Supply Chain In 3 Minutes
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The Bullwhip Effect in 3 minutes
The Bullwhip Effect is a well known supply chain distortion, commonly described as a problem that must be avoided. At Lokad, however, we would argue that the bullwhip effect is a phenomenon that naturally occurs in supply chains, and minimizing it is not necessarily advantageous for your business.
Service level in 3 minutes
In supply chain, the service level is a measure of quality of service. However, the definition of service level has not been fully agreed on. Some use it as the percentage of total demand covered in units of product, others define it as the percentage of orders fulfilled.
S&OP in 3 minutes
Sales and Operations Planning, or S&OP as it's more commonly referred to, helps large organisations to synchronise their operations by leveraging a deeper alignment between the supply chain and other key departments.
Lead time in 3 minutes
Lead time can be summarised as the latency between the initiation and completion of a process. In a supply chain, this is usually involved whenever goods are purchased, transformed or serviced.
Probabilistic Forecasting in 3 minutes
Probabilistic forecasts are used for everything, from predicting tomorrow's weather to generating betting odds on sporting events. Instead of looking at one possible outcome, this technique looks at all possible events and assigns a probability of each one occurring.
Min/Max Inventory Method in 3 minutes
Min/Max is one of the earliest automated replenishment methods that is now used across almost every piece of inventory software on the market. Its roots can originally be traced back to around the 19th century; it was developed as a visual method where you could physically see the amount of stock in a carefully sized bin.
Bill of Materials in 3 minutes
A bill of materials - which is more commonly referred to as a BOM - is a list of the raw materials and associated quantities that are needed to manufacture, assemble or repair an end product. Much like a list of ingredients that a chef would use to make a recipe, a BOM provides us with a compact inventory-oriented representation of the requirements associated with an end product.
Safety Stock in 3 minutes
In inventory control, there is a financial trade-off between purchasing more inventory and the cost of a potential stock-out. The more stock you have, the more working capital is needed and with too little stock on hand there are potential sales that can be missed, and even entire production processes that could be interrupted.
Inventory Turnover in 3 minutes
Inventory turnover is a popular inventory management concept that is used to determine the overall efficiency of an entire supply chain. The ratio reflects the number of times inventory is replaced during a given period of time, and can give a useful indication of both trends and how well a company controls its merchandise. Numerically, it is calculated as the ratio between the cost of goods sold, divided by the cost price of the average stock level over the same time period.
ABC Analysis in 3 minutes
ABC analysis is an inventory categorization method that provides a prioritization mechanism to concentrate efforts and resources on the items that matter most for a company.The method works by dividing items into categories based on their perceived importance and highlights the most frequently sold and consumed items so that resources can be allocated accordingly.
Seasonality in 3 minutes
We explore the basic idea of seasonality and learn how it can be confusing to keep track of due to factors such as noise. We explain the impact this can have and why computers are better than humans at predicting the future.