Supply Chain Fundamentals is one of the core study topics in our Business catalog. This page gathers the essentials: what the topic covers, the key concepts and
terminology, worked examples and exam-style questions — everything also available as 235 companion flashcards for spaced-repetition practice.
Main questions this page answers:
- What is procurement in supply chain management?
- What is the primary purpose of inventory management?
- Define logistics within a supply chain context.
- What is demand planning?
- Explain the bullwhip effect.
- What is a Key Performance Indicator (KPI) in supply chain management?
- What does Sales and Operations Planning (S&OP) stand for?
- Why is sustainability important in supply chain management?
What is procurement in supply chain management?
Procurement is the strategic process of acquiring goods, services, or works from external sources, typically through a tendering or bidding process. It involves sourcing, negotiation, purchasing, and supplier management to ensure cost-effective and timely delivery of materials.
What is a demand forecast?
A demand forecast is an estimate of future customer demand for a product or service over a specific period. It uses historical sales data, market trends, and statistical models to guide production planning, inventory management, and procurement decisions.
What is inventory carrying cost?
Inventory carrying cost includes expenses like capital, storage,
insurance, taxes, depreciation, and obsolescence incurred to hold inventory, typically expressed as a percentage of inventory value annually to guide stocking decisions.
What is the role of IoT in supply chain management?
IoT (Internet of Things) enables real-time tracking, monitoring, and data collection from connected devices like sensors and GPS across the supply chain, improving visibility, asset utilization, condition monitoring, and predictive maintenance.
What is a wave picking method in order fulfillment?
Wave picking batches orders into waves released at scheduled times. Workers pick multiple orders simultaneously, balancing workload across shifts and aligning order completion with outbound carrier departure windows.
What is green logistics?
Green logistics refers to environmentally sustainable logistics practices, including route optimization, modal shifts, electric vehicles, efficient warehousing, and reverse logistics that reduce carbon emissions and resource consumption.
What is a bill of materials (BOM)?
A comprehensive list detailing all raw materials, components, sub-assemblies, and quantities required to manufacture one unit of a finished product. It serves as the foundation for production planning, procurement, and costing processes.
Define make-to-stock (MTS) and make-to-order (MTO) production strategies.
MTS produces goods based on forecasted demand and holds them in inventory for immediate shipment. MTO begins production only after a customer order is received, reducing inventory holding costs but increasing delivery lead time.
What is carbon footprint reduction in logistics operations?
Carbon footprint reduction in logistics involves strategies like route optimization, modal shifts to rail or sea, electric vehicles, consolidation of shipments, and use of low-emission fuels to decrease greenhouse gas emissions from transportation and warehousing activities.
What is 'ship-from-store' fulfillment?
It is an omnichannel strategy where retail stores act as mini-distribution centers, shipping online orders directly to customers, reducing delivery distance and leveraging store inventory.