1. CSCMP SCPro Fundamentals Certification Exam Review
Supply Chain Management Principles

2. Learning Block 1: Demand Planning
Supply chain management is about
balancing supply with demand.

3. Integrated Business Mangement
Supply chains are the flow of materials, information, and finances as they move in all directions from supplier to manufacturer to wholesaler to retailer to consumer.
Customer demand is the key driver of the supply chain.

4. Balancing Supply & Demand
Balancing supply and demand is a constant process
Too much demand and low supply = business loss that may not be recaptured (stockouts)
Low demand and high supply = money tied up in inventory and storage facilities, risk that product become obsolete

5. Demand Shaping
Internal Method: being able to fluctuate how much is produced and how much inventory is stored
Equipment may allow companies to change what they are producing
External Method: adapts price and lead time which shapes the demand – influencing demand to match supply
Making 17" monitors the same price as 15" monitors to sell more 17" monitors

6. Demand Plans
Demand planning is a comprehensive, collaborative process that requires consensus
Companies need a common demand plan
Collaborative Planning, Forecasting, and Replenishing (CPFR) is the process used to achieve an agreed-upon plan
Key Terms:
Materials Required Plan
Master Production Schedule
Enterprise Resource Planning

7. Demand Plan

8. Enterprise Resource Planning
ERP is software that combines multiple business functions (MRP, DRP, CRP) into one system and merges all the business planning systems
All parts of the companies use one system to manage the process of balancing supply and demand

9. Demand Forecasting
Quantitative Forecasting: when historical data exists and is helpful in calculating future demand or forecasting based on numbers
Qualitative Forecasting: when there is little past data to rely on and intuition or expert judgment is used 
Both methods include the need to understand events and conditions that modify demand

10. Demand Patterns Stationary - even demand
Trend - predictable growth or decline
Seasonal - patterns of increase and decline that repeat cycle after cycle
Cyclical - patterns that are influenced by external factors (e.g. recession, recovery)
Random - changes and variances that are not predictable

11. Demand Planning Inaccuracies
Forecasting is almost never perfect
May lack customer demand data early enough
New products also present more challenges due higher levels of coordination and no previous data
Plans should consider and allow for inaccuracies
Long-range forecasts tend to have a greater degree of error than short-term forecasts

12. Bullwhip Effect
Bullwhip Effect: inaccurate forecasts create disruption and expense within the organization and has a ripple effect of customers and supplier
Ultimately it reduces profit and inflates the end cost for customers
Variations of demand are amplified at each of the following:
Inaccurate forecasting and planning
Lack of communication
Lack of visibility
Excess lead time
Late deliveries

13. Types of Demand Independent Demand Dependent Demand
demand for finished products
demand is outside the company and is created by customers
independent demand creates a demand for finished good to be manufactured
Dependent Demand
demand for one good or service occurs as a result for another rather than a customer
as demand for bicycles go up - tires and bicycle seats would be a dependent demand

14. Learning Block 2: Supply Management & Procurement
The goal of procurement in the supply chain is to balance supply with demand while creating value.

15. Procurement
Procurement: the key function in the supply chain that is responsible for buying, or procuring, good and services
Purchasing is the act of buying
Procurement process involves planning, negotiation, and administration associated with the eventual placement of purchase orders with suppliers
The right materials need to be purchased - based upon definition of requirements and formal specifications

16. Procurement includes…
Receiving requirements from MRP via purchase requisitions
Sourcing, or finding, suitable suppliers
Obtaining pricing and delivery data via requests for quotes (RFQs) and requests for price (RFPs)
Conduction negotiations with suppliers
Creating weighted scorecards to justify awards
Placing purchase orders (POs)
Tracking and expediting POs
Processing supplier invoices (payments)

17. Procurement Adds Value
Procurement is viewed as a strategic business function
Procurement is linked closely with other chain functions
Awards are made based upon the best value verses lowest price
Best value may include
Price
Delivery
Quality
Supplier reputation
Environmental factors

18. Relationship Management & Strategic Sourcing
Relationships with suppliers are more important
Relationship Management: the focus on building, maintaining, and developing relationships for the future of both organizations
Buying no longer focuses only of the lowest price, but takes in to account a variety of factors
Strategic sourcing describes the concept of a win-win relationship

19. Total Cost of Ownerships
Total cost of ownership (TCO): measures all of the costs associated with planning the procurement, making the award, and other post-award process
This includes costs that are accrued before, during, and after the transaction

20. Decision: Make or Buy
Companies usually like to make products they consider their core competencies
Core competencies or competitive advantage are what companies invest in, have expertise in, and strategically fit with the overall mission and visions
Benefits of buying include:
funds to invest elsewhere
product may be of better quality
supplier can make it cheaper due to economies of scale

21. Weighted Scorecard
A tool that identifies attributes of a requirement and generates a proportionate value based on a score multiplied by the value assigned to the attribute to achieve a total score of 100%.
Each attribute is then rated based on a consistent scale.
Example: a requirement may be a new supplier for product A.
Scored attributes: price, quality, and flexibility.

22. Learning Block 3: Warehousing Operations
Warehouse: a place in which inventory is held for vary periods of time
Primary Objective: to provide excellent and efficient customer service at the lowest cost possible

23. Warehouse Characteristics
Used by all types of businesses to store and manage products
Use sophisticated technology and systems
May store equipment, raw materials, excess, obsolete inventory, work-in-process inventory
Products may be stored for more than one year
A variation of a warehouse, but they only serve to distribute products, not to store products
Products come in quickly and go out to the customer almost as fast; Holds product for less than a month
Usually finished good ready to ship to end users
Distribution Centers (DCs) Characteristics

24. Warehouse Management System
Warehouse Management System (WMS): the central brain of managing warehouses and DCs – sophisticated software designed to manage the receiving, movement, storage, and retrieval of product

25. Key Operational Activities
Focuses on staging and storage locations for products in transit
Receiving 1.
Storage 2.
Order Fulfillment 3.
4. Preparation for Shipment

26. 1: Receiving
Receiving: product is moved from transportation vehicles into warehouses and entered into inventory
A specific time and date are scheduled for carriers to unload
Shipping documentation paperwork is transferred
Products are inspected for damage
Products are unloaded - counted for accuracy, labeled, and sent to storage

27. 2: Storage
Storage is the act of putting products away in specific, clean, and secure locations so they can be retrieved easily when needed

28. Strategies for Storage
Minimal Handing
The most efficient management practice is minimizing the number of times a product is handled
Ideally items are received, stored, and shipped out
Product Demand
Important key for proper storage is determining demand for particular items
Sometimes high demand items are never stored but moved directly to outbound shipping area
Low demand items may be stored in the farthest places in a warehouse

29. Strategies for Storage
Storage Racking
Most commonly used storage strategy - effectively organizes products and take advantage of vertical space
Each storage rack has a unique number - that allow everyone to know exact product locations
Great for storing full pallets of products
Bins and Containers
Frequently used when pallets have to be broken down into smaller units
Assigned unique numbers and locations
Usually have their own separate racking and storage area

30. Labeling & Storage Location
Location and labeling are key elements to storage success
License plates, storage labels are generated at receiving bays once products have been successfully received into the warehouse

31. 3: Order Fulfillment
This process starts when orders are placed by customers
Order Picking: products are located and brought out of storage location
Accuracy and speed are key concerns of order fulfillment and order picking

32. Picking Types
Manual Picking: Order pickers physically pick one item from orders and bring it back to the shipping staging area
Order Picking: Items are picked individually for an entire orde; Once finished, pickers will take orders to the shipping staging area
Batch Picking: Pickers focus on picking a batch of items for several different order; Improves picking efficiency and accuracy
Zone Picking: Warehouses are divided into zones; Picker(s) are assigned to one specific zone or area; They pick all items in their zone for any order

33. Picking Types Voice Picking Pick-to-Light
Voice-activated picking can be used with any of the previous methods
Employees listen to others on a headset about which items in certain quantities are needed for others
Results in faster picking times and reduced picking errors
Pick-to-Light
Beneficial if items need to be selected quickly and accurately
Shelves have digital displays telling employees where and what to pick from shelves
Once items are selected operators turn off the indicator light

34. 4: Preparation for Shipment
The last step in order fulfillment is shipping
Assembling orders into shippable forms
Provides the last opportunity to fix any order issues and verify orders are correct
Key Factors to consider when preparing orders:
The size of the order
The mode or method of transportation
The carrier shipping requirements
Need for refrigeration or safeguards for hazardous materials

35. Safety & Cleanliness
Staging Area:  the zone where products come off or go onto trucks
Safety is of utmost importance - this often the busiest and most dangerous area in warehouses / DCs
One way to make warehouses is safe is by ensuring they are clean - It is everyone's job to keep warehouses neat and clean
Safety and organization also extends to the loading process

36. Shipping Documentation
Bill of Lading
The most important document, travels with the trucks 
Contract saying that a specific set of goods have been received by a specific carrier as cargo to be delivered to a specific location and a specific receiver
Considered the official documentation that can be requested by government officials
Shipping/Packing Lists, Shipping Manifest, and Waybill
Itemized document that itemizes the complete inventory load
It provides more details about the products than the bill of lading

37. Tracking
Tracking is accomplished by entering data into a transportation system with a unique identifier
Today, customer service is priority, so carriers and shippers track shipments.

38. Learning Block 4: Inventory Management

39. What is Inventory?
Inventory: the physical assets that are held or stored for use, at some point, in…
Manufacturing products
Completing partially manufactured products
Direct sales to customers
Operating maintenance tasks
Represents a monetary investment and therefore needs to be turned to make a profit

40. Inventory Management Not all inventory is created equally
Inventory management – the process of ensuring the availability of products through inventory administration
Inventory control will sometimes be used interchangeable with inventory management
Seeks to balance the risk between stockouts and leftover inventory

41. Inventory Costs
Acquisition Cost: The net price plus other costs needed to purchase an item and move it to the point of use
Carrying Cost: Costs of holding inventory, which may include:
Warehousing costs
Labor
Risk of expiration or obsolescence that requires disposal
Damage

42. Maintenance, Repair, & Operations
4 Basic Inventory Types
Inventory classification plays a role in accounting, physical control, and use
Raw Materials
Work in Process
Finished Goods
Maintenance, Repair, & Operations
(MRO)

43. Raw Materials Work in Process
Raw Materials - raw materials include any items consumed to make finished goods
Raw materials from nature
Sub-categories: parts, components, semi-processed goods, catalysts, commodities, critical components, packaging
Work in Process - inventory that has been moved out of raw materials  and is in staging for manufacturing 
Can be consumed to make finished goods, returned to raw materials, or re-categorized as scrap
Work in Process

44. Maintenance, Repair, & Operating (MRO)
Finished Goods
Finished Goods - can be a completed product, a component that will be consumed in future manufacturing, or a service repair part that can be sold
Finished goods may be unsellable for multiple reasons: Obsolete, Rework, Return, Quarantine
Maintenance, repair, and operating (MRO) - is not directly consumed in the manufacturing and operations - is product that is consumed to support the operations to manufacture and manage inventory
gears to repair a conveyor, grease to lubricate machines
Maintenance, Repair, & Operating (MRO)

45. Lead Time
Lead Time: the average time from placing an order with a supplier to receiving goods
Increased lead time contributes directly to higher inventory levels and greater inaccuracy in forecasting
Longer lead times reduces flexibility because adjustments are more difficult when merchandise is ordered

46. Inventory Turns
Inventory Turns: the metric that tracks how often product is used and replaced in a given time period
high inventory turns = products are moving off the shelf quickly
low inventory turn ratio = can also indicate low sales and even overstocking of inventory
Lean: operational and procedural practices that create efficient flow – tasks that do not contribute value are reduced or eliminated
Just-in Time (JIT): an inventory control system where a company receives raw materials as they are needed for manufacturing, which can eliminate or dramatically reduce raw material warehousing and material costs

47. Supplier-Managed Inventory
occurs when the supplier is responsibleSupplier- Managed Inventory (SMI) for the monitoring and replenishment of inventory as needed
Inventory management can also be maintained through Third-Party Logistics Providers (3PLs) through the use of third-party warehouses

48. Learning Block 5: Manufacturing & Service Operations

49. What is a Process?
Process: a set if individual activities that are combined to product a product, service, or a combination or products and services
4 Elements of Processes
Inputs: raw or unfinished materials
Outputs: end product
Controls: rules, policies, guidelines
Resources: equipment, tools, supplies, labor

50. Product-Process Matrix
Product-Process Matrix: a way of linking marketing decisions and a product's life cycle to an organization's operations capabilities.

51. 5 Process Structures
Project Process: high variety and low volume process
Custom homes, bridges
Job Shop Process: medium-to-low volume and medium-to-high variety process
Beauty shops, auto repair shops
Batch Process: medium volume and medium variety process
Bakeries, production of auto parts
Repetitive Process: medium-to-high volume and medium-to-low variety process
Appliances, automobiles, buffet restaurants
Continuous Process: high volume and low variety process
Oil refineries, chemical plants, bottling factories

52. Product Life Cycles
Product life cycles: show the typical progression of manufactured goods for organizations
Organizations need to change and adapt organizational capabilities based on the product life cycle
Each phase can vary in length – there is no set amount of time for each phase

53. Product Life Cycle Phases
Introduction: introducing new products
market evaluation, product design, testing, packaging, and designing and setting up the supply chain
Growth: product sales expand
changes to product design, manufacturing processes, supply chain is monitored and evaluated, focus on maximizing revenue
Maturity: demand is relatively stable
product and production changes are minimal, focus on reducing costs and increasing production rates and supply chain efficiencies
Decline: demand continues to drop
adopt product innovations, point products don't appeal to customers or meet their expectations, cost is a critical factor

54. Operations
Operations Management is the management of the transformation process in which inputs are made into products and services
Manufacturing Operations – Operations specifically used for making products, including dish soap to automobiles; they make tangible items that can be inventoried and sold to consumers
Service Operations - Involve companies that provide intangible products or services directly to consumers, services cannot be inventoried

55. How Products are Sold Engineering-to-Order (ETO) Make-to-Order (MTO)
Long lead times and highly customized products
Customer orders are required before any work begins, once orders are received, the process and new designs begin
Custom home, individually designed yacht
Make-to-Order (MTO)
Larger customer base and allows for some customization
Orders are required before beginning the production process, most of the design work is complete and some parts may be in inventory
Jet airplane, haircut, purchasing a mobile home

56. How Products are Sold Assemble to Order (ATO) Make-to-Stock (MTS)
Products are assembled from standardized parts and modules 
Usually several assembly options available to customers
Restaurants with assembly lines, hardware stores that mix paint
Make-to-Stock (MTS)
Mass produce goods to be kept in inventory, ready to ship for customer orders
Use demand forecasting to estimate production - best for mature products
Books, cars, groceries, retail clothing

57. Service Operations
Service Operations: usually provides intangible services directly to consumers, end products cannot be inventoried
Require some amount of interaction with consumers
Inherently variably because of the customer interactions and unpredictable nature of humans
Customers contribute as much to the end product as many service providers do

58. How Services are Offered
Service Factory
Low labor cost, low customization, and low customer interactions
Customers focus on price and look for the best deal
Operations managers focus efforts on facilities and equipment utilization by maximizing output and keeping costs low
Hotels, trucking companies, airlines
Service Shop
High customization and customer interaction, but low labor and costs
Need to stay current with technology updates and scheduling
Auto repair shops

59. How Services are Offered
Mass Service
Low customization and customer interaction, but high labor costs
Operations managers concerned with improving service times and automated technologies
Retail banks
Professional Shop
High customization, customer interaction, and labor costs
Service providers are highly educated and the services they perform are time consuming and customized
Accountants, consultants, doctors, lawyers

60. Total Quality Management
Total Quality Management (TQM): a focus on designing processes to produce consistent quality
emphasis on quality is consistent throughout the entire organization
continuous quest to achieve improvements in product, service, equipment, people, procedures, material, etc.
Six Sigma - identifying the root cause of errors and fixing them
Lean - removing activities that do not add value

61. Learning Block 6: Transportation Operations

62. Transportation Efficiency
Demand for transportation services is derived from customer demand
7 Rights of Logistics: Transporting the…
right product 
to the right customer 
in the right quantity 
and the right condition 
at the right place
and the right time 
and for the right cost.

63. Transportation Challenges
Complexity of supply chains
Growth of offshore manufacturing
Customer demands for more tailored services
Capacity constraints from other types of infrastructure
Rising transportation rates
Government regulations

64. Road Transport (Motor Carrier)
Most widely used domestic mode of transportation - most freight is regional in a nature
Mode of choice for high-value, time-sensitive goods
Challenges: rising costs, labor issues, and competition
Mode of choice with large volume and shipment is over 900 miles
Primarily used for long-distance or low-value raw materials and manufactured products
Challenges: large investment in terminals, capacity, and unchangeable infrastructure
Rail Transport

65. Air Transport Water Transport
Historically viewed as expensive (emergency use)
JIT demand, lower inventory levels, and growth of e- commerce has increased demand
Mode of choice to ship small quantities of high value, low- weight, semi-finished, and finished goods
Major mode for international trade
Dominates all modes in international freight revenue
Ships are slow, but offer tremendous capacities for volume freight, efficient fuel consumption, and low cost
Water Transport

66. Pipeline “Hidden giant" of transportation
Equipment is fixed in place, providing a warehousing function and protecting the product from contamination
Most economical form of transportation with the lowest cost per ton-mile
For-hire and private carriers
Challenges: ongoing issues of safety and security 

67. Intermodal Transportation
Intermodal Transportation: two or more independent modes used to transport and deliver the same cargo
Cargo stays in one standard container throughout the transportation process
Has seen significant growth in the last 20 years

68. Freight Documentation
Shipments are accompanied by documentation that details what the shipment contains, where it is going, and to whom it is shipping
Common Shipment Documents
Bill of Lading
Freight Invoice / bill
Freight Claim

69. Freight Documentation
Freight Invoice / Bill
Does not serve as a key piece of evidence in disputes
Include specific information, including transaction-related information and charges that serve to describe the information on the bill of lading
Freight Claim
Legal claim by shippers against carriers for financial compensation for loss or damage of shipment
3 types of Freight Claims: Shortage/Loss, Damage, Delay
Concealed damage: discovered after shipments have been received and signed for; no visible damage to cartons or products

70. Safety & Security
Governmental deregulation has provided carriers with more feed to operate in competitive environments
Hours of Service (HOS) Regulations
11 hours of driving time within a consecutive 14-hour period, after which drivers must be off-duty for 10 hours
Limits maximum workweek to 70 hours
Drivers who reach 70 hours within a week, may resume driving if they rest for 34 consecutive hours
30 minute break during the first 8-hours of a shift

71. Quality of Service
Companies monitor and track the following to ensure quality of service:
Customer service demands
Service level of carriers
Shipment date, arrival date, and shipment damage information
Use of standardized scorecards
Key Performance Indicators (KPIs)
Transportation efficiency spending
Freight protection
Delivery service quality
Customer satisfaction

72. Transportation Management Systems (TMS)
Transportation Management Systems: include software tools related to moving goods throughout the supply chain and work in conjunction with other management tools (WMS, order managements systems, supply chain planning tools)
TMS Capabilities:
Routing and scheduling
Planning how to load containers or vessels
Tracking orders
Performance reporting and score carding
Auditing freight bills

73. Inbound, Outbound, & Reverse Logistics
Inbound Logistics: The transport, storage, and delivery of goods coming into businesses. Covers anything companies order from all suppliers.
Outbound Logistics: The transport, storage, and delivery of goods that are leaving businesses. Deals almost exclusively with end products.
Reverse Logistics: The transportation of good that need to be returned through the supply chain because of defects or because products have reached the end of their usage

74. Learning Block 7: Customer Service Operations

75. Internal & External Customers
CUSTOMERS ARE OFTEN CONFUSED WITH CONSUMERS
Internal Customers
Customers within the same company or organization
One department relies on another department for a product/service
External Customers
Customers outside an organization
Usually consumers of the products/services
Retailers may purchase products from wholesale distributors to resell them to customers

76. Customer Service
Customer service is a key competitive advantage and a part of every interaction with customers.
Employees must act as ambassadors for their company.
Customer service representative must be trained and be proficient in:
Order process and customer relationship management (CRM)
Communications
Returns and reverse logistics
Challenging customers
Legal and regulatory concerns

77. The Order Cycle
The customer order cycles occurs when customers interact with suppliers.

78. Relationship Management
Customer Relationship Management (CRM)
The term given to developing different strategies to serve most effectively the full range of customers that interact with a company
CRM may also be used to refer to the computer systems that help support the process of CRM
Customer Life Cycle:
The term used to describe the relationship used by a company to find, manage, retain, and develop interactions with customers

79. Communications Communication involves the transfer of information
Effective communicators need to:
Understand to whom they communicate
The message they communicate
The most appropriate form of communication
Communication Channels
Verbal communication
Listening
Nonverbal communication
Written ciommunication

80. Challenging Customers
Customer service representatives should have patience, skill, and good communication skills when working with challenging customers
Challenging customers may be:
Angry or openly antagonistic and aggressive
Lacking good communication skills and the ability to express their thoughts
Arrogant or supreme attitude
Prone to making unwarranted personal attacks
Overly talkative and lack the will or ability to listen