplier until used or sold
Consignment
when a commodity or component is purchased over a long period, the value of the items inventory is considered average, based on the mix of quantities and prices of the items bought at different times
averaging decreases the difference between short-term price fluctuations and long-term averages
Dollar Averaging
a term commitment (usually one year or more) to a supplier for certain goods or services over a predetermined period of time at predetermined prices, or at prices to be determined based on market or other conditions. this practice is aimed at reducing the number of small orders, utilizing short term releases to satisfy demand requirements
Blanket Order
strategies that determine the frequency and timing of purchases. these strategies are influenced by the current and projected requirements and supply market conditions, the speed of technological change and availability of funds
Buying strategies
advance purchases for use in the next three weeks to three months
Buying to Requirements
the computer-to-computer exchange of business information in a standard format. transaction documents, such as purchase orders, invoices, and shipping notices, are transmitted electronically and entered directly into a supplier’s (or purchaser’s) computer or into a third-party network for processing
Electronic Data Interchange (EDI)
contract for the purchase or sale and delivery of commodities or currencies at a specified future date for a specified price. primarily used as hedging device against market price fluctuations or unforeseen supply shortages
Futures Contract
regulated exchange using standardized futures contracts to buy or sell something (typically commodities or financial products at a particular time for a particular price)
Futures Market
a measure of the velocity of total inventory movement through the organization, found by dividing annual sales (at costs) by the average aggregate inventory value maintained during the year. the higher turnover, generally, the more favorable the measure
Inventory Turnover
a method for the effective planning of all resources used in a manufacturing organization. ideally, it addresses operational planning units and financial planning in dollars, and has a simulation capacity to answer “what if” questions. it is comprised of a variety of functions, each linked together: business planning, sales and operations planning, production planning, master production scheduling, material requirements planning, capacity requirements planning, and the execution support systems for capacity and materials. ___ is a direct outgrowth and extension of closed-loop material requirements planning (MRP)
Manufacturing Resource Planning (MRP II)
the stage in the product life cycle characterized by slower increases in sales, decline in profits, more competition and some marketplace exits
Maturity Stage
a replace-on-consumption process in which material moves only when specifically “pulled” by a user. pull processes can be created throughout a supply chain. in procurement, shipments occur (under an umbrella contract) when a user signals a supplier that goods have been consumed. in distribution, field inventory is replenished by decisions made at the field warehouse, not at a central point. in production, items are produced only to replace those withdrawal for use. in inventory control, materials are issued only on a signal from a user. typically the process of pulling and replacing material is accompanied by minimum paperwork
Pull System
reduction in inventory that occurs when items are lost, stolen or misplaced. can also occur naturally through evaporation or age and so on
Shrinkage
the volume of output generated by a resource in a specific period of time
Throughput
the movement of money through an organization. it is the measure of inbound revenues and outbound expenses by time period
Cash Flow
the process of overseeing and maximizing the financial and operational value of a group of related commodities, products or services by identifying and monitoring total spend and consumption, keeping abreast of market shifts, new alternatives or inventions, forecasting market supply and demand, and continuously evaluating supplier performance in order to drive down costs, improve supplier performance, and respond to changing business requirements and/or enhance stakeholder satisfaction
Category Management
refers to both internal partnering to define demand as well as working with suppliers. while often associated with vendor managed inventory or utilization of software, the process changes required within a business to reap benefits can be significant, as are the potential rewards for making such changes
Collaborative Inventory Management
a collaborative process between buyer and selling involving the exchange of jointly developed sales forecasts, inventory replenishment schedules and promotion plans. both parties benefit from these co-managed process and shared information
Collaborative Planning, Forecasting and Replenishment (CPFR)
the stages a product goes through from beginning to end. five distinct stages are: design, introduction, growth, maturity and decline
Product Life Cycle
(1) exposure to a chance or probability of loss or damage. (2) in supply management, exposure to business loss or interruption, of access to raw materials, manufactured goods, capacity, or other key materials, products or services required by the buying organization to execute its business plane. (3) from a legal perspective, consequences from some action or inaction. (4) in insurance law, the peril or casualty covered by the contract of insurance
Risk
the strategy and management of continuous, value-added processes across organizational boundaries to meet the needs of the end customer, while incorporating a structured approach, combined with the use of best-practice tools, to enable the development of comprehensive sourcing strategies that deliver maximum long-term value
Supply Chain Planning
a voluntary, nonprofit organization that establishes cross-industry standards to simplify the flow of product and information in the general merchandise retail industry. GS1 US and Voluntary Interindustry organization merged in 2012
Voluntary Interindustry Commerce Standards (VICS)
calculated by dividing the absolute forecast error by the actual demand for each time period
Mean Absolute Percentage Error (MAPE)
in statistics, a measure of accuracy used in time series analysis
Mean Squared Error (MSE)
when a population is normally distributed, ___ is the population standard deviation divided by the square root of the sample size
Standard Error of the Mean
the degree to which relevant data or information is accessible to all involved in the supply chain
Supply Chain Visibility
formula for target cost
target cost=expected price-desired profit
redefine a family of products or services
if successful, result in significant strikes in pass its competition and improving profitability
Breakthrough Ideas
process changes that improve the delivery or quality of an existing product or services while reducing costs
Incremental Ideas
results in add-on features that extend, improve, or modify existing product, service or processes
Derivative Ideas
result in product and services that are uniquely created to meet the specific demands of one customer
Customized Ideas
an approach to product or service development in which key stakeholders are involved early and continuously in the design stage to shorten cycle time and to ensure that manufacturability, procurement, reliability, maintenance, scheduling, delivery and marketing are considered simultaneously rather than sequentially
Concurrent Engineering
often used interchangeably with “term”, a provision in a contract. in traditional common law a distinction is drawn between ___ precedent and ___ subsequent
Condition
legal requirement for creation of a valid contract involving an exchange of value for value
Consideration
an evaluation of actual or anticipated cost data (material, labor, overhead, general and administrative, and profit). the application of experience, knowledge and judgement to data to project reasonable estimated contract costs. estimated costs serve as the basis for buyer-seller negotiations to arrive at mutually agreeable contract prices
Cost Analysis
an accounting classification that accumulates the monetary value of direct materials, direct labor and allocated overhead in products sold during a given time period. it is used to calculate earnings for the period, typically a year
Cost of Goods Sold (COGS)
