10 KEY TERMS TO KNOW IN SUPPLY CHAIN MANAGEMENT IN 2023

Global connectivity, supply chains, logistics, and the ever increasing pace of global commerce makes it necessary to have an understanding of the larger points of Supply Chain Management (SCM). The development and implementation of supply chains to be economical and efficient can sometimes be impossible if a business doesn’t have a full understanding of supply chain management terminology and jargon. Supply chain workflows are no longer traditional, and have gone through a series of modernizations. The digital supply chain is changing the B2B world and making global sales possible with just a click. These are a few key terms which are important to know within the SCM world today.

Supply Chain Management Terminology:

1). Logistics – Logistics is the process of planning, organizing, and managing the movement of goods, services, and information from one place to another. It includes the coordination of all the activities involved in the transportation, storage, and distribution of products or materials, as well as the associated documentation, communication, and financial information. The goal is to ensure that the right goods are delivered to the right place, at the right time, in the right quantity, and at the lowest possible cost. With the help of the GRID, logistics, transportation, inventory management, and demand planning can all be managed with ease.

2). Supply Chain Sustainability – Supply chain sustainability involves the integration of social, environmental, and economic considerations in the management of the supply chain. It involves ensuring that the production, distribution, and consumption of goods and services are carried out in a way that minimizes negative environmental impacts, promotes social equity, and fosters economic development.

Supply chain sustainability encompasses a wide range of issues, including greenhouse gas emissions, waste reduction, labor standards, human rights, community development, and ethical business practices. A sustainable supply chain is one that is resilient, efficient, and responsible, and that creates long-term value for all stakeholders, including the environment, society, and the economy.

3). Supply Chain Traceability – Supply chain traceability is the ability to track and trace the movement of goods, materials, and information along the supply chain, from the point of origin through consumption. It involves the identification and documentation of each step in the supply chain, as well as the capture and exchange of relevant data and information. The purpose of supply chain traceability is to enhance transparency and accountability, and to enable businesses and consumers to understand and manage the risks and opportunities associated with the supply chain. It enables companies to identify the source of raw materials, to monitor and manage the quality and safety of products, and to comply with regulations and industry standards.

4). Supply Chain Visibility – Supply chain visibility is the ability of a company or organization to track and monitor the movement of goods and materials through their entire supply chain, from suppliers to customers. It involves receiving real-time, accurate and complete information on the status of products and materials, including their location, condition, and availability. With supply chain visibility, companies can identify potential disruptions and delays, optimize inventory levels, and improve the efficiency of their operations. This information can also be used to improve collaboration with suppliers and customers, and to make more informed decisions about procurement, production, and logistics. Supply chain management software such as the GRID provides companies with the tools necessary to maintain full visibility of their supply chain.

5). Waybill – A waybill is a document that serves as a receipt of goods and a contract between a shipper and a carrier (transportation company). It contains information about the goods being shipped, their origin, destination, and the terms of the agreement between the shipper and the carrier. Waybills are typically used in the transportation of goods by air, land, or sea, and they provide a detailed record of the shipment. The document includes important details such as the names and addresses of the shipper and consignee (receiver), the carrier’s name, the type of transportation used, the date and time of departure and arrival, the weight and quantity of goods, and any special handling instructions. The waybill also serves as a legal document and can be used as evidence of the contract of carriage in the event of a dispute between the shipper and carrier.

6). Inventory Management – Inventory management is the process of planning, organizing, and controlling the flow of goods and materials in and out of a company’s inventory. It involves monitoring and tracking inventory levels, forecasting demand, and ensuring that the right products are available in the right quantities, at the right time. Inventory management techniques and strategies include just-in-time inventory, economic order quantity models, safety stock levels, and inventory turnover analysis. Inventory management can also be supported by software such as the GRID, which provide enhanced visibility into inventory levels across a supply chain. Largely, effective inventory management can improve operational efficiency, reduce costs, and enhance customer satisfaction, leading to increased profitability for a company.

7). Supply Chain Execution – involves the management and coordination of the processes involved in the movement of goods from the point of origin to the point of consumption. It encompasses all activities related to the planning, coordination, execution, and monitoring of the flow of goods and services through the supply chain. The goal of supply chain execution is to ensure that the right products are delivered to the right place at the right time, with the right quantity, quality, and cost. This involves managing various processes, such as transportation, warehousing, inventory management, order fulfillment, and distribution. Having a proper understanding of this term will help Supply Chain Managers make quick decisions to effectively manage their supply chain.

8). EDI – EDI (Electronic Data Interchange) is a technology used for the electronic exchange of business documents and information between different computer systems in a standardized format. EDI enables companies to exchange documents, such as purchase orders, invoices, and shipping notices, with their trading partners electronically, without the need for manual data entry or paper documents. This technology can save time and money by reducing the need for manual data entry, minimizing errors, and streamlining business processes.

EDI can be implemented through a variety of methods, such as direct connections between trading partners, value-added networks (VANs), or web-based portals such as the GRID. EDI is a key technology allowing companies to exchange information with their business partners in a fast, accurate, and efficient way, leading to improved supply chain efficiency and reduced costs.

9). Backordering – Backordering is a process in which a customer places an order for a product that is temporarily out of stock, and the seller accepts the order with the understanding that the item will be delivered at a later date. Backordering allows customers to purchase products that are temporarily out of stock and ensures that they will receive the item when it becomes available, rather than having to continuously check for availability. For sellers, it allows them to keep sales flowing and maintain customer satisfaction, even when they do not have the product in stock. However, backordering can also have some drawbacks. If the item is not available from the supplier within the estimated delivery date, the customer may become dissatisfied and cancel the order, leading to lost sales and negative reviews. Additionally, managing backorders can be complex and time-consuming, requiring careful inventory management and communication with customers.

10). Landed Cost – Landed cost refers to the total cost of a product or shipment that includes all expenses incurred to get the product to its final destination. It takes into account not only the actual cost of the product, but also the cost of shipping, customs duties, taxes, insurance, and any other charges related to the transportation of the product. Landed cost is often used by businesses to determine the total cost of their inventory and to calculate the selling price of their products. By taking into account all the costs associated with getting a product to its final destination, businesses can make more informed decisions about pricing and profitability.

At a Glance!

Staying up to date with the latest supply chain terms and concepts is essential for businesses to remain competitive and efficient in the rapidly evolving global marketplace. By understanding these ten supply chain terms, businesses can optimize their operations, reduce costs, increase revenue, and maintain a competitive edge in 2023 and beyond.