Discover the essential terms and concepts behind logistics and supply chain management.
Logistics and supply chain management are pivotal elements of what makes modern life so convenient. They ensure that our supermarkets are stocked with fresh produce. They make sure the shops on our high streets have the products we want to buy. Their work means that manufacturers receive the raw materials they need.
But we don’t tend to notice how vital these areas of business are until something goes wrong. For example, KFC suffered a huge blow to its reputation in February 2018 when a supply chain issue resulted in UK-wide chicken shortages. At its worst point, the franchise had to close 540 out of its 900 UK branches.
Incidents like this highlight how important logistics and supply chain management are in today’s global market. To make a difference in these fields, it’s important to have a foundational understanding of the key terms and concepts behind them.
In this blog post, we’ll share definitions of some of the most common terms associated with supply chain management and logistics.
Logistics and supply chain management definitions
A
Analytics: The systematic computational analysis of data or statistics used in supply chain management to improve decision-making and efficiency.B
Backorder: A customer order that cannot be filled out when presented, and for which the customer is prepared to wait for some time.C
Competitive advantage: A condition or circumstance that puts a company in a favourable or superior business position compared to its competitors.
D
Decision-making techniques: Methods and approaches used to make tactical and strategic decisions in supply chain management.
Distribution: The process of making a product or service available for the consumer or business user that needs it. This can involve building a distribution network for the transportation and storage of goods.
E
Electronic Data Interchange (EDI): The computer-to-computer exchange of business documents in a standard electronic format between business partners.
F
Fulfilment: The process of taking an order and executing it by making it ready for delivery to its intended customer. It often involves warehousing, picking, packing, and shipping.
G
Global logistics: The process of planning, implementing, and controlling the efficient, effective flow and storage of goods, services, and related information. It covers the point of origin to the point of consumption on a global scale.Goods receipt: The process involving the receipt of goods from a supplier, confirming the accuracy of the order, and updating inventory records.
H
Hub-and-spoke system: A system of connections arranged like a wire wheel in which all traffic moves along spokes connected to the hub at the centre.I
Information management: The collection, storage, dissemination, and optimal use of data. This is crucial for making informed decisions in logistics and supply chain management.
International trade: The exchange of goods and services between countries. This process is impacted by factors like tariffs, trade agreements, and global economic conditions.
J
Just-in-Time (JIT): An inventory management approach which involves aligning raw-material orders from suppliers directly with production schedules.
K
Kanban: A scheduling system for lean and just-in-time (JIT) production. Kanban controls the supply chain to achieve high levels of operational efficiency.L
Logistics: The process of coordinating the acquisition, storage, transportation, and delivery of goods from the point of origin to the point of consumption.M
Multimodal transportation: The use of different modes of transportation, such as truck, rail, and ship, in a single journey to move goods from origin to destination. This approach can optimise costs, reduce handling, and improve lead times.
N
Network design: The planning and optimisation of a logistics or supply chain network's structure and operational capabilities.O
Operations management: The administration of business practices to create the highest level of efficiency possible within an organisation. It focuses on converting materials and labour into goods and services as efficiently as possible.
Order processing: The activity required to administratively process a customer’s order and make it ready for shipment or production.
P
Procurement: The action of obtaining goods or services, typically for business purposes. This includes negotiation, strategic selection, and the purchasing of goods.
Product Lifecycle Management (PLM): The process of managing a product’s entire lifecycle, from inception, engineering design and manufacture, to service and disposal.
Q
Quality control: The part of quality management focused on fulfilling quality requirements for products and services before they reach the customer.R
Reverse logistics: The process of moving goods from their typical destination for the purpose of capturing value, or proper disposal.S
Stakeholders: Individuals or groups that have an interest in an organisation’s decisions or activities. These include suppliers, customers, employees, shareholders, and the community.
Strategic insight: The ability to understand and predict changes and trends in the business environment that affect an organisation’s strategic future.
Supply chain analysis: The process of evaluating every step in a supply chain to identify areas of improvement. The goal is to optimise the processes for maximum efficiency and effectiveness.
Supply chain complexity: The multitude of factors that interact within a supply chain. These variables can lead to unpredictable outcomes and make management challenging.
Supply chain innovation: The introduction of new processes, tools, or concepts to improve a supply chain’s efficiency, effectiveness, or competitive advantage.
Supply chain management: The process of overseeing materials, information, and finances as they move to different stakeholders (e.g., supplier to manufacturer to wholesaler to retailer to consumer).
Supply network design: The strategic arrangement of the supply chain’s structure. It defines the configuration and operation of processes, resources, and information flows that comprise it.
Sustainability: The concept of meeting current needs without compromising the ability of future generations to meet their own needs. This is especially relevant in environmental and social governance.
T
Transport Management System (TMS): A platform designed to streamline the shipping process; it is a subset of supply chain management concerning transportation solutions.
U
Utilisation: The degree to which the capacity of an asset is used in the production of goods. High utilization rates typically indicate effective use of assets.
V
Vendor-Managed Inventory (VMI): A family of business models in which a product’s buyer provides certain information to a vendor (supplier). The vendor then takes responsibility for maintaining an agreed inventory of the material.
W
Warehouse Management System (WMS): A software solution that offers visibility into a business’ entire inventory. It manages supply chain fulfillment operations from the distribution centre to the store shelf.
X
X-docking: A process in distribution centres where products from a supplier or manufacturing plant are distributed directly to a customer or retail chain. This is done with marginal to no handling or storage time.
Y
Yield management: A variable pricing strategy based on understanding, anticipating, and influencing consumer behaviour. The goal is to maximise revenue or profits from a fixed, perishable resource.
Z
Zone picking: A method of order picking in which a warehouse is divided into several pick zones. Order pickers are assigned to a specific zone and only pick items within that zone.
A master’s in Logistics and Supply Chain Management: your path to in-depth knowledge
Studying an online MSc in Logistics and Supply Chain Management with us doesn’t just involve learning about key concepts. It involves mastering them through practical application.
Through real-world case studies and and a CILT-accredited curriculum, you’ll develop the global vision required to drive innovation in these fields. With this holistic education, you’ll be able to lead your organisation towards success:
