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Available to Promise. An important concept in supply chain management, meaning to quote an available quantity and a delivery date for an order from a customer. There are various methods and levels of determining the quantity and delivery date depending on circumstances.
Business Process Reengineering. Approach to redesign business processes for creating profit and restructure the business using engineering methodology. This approach was introduced by Michael Hammer in his book "Reengineering the Corporation" and drew world's attention.
Constraint. Bottlenecks determine the throughput of a supply chain. Recognizing this fact and making improvements will increase cash flow.
Computer Aided Logistics Support. Business strategy that enables more efficient product development, business transactions, and business management by using digital data to comprehensively carry out the reform and standardization of business processes and application of international standards to the business processes.
Continuous Replenishment Program. Method of replenishing products in real time as needed only for the sold amount. "CRP" is a concept that supports the ECR strategy that was figured out for supply chain management of processed foods.
Drum Buffer Rope theory. Metaphoric example to understand the flow of a supply chain. A concept of increasing throughput by adjusting buffers by a rope and controlling speed by a drum.
Efficient Consumer Response. Strategic concept created by the processed food distribution industry in the U.S. aiming to recover competitive strength. Whether a company can survive depends on whether the company can provide customers with highervalues.
Just-in-Time. If the replenishment cycle time is shortened, the number of products to replenish will be reduced and there will be fewer inventories held for a long time. Also, the time that raw materials and work-in process items are held in the factory, i.e. the lead time, will shorten. This JIT operation is designed as the automatic nervous system that reacts to information called "Kanban" issued from previous processes to later processes every minute. As this production system evolves, the system then shifts from "one-by-one production" to "flow production". Furthermore, as the capacity of the operations increases for each process then synchronization amongst operations takes place during the process from prototype production to mass production.
Materials Requirement Planning. "MRP (Material Requirements Planning)" is a concept of creating material plans and production schedules based on the lead times of a supply chain. However, even if you create an MRP-based plan based on an ideal factory model, problems may still actually occur.
Vendor Managed Inventory. A method in which a material supplier holds and manages the materials and parts of their customers. The VMI method also suggests the need of making strategies such as advertising so that manufacturers can minimize unsold inventory and increase merchandise turnover. It means that manufacturers need to synchronize resource allocations for manufacturing, distribution, and sales. In other words, they need to place importance on creating strategic mechanisms of supply chain management. While the VMI method is a concept that provides an alliance measure for transactions between companies, it is also a tool to form a virtual corporation.
Theory of Constraints. TOC is a model that explains the impact on profitability from decision-making by a supply chain in terms of time. TOC is also a method of managing bottlenecks. It is a concept that serves as the theoretical base of supply chain management and a model that explains the relationship of variables in business as to how cash flow-based profitability is affected by decision-making in the supply chain concerning business processes in terms of time. By reducing the burden carried by the bottleneck person and by cheering him on to increase his capacity, the speed (throughput) of the whole group will increase. The important concept here is to increase the overall speed not by making all of the members exercise at the same capacity but by making improvements focusing on the capacity of one or two bottleneck persons. When looking at the word "TOC", bottlenecks (constraints) may appear to be the most important concepts. However, the concept of synchronization has a bigger impact on the theory.
Distribution Requirements Planning. Process for determining inventory requirements in a multiple plant/warehouse environment. DRP may be used for both distribution and manufacturing. In manufacturing, DRP will work directly with MRP. DRP may also be defined as Distribution Resource Planning which also includes determining labor, equipment, and warehouse space requirements.
Quick Response. QR is a management concept created to increase consumer satisfaction and survive increasing competition from new competitors. It intends to shorten the lead time from receiving an order to delivery of the products and increase the cash flow. Both concepts were developed from the standpoint of increasing consumer satisfaction and as a mean to survive againat certains types of competitors that producer-retailer alliances call discounters and category killers. These concepts intend to shorten lead times from order receipt to delivery, minimize unsold inventory by holding minimum inventory levels, and increase cash flow.
"Push type" means Make to Stock in which the production is not based on actual demand. "Pull type" means Make To Order in which the production is based on actual demand. In supply chain management, it is important to carry out processes halfway between push type and pull type or by a combination of push type and pull type. Supply Chain Management (SCM) is to create a solution i.e. "supply" for a goal or issue, i.e. "demand". Supply chain models of "Push type" and "Pull type" are opposite in terms of a demand and supply relationship. "Push type" is represented by "Make to Stock" (MTS) in which the production is not based on actual demand and "Pull type" is represented by "Make To Order" (MTO) in which the production is based on actual demand. At the point where "Pull type" starts to supply operations triggered by actual demand, it is like an elevator. An elevator starts when a button is pressed even if there is only one passenger. On the other hand, the "Push type" can be considered as an escalator. An escalator continues to supply (push) regardless of whether there is actual demand (passenger). In addition, "Push type" corresponds to a model for trains, buses, and airplanes for which supply (push) is based on demand forecast by time period and route. There may be various forms between "Push type" and "Pull type" depending on inventory forms of materials, work in progress (WIP), and finished items and how to deal with the actual demand in supply chain management.
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