Basic Terminologies in Supply Chain Management

Wednesday,

 Dear Supply Chain and Operations enthusiasts,

Being a supply chain management and operations student, I understand the issues that a novice faces in this field when he/she comes across new terminologies like- inbound and outbound transportation, distribution centers, 3PL, 2PL and many more.

So to help those students/working employees I am writing this blog with an insightful explainations of these jargons.

1. Inbound Transportation Cost- Inbound logistics refers to the network that brings goods or materials to your business. Your inbound logistics network includes everything needed to transport, store, and deliver goods to your business from other suppliers. Essentially, inbound logistics refers to everything that you need to bring into your operations to create the finished product you eventually sell. In most cases, you will want to receive your raw material close to when you are actually going to use it. This means that your inbound logistics network must be tailored to your specific production cycle and warehousing capacity to ensure that there isn’t a surplus of any material or goods when it isn’t needed. One of the ways to optimize the inbound transportation is by working with a third-party logistics  (3PL) provider. 


2. Outbound Logistics- Outbound logistics refers to the transportation, storage, and delivery systems that bring your products to your customers. 

In the past, outbound logistics for most companies was more similar to inbound logistics. Most shipments were large in size and were sent at regular intervals to retailers who stored some of the shipment in warehouses and some of the shipment on their shelves. Once the stock was depleted, the retailer would receive more. This isn’t really the case any longer. E-commerce has resulted in many more consumers completed purchases online. These purchases are then fulfilled through fulfillment centers, but those fulfillment centers generally don’t have the storage space to store huge amounts of products on their shelves. Rather, fulfillment centers store enough of a product to rapidly fulfill an order, but must then be replenished at more frequent intervals. This has resulted in much tighter windows during which products must be delivered.

3. Lead time- The time it takes one unit to make its way through your operation from beginning to end.

 e.g. time between placing the order and receiving the shipment

In manufacturing, lead time often represents the time it takes to create a product and deliver it to a consumer


4. Radio-frequency identification (RFID) - This technology allows us to automatically identify and track tags attached to objects using  electromagnetic fields. An RFID tag consists of a tiny radio transponder; a radio receiver and transmitter. When triggered by an electromagnetic interrogation pulse from a nearby RFID reader device, the tag transmits digital data, usually an identifying inventory number, back to the reader. This number can be used to inventory goods. 

There are two types of tags- 

    Passive tags- these are powered by energy from the RFID reader's interrogating radio waves. 

    Active tags- these are powered by a battery and thus can be read at a greater range from the RFID reader; up to hundreds of meters. Unlike a barcode, the tag doesn't need to be within the line of sight of the reader, so it may be embedded in the tracked object. 



5. Blockchain- Blockchain is literally just a chain of blocks. Here "block" refers to the digital data and "chain" means public database. Thus it is digital information stored in public dtabase. 

    Blocks store information about transactions like the date, time, and dollar amount of your most recent purchase. Blocks store information that distinguishes them from other blocks. Each block stores a unique code called a “hash” that allows us to tell it apart from every other block. Hashes are cryptographic codes created by special algorithms. 

6. Predictive Shipping-  Predictive shipping is the technology which enables a company to use algorithms that know, based on a customer’s earlier purchases, the product that he/she will want at a particular point in time, and ships it to him/her.

    e.g. E-commerce companies have been doing this manually, especially for products bought repeatedly, say, diapers or toilet paper. They would reach out to customers days before a pack might be expected to run out, and offer to send more; or offer a subscription for delivery at pre-defined intervals.


I hope I have been able to explain successfully the basic meanings of abovementioned six Jargons.


Thank you all!







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