Supply Chain 101

Supply Chain 101: Your Source for all Supply Chain and Logistics Definitions

Automated Storage and Retrieval Systems (AS/RS) – Automated storage and retrieval systems (AS/RS) are computer-controlled systems responsible for the automated movement and placement of goods, to and from set storage locations within a warehouse. There are a number of distinct categories of AS/RS systems. Traditionally, AS/RS systems referred to fixed aisle systems, typically comprising a storage and retrieval machine (SRM) that runs on rails or similar structure, consisting of a chassis, vertical mast, and lifting carriage with an insertion/extraction load handling device. Shuttle systems are a more recent addition to the AS/RS category of solutions. Shuttle systems differ from traditional AS/RS due to the independent movement of the horizontal shuttles and the lift systems.

Demand Management Systems – Demand management applications allow organizations to forecast demand. The forecasts are in units of measure used by the supply chain organization (units, cases, orders, tons, etc.) as well as in dollars. Forecasts can be done at different product hierarchical levels – stock keeping units versus product family level, for example; at different levels of granularity – product family sales by region vs. SKU sales by store, for example; and at different time horizons – weekly, monthly, quarterly, etc. These solutions have collaborative features that allow other groups (the sales organization, customers, etc.) that may have insights to contribute their inputs to the forecast.

Distributed Order Management (DOM) – distributed order management allows an organization to capture all information in the order management process across all relevant channels. This includes the entry of the order, sourcing, payments, and fulfillment. It also spans all channels of sales operations. The benefit is that it doesn’t matter where an order originates. All fulfillment channels have access to the information and the retailer can appropriately allocate the inventory depending on stock levels, demand requirements, and timing of fulfillment.

Global Trade Compliance Systems (GTC) – Global trade compliance systems automate and streamline processes related to customs and regulatory compliance.  GTC solutions automate the discovery, creation, retention, analysis, and communication of information about international supply chains that are of importance to customs and other government authorities responsible for regulation and taxation of cross-border trade.

Integrated Business Planning – Integrated Business Planning (IBP) solutions is a process for translating desired business outcomes (revenue, margin, profit, or market share) into operational resource requirements. The planning is done over different time horizons with a key focus being balancing projected demand with supply (the ability to make, procure, or fulfill goods in a given time period). There is often an operational planning horizon, what could we sell in the coming month versus what is it possible for us to make or procure) and strategic time horizons focused on quarters and years. In strategic planning the focus can be on what capacities need to be added, promotional plans that will extend over the coming year, and other longer-range activities that need to be conducted to meet long term business objectives. The main way IBP differs from Sales & Operations Planning (S&OP) is that S&OP is more focused on demand/supply balancing and IBP adds an increased focus on financial outcomes.

Inventory Optimization – Inventory optimization solutions take a demand plan, the margin of error associated with demand, and figure out how much inventory needs to be produced, and where it needs to be located across a network, to hit defined service levels.

Managed Transportation Services (MTS) – Managed Transportation Services include planning and execution activities where the 3PL serves as an outsourced transportation department for a customer.

Sales & Operations Planning – See Integrated Business Planning.

Supply Chain Planning – Supply Chain Planning solutions are composed of Demand Management Systems, Supply Planning Systems, Inventory Optimization, and Integrated Business Planning solutions. All of these solutions are defined in this document. Supply Chain Planning allows organizations to create feasible and optimal plans. Optimization can be defined as plans that minimize costs or maximize revenues, margins, or profits.

Supply Planning Systems – Supply planning systems create models that allow a company to understand the capacity and constraints they have in producing goods or fulfilling orders. The models for the factory can include things like how long it takes to set-up a machine, how many units per hour can be produced by the machine, how long routine maintenance takes, how many workers are needed, the hours the plant works, etc. Fulfillment constraints can include how long it will take to deliver goods to a destination, warehouse capacity, warehouse labor requirements, etc. The system than uses advanced algorithms to calculate whether a proposed schedule is feasible, and if feasible, the most optimal way goods should be produced and fulfilled.

Third Party Logistics (3PL) – third party logistics is a company’s use of an outside organization to handle its distribution, warehousing, and/or fulfillment services. A 3PL providers typically specializes in warehousing or transportation operations.

Transportation Management System (TMS) – a transportation management system helps companies move freight from origin to destination efficiently, reliably, and cost-effectively. Transportation management systems include 2 types of solutions. Planning and execution is focused on freight moves involving a carrier. The complete process would include procurement, creation of a route guide, planning and optimization, electronic communication with carriers, visibility and exception management, freight audit, and performance management.  Fleet Management involves freight moves with transportation assets owned by the company. The complete process would include routing and optimization; visibility and exception management; transportation asset management; and performance management.

Transportation Execution System (TES) – a transportation execution system allows shippers to connect to multiple carriers and then tender, track, & pay in the system. These systems do not include load board solutions or systems with optimization capabilities.

Warehouse Automation and Control (WAC)- Warehouse automation and control is a term representing a broad range of warehouse technology that includes the mechatronics, on-board controls (equipment controls), and off-board controls such as a material flow controller, of an automated warehouse system. Subsystems include conveyors and sortation, automated storage and retrieval, carousels, palletizing and depalletizing, autonomous warehouse vehicles, and more.

Warehouse Management Systems (WMS) – A warehouse management system is a category of application software that processes and manages information that supports warehouse operators and operations. Entities include orders, inventory, tasks, locations, status, and resources.  Supported processes include receiving, put-away, picking, value added services (VAS), shipping logic and more. ARC Advisory Group typically uses the term WMS as a reference to real-time systems such as those that utilized RF scanning to automatically record status change.

Yard Management Systems (YMS) – A yard management system is an application software program responsible for the management of information about facility yard activities, resources, and locations. Processes include yard check-in and check-out, asset presence and location, dock door scheduling and capacity management, and yard task and activity management.