Supply Chain Distribution Key Terms

Understand the key terminology used in supply chain distribution
By B. Lumadue Supply chain distribution involves getting inventory from a factory to a customer through warehousing, order fulfillment and inventory management. Efficient supply chain distribution means having the right inventory in stock and being able to get it to customers quickly, without waste or maintaining unwanted inventory. While this sounds like a simple process, supply chain management is complicated by global industry, technology and uncertainty about demand. To work on building or improving your company's supply chain distribution, get to know some of the terminology used in the many studies, models and practices meant to improve the process.

Inventory management

Inventory management involves reviewing stock periodically and placing orders to keep stock up to date.
Try:  See QuickMBA for information, formulas and practices used in inventory management.

Forecast improvement analysis

Forecasting entails examining demand to make sure that you are producing items that will sell. Some of the goals of forecast improvement analysis are to have desired items in stock when they are ordered and to reduce inventory that does not sell.
Try:  View Supply Chain Consultants to find out more about forecast improvement analysis.

Pick and pack

Pick and pack, also called order fulfillment, is the process of taking orders from stock and packing them for shipping. Pick and pack may be handled onsite or outsourced to fulfillment warehouses.
Try:  See Nexus Distribution for more information about pick and pack services.

Supply-Chain Operations Reference-model (SCOR)

The Supply-Chain Operations Reference-model (SCOR) is a model developed by the Supply-Chain Council that addresses distribution phases. It describes the management processes of plan, source, make, deliver and return.
Try:  Visit the Supply-Chain Council website for more information on the SCOR model.

Lean

A "lean" supply chain refers to how a supply chain should operate. Lean methodologies strive for quick customer delivery and minimum inventory waste. Building lean supply chains involves the processes of developing systems thinking, understanding customer value, mapping value streams, benchmarking best practices, designing to manage demand volatility, creating flow and developing performance metrics.
Try:  Read Industry Week's article for detailed information about lean supply chain practices.

Six Sigma

Six Sigma is a management strategy that was developed by Motorola and is now applied in many different industries, companies and activities, including supply chain management. Six Sigma is used to increase capacity, reduce cycle times and expenditures and generate higher revenues.
Try:  Check out Breakthrough Management Group International for more information about Six Sigma.