Midterm Exam in Logistics Management Flashcards
It deals with the integration of information and material flows across multiple organizations in the supply chain.
Logistics Management
One of the key factors, which can affect the profit of an enterprise.
Reduction of Inventory
Damaged due to improper packing, frequent handling of consignment, and other reasons.
Minimum Damage to Products
Received from the customers is an activity.
Order Processing
Physical distribution of the product, which also influences the efficiency of the logistical system.
Packaging
Major source of cost in logistics.
Economy of Freight
Which precede manufacturing. These include the movement of raw materials, and components for processing from suppliers.
Inbound Logistics
Who defines customer services as a complex of activities involving all areas of the business which combine to deliver and invoice the company’s product in a fashion that is perceived as satisfactory by the customer and which advances the company’s objective?
Lalonde Bernard J,
Service level and other related activities are defined on a policy level in both qualitative and quantitative measures.
Pre Transaction Phase
The ease with which customers can contact the firm.
Accessibility
In B2B transactions and e-commerce, the customer after payment of part value sometimes full value of the product as an advance, requests feed back on the status of the shipment on a continuous basis.
Information of order status
Train or educate the user regarding its operation.
Customer awareness and training
Which follow the production process. These include activities like warehousing, transportation, and inventory management of finished goods.
Outbound Logistics
Place where the finished goods are stored .
Warehousing
The customer service is associated with the routine tasks, which have to be performed in the logistics supply chain.
Transaction phase
The service standards for the company.
Customer Service Policy
Material required by the customer must be delivered on time.
Reliability and Consistency in Delivery Performance
The transmission of order collection, frequency of visit of salesman to customers, invoicing and collection systems, communications level between customers and suppliers which can be of more importance to certain organizations.
Other Factors
The act of obtaining goods or services, typically for business purposes.
Procurement
Refers to the stock of materials of any kind stored for future use, mainly in the production process.
Inventory
The business practice of hiring a party outside a company to perform services or create goods that were traditionally performed in-house by the company’s own employees and staff.
Outsourcing
Key determinant of profitability.
Inventory
The costs incurred to store inventory.
Holding costs
Directly related to processing. These include activities like storage and movement of raw materials, components within the manufacturing premises.
Process Logistics
A combination of activities enables a business firm to add more value to the buyer
Customer Service
A company may obtain a loan or forgo an opportunity to invest in an attractive return.
Interest or Opportunities Cost
Umbrella that encompasses all of the processes involved in managing the incoming materials needed for manufacturing.
Procurement Management
Who defines logistics management as “planning, implementing, and controlling the physical flows of materials and finished goods from point of origin to point of use to meet the customer’s need at a profit”?
Philip Kotler
Longer dimension of risk.
Manufacturer
A manufacturing organization needs to keep stock of raw materials, components and parts required for producing finished goods to meet the continuous production requirements.
Meeting the production requirements
Plays a major role in delivering customer service.
Physical distribution
The sourcing of materials needed to manufacture products.
Procurement Logistics
Ensuring that there is enough co-ordination across all the regions and business units, which will allow a firm to maximize economies of scale.
Ensure that there is appropriate co-ordination across regions and business units
When buyer and supplier work together, more opportunities for saving will be generated that the two parties working independently.
Building long-term relationships with key suppliers
The physical delivery of the product when the orders are not delivered on time.
Order Delivery Cycle Time
This is important because this can reduce the customer complaints on deliveries of products, their operations and maintenance etc.,
Educating the customer
The adaptability of the service delivery systems to meet a particular customer need is essential
System design and flexibility
Price reduction.
Evaluating the total cost of ownership
When inventories are high, the insurance on the assets i.e. Inventories also increases.
Taxes, Insurance and Shrinkage W
The expenses incurred to create and process an order to a supplier.
Ordering costs
Required for repairs, maintenance as well as operational support.
Support in operational requirements
A mechanical procedure, which helps in implementing an inventory policy.
Inventory Control
Items are classified as per their usage value. ‘A’ items costs approximately 60 – 70 per cent of the total inventory cost while they are less in number. ‘B’ items cost 20-30 per cent of the total inventory cost while ‘C’ class items are greater in number and carry less than 10 per cent of the cost of the entire inventory.
ABC Analysis
The collaboration with the various functions like engineering, purchase, manufacturing, engineering etc which will help in identifying the correct drivers in the total cost.
Use multifunctional teams
The expectations of customers, the industry standards, the standard of service the firm would like to maintain influence the basic structure of any service
Structuring the service
Corporate policies or programs, written statements of service policy, adequacy of organizational structure and system flexibility.
Pre-transaction
Re-organization of the existing assets of the company.
Switching Cost
Cost associated with having inventory on hand. It is primarily made up of the costs associated with the inventory investment and storage cost.
Inventory holding
This cost is incurred when a firm rents out space.
Storage and Handling Costs
This refers to the cost involved in the ordering process. The paperwork faxes, phone calls etc. will add to inventory related costs.
Ordering Cost
Service desired by the end user
Degree of control
Incurred when the order placed by the customer cannot be filled from the available inventory.
Out of stock costs
Reliability in fulfilling the order within the agreed time frame and also with respect to the quantity and quality of the material ordered.
Reliability of order fulfilment
Who defines logistics management as “the process of strategically managing the procurement, movement and storage of materials, parts and finished inventory (and the related information flows) through the organization and its marketing channels in such as way that current and future profitability are maximized through the cost-effective fulfillment of orders”?
Christopher, M.
Physical movement of the goods to the customers place.
Transportation
The customer may postpone an entire order or some parts of it. This means customer has to reschedule his requirements.
Order postponement
There may be some situations in which the product ordered couldn’t be shipped due to certain manufacturing or quality problems. In such cases, the seller can offer a substitute product and honor his commitment.
Product substitute
The ease with which customer can place an order.
Order convenience
Proper interface between employees of two organizations is important to resolve the issues, which are raised out of misunderstanding or miscommunication.
Human and electronic interface
Incurred when the company is having some stock in hand even after the demand for the product has been terminated.
Over stock costs
It is very difficult to achieve a match between the production and consumption cycle.
Striking a balance between supply and demand
Vital, Essential, and Desirable status of inventory items.
VED Analysis
The Fast, Slow or Normal analysis. consumption pattern of each item.
FSN analysis
Inventory helps the firms in getting the advantage of quantity discounts from suppliers.
Advantage of quantity discounts from suppliers
Keeping the production cycle continuous.
Cycle Inventory
Understanding in what the company is good at and not–will enable to find an appropriate partner.
Assessing the Strengths and Weaknesses
Selecting the right partner.
Identify a Short List of Providers
Delivery consistency of repeat orders is important.
Consistency of delivery
80 per cent of a company’s profits come form 20 per cent of the customers.
Pareto rule
Seller’s responsibility will not be over once the product is dispatched to client. Sometimes, the products damaged during transit, or the product may not be according to the functional requirements of the customer
Customer complaints, claims, and returns
Determining which functions to cede to the partner.
Decide what to outsource
S items are scarce items, which needs to be imported and thus take a long time to obtain. D items are difficult to obtain, and E items are easily obtainable.
SDE Classification
Refers to Scarce, Available and Plenty analysis which allows to build into provision forecasts.
SAP analysis
Provides ample scope for holding large amount of inventories.
Speculation
In order to avoid customer service problems and the hidden costs of unavailable components, companies hold safety stock.
Safety Stock
Nurturing relationships between key people on both sides.
Consider the Human Element
Part of the after sales service, as complex products may sometimes develop technical snags during the warranty period.
Product installation, commissioning and technical snags
Phase where customer satisfaction and building up of a long-term relationship with the customer are involved. It involves commitment of resources to offer the desired level of service.
Post transaction phase
The reporting structure, delegate authority and also allocate responsibility
Building the organization
Ability to enter new markets without building a costly distribution infrastructure.
Identify areas of opportunity
Customer satisfaction is used as a tool for competitive advantage.
Customer Service
Moving from point to point in the materials flow system.
Pipeline Inventory
The wholesaler handles more product lines than the manufacturer.
Wholesaler
Risk for a retailer is wider and not deeper in the sense he stocks a wide variety of products.
Retailer
Proactively schedules the product movement and also its allocation through the channel according to the demand forecast.
Planning approach
Inventory that is used to absorb uneven rates of demand or supply that businesses face.
Anticipation Inventory
Inventory ensures that the operating system does not have any disruption.
Protecting the operating system
When inventories are replaced in extremely small quantities, they result in low investments but high ordering costs.
Minimize costs at acceptable inventory levels
Aims to reduce costs and simultaneously improve service.
Inventory
Viewed as a supply chain cost driver rather than a material asset.
Inventory investment
Customer demands are satisfied through inventory.
Provide the desired customer service levels
A powerful driver of financial performance. Improper management of inventory leads to slow growth and pressure on profitability
Management of inventory
Systems used by large businesses and especially retailers, which allow ordering process costs to be significantly reduced.
Cost of electronic data interchange (EDI)
Customer demand to pull the product through the distribution channel.
Being a reactive or pull approach
Combines the former versions and results in an inventory management philosophy.
Hybrid logic
Inability to predict future demands precisely and getting the materials in time, without incurring extra costs.
Precaution
A scheduling procedure for production processes.
Material Requirement Planning (MRP)
The supplier takes charge of the inventory management of the product and also manages the replenishment process based on the customer’s consumption pattern.
Vendor Management Inventory
The costs of moving the goods to the warehouse or store.
Transportation costs
Clerical costs, such as invoice processing, accounting, and communication costs.
Clerical costs of preparing purchase orders
A manufacturing philosophy, which leads to Production of necessary units, in the necessary quantities at the necessary time with the required quality.
Just – in – Time System (JIT)
The replenishment order quantity, which minimizes the combined cost of inventory maintenance and ordering.
Economic Order Quantity
Costs spent on these will likely be inconsistent.
Cost of finding suppliers and expediting orders
Costs of unloading goods at the warehouse, and inspecting the goods to make sure they are the correct items and free of defects
Receiving costs
Also known as ABC classification, this groups products and markets with similar characteristics to ease inventory management.
Market / Product Classification
Clear and consistent measures of performance.
Performance Measures
Inventory which are ready for delivery to the distribution centers, retailers, and wholesalers or to the customers directly.
Finished goods
Requires the tracking of all parts and materials purchased, products processed, and products stored and ready for shipment.
Inventory control
With the increase in the size of manufacturing units, there is a necessity to have sufficient inventory control so that increasing inventories do not become non-value added expenditure.
Increase in the size of manufacturing units
Effectiveness and performance of inventory.
Integration of Information
These expert systems utilize a computerized knowledge base to share inventory management expertise among the enterprise.
Application of Expert Systems
Complex owing to the number of factors involved.
Training
The need for conscious inventory management.
Wide variety and complexity of the requirements
Refers to the inventory waiting in the process for being assembled into final products.
Work-in-Process
Includes all the purchased parts and direct materials that go into the end product.
Raw Material
There is an increased stress on liquidity in today’s organizations, where it becomes a necessity to maintain liquidity at the levels of nearly 10-20 per cent of the total capital invested in finished goods.
Liquidity
The integrated inventory strategy for each product or market group or segment is defined.
Segment Strategy:
If men and machines are kept idle, it is highly uneconomical for the firm. Inventory levels have to be managed keeping this factor in mind.
High idle time cost of machine and men
Clearly defining the detailed procedures and parameters.
Operationalized policies and parameters
