Lizbeth Magdalena Valdez Arredondo

CHAPTER 4

KEY TERMS
C-level” position: which refers to corporate officers such as a chief executive officer (CEO), a chief
operating officer (COO), or a chief financial officer (CFO).

Centralized logistics organization: Implies that the company maintains a single logistics
department that administers the related activities for the entire company from the home office.

Container security initiative (CSI): An agreement in which some of the world’s ports agree to
allow U.S. customs agents to identify and inspect high-risk containers bound for the United States
before they are loaded onto ships.

Customs Trade Partnership Against Terrorism (C-TPAT): In which public (CBP) and private (e.g.,
retailers and manufacturers) organizations work together to prevent terrorism against the United
States through imports and transportation.

Decentralized logistics organization: Means that logistics-related decisions are made separately
at the divisional or product group level and often in different geographic regions.

Excess capacity: Can be unproductive because it may result in the purchase of additional
equipment or facilities—a situation that adds to costs (input) but not necessarily to output, thus
resulting in lower productivity.

Fragmented logistics structure:Logistics activities are managed in multiple departments

throughout an organization.

Importer security filing (ISF) rule: Which went into effect in early 2009. The ;10 + 2< moniker refers
to the fact that importers are required to file 10 pieces of information (e.g., country of origin;
manufacturer’s name and address), and carriers two pieces of information (e.g., vessel storage plan),
before cargo is loaded at non-U.S. water ports.

ISO 9000: Is a set of generic standards used to document, implement, and demonstrate quality
management and assurance systems.

Lean Six Sigma: Is an area of increased focus within many companies. Lean Six Sigma integrates
the goals and methods of these two approaches in pursuit of quality.

Logistics service quality: Relates to a firm’s ability to deliver products, materials, and services
without defects or errors to both internal and external customers.

Logistics social responsibility: That relate directly to logistics,36 did not emerge until the mid-
1990s.

Logistics uncertainty pyramid model: Has been established to identify sources of uncertainty that
can affect the risk exposure for logistics activities.
Malcolm Baldrige National Quality Award: Which was established in the late 1980s to recognize
U.S. organizations for their achievements in quality and performance.

Pilferage: Which refers to employee theft, cannot be eliminated, and both warehousing and
transportation operations are especially vulnerable to pilferage.

Productivity: Can be defined as the amount of output divided by the amount of input.

Sharing economy: Which entails an organization making their unused resources (e.g., excess
warehouse space, unused trailer space) available to other organizations. Companies are finding that
strategic sharing can result in increased revenues, enhanced utilization of assets, and savings from a
reduced need to make capital investments.

Six Sigma: Emphasizes the virtual elimination of business errors. Those who remember the normal
distribution (curve) from their statistics class will recall that sigmas are related to standard deviations
from the mean.

Tachograph: A recording instrument that is installed inside a truck and produces a continuous,
timed record of the truck, its speed, and its engine speed.

Theft: Which can be defined as the taking and removing of personal property with the intent to
deprive the rightful owner of it, is another logistics risk issue that confronts many managers.

Transportation worker identification credential (TWIC): Which is a common credential used to

identify workers across all modes of transportation.

Unified logistics structure: Multiple logistics activities are combined into, and managed as, a single
department.
Lizbeth Magdalena Valdez Arredondo

CHAPTER 5

KEY TERMS
Agile supply chain: Focuses on an organization’s ability to respond to changes in demand with
respect to volume and variety.

Bullwhip effect: Which is characterized by variability in demand orders among supply chain
members—the result of which is inventory lumps.

Contract logistics: Continues to be one of the most misunderstood terms in logistics and SCM. As
we have seen with other supply chain concepts (e.g., collaboration, SCM), there is no commonly
accepted definition of third-party logistics.

Fast supply chain: Emphasizes a speed and time component, whereas an agile supply chain focuses
on an organization’s ability to respond to changes in demand with respect to volume and variety.

Fourth-party logistics: Which emerged in the mid-1990s. Because 4PL/LLP is still relatively young,
there is disagreement as to what it should be called as well as how it should be defined. W

GSCF model: Customer relationship management, supplier relationship management, customer

service management, demand management, order fulfillment, manufacturing flow management,
product development and commercialization, and returns management.

Lead logistics provider: Provider appears to be emerging as the moniker of choice, but some
providers, such as UPS Supply Chain Services, don’t use either term to describe their services.

Leagility: Combines aspects of both lean and agile to focus part of one’s supply chain on a timely
response to fluctuating customer orders and/or product variety and another part of the supply chain
on leveling out the planning requirements to smooth production output.

Lean supply chain: May be a more appropriate goal. Lean supply chains are focused on eliminating
all waste, including time, and ensuring a level schedule.

Perfect order: (i.e., simultaneous achievement of relevant customer metrics such as on-time
delivery, damage free, and correct order quantity) metric that examines the total impact of an
incorrect order in a single metric via a multiplier effect.

Relational exchanges: Importantly, a long-term orientation tends to be predicated on relational

exchanges, whereas a short-term orientation tends to focus on transactional exchanges.

SCOR model: ldentifies six processes—Plan, Source, Make, Deliver, Return, and Enable—
associated with SCM.

Supply chain: Can be liberally viewed as a combination of processes, functions, activities,

relationships, and pathways along which products, services, information, and financial transactions
move in and between enterprises from original producer to ultimate end-user or consumer.
Supply chain analytics: Combines technology with manual employee effort to identify trends,
perform comparisons, and highlight opportunities in supply chain processes, even when large
amounts of data are involved.

Supply chain collaboration: Cooperative relationships between members of a supply chain—

formal or informal—between companies and their suppliers or customers, established to enhance
the overall business performance of all parties.

Supply chain management: Views logistics activities as being part of managing one’s supply chain.

Supply chain partnership: Defined as a tailored business relationship between two supply chain
members.

Third-party logistics (logistics outsourcing): Emphasize that 3PL arrangements involve a long-
term perspective between buyer and seller and that the parties have a relationship, as opposed to
transactional, perspective.

Transactional exchanges: Relational exchanges tend to be characterized by a far different set of

attributes than are transactional exchanges, including—but not limited to—trust, commitment,
dependence, joint investment, and shared benefits.
Lizbeth Magdalena Valdez Arredondo

CHAPTER 6

KEY TERMS
Bribes: Money paid before an exchange

Excess (surplus) materials: Refer to stock that exceeds the reasonable requirements of an
organization, perhaps because of an overly optimistic demand forecast.

FinTech: Companies use cloud-based software to optimize the connection between procurement
and accounts payable.

Global procurement (sourcing): Which refers to buying components and inputs anywhere in the
world, is driven by two primary reasons, namely, the factor-input strategy and the market-access
strategy.

Investment recovery: Which identifies opportunities to recover revenues or reduce costs

associated with scrap, surplus, obsolete, and waste materials, is often the responsibility of the
procurement manager.

Kickbacks: Money paid after an exchange

Kraljic’s Portfolio Matrix: Is used by many managers to classify corporate purchases in terms of
their importance and supply complexity with a goal of minimizing supply vulnerability and getting
the most out of the firm’s purchasing power.

Multiple sourcing: Proponents argue that by having more than one supplier increased amounts of
competition, greater supply risk mitigation, and improved market intelligence can arise.

Near-sourcing: (procuring products from suppliers closer to one’s own facilities) by many firms.

Obsolete materials: Are not likely to ever be used by the organization that purchased them. Having
said this, materials that are obsolete to one organization might not be obsolete to other users; as
such, it might be possible to sell obsolete materials to other organizations.

Procurement: Refers to the raw materials, component parts, and supplies bought from outside
organizations to support a company’s operations.

Procurement cards (p-cards): Has also grown dramatically with the evolution of electronic
commerce. P-cards are similar to charge cards such as Visa and MasterCard that are typically focused
on personal use, with p-cards being used for an organization’s buying needs.

Purchasing: Purchasing, and supply management were terms that could be used almost
interchangeably, but this is no longer the case. Although “procurement” and “purchasing” are
sometimes viewed as synonymous terms, supply management is now viewed as a relational
exchange approach involving a limited number of suppliers.
Scrap materials: Refer to materials that are no longer serviceable, have been discarded, or are a
by-product of the production process.

Single sourcing: Consolidates purchase volume with a single supplier with the hopes of enjoying
lower costs per unit and increased cooperation and communication in the supply relationship

Strategic sourcing: This approach involves an increased focus on identifying and using data
internally and across the supply chain so that a company can consolidate its purchasing power for
enhanced value.

Sustainable procurement: Refers to the integration of social and environmental considerations

into all stages of the purchasing process with the goal of minimizing the impact of procurement
activities on human health and the environment.

Supplier audit: A supplier audit usually involves an onsite visit to a supplier’s facility. The goal of
this visit is to gain a deeper knowledge of the supplier.

Supplier development (reverse marketing): Refers to aggressive procurement involvement not

typically part of supplier selection and can include a purchaser initiating contact with a supplier or a
purchaser establishing prices, terms, and conditions, among other behaviors.

Supplier scorecards: To report performance information to their suppliers.

Supply chain finance: An emerging focus within the supply chain that is directly affecting
procurement relationships.

Supply management: A relational exchange approach involving a limited number of suppliers.

Total cost of ownership (TCO): Firms consider all the costs that can be assigned to the acquisition,
use, and maintenance of a purchase

Waste materials: Refer to those that have been spoiled, broken, or otherwise rendered unfit for
further use or reclamation. Unlike scrap materials, waste materials have no economic value.