Logistic Glossary – Letter S
Sales and Operations Planning.
Society of Automotive Engineers
The inventory a company holds above normal needs as a buffer against delays in receipt of supply or changes in customer demand.
A part of assembly authorized for sale to final customers through the marketing function.
Sales and Operations Planning (S&OP)
A strategic planning process that reconciles conflicting business objectives and plans future supply chain actions. S&OP usually involves various business functions, such as sales, operations, and finance to agree on a single plan/forecast that can be used to drive the entire business.
The proportion of individual product-type sales volumes that make up the total sales volume.
A quantity-versus-time graphic representation of the order point/order quantity inventory system showing inventory being received, used up, and reordered.
A system of group incentives on a companywide or plantwide basis that sets up one measure that reflects the results of all efforts. The Scanlon plan originated in the 1930s by Joe Scanlon and MIT. The universal standard is the ratio of labor costs to sales value added by production. If there's an increase in production sales value with no change in labor costs, productivity has increased while unit cost has decreased.
Supply Chain Execution (SCE)
Supply Chain Event Management (SCEM)
A form of planning in which likely sets of relevant circumstances are identified in advance, and used to assess the impact of alternative actions.
Supply Chain Management
Supply Chain Operations Reference Model. This is the model developed by the Supply-Chain Council (SCC), and is build around six major processes
plan, source, make, deliver, return, and enable. The aim of the SCOR is to provide a standardized method of measuring supply chain performance, and to use a common set of metrics to benchmark against other organizations.
A performance measurement tool used to capture a summary of the key performance indicators (KPIs)/metrics of a company. Metrics dashboards/scorecards should be easy to read and usually have red, yellow, green indicators to flag when the company is not meeting its metrics targets. Ideally, a dashboard/scorecard should be cross functional in nature and include both financial and non-financial measures. In addition, scorecards should be reviewed regularly - at least on a monthly basis and weekly in key functions, such as manufacturing and distribution where activities are critical to the success of a company. The dashboard/scorecards philosophy can also be applied to external supply chain partners like suppliers to ensure that their objectives and practices align. Synonym
A repetitive pattern of demand from year to year (or other repeating time interval), with some periods considerably higher than others. Seasonality explains the fluctuation in demand for various recreational products which are used during different seasons.
Secure Electronic Transaction (SET)
In e-commerce, a system of guaranteeing the security of financial transactions conducted over the Internet.
A transportation industry strategy which prescribes that a carrier will accept payment based on the tender document provided by the shipper.
A computer term for an online process that validates data and won't allow the data to enter the system unless all errors are corrected.
Selling, General, and Administrative (SG&A) Expenses
Includes marketing, communication, customer service, sales, salaries and commissions, occupancy expenses, unallocated overhead, etc. Excludes interest on debt, domestic or foreign income taxes, depreciation and amortization, extraordinary items, equity gains or losses, gain or loss from discontinued operations and extraordinary items.
Secure Electronic Transaction.
Selling, General, and Administrative Expenses.
Consolidation of a company's back-office processes to form a spinout (0r a separate "shared services" unit to be run like a separate business), providing services to the parent company and sometimes, to external customers. Shared services typically lower overall cost due to the consolidation, and may improve support as a result of focus.
Combination of profitability (revenue and costs) and invested capital (working capital and fixed capital).
The amount of time an item may be held in inventory before it becomes unusable. Shelf life is a consideration for food and drugs which deteriorate over time, and for high-tech products which become obsolete quickly.
Shingo's Seven Wastes
Shigeo Shingo, a pioneer in the Japanese just-in-time philosophy, identified seven barriers to improving manufacturing. They are the waste of overproduction, waste of waiting, waste of transportation, waste of stocks, waste of motion, waste of making defects, and waste of the processing itself.
The party that tenders goods for transportation.
Shipper-carriers (also called private carriers) are companies with goods to be shipped that own or manage their own vehicle fleets. Many large retailers, particularly groceries and "big box" stores, are shipper-carriers.
A predetermined, mapped route on the ocean that commercial vessels tend to follow between ports. This helps ships avoid hazardous areas. In general transportation, the logical route between the point of shipment and the point of delivery used to analyze the volume of shipment between two points.
A document that lists the pieces in a shipment. A manifest usually covers an entire load regardless of whether the load is to be delivered to a single destination or many destinations. Manifests usually list the items, piece count, total weight, and the destination name and address for each destination in the load.
The function that performs the tasks for the outgoing shipment of parts, components, and products. It includes packaging, marking, weighing, and loading for shipment.
Shop Floor Production Control Systems
The systems that assign priority to each shop order, maintaining work-in-process quantity information, providing actual output data for capacity control purposes, and providing quantity by location by shop order for work-in-process inventory and accounting purposes.
Piece of freight missing from shipment as stipulated by documents on hand.
Reductions of actual quantities of items in stock, in process, or in transit. The loss may be caused by scrap, theft, deterioration, evaporation, etc.
A Greek letter commonly used to designate the standard deviation of a population.
A term generally used to indicate that a process is well controlled, I.e., tolerance limits are +-6 sigma (3.4 defects per million events) from the centerline in a control chart. The term is usually associated with Motorola which named one of its key operations initiatives Six-Sigma Quality.
A visible means of displaying people's skill levels in various tasks. Used in a team environment to identify the skills required by the team and which team members possess those skills.
Stock-Keeping Unit (SKU)
Warehouse slotting is defined as the placement of products within a warehouse facility. Its objective is to increase picking efficiency and reduce warehouse handling costs through optimizing product location and balancing the workload.
Small Group Improvement Activity
An organizational technique for involving employees in continuous improvement activities. Also see
Specific, Measurable, Achievable, Realistic, Time Based.
Standard Operating Procedure.
Statement of Work (SOW)
Statistical Process Control (SPC).
Specific, Measurable, Achievable, Realistic, Time Based (SMART)
A shorthand description of a way of setting goals and targets for individuals and teams.
A method by which a larger quantity is ordered on a purchase order to secure a lower price, but delivery is divided into smaller quantities and is spread out over several dates to control inventory investment, save storage space, etc.
Demand with a short lead time that's difficult to estimate. Usually supply for this demand is provided at a premium price. An example of spot demand would be when there's a spiked demand for building materials as a result of a hurricane.
Pulling material for an order from inventory before the material is required. This action is often taken to identify shortages, but it can lead to increased problems in availability and inventory accuracy. Also see
Components (parts) of a product for which there is an abundance of suppliers. Not difficult to produce. An example would be a power cord for a computer.
Standard Cost Accounting System
A cost accounting system that uses cost units determined before production for estimating the cost of an order or product. For management control purposes, the standards are compared to actual costs, and variances are computed.
Placing customer-specific stickers on boxes of product. An example would be where Wal-Mart has a request for their own product codes to be applied to retail boxes prior to shipment.
Stock-Keeping Unit (SKU)
A category of unit with a unique combination of form, fit, and function (i.e., unique components held in stock). To illustrate
If two items are indistinguishable to the customer, or if any distinguishing characteristics visible to the customer are not important to the customer so that the customer believes the two items to be the same, these two items are part of the same SKU.
Straight trucks do not have a separate tractor and trailer. The driving compartment, engine and trailer are one unit.
Business relationship in which two or more independent organizations cooperate and willingly modify their business objectives and practices to help achieve long-term goals and objectives.
Sending production work outside to another manufacturer. This can involve specialized operations such as plating metals or complete functional operations. Also see
A subhauler drives a tractor under contract for a company. Usually a subhauler is an owner/operator or a small company.
Decisions or activities in part made at the expense of the whole. An example of sub-optimization is where a manufacturing unit schedules production to benefit its cost structure without regard to customer requirements or the effect on other business units.
1) The unrecovered balance of an investment. It's a cost already paid that is not relevant to the decision concerning the future that is being made. Capital already invested that for some reason cannot be retrieved.2) A past cost that has no relevance with respect to future receipts and disbursements of a facility undergoing an economic study. This concept implies that since a past outlay is the same regardless of the alternative selected, it should not influence the choice between alternatives.
Certification procedures verifying that a supplier operates, maintains, improves, and documents effective procedures that relate to the customer's requirements. Such requirements can include cost, quality, delivery, flexibility, maintenance, safety, and ISO quality and environmental standards.
A variant of Vendor-Managed Inventory and Consignment Inventory. In this case the supplier not only manages the inventory, but also owns the stock close to or at the customer location until the point of consumption or usage by the customer.
Supply Chain Design
The determination of how to structure a supply chain. Design decisions include the selection of partners, the location and capacity of warehouse and production facilities, the products, the modes of transportation, and supporting information systems.
Supply Chain Event Management (SCEM)
SCEM is an application that supports control processes for managing events within and between companies. It consists of integrated software functionality that supports five business processes
monitor, notify, simulate, control, and measure supply chain activities.
Supply Chain Execution (SCE)
The ability to move the product out of the warehouse door. This is a critical capacity and one that only brick-and-mortar firms bring to the B2B table. Dot coms have the technology, but that's only part of the equation. The need for SCE is what is driving the dot coms to offer equity partnerships to the wholesale distributors.
Supply Chain Integration (SCI)
Likely to become a key competitive advantage of selected e-marketplaces. Similar concept to the back-end integration, but with greater emphasis on the moving of goods and services.
Supply Chain Inventory Visibility
Software applications that permit monitoring events across a supply chain. These systems track and trace inventory globally on a line-item level, and notify the user of significant deviations from the plans. Companies are provided with realistic estimates of when the material will arrive.
Supply Chain Management (SCM)
Supply chain management encompasses the planning and management of all activities involved in sourcing and procurement, conversion, and all logistics management activites. Importantly, it also includes coordination and collaboration with channel partners, which can be suppliers, intermediaries, third party service providers, and customers. In essence, supply chain management integrates supply and demand management within and across companies. Supply chain management is an integrating function with primary responsibility for linking major business functions and business processes within and across companies into a cohesive, high-performing business model. It includes all of the logistics managment activities noted above, as well as manufacturing operations, and it drives coordination of processes and activities with and across marketing, sales, product design, finance, and information technology. — as defined by the Council of Supply Chain Management Professionals (CSCMP)
Supply Chain Network Design Systems
The systems employed in optimizing the relationships among the various elements of the supply chain manufacturing plants, distribution centers, points of sale, as well as raw materials, relationships among product families, and other factors to synchronize supply chains at a strategic level.
Supply Chain Strategic Planning
The process of analyzing, evaluating, and defining supply chain strategies, including network design, manufacturing and transportation strategy, and inventory policy.
(1) Starting with unprocessed raw materials and ending with the final customer using the finished goods, the supply chain links many companies together. (2) The material and informational interchanges in the logistical process, stretching from acquisition of raw materials to delivery of finished products to the end user. All vendors, service providers, and customers are links in the supply chain.
Supply Chain-Related Finance and Planning Cost Element
One of the elements comprising a company's total supply chain management costs. These costs consist of the following
Supply Chain-Related IT Costs
Information technology (IT) costs (in US dollars) associated with major supply chain management processes as described below. These costs should include
The process of identifying, prioritizing, and aggregating, as a whole with constituent parts, all sources of supply that are required and add value in the supply chain of a product or service at the appropriate level, horizon, and interval.
A warehouse that stores raw materials. Goods from different suppliers are picked, sorted, staged, or sequenced at the warehouse to assemble plant orders.
Costs of activities not directly associated with producing or delivering products or services. Examples are the costs of information systems, process engineering, and purchasing. Also see
An activity that benefits an organizational unit as a whole, but not any specific cost object.
An analysis of the strengths, weaknesses, opportunities, and threats of and to an organization. SWOT analysis is useful in developing strategy.
See SWOT Analysis (SWOT).