TERMS and
GLOSSARY
A
Abandonment:
The
decision of a carrier to give up or to discontinue service over a route.
Railroads must seek ICC permission to abandon routes.
ABB:
See
Activity Based Budgeting
ABC:
See
Activity Based Costing
ABC
Classification:
Classification of a
group of items in decreasing order of annual dollar volume or other criteria.
This array is then split into three classes called A, B, and C. The A group
represents 10 to 20% by number of items, and 50 to 70% by projected dollar
volume. The next grouping, B, represents about 20% of the items and about 20% of
the dollar volume. The C Class contains 60 to 70% of the items, and represents
about 10 to 30% of the dollar volume.
ABC Costing:
See Activity
Based Costing
ABC Inventory
Control:
An inventory control approach based on the ABC volume or sales revenue
classification of products (A items are highest volume or revenue, C—or perhaps
D—are lowest-volume SKUs).
ABC Model:
In cost
management, a representation of resource costs during a time period that are
consumed through activities and traced to products, services, and customers or
to any other object that creates a demand for the activity to be performed.
ABC System:
In cost
management, a system that maintains financial and operating data on an
organization’s resources,
activities, drivers,
objects and measures. ABC models are created and maintained within this system.
ABM:
See
Activity Based Management
Abnormal
Demand:
Demand in any period that is outside the limits established by management
policy. This demand may come from a new customer or from existing customers
whose own demand is increasing or decreasing. Care must be taken in evaluating
the nature of the demand: is it a volume change, is it a change in product mix,
or is it related to the timing of the order?
Also see:
Outlier.
ABP:
See
Activity Based Planning
Absorption
Costing:
In cost management, an approach to inventory valuation in which variable costs
and a portion of fixed costs are assigned to each unit of production. The fixed
costs are usually allocated to units of output on the basis of direct labor
hours, machine hours, or material costs. Synonym: Allocation Costing.
Acceptable
Quality Level (AQL):
In quality
management, when a continuing series of lots is considered, AQL represents a
quality level that, for the purposes of sampling inspection, is the limit of a
satisfactory process average.
Also see: Acceptance
Sampling.
Acceptable
Sampling Plan:
In quality
management, a specific plan that indicates the sampling sizes and the associated
acceptance or
non-acceptance criteria to be used. Also see:
Acceptance Sampling.
Acceptance
Number:
In quality management, 1) A number used in acceptance sampling as a cutoff at
which the lot will be accepted or rejected. For example, if x or more units are
bad within the sample, the lot will be rejected. 2) The value of the test
statistic that divides all possible values into acceptance and rejection regions.
Also see:
Acceptance Sampling
nor does
CSCMP endorse these as official definitions except as noted.
Acceptance
Sampling:
1) The process of
sampling a portion of goods for inspection rather than examining the entire lot.
The entire lot may be accepted or rejected based on the sample even though the
specific units in the lot are better or worse than the sample. There are two
types: attributes sampling and variables sampling. In attributes sampling, the
presence or absence of a characteristic is noted in each of the units inspected.
In variables sampling, the numerical magnitude of a characteristic is measured
and recorded for each inspected unit; this type of sampling involves reference
to a continuous scale of some kind. 2) A method of measuring random samples of
lots or batches of products against predetermined standards.
Accessibility:
The
ability of a carrier to provide service between an origin and a destination.
Accessory:
A choice
or feature added to the good or service offered to the customer for customizing
the end product. An accessory enhances the capabilities of the product but is
not necessary for the basic function of the product. In many companies, an
accessory means that the choice does not have to be specified before shipment
but can be added at a later date. In other companies, this choice must be made
before shipment.
Accessorial
charges:
A carrier’s charge for accessorial services such as loading, unloading, pickup,
and delivery.
See also:
Upcharges.
Accountability:
Being
answerable for, but not necessarily personally charged with, doing specific
work. Accountability cannot be delegated, but it can be shared. For example,
managers and executives are accountable for business performance even though
they may not actually perform the work.
Accounts
Payable (A/P):
The value of goods
and services acquired for which payment has not yet been made.
Accounts
receivable (A/R):
The value of goods
shipped or services rendered to a customer on whom payment has not yet been
received. Usually includes an allowance for bad debts.
Accreditation:
Certification by a recognized body of the facilities, capability, objectivity,
competence, and integrity of an agency, service, operational group, or
individual to provide the specific service or operation needed. For example, the
Registrar Accreditation Board accredits those organizations that register
companies to the ISO 9000 Series Standards.
Accredited
Standards Committee (ASC):
A committee of the
ANSI chartered in 1979 to develop uniform standards for the electronic
interchange of business documents. The committee develops and maintains U.S.
generic standards (X12) for Electronic Data Interchange.
Accumulation
bin: A
place, usually a physical location, used to accumulate all components that go
into an assembly before the assembly is sent out to the assembly floor. Syn:
assembly bin.
Accuracy:
In
quality management, the degree of freedom from error or the degree of conformity
to a standard. Accuracy is different from precision. For example,
four-significant-digit numbers are less precise than six-significant-digit
numbers; however, a properly computed four-significant-digit number might be
more accurate than an improperly computed sixsignificant-digit number.
ACD:
See
Automated Call Distribution
ACE:
See
Automated Commercial Environment
ACH:
See
Automated Clearinghouse
Acknowledgment:
A
communication by a supplier to advise a purchaser that a purchase order has been
received. It usually implies acceptance of the order by the supplier.
Acquisition
Cost: In
cost accounting, the cost required to obtain one or more units of an item. It is
order quantity times unit cost.
Action Message:
An output
of a system that identifies the need for and the type of action to be taken to
correct a current or potential problem. Examples of action messages in an MRP
system include release order, reschedule in, reschedule out, and cancel.
Synonym: exception message, action report.
Action plan:
A
specific method or process to achieve the results called for by one or more
objectives. An action plan may be a simpler version of a project plan.
Action Report:
See
Action
Message
Activation:
In
constraint management, the use of non-constraint resources to make parts or
products above the level needed to support the system constraint(s). The result
is excessive work-in-process inventories or finished goods inventories, or both.
In contrast, the term utilization is used to describe the situation in which
non-constraint resource(s) usage is synchronized to support the needs of the
constraint.
Active
Inventory:
The raw materials,
work in process, and finished goods that will be used or sold within a given
period.
Active stock:
Goods in
active pick locations and ready for order filling.
Activity:
Work
performed by people, equipment, technologies or facilities. Activities are
usually described by the “action-verbadjective-noun” grammar convention.
Activities may occur in a linked sequence and activity-to-activity assignments
may exist.
1) In activity-based
cost accounting, a task or activity, performed by or at a resource, required in
producing the organization’s output of goods and services. A resource may be a
person, machine, or facility. Activities are grouped into pools by type of
activity and allocated to products. 2) In project management, an element of work
on a project. It usually has an anticipated duration, anticipated cost, and
expected resource requirements. Sometimes “major activity” is used for larger
bodies of work.
Activity
Analysis:
The process of
identifying and cataloging activities for detailed understanding and
documentation of their characteristics. An activity analysis is accomplished by
means of interviews, group sessions, questionnaires, observations, and reviews
of physical records of work.
Activity Based
Budgeting (ABB):
An approach to
budgeting where a company uses an understanding of its activities and driver
relationships to quantitatively estimate workload and resource requirements as
part of an ongoing business plan. Budgets show the types, number of and cost of
resources that activities are expected to consume based on forecasted workloads.
The budget is part of an organization’s activity-based planning process and can
be used in evaluating its success in setting and pursuing strategic goals.
Activity Based
Costing (ABC):
A methodology that
measures the cost and performance of cost objects, activities and resources.
Cost objects consume activities and activities consume resources. Resource costs
are assigned to activities based on their use of those resources, and activity
costs are reassigned to cost objects (outputs) based on the cost objects
proportional use of those activities. Activity-based costing incorporates causal
relationships between cost objects and activities and between activities and
resources.
Activity Based
Costing Model:
In activity-based
cost accounting, a model, by time period, of resource costs created because of
activities related to products or services or other items causing the activity
to be carried out.
Activity Based
Costing System:
A set of
activity-based cost accounting models that collectively define data on an
organization’s
resources, activities, drivers, objects, and measurements.
Activity-Based
Management (ABM):
A discipline
focusing on the management of activities within business processes as the route
to continuously improve both the value received by customers and the profit
earned in providing that value. ABM uses activity-based cost information and
performance measurements to influence management action.
See
Activity-Based Costing
Activity Based
Planning (ABP):
Activity-based
planning (ABP) is an ongoing process to determine activity and resource
requirements (both financial and operational) based on the ongoing demand of
products or services by specific customer needs. Resource requirements are
compared to resources available and capacity issues are identified and managed.
Activity-based budgeting (ABB) is based on the outputs of activity-based
planning.
Activity
Dictionary:
A listing and
description of activities that provides a common/standard definition of
activities across the organization. An activity dictionary can include
information about an activity and/or its relationships, such as activity
description, business process, function source, whether value-added, inputs,
outputs, supplier, customer, output measures, cost drivers, attributes, tasks,
and other information as desired to describe the activity.
Activity
Driver:
The best single quantitative measure of the frequency and intensity of the
demands placed on an activity by cost objects or other activities. It is used to
assign activity costs to cost objects or to other activities.
Activity Level:
A
description of types of activities dependent on the functional area.
Product-related activity levels may include unit, batch, and product levels.
Customer-related activity levels may include customer, market, channel, and
project levels.
Activity
network diagram:
An arrow diagram
used in planning and managing processes and projects.
Activity Ratio:
A
financial ratio used to determine how an organization’s resources perform
relative to the revenue the resources produce. Activity ratios include inventory
turnover, receivables conversion period, fixed-asset turnover, and return on
assets.
Actual Cost
System: A
cost system that collects costs historically as they are applied to production
and allocates indirect costs to products based on the specific costs and
achieved volume of the products.
Actual Costs:
The
labor, material, and associated overhead costs that are charged against a job as
it moves through the
production process.
Actual Demand:
Actual
demand is composed of customer orders (and often allocations of items,
ingredients, or raw materials to production or distribution). Actual demand nets
against or “consumes” the forecast, depending upon the rules chosen over a time
horizon. For example, actual demand will totally replace forecast inside the
sold-out customer order backlog horizon (often called the demand time fence),
but will net against the forecast outside this horizon based on the chosen
forecast consumption rule.
Actual to
Theoretical Cycle Time:
The ratio of the measured time required to produce a given
output divided by the sum of the time required to produce a given output based
on the rated efficiency of the machinery and labor operations.
Adaptive
Control:
1) The ability of a control system to change its own parameters in response to a
measured change in
operating
conditions. 2) Machine control units in which feeds and/or speeds are not fixed.
The control unit, working from feedback sensors, is able to optimize favorable
situations by automatically increasing or decreasing the machining parameters.
This process ensures optimum tool life or surface finish and/or machining costs
or production rates.
Adaptive
Smoothing:
In forecasting, a
form of exponential smoothing in which the smoothing constant is automatically
adjusted as a function of one or many items, for example, forecast error
measurement, calendar characteristics (launch, replenishment, end of life), or
demand volume.
Advance
Material Request:
Ordering materials
before the release of the formal product design. This early release is required
because of long lead times.
Advanced
Planning and Scheduling (APS):
Techniques that deal
with analysis and planning of logistics and manufacturing over the short,
intermediate, and long-term time periods. APS describes any computer program
that uses advanced mathematical algorithms or logic to perform optimization or
simulation on finite capacity scheduling, sourcing, capital planning, resource
planning, forecasting, demand management, and others. These techniques
simultaneously consider a range of constraints and business rules to provide
real-time planning and scheduling, decision support, available-to-promise, and
capable-to-promise capabilities. APS often generates and evaluates multiple
scenarios. Management then selects one scenario to use as the "official plan."
The five main components of APS systems are demand planning, production
planning, production scheduling, distribution planning, and transportation
planning.
Advanced
Shipping Notice (ASN):
Detailed shipment
information transmitted to a customer or consignee in advance of delivery,
designating the contents (individual products and quantities of each) and nature
of the shipment. May also include carrier and shipment specifics including time
of shipment and expected time of arrival.
See also:
Assumed Receipt
After-Sale
Service:
Services provided to the customer after products have been delivered. This can
include repairs, maintenance and/or telephone support. Synonym: Field Service.
Agency tariff:
A
publication of a rate bureau that contains rates for many carriers.
Agile
manufacturing—Tools,
techniques, and initiatives that enable a plant or company to thrive under
conditions of
unpredictable
change. Agile manufacturing not only enables a plant to achieve rapid response
to customer needs, but also includes the ability to quickly reconfigure
operations—and strategic alliances—to respond rapidly to unforeseen shifts in
the marketplace. In some instances, it also incorporates “mass customization”
concepts to satisfy unique customer requirements. In broad terms, it includes
the ability to react quickly to technical or environmental surprises.
Agglomeration:
A net advantage gained by a common location with other companies.
Aggregate
Forecast:
An estimate of
sales, often time phased, for a grouping of products or product families
produced by a facility or firm. Stated in terms of units, dollars, or both, the
aggregate forecast is used for sales and production planning (or for sales and
operations planning) purposes.
Aggregate
Inventory:
The inventory for
any grouping of items or products involving multiple stock-keeping units.
Also see
Base
Inventory Level.
Aggregate
Inventory Management:
Establishing the
overall level (dollar value) of inventory desired and implementing controls to
achieve this goal.
Aggregate Plan:
A plan
that includes budgeted levels of finished goods, inventory, production backlogs,
and changes in the workforce to support the production strategy. Aggregated
information (e.g., product line, family) rather than product information is
used, hence the name aggregate plan.
Aggregate
Planning:
A process to develop
tactical plans to support the organization’s business plan. Aggregate planning
usually includes the development, analysis, and maintenance of plans for total
sales, total production, targeted inventory, and targeted customer backlog for
families of products. The production plan is the result of the aggregate
planning process. Two approaches to aggregate planning exist—production planning
and sales and operations planning.
Aggregate
tender rate:
A reduced rate
offered to a shipper who tenders two or more class-rated shipments at one time
and one place.
Agility:
The ability to
successfully manufacture and market a broad range of low-cost, high-quality
products and services with short lead times and varying volumes that provides
enhanced value to customers through customization. Agility merges the four
distinctive competencies of cost, quality, dependability, and flexibility.
AGVS:
See:
Automated Guided Vehicle System.
Air cargo:
Freight
that is moved by air transportation.
Airport and
Airway Trust Fund:
A federal fund that
collects passenger ticket taxes and disburses those funds for airport
facilities.
Air taxi:
An exempt
for-hire air carrier that will fly anywhere on demand: air taxis are restricted
to a maximum payload and passenger capacity per plane.
Air Transport
Association of America:
A U.S. airline industry association.
Alaskan
carrier:
A for-hire air carrier that operates within the state of Alaska.
Alert:
See
Action Message.
Algorithm:
A clearly
specified mathematical process for computation; a set of rules, which, if
followed, give a prescribed result.
All-cargo
carrier:
An air carrier that transports cargo only.
Allocated item:
In an MRP
system, an item for which a picking order has been released to the stockroom but
not yet sent from the stockroom.
Allocation:
1)In cost
accounting, a distribution of costs using calculations that may be unrelated to
physical observations or direct or repeatable cause-and-effect relationships.
Because of the arbitrary nature of allocations, costs based on cost causal
assignment are viewed as more relevant for management decision-making. 2) In
order management, allocation of available inventory to customer and production
orders.
Allocation
Costing:
See
Absorption Costing
Alpha release:
A very
early release of a product to get preliminary feedback about the feature set and
usability.
Alternate
Routing:
A routing, usually less preferred than the primary routing, but resulting in an
identical item. Alternate routings may be maintained in the computer or off-line
via manual methods, but the computer software must be able to accept alternate
routings for specific jobs.
American
Customer Satisfaction Index (ACSI):
Released for the first time in October 1994, an economic
indicator and cross industry measure of the satisfaction of U.S. household
customers with the quality of the goods and services available to them—both
those goods and services produced within the United States and those provided as
imports from foreign firms that have substantial market shares or dollar sales.
The ACSI is co-sponsored by the University of Michigan Business School, ASQ and
the CFI Group.
American
National Standards Institute (ANSI):
A non-profit organization chartered to develop, maintain, and
promulgate voluntary U.S. national standards in a number of areas, especially
with regards to setting EDI standards. ANSI is the U.S. representative to the
International Standards Organization (ISO).
American
Society for Quality (ASQ):
Founded in 1946, a
not-for-profit educational organization consisting of 144,000 members who are
interested in quality improvement.
American
Society for Testing and Materials (ASTM):
Not-for-profit organization that provides a forum
for the development and publication of voluntary consensus standards for
materials, products, systems and services.
American
Society for Training and Development (ASTD):
A membership organization providing materials,
education and support related to workplace learning and performance.
American
Society of Transportation & Logistics:
A professional organization in the field of
logistics.
American
Standard Code for Information Interchange (ASCII):
ASCII format - simple text based data with
no formatting. The standard code for information exchange among data processing
systems. Uses a coded character set consisting of 7-bit coded characters (8 bits
including parity check).
American
Trucking Association, Inc.:
A motor carrier
industry association that is made up of subconferences representing various
sectors of the motor carrier industry.
American
Waterway Operators:
A domestic water
carrier industry association representing barge operators on the inland
waterways.
Amtrak:
The National
Railroad Passenger Corporation, a federally created corporation that operates
most of the United States’ intercity passenger rail service.
Animated GIF:
A file
containing a series of GIF (Graphics Interchange Format) images that are
displayed in rapid sequence by some Web browsers, giving an animated effect.
Also see: GIF.
ANSI:
See
American National Standards Institute.
ANSI ASC X12:
American
National Standards Institute Accredited Standards Committee X12. The committee
of ANSI that is charted with setting EDI standards.
ANSI Standard:
A
published transaction set approved by ANSI. The standards are reviewed every six
months.
Anticipated
Delay Report:
A report, normally
issued by both manufacturing and purchasing to the material planning function,
regarding jobs or purchase orders that will not be completed on time and
explaining why the jobs or purchases are delayed and when they will be
completed. This report is an essential ingredient of the closed-loop MRP system.
It is normally a handwritten report. Synonym: delay report.
Anticipation
Inventories:
Additional inventory
above basic pipeline stock to cover projected trends of increasing sales,
planned sales promotion programs, seasonal fluctuations, plant shutdowns, and
vacations.
Any-quantity
rate (AQ):
The same rate
applies to any size shipment tendered to a carrier; no discount rate is
available for large shipments.
A/P:
See
Accounts Payable
Applicability
Statement 2 (AS2):
A specification for
Electronic Data Interchange between businesses using the Internet's Web page
protocol, the Hypertext Transfer Protocol (HTTP). The specification is an
extension of the earlier version, Applicability Statement 1 (AS1). Both
specifications were created by EDI over the Internet (EDIINT), a working group
of the Internet Engineering Task Force (IETF) that develops secure and reliable
business communications standards.
Application
Service Provider (ASP):
A company that
offers access over the Internet to application (examples of applications include
word processors, database programs, Web browsers, development tools,
communication programs) and related services that would otherwise have to be
located in their own computers. Sometimes referred to as “apps-on-tap", ASP
services are expected to become an important alternative, especially for smaller
companies with low budgets for information technology. The purpose is to try to
reduce a company's burden by installing, managing, and maintaining software.
Application-to-Application:
The direct
interchange of data between computers, without re-keying.
Appraisal
Costs:
Those costs associated with the formal evaluation and audit of quality in the
firm. Typical costs include inspection, quality audits, testing, calibration,
and checking time.
Approved Vendor
List (AVL):
List of the
suppliers approved for doing business. The AVL is usually created by procurement
or sourcing and engineering personnel using a variety of criteria such as
technology, functional fit of the product, financial stability, and past
performance of the supplier.
APS:
See
Advanced Planning and Scheduling
AQ:
See Any
quantity rate
AQL:
See
Acceptable Quality Level
A/R:
See
Accounts Receivable
Army Corps of
Engineers:
A federal agency responsible for the construction and maintenance or waterways.
Arrow diagram:
A
planning tool to diagram a sequence of events or activities (nodes) and the
interconnectivity of such nodes. It is used for scheduling and especially for
determining the critical path through nodes.
Artificial
Intelligence:
Understanding and
computerizing the human thought process.
ASC:
See
Accredited Standards Committee of ANSI.
ASC X12:
Accredited
Standards Committee X12. A committee of ANSI chartered in 1979 to develop
uniform standards for the electronic interchange of business documents.
ASCII:
See
American Standard Code for Information Interchange
ASN:
See
Advanced Shipping Notice.
ASP:
See
Application Service Provider
ASQ:
See
American Society for Quality
AS/RS:
See
Automated Storage and Retrieval System
Association of
American Railroads:
A railroad industry
association that represents the larger U.S. railroads.
ASTM:
See
American Society for Testing and Materials
ASTD:
See
American Society for Training and Development
AS2:
See
Applicability Statement 2
Assemble-to-order:
A production
environment where a good or service can be assembled after receipt of a
customer's order. The key components (bulk, semi-finished, intermediate,
subassembly, fabricated, purchased, packing, and so on) used in the assembly or
finishing process are planned and usually stocked in anticipation of a customer
order. Receipt of an order initiates assembly of the customized product. This
strategy is useful where a large number of end products (based on the selection
of options and accessories) can be assembled from common components. Synonym:
Finish to Order. Also see: Make to Order, Make to Stock.
Assembly:
A group
of subassemblies and/or parts that are put together and that constitute a major
subdivision for the final product. An assembly may be an end item or a component
of a higher level assembly.
Assembly Line:
An
assembly process in which equipment and work centers are laid out to follow the
sequence in which raw materials and parts are assembled.
Assignment:
A
distribution of costs using causal relationships. Because cost causal
relationships are viewed as more relevant for management decision-making,
assignment of costs is generally preferable to allocation techniques.
(Synonymous with
Tracing.
Contrast with
Allocation.)
Assumed
Receipt:
The principle of assuming that the contents of a shipment are the same as those
presented on a shipping or
delivery note.
Shipping and receiving personnel do not check the delivery quantity. This
practice is used in conjunction with bar
codes and an
EDI-delivered ASN to eliminate invoices and facilitate rapid receiving.
ATP:
See
Available to Promise
ATS:
See
Available to Sell
Attachment:
An
accessory that has to be physically attached to the product.
Attributes:
A label
used to provide additional classification or information about a resource,
activity, or cost object. Used for focusing attention and may be subjective.
Examples are a characteristic, a score or grade of product or activity, or
groupings of these items, and performance measures.
Audit:
The inspection
and examination of a process or quality system to ensure compliance to
requirements. An audit can apply to an entire organization or may be specific to
a function, process or production step.
Audit Trail:
Manual or
computerized tracing of the transactions affecting the contents or origin of a
record.
Auditing:
Determining the correct transportation charges due the carrier: auditing
involves checking the accuracy of the freight bill for errors, correct rate, and
weight.
Auditability:
A
characteristic of modern information systems, gauged by the ease with which data
can be substantiated by trading it to source documents and the extent to which
auditors can rely on pre-verified and monitored control processes.
Authentication:
1) The
process of verifying the eligibility of a device, originator, or individual to
access specific categories of information or to enter specific areas of a
facility. This process involves matching machine-readable code with a
predetermined list of authorized end users. 2) A practice of establishing the
validity of a transmission, message, device, or originator, which was designed
to provide protection against fraudulent transmissions.
Authentication
Key: A
short string of characters used to authenticate transactions between trading
partners.
Autodiscrimination:
The functionality of
a bar code reader to recognize the bar code symbology being scanned thus
allowing a reader to read several different symbologies consecutively
AutoID:
Referring to an
automated identification system. This includes technology such as bar coding and
radio frequency tagging (RFID).
Automated Call
Distribution (ACD):
A feature of large
call center or “Customer Interaction Center” telephone switches that routes
calls by rules such as next available employee, skill-set etc.
Automated
Clearinghouse (ACH):
Automated
Clearinghouse. A nationwide electronic payments system, which more than 15,000
financial institutions use, on behalf of 100,000 corporations and millions of
consumer in the U.S. The funds transfer system of choice among businesses that
make electronic payments to vendors, it is economical and can carry remittance
information in standardized, computer processable data formats.
Automated
Commercial Environment (ACE):
Update of outmoded
Automated Commercial System (ACS). It is intended to provide automated
information system to enable the collection, processing and analysis of
commercial import and export data, allowing for moving goods through the ports
faster and at lower cost, as well as detection of terrorist threats.
Automated
Guided Vehicle System (AGVS):
A transportation network that automatically routes one or
more material handling devices, such as carts or pallet trucks, and positions
them at predetermined destinations without operator intervention.
Automated
Storage/Retrieval System (AS/RS):
A high-density rack inventory storage system with
un-manned vehicles automatically loading and unloading products to/from the
racks.
Automatic
Relief: A
set of inventory bookkeeping methods that automatically adjusts computerized
inventory records based on a production transaction. Examples of automatic
relief methods are backflushing, direct-deduct, pre-deduct, and post-deduct
processing.
Automatic
Rescheduling:
Rescheduling done by
the computer to automatically change due dates on scheduled receipts when it
detects that due dates and need dates are out of phase. Ant: manual
rescheduling.
Available
Inventory:
The on-hand
inventory balance minus allocations, reservations, backorders, and (usually)
quantities held for quality problems. Often called “beginning available
balance". Synonyms: Beginning Available Balance, Net Inventory.
Available to
Promise (ATP):
The uncommitted
portion of a company’s inventory and planned production maintained in the master
schedule to support customer-order promising. The ATP quantity is the
uncommitted inventory balance in the first period and is normally calculated for
each period in which an MPS receipt is scheduled. In the first period, ATP
includes on-hand inventory less customer orders that are due and overdue. Three
methods of calculation are used: discrete ATP, cumulative ATP with lookahead,
and cumulative ATP without lookahead.
Available to
Sell (ATS):
Total quantity of
goods committed to the pipeline for a ship to or selling location. This includes
the current inventory at a location and any open purchase orders.
Average Annual
Production Materials Related A/P (Accounts Payable):
The value of direct
materials acquired in that year for which payment has not yet been made.
Production-related materials are those items classified as material purchases
and included in the Cost of Goods Sold (COGS) as raw material purchases.
Calculate using the 5-Point Annual Average.
Average Cost
per Unit:
The estimated total
cost, including allocated overhead, to produce a batch of goods divided by the
total number of units produced.
Average
Inventory:
The average
inventory level over a period of time. Implicit in this definition is a
“sampling period” which is the amount of time between inventory measurements.
For example, daily inventory levels over a two-week period of time, hourly
inventory levels over one day, etc. The average inventory for the same total
period of time can fluctuate widely depending upon the sampling period used.
Average Payment
Period (for materials):
The average time from receipt of production-related materials
and payment for those materials. Production-related materials are those items
classified as material purchases and included in the Cost of Goods Sold (COGS)
as raw material purchases. (An element of Cash-to-Cash Cycle Time)
Calculation:
[Five
point annual average production-related material accounts payable] / [Annual
production-related material receipts/365]
AVL:
See
Approved Vendor List.
Avoidable Cost:
A cost
associated with an activity that would not be incurred if the activity was not
performed (e.g., telephone cost associated with vendor support).
B
B2B:
See
Business to Business
B2C:
See
Business to Consumer
Back Order:
Product ordered but out of stock and promised to ship when the product becomes
available.
Back
Scheduling:
A technique for
calculating operation start dates and due dates. The schedule is computed
starting with the due date for the order and working backward to determine the
required start date and/or due dates for each operation.
Backflush:
A method
of inventory bookkeeping where the book (computer) inventory of components is
automatically reduced by the computer after completion of activity on the
component’s upper-level parent item based on what should have been used as
specified on the bill of material and allocation records. This approach has the
disadvantage of a built-in differential between the book record and what is
physically in stock. Synonym: explode-to-deduct.
Also see: Pre-deduct Inventory Transaction
Processing
Backhaul:
The
process of a transportation vehicle returning from the original destination
point to the point of origin. The 1980 Motor Carrier Act deregulated interstate
commercial trucking and thereby allowed carriers to contract for the return
trip. The backhaul can be with a full, partial, or empty load. An empty backhaul
is called deadheading.
Also see:
Deadhead
Backlog
Customer:
Customer orders
received but not yet shipped; also includes backorders and future orders.
Backorder:
1) The
act of retaining a quantity to ship against an order when other order lines have
already been shipped. Backorders are usually caused by stock shortages. 2) The
quantity remaining to be shipped if an initial shipment(s) has been processed.
Note: In some cases backorders are not allowed, this results in a lost sale when
sufficient quantities are not available to completely ship and order or order
line.
Also see:
Balance to Ship
Backsourcing:
Pulling a
function back in-house as an outsourcing contract expires
Back Order:
Product
ordered but out of stock and promised to ship when the product becomes
available.
Balance-of-Stores Record:
A double-entry
record system that shows the balance of inventory items on hand and the balances
of items on order and available for future orders. Where a reserve system of
materials control is used, the balance of material on reserve is also shown.
Balance to Ship
(BTS):
Balance or remaining quantity of a promotion or order that has yet to ship.
Also see: Backorder
Balanced
Scorecard:
A structured
measurement system developed by David Norton and Robert Kaplan of the Harvard
Business School. It is based on a mix of financial and non financial measures of
business performance. A list of financial and operational measurements used to
evaluate organizational or supply chain performance. The dimensions of the
balanced scorecard might include customer perspective, business process
perspective, financial perspective, and innovation and learning perspectives. It
formally connects overall objectives, strategies, and measurements. Each
dimension has goals and measurements.
Also see: Scorecard
BAM:
See
Business Activity Monitoring
Bar Code:
A symbol
consisting of a series of printed bars representing values. A system of optical
character reading, scanning, and tracking of units by reading a series of
printed bars for translation into a numeric or alphanumeric identification code.
A popular example is the UPC code used on retail packaging.
Bar code
scanner:
A device to read bar codes and communicate data to computer systems.
Barge:
The
cargo-carrying vehicle used primarily by inland water carriers. The basic barges
have open tops, but there are covered barges for both dry and liquid cargoes.
Barrier to
Entry:
Factors that prevent companies from entering into a particular market, such as
high initial investment in equipment.
Base Demand:
The
percentage of a company’s demand that is derived from continuing contracts
and/or existing customers. Because this demand is well known and recurring, it
becomes the basis of management’s plans. Synonym: Baseload Demand.
Base Index:
See Base
Series
Base Inventory
Level:
The inventory level made up of aggregate lot-size inventory plus the aggregate
safety stock inventory. It does not take into account the anticipation inventory
that will result from the production plan. The base inventory level should be
known before the production plan is made.
Also see:
Aggregate
Inventory.
Base Series:
A
standard succession of values of demand-over-time data used in forecasting
seasonal items. This series of factors is usually based on the relative level of
demand during the corresponding period of previous years. The average value of
the base series over a seasonal cycle will be 1.0. A figure higher than 1.0
indicates that the demand for that period is more than the average; a figure
less than 1.0 indicates less than the average. For forecasting purposes, the
base series is superimposed upon the average demand and trend in demand for the
item in question. Synonym: Base Index.
Also see: Seasonality
Base Stock
System: A
method of inventory control that includes as special cases most of the systems
in practice. In this system, when an order is received for any item, it is used
as a picking ticket, and duplicate copies, called replenishment orders, are sent
back to all stages of production to initiate replenishment of stocks. Positive
or negative orders (called base stock orders) are also used from time to time to
adjust the level of the base stock of each item. In actual practice,
replenishment orders are usually accumulated when they are issued and are
released at regular intervals.
Basic Producer:
A
manufacturer that uses natural resources to produce materials for other
manufacturing. A typical example is a steel company that processes iron ore and
produces steel ingots; others are those making wood pulp, glass, and rubber.
Baseload
Demand:
See Base
Demand
Batch Control
Totals:
The result of grouping transactions at the input stage and establishing control
totals over them to ensure proper processing. These control totals can be based
on document counts, record counts, quantity totals, dollar totals, or hash
(mixed data, such as customer AR numbers) totals.
Batch Number:
A
sequence number associated with a specific batch or production run of products
and used for tracking purposes. Synonym: Lot Number.
Batch Picking:
A method
of picking orders in which order requirements are aggregated by product across
orders to reduce movement to and from product locations. The aggregated
quantities of each product are then transported to a common area where the
individual orders are constructed.
Also See:
Discrete Order Picking, Order Picking, Zone Picking
Batch
Processing:
A computer term
which refers to the processing of computer information after it has been
accumulated in one group, or batch. This is the opposite of “real-time”
processing where transactions are processed in their entirety as they occur.
Baud:
A computer term
describing the rate of transmission over a channel or circuit. The baud rate is
equal to the number of pulses that can be transmitted in one second, often the
same as the number of bits per second. Common rates are now 1200, 2400, 4800,
9600 bits and 19.2 and 56 kilobytes (Kbs) for “dial-up” circuits, and may be
much higher for broadband circuits.
BCP:
See
Business Continuity Plan
Beginning
Available Balance:
See Available
Inventory
Benchmarking:
The
process of comparing performance against the practices of other leading
companies for the purpose of improving performance. Companies also benchmark
internally by tracking and comparing current performance with past performance.
Benefit-cost
ratio: An
analytical tool used in public planning; a ratio of total measurable benefits
divided by the initial capital cost.
Best-in-Class:
An
organization, usually within a specific industry, recognized for excellence in a
specific process area.
Best Practice:
A
specific process or group of processes which have been recognized as the best
method for conducting an action. Best Practices may vary by industry or
geography depending on the environment being used. Best practices methodology
may be applied with respect to resources, activities, cost object, or processes.
Beta release:
A
pre-released version of a product that is sent to customers for evaluation and
feedback.
Bilateral
Contract:
An agreement wherein
each party makes a promise to the other party.
Bill of
Activities:
A listing of
activities required by a product, service, process output or other cost object.
Bill of activity attributes could include volume and or cost of each activity in
the listing.
Bill of Lading
(BOL): A
transportation document that is the contract of carriage containing the terms
and conditions between the shipper and carrier.
Bill of
Material (BOM):
A structured list of
all the materials or parts and quantities needed to produce a particular
finished product, assembly, subassembly, or manufactured part, whether purchased
or not.
Bill of
Material Accuracy:
Conformity of a list
of specified items to administrative specifications, with all quantities correct
Bill of
Resources:
A listing of
resources required by an activity. Resource attributes could include cost and
volumes.
Bin:
1) A storage
device designed to hold small discrete parts. 2) A shelving unit with physical
dividers separating the storage locations.
Binary:
A computer term
referring to a system of numerical notation that assumes only two possible
states or values, zero (0) and one (1). Computer systems use a binary technique
where an individual bit or “Binary Digit” of data can be “on” or “off” (1 or 0).
Multiple bits are combined into a “Byte” which represents a character or number.
Bisynchronous:
A
computer term referring to a communication protocol whereby messages are sent as
blocks of characters. The blocks of data are checked for completeness and
accuracy by the receiving computer.
Bitmap Image
(BMP):
The standard image format on Windows-compatible computers. Bitmap images can be
saved for Windows or OS/2 systems and support 24-bit color.
Blanket Order:
See
Blanket Purchase Order
Blanket
Purchase Order:
A long-term
commitment to a supplier for material against which short-term releases will be
generated to satisfy
requirements. Often blanket orders cover only one item with predetermined
delivery dates. Synonym: Blanket Order, Standing Order.
Blanket
Release:
The authorization to ship and/or produce against a blanket agreement or
contract.
Blanket rate:
A rate
that does not increase according to the distance the commodity is shipped.
Bleeding Edge:
An
unproven process or technology so far ahead of its time that it may create a
competitive disadvantage.
Block diagram:
A diagram
that shows the operation, interrelationships and interdependencies of components
in a system. Boxes, or blocks (hence the name), represent the components;
connecting lines between the blocks represent interfaces. There are two types of
block diagrams: a functional block diagram, which shows a system's subsystems
and lower level products and their interrelationships and which interfaces with
other systems; and a reliability block diagram, which is similar to the
functional block diagram except that it is modified to emphasize those aspects
influencing reliability.
Blocking bug:
A defect
that prevents further or more detailed analysis or verification of a functional
area or feature, or any issue that would prevent the product from shipping.
Blow Through:
An MRP
process which uses a “phantom bill of material” and permits MRP logic to drive
requirements straight through the phantom item to its components. The MRP system
usually retains its ability to net against any occasional inventories of the
item.
Also see:
Phantom Bill of Material
Body of
knowledge (BOK):
The prescribed
aggregation of knowledge in a particular area an individual is expected to have
mastered to be considered or certified as a practitioner.
BOL:
See
Bill of Lading
BOK:
See
Body of Knowledge
BOM:
See
Bill of Materials
Book Inventory:
An
accounting definition of inventory units or value obtained from perpetual
inventory records rather than by actual count.
Bookings:
The sum
of the value of all orders received (but not necessarily shipped), net of all
discounts, coupons, allowances, and rebates.
Bundle:
A group of
products that are shipped together as an unassembled unit.
Bonded
Warehouse:
Warehouse approved
by the Treasury Department and under bond/guarantee for observance of revenue
laws. Used for storing goods until duty is paid or goods are released in some
other proper manner.
Bottleneck:
A
constraint, obstacle or planned control that limits throughput or the
utilization of capacity.
Bottom-up
Replanning:
In MRP, the process
of using pegging data to solve material availability or other problems. This
process is accomplished by the planner (not the computer system), who evaluates
the effects of possible solutions. Potential solutions include compressing lead
time, cutting order quantity, substituting material, and changing the master
schedule.
Box-Jenkins
Model: A
forecasting method based on regression and moving average models. The model is
based not on regression of independent variables, but on past observations of
the item to be forecast at varying time lags and on previous error values from
forecasting. See: Forecast.
Boxcar:
An enclosed rail
car typically 40 to 50 feet long; used for packaged freight and some bulk
commodities.
BMP:
See
Bitmap Imagine
BPM:
See
Business Performance Measurement
BPO:
See
Business Process Outsourcing
BPR:
See Business Process Reengineering
Bracing:
Securing a
shipment inside a carrier’s vehicle to prevent damage.
Bracketed
Recall:
Recall from customers of suspect lot numbers plus a specified number of lots
produced before and after the suspect ones.
Branding:
The use
of a name, term, symbol, or design, or a combination of these, to identify a
product.
Breadman:
A
specific application of Kanban, used in coordinating vendor replenishment
activities. In making bread or other route type deliveries, the deliveryman
typically arrives at the customer's location and fills a designated container or
storage location with product. The size of the order is not specified on an
ongoing basis, nor does the customer even specify requirements for each
individual delivery. Instead, the supplier assumes the responsibility for
quantifying the need against a prearranged set of rules and delivers the
requisite quantity.
Break-Bulk:
The
separation of a single consolidated bulk load into smaller individual shipments
for delivery to the ultimate consignees. This is preceded by a consolidation of
orders at the time of shipment, where many individual orders which are destined
for a specific geographic area are grouped into one shipment in order to reduce
cost.
Break-Even
Chart: A
graphical tool showing the total variable cost and fixed cost curve along with
the total revenue curve. The point of intersection is defined as the break-even
point, i.e., the point at which total revenues exactly equal total costs.
Also see:
Total Cost Curve
Break-Even
Point:
The level of production or the volume of sales at which operations are neither
profitable nor unprofitable. The break-even point is the intersection of the
total revenue and total cost curves.
Also see:
Total Cost Curve
Bricks and
Mortar:
The act of selling through a physical location. The flip side of clicks and
mortar, where selling is conducted via the Internet. An informal term for
representing the old economy versus new economy or the Industrial economy versus
information economy.
Broadband:
A
high-speed, high-capacity transmission channel. Broadband channels are carried
on radio wave, coaxial or fiberoptic cables that have a wider bandwidth than
conventional telephone lines, giving them the ability to carry video, voice, and
data simultaneously.
Broken case:
An open
case. The term is often used interchangeably with "repack" or
"less-than-full-case" to name the area in which materials are picked in that
form.
Broker:
An intermediary
between the shipper and the carrier. The broker arranges transportation for
shippers and represents carriers.
Brokered
Systems:
Independent computer systems, owned by independent organizations or entities,
linked in a manner to allow one system to retrieve information from another. For
example, a customer's computer system is able to retrieve order status from a
supplier's computer.
Browser:
A utility that
allows an internet user to look through collections of things. For example,
Netscape Navigator and Microsoft Explorer allow you to view contents on the
World Wide Web.
BTS:
See
Balance to Ship
Bulletin Board:
An
electronic forum that hosts posted messages and articles related to a common
subject.
Bucketed
System:
An MRP, DRP, or other time-phased system in which all time-phased data are
accumulated into time periods, or buckets. If the period of accumulation is one
week, then the system is said to have weekly buckets.
Bucketless
system:
An MRP, DRP, or other time-phased system in which all time-phased data are
processed, stored, and usually displayed using dated records rather than defined
time periods, or buckets.
Buffer:
1) A quantity of
materials awaiting further processing. It can refer to raw materials,
semifinished stores or hold points, or a work backlog that is purposely
maintained behind a work center. 2) In the theory of constraints, buffers can be
time or material and support throughput and/or due date performance. Buffers can
be maintained at the constraint, convergent points (with a constraint part),
divergent points, and shipping points.
Buffer
Management:
In the theory of
constraints, a process in which all expediting in a shop is driven by what is
scheduled to be in the buffers (constraint, shipping, and assembly buffers). By
expediting this material into the buffers, the system helps avoid idleness at
the constraint and missed customer due dates. In addition, the causes of items
missing from the buffer are identified, and the frequency of occurrence is used
to prioritize improvement activities.
Buffer Stock:
See Safety
Stock.
Bulk area:
A storage
area for large items which at a minimum are most efficiently handled by the
pallet load.
Bulk storage:
The
process of housing or storing materials and packages in larger quantities,
generally using the original packaging or shipping containers or boxes.
Bulk packing:
The
process or act of placing numbers of small cartons or boxes into a larger single
box to aid in the movement of product and to prevent damage or pilferage to the
smaller cartons or boxes.
Bullwhip
Effect:
An extreme change in the supply position upstream in a supply chain generated by
a small change in demand downstream in the supply chain. Inventory can quickly
move from being backordered to being excess. This is caused by the serial nature
of communicating orders up the chain with the inherent transportation delays of
moving product down the chain. The bullwhip effect can be eliminated by
synchronizing the supply chain.
Burn Rate:
The rate
of consumption of cash in a business. Burn rate is used to determine cash
requirements on an on-going basis. A burn-rate of $50,000 would mean the company
spends $50,000 a month above any incoming cash flow to sustain its business.
Entrepreneurial companies will calculate their burn-rate in order to understand
how much time they have before they need to raise more money, or show a positive
cash flow.
Business
Activity Monitoring (BAM):
A term which refers
to capturing operational data in real-time or close to it, making it possible
for an enterprise to react more quickly to events. This is typically done
through software and includes features to provide alerts / notifications when
specific events occur.
See also: Supply Chain Event
Management
Business
Application:
Any computer
program, set of programs, or package of programs created to solve a particular
business problem or function.
Business
Continuity Plan (BCP):
A contingency plan
for sustained operations during periods of high risk, such as during labor
unrest or natural disaster. CSCMP provides suggestions for helping companies do
continuity planning in their Securing the Supply Chain Research. A copy of the
research is available on the CSCMP website.
Business
logistics:
The systematic and
coordinated set of activities required to provide the physical movement and
storage of goods (raw materials, parts, finished goods) from vendor/supply
services through company facilities to the customer (market) and the associated
activities—packaging, order processing, etc.—in an efficient manner necessary to
enable the organization to contribute to the explicit goals of the company.
Business Plan:
1) A
statement of long-range strategy and revenue, cost, and profit objectives
usually accompanied by budgets, a projected balance sheet, and a cash flow
(source and application of funds) statement. A business plan is usually stated
in terms of dollars and grouped by product family. The business plan is then
translated into synchronized tactical functional plans through the production
planning process (or the sales and operations planning process). Although
frequently stated in different terms (dollars versus units), these tactical
plans should agree with each other and with the business plan. See: long-term
planning, strategic plan. 2) A document consisting of the business details
(organization, strategy, and financing tactics) prepared by an entrepreneur to
plan for a new business.
Business
Performance Measurement (BPM):
A technique which
uses a system of goals and metrics to monitor performance. Analysis of these
measurements can help businesses in periodically setting business goals, and
then providing feedback to managers on progress towards those goals. A specific
measure can be compared to itself over time, compared with a preset target or
evaluated along with other measures.
Business
Process Outsourcing (BPO):
The practice of
outsourcing non-core internal functions to third parties. Functions typically
outsourced include logistics, accounts payable, accounts receivable, payroll and
human resources. Other areas can include IT development or complete management
of the IT functions of the enterprise.
Business
Process Reengineering (BPR):
The fundamental
rethinking and oftentimes, radical redesign of business processes to achieve
dramatic organizational improvements.
Business-to-Business (B2B):
As opposed to
business-to-consumer (B2C). Many companies are now focusing on this strategy,
and their sites are aimed at businesses (think wholesale) and only other
businesses can access or buy products on the site. Internet analysts predict
this will be the biggest sector on the Web.
Business-to-Consumer (B2C):
The hundreds of
e-commerce Web sites that sell goods directly to consumers are considered B2C.
This distinction is important when comparing Websites that are B2B as the entire
business model, strategy, execution, and fulfillment is different.
Business Unit:
A
division or segment of an organization generally treated as a separate
profit-and-loss center.
Buyer Behavior:
The way
individuals or organizations behave in a purchasing situation. The
customer-oriented concept finds out the wants, needs, and desires of customers
and adapts resources of the organization to deliver need-satisfying goods and
services.
Byte:
A computer term
used to define a string of 7 or 8 bits, or binary digits. The length of the
string determines the amount of data that can be represented. The 8-bit byte can
represent numerous special characters, 26 uppercase and lowercase alphabetic
characters, and 10 numeric digits, totaling 256 possible combinations.
C
Cabotage:
A federal
law that requires coastal and inter-coastal traffic to be carried in U.S.-built
and –registered ships.
CAE:
See
Computer Aided Engineering
Cage:
(1) A secure
enclosed area for storing highly valuable items, (2) a pallet-sized platform
with sides that can be secured to the tines of a forklift and in which a person
may ride to inventory items stored will above the warehouse floor.
Caged:
Referring to the
practice of placing high-value or sensitive products in a fenced off area within
a warehouse.
Calendar Days:
The
conversion of working days to calendar days is based on the number of regularly
scheduled workdays per week in your manufacturing calendar.
Calculation:
To convert
from working days to calendar days: if work week
= 4 days,
multiply by 1.75
= 5 days,
multiply by 1.4
= 6 days,
multiply by 1.17
Call Center:
A
facility housing personnel who respond to customer phone queries. These
personnel may provide customer service or technical support. Call center
services may be in-house or outsourced. Synonym: Customer Interaction Center.
Can-order
Point: An
ordering system used when multiple items are ordered from one vendor. The
can-order point is a point higher than the original order point. When any one of
the items triggers an order by reaching the must-order point, all items below
their can-order point are also ordered. The can-order point is set by
considering the additional holding cost that would be incurred should the item
be ordered early.
Capable to
Promise (CTP):
A technique used to
determine if product can be assembled and shipped by a specific date. Component
availability throughout the supply chain, as well as available materials, is
checked to determine if delivery of a particular product can be made. The
process of committing orders against available capacity as well as inventory.
This process may involve multiple manufacturing or distribution sites.
Capable-to-promise is used to determine when a new or unscheduled customer order
can be delivered. Capable-to-promise employs a finite-scheduling model of the
manufacturing system to determine when an item can be delivered. It includes any
constraints that might restrict the production, such as availability of
resources, lead times for raw materials or purchased parts, and requirements for
lower-level components or subassemblies. The resulting delivery date takes into
consideration production capacity, the current manufacturing environment, and
future order commitments. The objective is to reduce the time spent by
production planners in expediting orders and adjusting plans because of
inaccurate delivery-date promises.
Capability
maturity model (CMM):
A framework that
describes the key elements of an effective software process. It's an
evolutionary improvement path from an immature process to a mature, disciplined
process. The CMM covers practices for planning, engineering and managing
software development and maintenance. When followed, these key practices improve
the ability of organizations to meet goals for cost, schedule, functionality and
product quality.
Capacity:
The
physical facilities, personnel and process available to meet the product or
service needs of customers. Capacity generally refers to the maximum output or
producing ability of a machine, a person, a process, a factory, a product, or a
service.
Also see:
Capacity Management
Capacity
Management:
The concept that
capacity should be understood, defined, and measured for each level in the
organization to
include market segments, products, processes, activities, and resources. In each
of these applications, capacity is defined in a hierarchy of idle,
non-productive, and productive views.
Capacity
Planning:
Assuring that needed
resources (e.g., manufacturing capacity, distribution center capacity,
transportation vehicles, etc.) will be available at the right time and place to
meet logistics and supply chain needs.
CAPEX:
A term used to
describe the monetary requirements (CAPital EXPenditure) of an initial
investment in new machines or equipment.
Capital:
The resources,
or money, available for investing in assets that produce output.
Car supply
charge: A
railroad charge for a shipper’s exclusive use of special equipment.
Cargo:
A product
shipped in an aircraft, railroad car, ship, barge, or truck.
Carload Lot:
A
shipment that qualifies for a reduced freight rate because it is greater than a
specified minimum weight. Since carload rates usually include minimum rates per
unit of volume, the higher LCL (less than carload) rate may be less expensive
for a heavy but relatively small shipment.
Carmack
Amendment:
An Interstate
Commerce Act amendment that delineates the liability of common carriers and the
bill of lading provision.
Carousel:
Carousels
are a technology used to store items for eventual picking or retrieval. There
are two primary types of carousels and one related technology, all of which
operate under some form of computer control. Since the late 1990s, carousels
have been placed under the more general category of AS/RS.
Carrier:
A firm which
transports goods or people via land, sea or air.
Cartel:
A group of
companies that agree to cooperate, rather than compete, in producing a product
or service, thus limiting or regulating competition.
Case Code:
The UPC
number for a case of product. The UPC case code is different from the UPC item
code. This is sometimes referred to as the “Shipping Container Symbol” or ITF-14
code.
Cash-to-Cash
Cycle Time:
The time it takes
for cash to flow back into a company after it has been spent for raw materials.
Synonym: Cash Conversion Cycle.
Calculation:
Total
Inventory Days of Supply + Days of Sales Outstanding - Average Payment Period
for Material in days
Cash Conversion
Cycle: 1)
In retailing, the
length of time between the sale of products and the cash payments for a
company’s resources.
2)
In manufacturing, the length of time from the
purchase of raw materials to the collection of accounts receivable from
customers for the sale of products or services.
Also see:
Cash-to-Cash Cycle Time
Catalog
Channel:
A call center or order processing facility that receives orders directly from
the customer based on defined catalog offerings and ships directly to the
customer.
Categorical
Plan: A
method of selecting and evaluating suppliers that considers input from many
departments and functions within the buyer’s organization and systematically
categorizes that input. Engineering, production, quality assurance, and other
functional areas evaluate all suppliers for critical factors within their scope
of responsibility. For example, engineering would develop a category evaluating
suppliers’ design flexibility. Rankings are developed across categories, and
performance ratings are obtained and supplier selections are made.
Also see:
Weighted-Point Plan
Category
Management:
The management of
product categories as strategic business units. The practice empowers a category
manager with full responsibility for the assortment decisions, inventory levels,
shelf-space allocation, promotions and buying. With this authority and
responsibility, the category manager is able to judge more accurately the
consumer buying patterns, product sales and market trends of that category.
Cause and
Effect Diagram:
In quality
management, a structured process used to organize ideas into logical groupings.
Used in brainstorming and problem solving exercises. Also known as Ishikawa or
fish bone diagram.
Causal
Forecast:
In forecasting, a
type of forecasting that uses cause-and-effect associations to predict and
explain relationships between the independent and dependent variables. An
example of a causal model is an econometric model used to explain the demand for
housing starts based on consumer base, interest rates, personal incomes, and
land availability.
CBT:
See
Computer-Based Training.
Cell:
A manufacturing
or service unit consisting of a number of workstations, and the materials
transport mechanisms and storage buffers that interconnect them.
Cellular
manufacturing:
A manufacturing
approach in which equipment and workstations are arranged to facilitate
small-lot, continuous-flow production. In a manufacturing "cell," all operations
necessary to produce a component or subassembly are performed in close
proximity, thus allowing for quick feedback between operators when quality
problems and other issues arise. Workers in a manufacturing cell typically are
cross-trained and, therefore, able to perform multiple tasks as needed.
Center-of-Gravity Approach:
A supply chain
planning methodology for locating distribution centers at approximately the
location representing the minimum transportation costs between the plants, the
distribution centers, and the markets.
Centralized
authority:
Management authority
to make decisions is restricted to few managers.
Centralized
Dispatching:
The organization of
the dispatching function into one central location. This structure often
involves the use of data collection devices for communication between the
centralized dispatching function, which usually reports to the production
control department, and the shop manufacturing departments.
Centralized
Inventory Control:
Inventory decision
making (for all SKUs) exercised from one office or department for an entire
company.
Certificate of
Analysis (COA):
A certification of
conformance to quality standards or specifications for products or materials. It
may include a list or reference of analysis results and process information. It
is often required for transfer of the custody/ ownership/title of materials.
Certificate of
Compliance:
A supplier’s
certification that the supplies or services in question meet
specified-requirements.
Certificate of
origin:
An international business document that certifies the country of origin of the
shipment.
Certificate of
public convenience and necessity:
The grant of operating authority that is given to
common carriers. A carrier must prove that a public need exists and that the
carrier is fit, willing, and able to provide the needed service. The certificate
may specify the commodities to be hauled, the area to be served, and the routes
to be used.
Certified
Supplier:
A status awarded to
a supplier who consistently meets predetermined quality, cost, delivery,
financial, and count objectives. Incoming inspection may not be required.
Certificated
carrier:
A for-hire air carrier that is subject to economic regulation and requires an
operating certification to provide service.
CFD:
See
Continuous Flow Distribution
CGMP:
See
Current Good Manufacturing Practice.
Chain of
Customers:
The sequence of
customers who in turn consume the output of each other, forming a chain. For
example, individuals are customers of a department store, which in turn is the
customer of a producer, who is the customer of a material supplier.
Chain reaction:
A chain
of events described by W. Edwards Deming: improve quality, decrease costs,
improve productivity, increase market with better quality and lower price, stay
in business, provide jobs and provide more jobs.
Challenge and
Response:
A method of user
authentication. The user enters an ID and password and, in return, is issued a
challenge by the system. The system compares the user's response to the
challenge to a computed response. If the responses match, the user is allowed
access to the system. The system issues a different challenge each time. In
effect, it requires a new password for each logon.
Champion:
A
business leader or senior manager who ensures that resources are available for
training and projects, and who is involved in project tollgate reviews; also an
executive who supports and addresses Six Sigma organizational issues.
Change agent:
An
individual from within or outside an organization who facilitates change within
the organization. May or may not be the initiator of the change effort.
Change
Management:
The business process
that coordinates and monitors all changes to the business processes and
applications operated by the business as well as to their internal equipment,
resources, operating systems, and procedures. The change management discipline
is carried out in a way that minimizes the risk of problems that will affect the
operating environment and service delivery to the users.
Change Order:
A formal
notification that a purchase order or shop order must be modified in some way.
This change can result from a revised quantity, date, or specification by the
customer; an engineering change; a change in inventory requirement date; etc.
Changeover:
Process
of making necessary adjustments to change or switchover the type of products
produced on a
manufacturing line.
Changeovers usually lead to downtime and for the most part companies try to
minimize changeover time to help reduce costs.
Channel:
1) A method
whereby a business dispenses its product, such as a retail or distribution
channel, call center or web based electronic storefront. 2) A push technology
that allows users to subscribe to a website to browse offline, automatically
display updated pages on their screen savers, and download or receive
notifications when pages in the website are modified. Channels are available
only in browsers that support channel definitions, such as Microsoft Internet
Explorer version 4.0 and above.
Channel
Conflict:
This occurs when
various sales channels within a company's supply chain compete with each other
for the same business. An example is where a retail channel is in competition
with a web based channel set up by the company.
Channel
Partners:
Members of a supply
chain (i.e. suppliers, manufacturers, distributors, retailers, etc.) who work in
conjunction with one
another to manufacture, distribute, and sell a specific product.
Channels of
Distribution:
Any series of firms
or individuals that participates in the flow of goods and services from the raw
material supplier and producer to the final user or consumer.
Also see:
Distribution Channel
Charging area:
A
warehouse area where a company maintains battery chargers and extra batteries to
support a fleet of
electrically powered
materials handling equipment. The company must maintain this area in accordance
with government safety regulations.
Chock:
A wedge, usually
made of hard rubber or steel, that is firmly placed under the wheel of a
trailer, truck, or boxcar to stop it from rolling.
CI:
See
Continuous Improvement
CIF:
See
Cost, Insurance, Freight.
City driver:
A motor
carrier driver who drives a local route as opposed to a long-distance, intercity
route.
Civil
Aeronautics Board:
A federal regulatory
agency that implemented economic regulatory controls over air carriers.
CL:
Carload rail service
requiring shipper to meet minimum weight.
Claim:
A charge made
against a carrier for loss, damage, delay, or overcharge.
Class I
carrier:
A classification of regulated carriers based upon annual operating
revenues—motor carriers of property: > or = $5 million; railroads: > or =$50
million; motor carriers of passengers: > or =$3 million.
Class II
carrier:
A classification of regulated carriers based upon annual operating
revenues—motor carriers of property: $1-$5 million; railroads: $10-$50 million;
motor carriers of passengers: < or = $3 million.
Class III
carrier:
A classification of regulated carriers based upon annual operating
revenues—motor carriers of property: < or = $1 million; railroads: < or = $10
million.
Classification:
An
alphabetical listing \of commodities, the class or rating into which the
commodity is placed, and the
minimum weight
necessary for the rate discount; used in the class rate structure.
Classification
yard: A
railroad terminal area where rail cars are grouped together to form train units.
Class rate:
A rate
constructed from a classification and a uniform distance system. A class rate is
available for any product between any two points.
Clearinghouse:
A
conventional or limited purpose entity generally restricted to providing
specialized services, such as clearing funds or settling accounts.
Click-and-Mortar:
With reference to a
traditional brick-and-mortar company that has expanded its presence online. Many
brickand- mortar stores are now trying to establish an online presence but often
have a difficult time doing so for many reasons. Clickand-mortar is "the
successful combination of online and real world experience."
Clip Art:
A
collection of icons, buttons, and other useful image files, along with sound and
video files that can be inserted into documents/web pages.
Clipboard:
A
temporary storage area on a computer for cut or copied items.
CLCA:
See
Closed-loop corrective action.
CLM:
See
Council of Supply Chain Management Professionals.
Closed-loop
corrective action (CLCA):
A sophisticated engineering system designed to document,
verify and diagnose failures, recommend and initiate corrective action, provide
follow-up and maintain comprehensive statistical records.
Closed-loop
MRP: A
system built around material requirements planning that includes the additional
planning processes of production planning (sales and operations planning),
master production scheduling, and capacity requirements planning. Once this
planning phase is complete and the plans have been accepted as realistic and
attainable, the execution processes come into play. These processes include the
manufacturing control processes of input-output (capacity) measurement, detailed
scheduling and dispatching, as well as anticipated delay reports from both the
plant and suppliers, supplier scheduling, and so on. The term closed loop
implies not only that each of these processes is included in the overall system,
but also that feedback is provided by the execution processes so that the
planning can be kept valid at all times.
CMI:
See
Co-managed Inventory
CMM:
See
Capability Maturity Model
COA:
See
Certificate of Analysis
Coastal
carriers:
Water carriers that provide service along coasts serving ports on the Atlantic
or Pacific oceans or on the Gulf of Mexico
Co-destiny:
The
evolution of a supply chain from intra-organizational management to
inter-organizational management.
Co-Packer:
A
contract co-packer produces goods and/or services for other companies, usually
under the other company's label or name. Co-Packers are more frequently seen in
CPG and Foods.
Co-Managed
Inventory (CMI):
A form of continuous
replenishment in which the manufacturer is responsible for replenishment of
standard merchandise, while the retailer manages the replenishment of
promotional merchandise.
Code:
A numeric, or
alphanumeric, representation of text for exchanging commonly used information.
For example: commodity codes, carrier codes,
Codifying:
The
process of detailing a new standard.
COGS:
See
Cost of Goods Sold
Collaboration:
Joint
work and communication among people and systems – including business partners,
suppliers, and
customers – to
achieve a common business goal.
Collaborative
Planning, Forecasting and Replenishment (CPFR): 1)
A collaboration
process whereby supply chain trading partners can jointly plan key supply chain
activities from production and delivery of raw materials to production and
delivery of final products to end customers. Collaboration encompasses business
planning, sales forecasting, and all operations required to replenish raw
materials and finished goods.
2)
A process philosophy for facilitating
collaborative communications. CPFR is considered a standard, endorsed by the
Voluntary Inter-industry Commerce Standards.
Combined Lead
Time:
See
Cumulative Lead Time
Commercial
zone: The
area surrounding a city or town to which rates quoted for the city or town also
apply; the area is defined by the ICC.
Committee of
American Steamship Lines:
An industry association representing subsidized U.S. Flag
steamship firms.
Committed
Capability:
The portion of the
production capability that is currently in use, or is scheduled for use.
Commodities
clause: A
clause that prohibits railroads from hauling commodities that they produced,
mined, owned, or had an interest in.
Commodity:
An item
that is traded in commerce. The term usually implies an undifferentiated product
competing primarily on price and availability.
Commodity
Buying:
Grouping like parts or materials under one buyer’s control for the procurement
of all requirements to support production.
Commodity
Procurement Strategy:
The purchasing plan
for a family of items. This would include the plan to manage the supplier base
and solve problems.
Commodity rate:
A rate
for a specific commodity and its origin-destination.
Common Carrier:
Transportation available to the public that does not provide special treatment
to any one party and is regulated as to the rates charged, the liability
assumed, and the service provided. A common carrier must obtain a certificate of
public convenience and necessity from the Federal Trade Commission for
interstate traffic.
Common carrier
duties:
Common carriers are required to serve, deliver, charge reasonable rates, and not
discriminate.
Common cost:
A cost
that cannot be directly assignable to particular segments of the business but
that is incurred for the business as a whole.
Commuter:
An exempt for-hire air carrier that publishes a time schedule on specific
routes; a special type of air taxi.
Communication
Protocol:
The method by which
two computers coordinate their communications. BISYNC and MNP are two examples.
Company
Culture:
A system of values, beliefs, and behaviors inherent in a company. To optimize
business performance, top management must define and create the necessary
culture.
Comparative
advantage:
A principle based on
the assumption that an area will specialize in the production of goods for which
it has the greatest advantage or least comparative disadvantage.
Competitive
Advantage:
Value created by a
company for its customers that clearly distinguishes it from the competition,
and provides its customers a reason to remain loyal.
Competitive
Benchmarking:
Benchmarking a
product or service against competitors.
Also see: Benchmarking
Competitive
Bid: A
price/service offering by a supplier that must compete with offerings from other
suppliers.
Complete &
On-Time Delivery (COTD):
A measure of customer service. All items on any given order
must be delivered on time for the order to be considered as complete and on time
Complete
Manufacture to Ship Time:
Average time from
when a unit is declared shippable by manufacturing until the unit actually ships
to a customer.
Compliance:
Meaning
that products, services, processes and/or documents comply with requirements.
Compliance
Checking:
The function of EDI
processing software that ensures that all transmissions contain the mandatory
information demanded by the EDI standard. Compares information sent by an EDI
user against EDI standards and reports exceptions. Does not ensure that
documents are complete and fully accurate, but does reject transmissions with
missing data elements or syntax errors.
Compliance
Monitoring:
A check done by the
VAN/third party network or the translation software to ensure the data being
exchanged is in the correct format for the standard being used.
Compliance
Program:
A method by which two or more EDI trading partners periodically report
conformity to agreed upon standards of control and audit. Management produces
statements of compliance, which briefly note any exceptions, as well as
corrective action planned or taken, in accordance with operating rules. Auditors
produce an independent and objective statement of opinion on management
statements.
Component:
Material
that will contribute to a finished product but is not the finished product
itself. Examples would include tires for an automobile, power supply for a
personal computer, or a zipper for a ski parka. Note that what is a component to
the manufacturer may be considered the finished product of their supplier.
Computer-aided
design (CAD)—Computer-based
systems for product design that may incorporate analytical and “what if”
capabilities to optimize product designs. Many CAD systems capture geometric and
other product characteristics for engineering data-management systems,
producibility and cost analysis, and performance analysis. In many cases,
CAD-generated data
Computer Aided
Engineering (CAE):
The use of computers
to model design options to stimulate their performance.
Computer-aided
manufacturing (CAM):
Computerized systems
in which manufacturing instructions are downloaded to automated equipment or to
operator workstations.
Computer-aided
process planning (CAPP):
Software-based systems that aid manufacturing engineers in
creating a process plan to manufacture a product who’s geometric, electronic,
and other characteristics have been captured in a CAD database.
CAPP systems address
such manufacturing criteria as target costs, target lead times, anticipated
production volumes, availability of
Computer-Based
Training (CBT):
Training that is
delivered via computer workstation and includes all training and testing
materials.
Computer-integrated manufacturing (CIM):
A variety of
approaches in which computer systems communicate or interoperate over a
local-area network. Typically, CIM systems link management functions with
engineering, manufacturing, and support operations. In the factory, CIM systems
may control the sequencing of production operations, control operation of
automated equipment and conveyor systems, transmit manufacturing instructions,
capture data at various stages of the manufacturing or assembly process,
facilitate tracking and analysis of test results and operating parameters, or a
combination of these.
Computerized
maintenance management systems (CMMS):
Software-based systems that analyze operating
conditions of production equipment -- vibration, oil analysis, heat, etc. -- and
equipment-failure data, and apply that data to the scheduling of maintenance and
repair inventory orders and routine maintenance functions. A CMMS prevents
unscheduled machine downtime and optimizes a plant's ability to process product
at optimum volumes and quality levels.
Computerized
process simulation:
Use of computer
simulation to facilitate sequencing of production operations, analysis of
production flows, and layout of manufacturing facilities.
Computerized
SPC:
See
Statistical process control
Concurrent
engineering:
A cross-functional,
team-based approach in which the product and the manufacturing process are
designed and configured within the same time frame, rather than sequentially.
Ease and cost of manufacturability, as well as customer needs, quality issues,
and product-life-cycle costs are taken into account earlier in the development
cycle. Fully configured concurrent engineering teams include representation from
marketing, design engineering, manufacturing engineering, and purchasing, as
well as supplier––and even customer––companies.
Configuration:
The
arrangement of components as specified to produce an assembly.
Configure/Package-to-Order:
A process where the
trigger to begin manufacture, final assembly or packaging of a product is an
actual customer order or release, rather than a market forecast. In order to be
considered a Configure-to-Order environment, less than 20% of the value-added
takes place after the receipt of the order or release, and virtually all
necessary design and process documentation is available at time of order
receipt.
Confirmation:
With
regards to EDI, a formal notice (by message or code) from a electronic mailbox
system or EDI server indicating that a message sent to a trading partner has
reached its intended mailbox or been retrieved by the addressee.
Confirming
Order: A
purchase order issued to a supplier, listing the goods or services and terms of
an order placed orally or otherwise before the usual purchase document.
Conformance:
An
affirmative indication or judgment that a product or service has met the
requirements of a relevant
specification,
contract, or regulation. Synonym: Compliance.
Conrail:
The Consolidated
Rail Corporation established by the Regional Reorganization Act of 1973 to
operate the bankrupt Penn Central Railroad and other bankrupt railroads in the
Northeast; funding was provided by the 4-R Act of 1976.
Consensus:
A state
in which all the members of a group support an action or decision, even if some
of them don't fully agree with it.
Consignee:
The party
to whom goods are shipped and delivered. The receiver of a freight shipment.
Consignment:
1) A
shipment that is handled by a common carrier. 2) The process of a supplier
placing goods at a customer location without receiving payment until after the
goods are used or sold.
Also see:
Consignment Inventory
Consignment
Inventory:
1) Goods or product
that are paid for when they are sold by the reseller, not at the time they are
shipped to the reseller. 2) Goods or products which are owned by the vendor
until they are sold to the consumer.
Consignor:
The party
who originates a shipment of goods (shipper). The sender of a freight shipment,
usually the seller.
Consolidation:
Combining
two or more shipments in order to realize lower transportation rates. Inbound
consolidation from vendors is called make-bulk consolidation; outbound
consolidation to customers is called break-bulk consolidation.
Consortium:
A group
of companies that work together to jointly produce a product, service, or
project.
Constraint:
A
bottleneck, obstacle or planned control that limits throughput or the
utilization of capacity.
Consumer-Centric Database:
Database with
information about a retailer’s individual consumers, used primarily for
marketing and promotion.
Consumer
packaged goods (CPG):
Consumable goods
such as food and beverages, footwear and apparel, tobacco, and cleaning
products. In general, CPGs are things that get used up and have to be replaced
frequently, in contrast to items that people usually keep for a long time, such
as cars and furniture.
Consuming the
Forecast:
The process of
reducing the forecast by customer orders or other types of actual demands as
they are received. The adjustments yield the value of the remaining forecast for
each period.
Container:
1) A
“box,” typically 10 to 40 feet long, which is primarily used for ocean freight
shipments. For travel to and from ports, containers are loaded onto truck
chassis or on railroad flatcars. 2) The packaging, such as a carton, case, box,
bucket, drum, bin, bottle, bundle, or bag, that an item is packed and shipped
in.
Container
Security Initiative (CSI):
U.S. Customs program
to prevent global containerized cargo from being exploited by terrorists.
Designed to enhance security of sea cargo container.
Containerization:
A shipment method in
which commodities are placed in containers, and after initial loading, the
commodities per se are not re-handled in shipment until they are unloaded at the
destination.
Contingency
planning:
Preparing to deal
with calamities (e.g., floods) and non-calamitous situations (e.g., strikes)
before they occur
Continuous Flow
Distribution (CFD):
The streamlined pull
of products in response to customer requirements while minimizing the total
costs of distribution.
Continuous-flow, fixed-path equipment:
Materials handling devices that include conveyors and drag lines.
Continuous
Improvement (CI):
A structured
measurement driven process that continually reviews and improves performance.
Continuous
Process Improvement (CPI):
A never-ending
effort to expose and eliminate root causes of problems; small-step improvement
as opposed to big-step improvement. Synonym: Continuous Improvement.
Also see:
Kaizen
Continuous
Replenishment:
Continuous
Replenishment is the practice of partnering between distribution channel members
that changes the traditional replenishment process from distributor-generated
purchase orders, based on economic order quantities, to the replenishment of
products based on actual and forecasted product demand.
Continuous
Replenishment Planning (CRP):
A program that triggers the manufacturing and
movement of product through the supply chain when the identical product is
purchased by an end user.
Contract:
An
agreement between two or more competent persons or companies to perform or not
to perform specific acts or services or to deliver merchandise. A contract may
be oral or written. A purchase order, when accepted by a supplier, becomes a
contract. Acceptance may be in writing or by performance, unless the purchase
order requires acceptance in writing.
Contract
Administration:
Managing all aspects
of a contract to guarantee that the contractor fulfills his obligations.
Contract
Carrier:
A carrier that does not serve the general public, but provides transportation
for hire for one or a limited number of shippers under a specific contract.
Contribution:
The
difference between sales price and variable costs. Contribution is used to cover
fixed costs and profits.
Contribution
Margin:
An amount equal to the difference between sales revenue and variable costs.
Controlled
Access:
Referring to an area within a warehouse or yard that is fenced and gated. These
areas are typically used to store high-value items and may be monitored by
security cameras
Conveyor:
A
materials handling device that moves freight from one area to another in a
warehouse. Roller conveyors make sue of gravity, whereas belt conveyors use
motors.
Cookie:
A computer term.
A piece of information from your computer that references what the user has
clicked on, or references information that is stored in a text file on the
user's hard drive (such as a username). Another way to describe cookies is to
say they are tiny files containing information about individual computers that
can be used by advertisers to track online interests and tastes. Cookies are
also used in the process of purchasing items on the Web. It is because of the
cookie that the "shopping cart" technology works. By saving in a text file, the
name, and other important information about an item a user "clicks" on as they
move through a shopping Website, a user can later go to an order form, and see
all the items they selected, ready for quick and easy processing.
Cooperative
associations:
Groups of firms or
individuals having common interests: agricultural cooperative associations may
haul up to 25% of their total interstate tonnage in nonfarm, nonmenber goods in
movements incidental and necessary to their primary business.
Co-opetition:
A
combination of cooperation and competition that offers the counter intuitive
possibility for rivals to benefit from each other's seemingly competitive
activities. In short, there are circumstances where having more players to cut
the pie means bigger pieces of pie for everyone. An example would be found in
the group buying setting where its use refers to the activity of multiple,
normally competitive buying group members leveraging each other’s buying power
to gain reduced pricing.
Coordinated
transportation:
Two or more carriers
of different modes transporting a shipment.
Co-product:
The term
co-product is used to describe multiple items that are produced simultaneously
during a production run. Co-products are often used to increase yields in
cutting operations such as die cutting or sawing when it is found that scrap can
be reduced by combining multiple-sized products in a single production run.
Co-products are also used to reduce the frequency of machine setups required in
these same types of operations. Co-products, also known as byproducts, are also
common in process manufacturing such as in chemical plants. Although the concept
of co-products is fairly simple, the programming logic required to provide for
planning and processing of co-products is very complicated.
Core
Competency:
Bundles of skills or
knowledge sets that enable a firm to provide the greatest level of value to its
customers in a way that is difficult for competitors to emulate and that
provides for future growth. Core competencies are embodied in the skills of the
workers and in the organization. They are developed through -collective
-learning, communication, and commitment to work across levels and functions in
the organization and with the customers and suppliers. For example, a core
competency could be the capability of a firm to coordinate and harmonize diverse
production skills and multiple technologies. To illustrate, advanced casting
processes for making steel require the integration of machine design with
sophisticated sensors to track temperature and speed, and the sensors require
mathematical modeling of heat transfer. For rapid and effective development of
such a process, materials scientists must work closely with machine designers,
software engineers, process specialists, and operating personnel. Core
competencies are not directly related to the product or market.
Core Process:
That
unique capability that is central to a company’s competitive strategy.
Cost
Accounting:
The branch of
accounting that is concerned with recording and reporting business operating
costs. It includes the reporting of costs by departments, activities, and
products.
Cost
Allocation:
In accounting, the
assignment of costs that cannot be directly related to production activities via
more
measurable means,
e.g., assigning corporate expenses to different products via direct labor costs
or hours.
Cost Center:
In
accounting, a sub-unit in an organization that is responsible for costs.
Cost Driver:
In
accounting, any situation or event that causes a change in the consumption of a
resource, or influences quality or cycle time. An activity may have multiple
cost drivers. Cost drivers do not necessarily need to be quantified; however,
they strongly influence the selection and magnitude of resource drivers and
activity drivers.
Cost Driver
Analysis:
In cost accounting,
the examination, quantification, and explanation of the effects of cost drivers.
The results are often used for continuous improvement programs to reduce
throughput times, improve quality, and reduce cost.
Cost Element:
In cost
accounting, the lowest level component of a resource, activity, or cost object.
Cost,
Insurance, Freight (CIF):
A freight term
indicating that the seller is responsible for cost, the marine insurance, and
the freight charges on an ocean shipment of goods.
Cost
Management:
The management and
control of activities and drivers to calculate accurate product and service
costs, improve business processes, eliminate waste, influence cost drivers, and
plan operations. The resulting information will have utility in setting and
evaluating an organization’s strategies.
Cost of
Capital:
The cost to borrow or invest capital.
Cost of Goods
Sold (COGS):
The amount of direct
materials, direct labor, and allocated overhead associated with products sold
during a given period of time, determined in accordance with Generally Accepted
Accounting Principles (GAAP)
Cost of lost
sales:
The forgone profit associated with a stockout.
Cost trade-off:
The
interrelationship among system variables indicates that a change in one variable
has cost impact upon other variables. A cost reduction in one variable may be at
the expense of increased cost for other variables, and vice versa.
Cost Variance:
In cost
accounting, the difference between what has been budgeted for an activity and
what it actually costs.
COTD:
See
Complete & On-Time Delivery
Courier
service:
A fast, door-to-door service for high-valued goods and documents; firms usually
limit service to shipments of 50 pounds or less.
Council of
Logistics Management (CLM):
See Council
of Supply Chain Management Professionals.
Council of
Supply Chain Management Professionals (CSCMP):
The CSCMP is a not-for-profit professional
business organization consisting of individuals throughout the world who have
interests and/or responsibilities in logistics and supply chain management, and
the related functions that make up these professions. Its purpose is to enhance
the development of the logistics and supply chain management professions by
providing these individuals with educational opportunities and relevant
information through a variety of programs, services, and activities.
CPFR:
See
Collaborative Planning Forecasting and Replenishment
CPG:
See
Consumer Packaged Goods
CPI:
See
Continuous Process Improvement
Credit Level:
The
amount of purchasing credit a customer has available. Usually defined by the
internal credit department and reduced by any existing unpaid bills or open
orders.
Critical
Differentiators:
This is what makes
an idea, product, service or business model unique.
Critical value
analysis:
A modified ABC
analysis in which a subjective value of criticalness is assigned to each item in
the inventory.
Cross Docking:
A
distribution system in which merchandise received at the warehouse or
distribution center is not put away, but instead is readied for shipment to
retail stores. Cross docking requires close synchronization of all inbound and
outbound shipment movements. By eliminating the put-away, storage and selection
operations, it can significantly reduce distribution costs.
Cross
functional:
A term used to
describe a process or an activity that crosses the boundary between functions. A
cross functional team consists of individuals from more than one organizational
unit or function.
Cross Sell:
The
practice of attempting to sell additional products to a customer during a sales
call. For example, when the CSR presents a camera case and accessories to a
customer that is ordering a camera
Cross-Shipment:
Material
flow activity where materials are shipped to customers from a secondary shipping
point rather than from a preferred shipping point.
Cross-Subsidy:
In cost
accounting, the inequitable assignment of costs to cost objects, which leads to
over costing or under costing them relative to the amount of activities and
resources actually consumed. This may result in poor management decisions that
are inconsistent with the economic goals of the organization.
CRP:
See
Continuous Replenishment Program
Critical
Success Factor (CSF):
Those activities
and/or processes that must be completed and/or controlled to enable a company to
reach its goals.
CRM:
See
Customer Relationship Management
CSCMP:
See
Council of Supply Chain Management Professionals.
CSF:
See
Critical Success Factor
CSI:
See
Container Security Initiative
CSR:
See
Customer Service Representative
CTP:
See
Capacity to Promise
C-TPAT:
See
Customs-Trade Partnership against Terrorism
Cube:
The volume of
the shipment or package (the product of the length x width x depth).
Cubage:
Cubic volume of
space being used or available for shipping or storage.
Cube
Utilization:
In warehousing, a
measurement of the utilization of the total storage capacity of a vehicle or
warehouse.
Cubic Space:
In
warehousing, a measurement of space available or required in transportation and
warehousing.
Cumulative
Available-to-Promise:
A calculation based
on the available-to-promise (ATP) figure in the master schedule. Two methods of
computing the cumulative available-to-promise are used, with and without
lookahead calculation. The cumulative with lookahead ATP equals the ATP from the
previous period plus the MPS of the period minus the backlog of the period minus
the sum of the differences between the backlogs and MPSs of all future periods
until, but not to include, the period where point production exceeds the
backlogs. The cumulative without lookahead procedure equals the ATP in the
previous period plus the MPS, minus the backlog in the period being considered.
Also see: Available-to-Promise
Cumulative Lead
Time: The
total time required to source components, build and ship a product.
Cumulative
Source/Make Cycle Time:
The cumulative internal and external lead time to manufacture
shippable product, assuming that there is no inventory on-hand, no materials or
parts on order, and no prior forecasts existing with suppliers. (An element of
Total Supply Chain Response Time)
Calculation:
The critical
path along the following elements: Total Sourcing Lead Time, Manufacturing Order
Release to Start
Manufacturing, Total Manufacture Cycle Time (Make-to-Order, Engineer-to-Order,
Configure/Package-to-Order) or
Manufacture
Cycle Time (Make-to-Stock), Complete Manufacture to Ship Time
Note: Determined
separately for Make-to-Order, Configure/Package-to-Order, Engineer-to-Order, and
Make-to-Stock
products
Currency
adjustment factor (CAF):
An added charge
assessed by water carriers for currency value changes.
Current good
manufacturing practices (CGMP):
Regulations enforced by the U.S. Food and Drug
Administration for food and chemical manufacturers and packagers.
Customer:
1) In
distribution, the Trading Partner or reseller, i.e. Wal-Mart, Safeway, or CVS.
2) In Direct-to-Consumer, the end customer or user.
Customer
Acquisition or Retention:
The rate by which
new customers are acquired, or existing customers are retained. A key selling
point to potential marquis partners.
Also see:
Marquis Partner
Customer
Driven:
The end user, or customer, motivates what is produced or how it is delivered.
Customer
Facing:
Those personnel whose jobs entail actual contact with the customer.
Customer
Interaction Center:
See Call
Center
Customer Order:
An order
from a customer for a particular product or a number of products. It is often
referred to as an actual demand to distinguish it from a forecasted demand.
Customer/Order
Fulfillment Process:
A series of
customers’ interactions with an organization through the order filling process,
including product/service design, production and delivery, and order status
reporting.
Customer
Profitability:
The practice of
placing a value on the profit generated by business done with a particular
customer.
Customer
Receipt of Order to Installation Complete:
Average lead-time from receipt of goods at the
customer to the time when installation (if applicable) is complete, including
the following sub-elements: time to get product up and running, and product
acceptance by customer. (An element of Order Fulfillment Lead Time)
Note: Determined
separately for Make-to-Order, Configure/Package-to-Order, Engineer-to-Order, and
Make-to-Stock products.
Customer
Relationship Management (CRM):
This refers to information systems that help
sales and marketing functions, as opposed to the ERP (Enterprise Resource
Planning), which is for back-end integration.
Customer
Segmentation:
Dividing customers
into groups based on specific criteria, such as products purchased, customer
geographic location, etc.
Customer
service:
Activities between the buyer and seller that enhance or facilitate the sale or
use of the seller’s products or services.
Customer
Service Ratio:
See Percent
of Fill
Customer
Service Representative (CSR):
The individual who
provides customer support via telephone in a call center environment.
Customer
Signature/Authorization to Order Receipt:
Average lead-time from when a customer
authorizes an order to the time that that order is received and order entry can
commence. (An element of Order Fulfillment Lead Time)
Note: Determined
separately for Make-to-Order, Configure/Package-to-Order, Engineer-to-Order, and
Make-to-Stock
products.
Customer-Supplier Partnership:
A long-term
relationship between a buyer and a supplier characterized by teamwork and mutual
confidence. The supplier is considered an extension of the buyer’s organization.
The partnership is based on several commitments. The buyer provides long-term
contracts and uses fewer suppliers. The supplier implements quality assurance
processes so that incoming inspection can be minimized. The supplier also helps
the buyer reduce costs and improve product and process designs.
Customization:
Creating
a product from existing components into an individual order. Synonym: Build to
Order.
Customs House
Broker: A
business firm that oversees the movement of international shipments through
customs and ensures that the documentation accompanying a shipment is complete
and accurate.
Customs-Trade
Partnership against Terrorism (C-TPAT):
A joint government/business initiative to build
cooperative relationships that strengthen overall supply chain and border
security. The voluntary program is designed to share information that will
protect against terrorists' compromising the supply chain.
CWT:
See
Hundredweight
Cycle Counting:
An
inventory accuracy audit technique where inventory is counted on a cyclic
schedule rather than once a year. A cycle inventory count is usually taken on a
regular, defined basis (often more frequently for high-value or fast-moving
items and less frequently for low-value or slow-moving items). Most effective
cycle counting systems require the counting of a certain number of items every
workday with each item counted at a prescribed frequency. The key purpose of
cycle counting is to identify items in error, thus triggering research,
identification, and elimination of the cause of the errors.
Cycle
inventory:
An inventory system
where counts are performed continuously, often eliminating the need for an
annual overall inventory. It is usually set up so that A items are counted
regularly (i.e., every month), B items are counted semiregularly (every quarter
or six months), and C items are counted perhaps only once a year.
Cycle Time:
The
amount of time it takes to complete a business process.
Cycle Time to
Process Excess Product Returns for Resale:
The total time to process goods returned as
Excess by customer or distribution centers, in preparation for resale. This
cycle time includes the time a Return Product Authorization (RPA) is created to
the time the RPA is approved, from Product Available for Pick-up to Product
Received and from Product Receipt to Product Available for use.
Cycle Time to
Process Obsolete and End-of-Life Product Returns for Disposal:
The total time to
process goods returned as Obsolete & End of Life to actual Disposal. This cycle
time includes the time a Return Product Authorization (RPA) is created to the
time the RPA is approved, from Product Available for Pick-up to Product Received
and from Product Receipt to Product Disposal/Recycle.
Cycle Time to
Repair or Refurbish Returns for Use:
The total time to process goods returned for
repair or refurbishing. This cycle time includes the time a Return Product
Authorization (RPA) is created to the time the RPA is approved, from Product
Available for Pick-up to Product Received, from Product Receipt to Product
Repair/Refurbish begin, and from Product Repair/Refurbish begin to Product
Available for use.
Cyclical
Demand: A
situation where demand patterns for a product run in cycles driven by
seasonality or other predictable factors.
D
Dashboard:
A
performance measurement tool used to capture a summary of the Key Performance
Indicators (KPIs)/metrics of a company. Metrics dashboards/scorecards should be
easy to read and usually have “red, yellow, green” indicators to flag when the
company is not meeting its metrics targets. Ideally, a dashboard/scorecard
should be cross-functional in nature and include both financial and
non-financial measures. In addition, scorecards should be reviewed regularly –
at least on a monthly basis and weekly in key functions such as manufacturing
and distribution where activities are critical to the success of a company. The
dashboard/scorecards philosophy can also be applied to external supply chain
partners such as suppliers to ensure that supplier’s objectives and practices
align. Synonym: Scorecard.
Data
Communications:
The electronic
transmission of data, usually in computer readable form, using a variety of
transmission vehicles and paths.
Data
Dictionary:
Lists the data
elements for which standards exist. The Joint Electronic Document Interchange
(JEDI)
committee developed
a data dictionary that is employed by many EDI users.
Data
Interchange Standards Association (DISA):
The secretariat, which provides clerical and
administrative support to the ASC X12 Committee.
Data Mining:
The
process of studying data to search for previously unknown relationships. This
knowledge is then applied to achieving specific business goals.
Data Warehouse:
A
repository of data that has been specially prepared to support decision-making
applications. Synonym: Decision-Support Data.
Database:
Data
stored in computer-readable form, usually indexed or sorted in a logical order
by which users can find a particular item of data they need.
Date Code:
A label
on products with the date of production. In food industries, it is often an
integral part of the lot number.
Days of Supply:
Measure
of quantity of inventory-on-hand, in relation to number of days for which usage
which will be covered. For example, if a component is consumed in manufacturing
at the rate of 100 per day, and there are 1,585 units available onhand, this
represents 15.85 days supply.
Days Sales
Outstanding (DSO):
Measurement of the
average collection period (time from invoicing to cash receipt).
Calculation
[5 Point Annual Gross Accounts Receivables] / [Total Annual Sales / 365]
DBR:
See
Drum-Buffer-Rope
DC:
See
Distribution Center
Dead on Arrival
(DOA): A
term used to describe products which are not functional when delivered. Synonym:
Defective.
Deadhead:
The
return of an empty transportation container to its point of origin. See:
backhauling.
Decentralized
authority:
A situation in which
management decision-making authority is given to managers at many levels in the
organizational hierarchy.
Decision
Support System (DSS):
Software that speeds
access and simplifies data analysis, queries, etc. within a database management
system.
Decomposition:
A method
of forecasting where time series data are separated into up to three components:
trend, seasonal, and cyclical; where trend includes the general horizontal
upward or downward movement over time; seasonal includes a recurring demand
pattern such as day of the week, weekly, monthly, or quarterly; and cyclical
includes any repeating, non-seasonal pattern. A fourth component is random, that
is, data with no pattern. The new forecast is made by projecting the patterns
individually determined and then combining them.
Dedicated
Contract Carriage:
A third-party
service that dedicates equipment (vehicles) and drivers to a single customer for
its exclusive use on a contractual basis.
Defective goods
inventory (DGI):
Those items that
have been returned, have been delivered damaged and have a freight claim
outstanding, or have been damaged in some way during warehouse handling.
Delimiters:
1) ASCII,
characters which are used to separate data elements within a data stream.
2)
EDI, two levels
of separators and a terminator that are integrals part of a transferred data
stream. Delimiters are specified in the interchange header. From highest to
lowest level, the separators and terminator are segment terminator, data element
separator, and component element separator (used only in EDIFACT).
Delivery-Duty-Paid:
Supplier/manufacturer arrangement in which suppliers are responsible for the
transport of the goods they have produced, which is being sent to a
manufacturer. This responsibility includes tasks such as ensuring products get
through Customs.
Delivery
Performance to Commit Date:
The percentage of
orders that are fulfilled on or before the internal Commit date, used as a
measure of internal scheduling systems effectiveness. Delivery measurements are
based on the date a complete order is shipped or the ship-to date of a complete
order. A complete order has all items on the order delivered in the quantities
requested. An order must be complete to be considered fulfilled. Multiple line
items on a single order with different planned delivery dates constitute
multiple orders, and multiple planned delivery dates on a single line item also
constitute multiple orders.
Calculation:
[Total number of
orders delivered in full and on time to the scheduled commit date] / [Total
number of orders
delivered]
Delivery
Performance to Request Date:
The percentage of
orders that are fulfilled on or before the customer's requested date used as a
measure of responsiveness to market demand. Delivery measurements are based on
the date a complete order is shipped or the ship-to date of a complete order. A
complete order has all items on the order delivered in the quantities requested.
An order must be complete to be considered fulfilled. Multiple line items on a
single order with different planned delivery dates constitute multiple orders,
and multiple planned delivery dates on a single line item also constitute
multiple orders.
Calculation:
[Total number
of orders delivered in full and on time to the customer's request date] / [Total
number of orders delivered]
Delphi Method:
A
qualitative forecasting technique where the opinions of experts are combined in
a series of iterations. The results of each iteration are used to develop the
next, so that convergence of the experts’ opinions is obtained.
Delta Nu Alpha:
A professional association of transportation and traffic practitioners.
Demand Chain:
Another
name for the supply chain, with emphasis on customer or end-user demand pulling
materials and product through the chain.
Demand Chain
Management:
Same as supply chain
management, but with emphasis on consumer pull versus supplier push.
Demand
Management:
The proactive
compilation of requirements information regarding demand (i.e., customers,
sales, marketing, finance) and the firm's capabilities from the supply side
(i.e., supply, operations and logistics management); the development of a
consensus regarding the ability to match the requirements and capabilities; and
the agreement upon a synthesized plan that can most effectively meet the
customer requirements within the constraints imposed by supply chain
capabilities.
Demand
Planning:
The process of
identifying, aggregating, and prioritizing, all sources of demand for the
integrated supply chain of a product or service at the appropriate level,
horizon and interval.
The sales forecast
is comprised of the following concepts:
1. The
sales
forecasting level
is the focal point
in the corporate hierarchy where the forecast is needed at the most generic
level, i.e. Corporate forecast, Divisional forecast, Product Line forecast, SKU,
SKU by Location.
2. The
sales
forecasting time horizon
generally coincides
with the time frame of the plan for which it was developed, i.e. Annual, 1-5
years, 1- 6 months, Daily, Weekly, Monthly.
3. The
sales
forecasting time interval
generally coincides
with how often the plan is updated, i.e. Daily, Weekly, Monthly, and Quarterly.
Demand Planning
Systems:
The systems that assist in the process of identifying, aggregating, and
prioritizing, all sources of demand for the integrated supply chain of a product
or service at the appropriate level, horizon and interval.
Demand Pull:
The
triggering of material movement to a work center only when that work center is
ready to begin the next job. It in effect eliminates the queue from in front of
a work center, but it can cause a queue at the end of a previous work center.
Demand-Side
Analysis:
Techniques such as
market research, surveys, focus groups, and
performance/cost
modeling used to identify emerging technologies.
Demand Supply
Balancing:
The process of
identifying and measuring the gaps and imbalances between demand and resources
in order to determine how to best resolve the variances through marketing,
pricing, packaging, warehousing, outsource plans or some other action that will
optimize service, flexibility, costs, assets (or other supply chain
inconsistencies) in an iterative and collaborative environment.
Demand Time
Fence (DTF):
1) That point in
time inside of which the forecast is no longer included in total demand and
projected available inventory calculations; inside this point, only customer
orders are considered. Beyond this point, total demand is a combination of
actual orders and forecasts, depending on the forecast consumption technique
chosen. 2) In some contexts, the demand time fence may correspond to that point
in the future inside which changes to the master schedule must be approved by an
authority higher than the master scheduler. Note, however, that customer orders
may still be promised inside the demand time fence without higher authority
approval if there are quantities available-to-promise (ATP). Beyond the demand
time fence, the master scheduler may change the MPS within the limits of
established rescheduling rules, without the approval of higher authority. See:
planning time fence, time fence.
Deming Circle:
The
concept of a continuously rotating wheel of plan-do-check-action (PDCA) used to
show the need for interaction among market research, design, production, and
sales to improve quality.
Also see:
Plan-Do-Check-Action
Demographic
Segmentation:
In marketing,
dividing potential markets by characteristics of potential customers, such as
age, sex, income, and education.
Demurrage:
The
carrier charges and fees applied when rail freight cars and ships are retained
beyond a specified loading or unloading time.
Also see: Detention, Express
Denied Party
List (DPL):
A list of
organizations that are unauthorized to submit a bid for an activity or to
receive a specific product. For example, some countries have bans for certain
products such as weapons or sensitive technology.
Density:
A physical
characteristic of a commodity measuring its mass per unit volume or pounds per
cubic foot; an important factor in rate making, since density affects the
utilization of a carrier’s vehicle.
Density Rate:
A rate
based upon the density and shipment weight.
Deregulation:
Revisions
or complete elimination of economic regulations controlling transportation. The
Motor Carrier Act of 1980 and the Staggers Act of 1980 revised the economic
controls over motor carriers and railroads, and the Airline Deregulation Act of
1978 eliminated economic controls over air carriers.
Derived Demand:
Demand
for component products that arises from the demand for final design products.
For example, the demand for steel is derived from the demand for automobiles.
Design For
Manufacture / Assembly (DFMA):
A product design methodology that provides a
quantitative evaluation of product designs.
Design of
Experiments (DoE):
A branch of applied
statistics dealing with planning, conducting, analyzing, and interpreting
controlled tests to evaluate the factors that control the value of a parameter
or group of parameters
Destination-Enhanced Consolidation:
Ganging of smaller
shipments to cut cost, often as directed by a system or via pooling with a third
party.
Detention:
The
carrier charges and fees applied when rail freight cars and ships are retained
beyond a specified loading or unloading time.
Also see: Demurrage, Express
Deterministic
Models:
Models where no uncertainty is included, e.g., inventory models without safety
stock considerations.
DFMA:
See
Design for Manufacture/ Assembly
DGI:
See
Defective Goods Inventory
Dial Up:
Access a network
by dialing a phone number or initiating a computer to dial the number. The
dial-up line connects to the network access point via a node or a PAD.
Differential:
A discount offered by a carrier that faces a service time disadvantage over a
route.
Digital
Signature:
Electronically
generated, digitized (as opposed to graphically created) authorization that is
uniquely linkable and traceable to an empowered officer.
Direct Channel:
Your own
sales force sells to the customer. Your entity may ship to the customer, or a
third party may handle shipment, but in either case your entity owns the sales
contract and retains rights to the receivable from the customer. Your end
customer may be a retail outlet. The movement to the customer may be direct from
the factory, or the product may move through a distribution network owned by
your company. Order information in this channel may be transmitted by electronic
means.
Direct Cost:
A cost
that can be directly traced to a cost object since a direct or repeatable
cause-and-effect relationship exists. A direct cost uses a direct assignment or
cost causal relationship to transfer costs.
Also see: Indirect Cost, Tracing
Direct product
profitability (DPP):
Calculation of the
net profit contribution attributable to a specific product or product line.
Direct
Production Material:
Material that is
used in the manufacturing/content of a product (example: Purchased parts,
solder, SMT glues, adhesives, mechanical parts etc. Bill-of-Materials parts,
etc.)
Direct Retail
Locations:
A retail location
that purchases products directly from your organization or responding entity.
Direct Store
Delivery (DSD):
Process of shipping
direct from a manufacturer’s plant or distribution center to the customer’s
retail store, thus bypassing the customer’s distribution center. Also called
Direct-to-Store Delivery
Direct
Transmission:
A transmission
whereby data is exchanged directly between sender and receiver computers,
without an intervening third-party service. Also called a point-to-point
transmission.
Direct-to-Store
(DTS) Delivery:
Same as Direct Store
Delivery.
Directed tasks:
Tasks
that can be completed based upon detailed information provided by the computer
system. An order picking task where the computer details the specific item,
location, and quantity to pick is an example of a directed task. If the computer
could not specify the location and quantity forcing the worker to choose
locations or change quantities, it would not be
a directed task.
Directed tasks set up the opportunity for confirmation transactions.
DISA:
See
Data Interchange Standards Association.
Disaster
Recovery Planning:
Contingency planning
specifically related to recovering hardware and software (e.g. data centers,
application software, operations, personnel, telecommunications) in information
system outages.
Discontinuous
Demand: A
demand pattern that is characterized by large demands interrupted by periods
with no demand, as opposed to a continuous or steady (e.g., daily) demand.
Synonym: Lumpy Demand.
Discrete
Available-to-Promise:
A calculation based
on the available-to-promise figure in the master schedule. For the first period,
the ATP is the sum of the beginning inventory plus the MPS quantity minus
backlog for all periods until the item is master scheduled again. For all other
periods, if a quantity has been scheduled for that time period then the ATP is
this quantity minus all customer commitments for this and other periods, until
another quantity is scheduled in the MPS. For those periods where the quantity
scheduled is zero, the ATP is zero (even if deliveries have been promised). The
promised customer commitments are accumulated and shown in the period where the
item was most recently scheduled.
Also see:
Available-to-
Promise
Discrete
Manufacturing:
Discrete
manufacturing processes create products by assembling unconnected distinct parts
as in the production of distinct items such as automobiles, appliances, or
computers.
Discrete Order
Picking:
A method of picking orders in which the items on one order are picked before the
next order is picked.
Also see:
Batch Picking, Order Picking, Zone Picking
Discrete Order
Quantity:
An order quantity
that represents an integer number of periods of demand. Most MRP systems employ
discrete order quantities.
Also see: Fixed-period Requirements,
Least Total Cost, Least Unit Cost, Lot-for-Lot, Part Period Balancing, Period
Order Quantity, Wagner-Whitin Algorithm
Disintermediation:
When the traditional
sales channels are disassembled and the middleman gets cut out of the deal. Such
as where the manufacturer ships direct to a retailer, bypassing the distributor.
Dispatching:
The carrier activities involved with controlling equipment; involves arranging
for fuel, drivers, crews, equipment, and terminal space.
Distributed
Inventory:
Inventory that is
geographically dispersed. For example, where a company maintains inventory in
multiple distribution centers to provide a higher level of customer service.
Distribution:
Outbound
logistics, from the end of the production line to the end user. 1) The
activities associated with the movement of material, usually finished goods or
service parts, from the manufacturer to the customer. These activities encompass
the functions of transportation, warehousing, inventory control, material
handling, order administration, site and location analysis, industrial
packaging, data processing, and the communications network necessary for
effective management. It includes all activities related to physical
distribution, as well as the return of goods to the manufacturer. In many cases,
this movement is made through one or more levels of field warehouses. Synonym:
Physical Distribution. 2) The systematic division of a whole into discrete parts
having distinctive characteristics.
Distribution
Center (DC):
The warehouse
facility which holds inventory from manufacturing pending distribution to the
appropriate stores.
Distribution
Channel:
One or more companies or individuals who participate in the flow of goods and
services from the manufacturer to the final user or consumer.
Distribution On
Demand (DOD):
The order
fulfillment state a distribution operation achieves when it can respond, closest
to real time, to changes in demand while shipping 100 percent customer compliant
orders at the least cost.
Distribution
Planning:
The planning
activities associated with transportation, warehousing, inventory levels,
materials handling, order administration, site and location planning, industrial
packaging, data processing, and communications networks to support distribution.
Distribution
Requirements Planning (DRP):
A system of determining demands for inventory at
distribution centers and consolidating demand information in reverse as input to
the production and materials system.
Distribution
Resource Planning (DRP II):
The extension of distribution requirements planning into the
planning of the key resources contained in a distribution system: warehouse
space, workforce, money, trucks, freight cars, etc.
Distribution
warehouse:
A warehouse that
stores finished goods and from which customer orders are assembled.
Distributor:
A
business that does not manufacture its own products, but purchases and resells
these products. Such a business usually maintains a finished goods inventory.
Synonym: Wholesaler.
Diversion:
The
practice of selling goods to a competitor that the vendor assumes would be used
to service that Customer's store. Example; Grocery Store Chain A buys orange
juice from Minute Maid. Grocery Store Chain A, because of their sales volume or
because of promotion, can buy product for $12.50 per case. Grocery Store Chain
B, because of a lower sales volume, buys the same orange juice for $14.50 per
case. Grocery Store Chain A and Grocery Store Chain B get together and make a
deal. Grocery Store Chain A resells that product to Grocery Store Chain B for
$13.50 per case. Grocery Store Chain A makes $1.00 per case and Grocery Store
Chain B gets product for $1.00 less per case than it can buy from Minute Maid.
Dock-to-Stock:
A program
by which specific quality and packaging requirements are met before the product
is released. Prequalified product is shipped directly into the customer's
inventory. Dock-to-stock eliminates the costly handling of components,
specifically in receiving and inspection and enables product to move directly
into production.
Document:
In EDI, a
form, such as an invoice or a purchase order, that trading partners have agreed
to exchange and that the EDI software handles within its compliance-checking
logic.
DOA:
See
Dead on Arrival.
Dock receipt:
A receipt
that indicates an export shipment has been delivered to a steamship company by a
domestic carrier.
DOD:
See
Distribution on Demand.
DOE:
See
Design of Experiments
Domain:
A computer term
for the following: 1) Highest subdivision of the Internet, for the most part by
country (except in the U.S., where it's by type of organization, such as
educational, commercial, and government). Usually the last part of a host name;
for example, the domain part of ibm.com is .com, which represents the domain of
commercial sites in the U.S. 2) In corporate data networks, a group of client
computers controlled by a server system.
Domestic trunk
line carrier:
An air carrier
classification for carriers that operate between major population centers. These
carriers are now classified as major carriers.
Dormant route:
A route
over which a carrier failed to provide service 5 days a week for 13 weeks out of
a 26-week period.
Double bottoms:
A motor
carrier operation involving two trailers being pulled by one tractor.
Double Order
Point System:
A distribution
inventory management system that has two order points. The smallest equals the
original order point, which covers demand during replenishment lead time. The
second order point is the sum of the first order point plus normal usage during
manufacturing lead time. It enables warehouses to forewarn manufacturing of
future replenishment orders.
Double-pallet
jack: A
mechanized device for transporting two standard pallets simultaneously.
Double stack:
Two
containers, one on top of the other, loaded on a railroad flatcar; an intermodal
service.
Download:
To merge
temporary files containing a day’s or week’s worth of information with the main
data base in order to update it.
Downstream:
Referring
to the demand side of the supply chain. One or more companies or individuals who
participate in the flow of goods and services moving from the manufacturer to
the final user or consumer. Opposite of Upstream.
DPC:
See
Dynamic Process Control
DPL:
See
Denied Party List
DPP:
See
Direct product profitability
Drayage:
Transportation
of materials and freight on a local basis, but intermodal freight carriage may
also be referred to as drayage.
Driving time
regulations:
Rules administered
by the U.S. Department of Transportation that limit the maximum time a driver
may drive in interstate commerce; both daily and weekly maximums are prescribed.
Drop:
A situation in
which an equipment operator deposits a trailer or boxcar at a facility at which
it is to be loaded or unloaded.
Drop Ship:
To take
the title of the product but not actually handle, stock, or deliver it, e.g., to
have one supplier ship directly to another or to have a supplier ship directly
to the buyer’s customer.
DRP:
See
Disaster Recovery Planning
DRP:
See
Distribution Requirements Planning
DRPII:
See
Distribution Resources Planning
Drum-Buffer-Rope (DBR):
In the theory of
constraints, the generalized process used to manage resources to maximize
throughput. The drum is the rate or pace of production set by the system’s
constraint. The buffers establish the protection against uncertainty so that the
system can maximize throughput. The rope is a communication process from the
constraint to the gating operation that checks or limits material released into
the system to support the constraint.
Also see:
Finite Scheduling,
DSD:
See
Direct Store Delivery
DSO:
See
Days Sales Outstanding
DSS:
See
Decision Support System
DTF:
See
Demand Time Fence
DTS:
See
Direct Store Delivery
Dual operation:
A motor
carrier that has both common and contract carrier operating authority.
Dual rate
system:
An international water carrier pricing system where a shipper signing an
exclusive use agreement with the conference pays a lower rate (10% to %15) than
non-signing shippers for an identical shipment.
Dumping:
Selling goods
below costs in selected markets.
Dunnage:
The packing
material used to protect a product from damage during transport.
DUNS Number:
A unique
nine-digit number assigned by Dun and Bradstreet to identify a company. DUNS
stands for Data Universal Numbering System.
DUNS:
Data Universal
Numbering System.
Durable Goods:
Generally, any goods whose continuous serviceability is likely to exceed three
years (e.g., trucks, furniture).
Dynamic Lot
Sizing:
Any lot-sizing technique that creates an order quantity subject to continuous
recomputation. See: Least total cost, Least unit cost, Part period balancing,
Period order quantity, Wagner-Whitin algorithm.
Dynamic Process
Control (DPC):
Continuous
monitoring of process performance and adjustment of control parameters to
optimize process output
E
EAI:
See
Enterprise Application Integration
EAN.UCC:
European Article
Numbering/ Uniform Code Council. The EAN.UCC System provides identification
standards to uniquely identify trade items, logistics units, locations, assets,
and service relations worldwide. The identification standards define the
construction of globally-unique and unambiguous numbers. For additional
reference, please see
http://www.uccouncil.org/ ean
Early Supplier
Involvement (ESI):
The process of
involving suppliers early in the product design activity and drawing on their
expertise, insights, and knowledge to generate better designs in less time and
designs that are easier to manufacture with high quality.
Earnings Before
Interest and Taxes (EBIT):
A measure of a company's earning power from ongoing
operations, equal to earnings (revenues minus cost of sales, operating expenses,
and taxes) before deduction of interest payments and income taxes. Also called
operating profit.
EBIT:
See
Earnings Before Interest and Taxes
EC:
See
Electronic Commerce
ECO:
See
Engineering Change Order
E-Commerce:
See
Electronic Commerce
Economic Order
Quantity (EOQ):
An inventory model
that determines how much to order by determining the amount that will meet
customer service levels while minimizing total ordering and holding costs.
Economic Value
Added (EVA):
A measurement of
shareholder value as a company's operating profits after tax, less an
appropriate charge for the capital used in creating the profits.
Economy of
Scale: A
phenomenon whereby larger volumes of production reduce unit cost by distributing
fixed costs over a larger quantity.
ECR:
See
Efficient Consumer Response
EDI:
See
Electronic Data Interchange
EDIA:
See
Electronic Data Interchange Association
EDIFACT:
Electronic Data
Interchange for Administration, Commerce, and Transport. The United Nations EDI
standard.
EDI Standards:
Criteria
that define the data content and format requirements for specific business
transactions (e.g. purchase orders). Using standard formats allows companies to
exchange transactions with multiple trading partners easily.
Also see:
American
National Standards Institute, Uniform Code Council
EDI
Transmission:
A functional group
of one or more EDI transactions that are sent to the same location, in the same
transmission, and
are identified by a functional group header and trailer.
Efficient
Consumer Response (ECR):
A demand driven
replenishment system designed to link all parties in the logistics channel to
create a massive flow-through distribution network. Replenishment is based upon
consumer demand and point of sale information.
EFT:
See
Electronic Funds Transfer
Electronic
Commerce (EC):
Also written as
e-commerce. Conducting business electronically via traditional EDI technologies,
or online via the Internet. In the traditional sense of selling goods, it is
possible to do this electronically because of certain software programs that run
the main functions of an e-commerce website, such as product display, online
ordering, and inventory management. The definition of e-commerce includes
business activity that is business-to-business (B2B), business-to-consumer
(B2C).
Electronic Data
Interchange (EDI):
Intercompany,
computer-to-computer transmission of business information in a standard format.
For EDI purists, "computer-to-computer" means direct transmission from the
originating application program to the receiving, or processing, application
program. An EDI transmission consists only of business data, not any
accompanying verbiage or free-form messages. Purists might also contend that a
standard format is one that is approved by a national or international standards
organization, as opposed to formats developed by industry groups or companies.
Electronic Data
Interchange Association:
A national body that propagates and controls the use of EDI
in a given country. All EDIAs are nonprofit organizations dedicated to
encouraging EDI growth. The EDIA in the United States was formerly TDCC and
administered the development of standards in transportation and other
industries.
Electronic
Funds Transfer (EFT):
A computerized
system that processes financial transactions and information about these
transactions or performs the exchange of value. Sending payment instructions
across a computer network, or the company-to company, company-to-bank, or
bank-to-bank electronic exchange of value.
Electronic Mail
(E-Mail):
The
computer-to-computer exchange of messages. E-mail is usually unstructured
(free-form) rather than in a structured format. X.400 has become the standard
for e-mail exchange.
Electronic
Product Code (EPC or ePC):
An electronically
coded tag that is intended as an improvement to the UPC bar code system. The EPC
is a 96-bit tag which contains a number called the Global Trade Identification
Number (GTIN). Unlike a UPC number, which only provides information specific to
a group of products, the GTIN gives each product its own specific identifying
number, giving greater accuracy in tracking.
Electronic
Signature:
A form of
authentication that provides identification and validation of a transaction by
means of an authorization code identifying the individual or organization
Elkins Act:
An
amendment to the IC Act that prohibits giving rebates.
E-mail:
See
Electronic Mail
Empirical:
Pertaining to a statement or formula based upon experience or observation rather
than on deduction or theory.
Empowerment:
A
condition whereby employees have the authority to make decisions and take action
in their work areas without prior approval. For example, an operator can stop a
production process if he or she detects a problem, or a customer service
representative can send out a replacement product if a customer calls with a
problem.
Encryption:
The
transformation of readable text into coded text for security purposes.
End item:
A product
sold as a completed item or repair part; any item subject to a customer order or
sales forecast. Synonym: Finished Goods Inventory.
End-of-Life:
Planning
and execution at the end of the life of a product. The challenge is making just
the right amount to avoid A) ending up with excess, which have to be sold at
great discounts or scrapped or B) ending up with shortages before the next
generation is available.
End-of-Life
Inventory:
Inventory on hand
that will satisfy future demand for products that are no longer in production at
your entity.
Engineering
Change: A
revision to a drawing or design released by engineering to modify or correct a
part. The request for the change can be from a customer or from production,
quality control, another department, or a supplier. Synonym: Engineering Change
Order.
Engineering
Change Order (ECO):
A documented and
approved revision to a product or process specification.
Engineer-to-Order:
A process in which
the manufacturing organization must first prepare (engineer) significant product
or process documentation before manufacture may begin.
Enterprise
Application Integration (EAI):
A computer term for the tools and techniques used
in linking ERP and other enterprise systems together. Linking systems is key for
e-business. Gartner say 'firms implementing enterprise applications spend at
least 30% on point-to-point interfaces'.
Enterprise-Wide
ABM: A
management information system that uses activity-based information to facilitate
decision making across an organization.
Enterprise
Resource Planning (ERP) System:
A class of software for planning and managing
“enterprise-wide” the resources needed to take customer orders, ship them,
account for them and replenish all needed goods according to customer orders and
forecasts. Often includes electronic commerce with suppliers. Examples of ERP
systems are the application suites from SAP, Oracle, PeopleSoft and others.
Enveloping:
An EDI
management software function that groups all documents of the same type, or
functional group, and bound for the same destination into an electronic
envelope. Enveloping is useful where there are multiple documents such as orders
or invoices issued to a single trading partner that need to be sent as a packet.
Environmentally
Sensitive Engineering:
Designing features in a product and its packaging that
improve recycling, etc. It can include elimination of compounds that are
hazardous to the environment.
EOL:
See
End-of-Life.
EOQ:
See
Economic Order Quantity
EPC or ePC:
See:
Electronic Product Code.
EPS:
A computer term.
Encapsulated Postscript. An extension of the PostScript graphics file format
developed by Adobe Systems. EPS lets PostScript graphics files be incorporated
into other documents.
Ergonomic:
The
science of creating workspaces and products which are human friendly to use.
ERP:
See
Enterprise Resources Planning System
ERS:
See
Evaluated Receipts Settlement
ESI:
See
Early Supplier Involvement
Ethernet:
A
computer term for the most commonly used type of local area network (LAN)
communication protocol using coaxial or twisted pair wiring.
Ethical
standards:
A set of guidelines
for proper conduct by business professionals.
European
Article Number (EAN):
A defined numbering
mechanism used in Europe to uniquely identify every retail product and packaging
option. The EAN is similar in concept and design to the UPC code and is usually
what the barcode represents on goods. Also see: Uniform Product Code.
EVA:
See
Economic Value Added
Evaluated
Receipts Settlement (ERS):
A process for
authorizing payment for goods based on actual receipts with purchase order data,
when price has already been negotiated. The basic premise behind ERS is that all
of the information in the invoice is already transmitted in the shipping
documentation. Therefore, the invoice is eliminated and the shipping
documentation is used to pay the vendor.
Exception-Based
Processing:
A computer term for
applications that automatically highlight particular events or results which
fall outside pre-determined parameters. This saves considerable effort by
automatically finding problems and alerting the right persons. An example would
be where a shorted item on a purchase order receipt would automatically notify a
purchasing agent for follow-up.
Exception
Message:
See Action
Message
Exception rate:
A
deviation from the class rate; changes (exceptions) made to the classification.
Exclusive
patronage agreements:
A shipper agrees to
use only member liner firms of a conference in return for a 10% to 15% rate
reduction.
Exclusive use:
Carrier
vehicles that are assigned to a specific shipper for its exclusive use.
Exempt Carrier:
A
for-hire carrier that is free from economic regulation. Trucks hauling certain
commodities are exempt from Interstate Commerce Commission economic regulation.
By far the largest portion of exempt carriers transports agricultural
commodities or seafood.
Expediting:
1) Moving
shipments through regular channels at an accelerated rate. 2) To take
extraordinary action because of an increase in relative priority. Synonym:
Stockchase.
Expert system:
A
computer program that mimics a human expert.
Explode-to-Deduct:
See Backflush
Exponential
Smoothing Forecast:
In forecasting, a
type of weighted moving average forecasting technique in which past observations
are geometrically discounted according to their age. The heaviest weight is
assigned to the most recent data. The smoothing is termed exponential because
data points are weighted in accordance with an exponential function of their
age. The technique makes use of a smoothing constant to apply to the difference
between the most recent forecast and the critical sales data, thus avoiding the
necessity of carrying historical sales data. The approach can be used for data
that exhibit no trend or seasonal patterns. Higher order exponential smoothing
models can be used for data with either (or both) trend and seasonality
Export:
1) In
logistics, the movement of products from one country to another. For example,
significant volumes of cut flowers are exported from The Netherlands to other
countries of the world. 2) A computer term referring to the transfer of
information from a source (system or database) to a target.
Export
Compliance:
Complying with rules
for exporting products, including packaging, labeling, and documentation
Export
declaration:
A document required
by the Department of commerce that provides information as to the nature, value,
etc., of export activity.
Export sales
contract:
The initial document
in any international transaction; it details the specifics of the sales
agreement between the buyer and seller.
Exports:
A term used to
describe products produced in one country and sold in another.
Also see:
Export
Express:
1) Carrier payment to its customers when ships, rail cars, or trailers are
unloaded or loaded in less than the time allowed by contract and returned to the
carrier for use. See: demurrage, detention. 2) The use of priority package
delivery to achieve overnight or second-day delivery.
Extended
Enterprise:
The notion that
supply chain partners form a larger entity which works together as though it
were a single unit.
Extensible
Markup Language (XML):
A computer term for
a language that facilitates direct communication among computers on the
Internet. Unlike the older hypertext markup language (HTML), which provides data
tags giving instructions to a web browser about how to display information, XML
tags give instructions to a browser or to application software which help to
define the specifics about the category of information.
External
Factory:
A situation where suppliers are viewed as an extension of the firm’s
manufacturing capabilities and
capacities. The same
practices and concerns that are commonly applied to the management of the firm’s
manufacturing system should also be applied to the management of the external
factory.
Extranet:
A
computer term describing a private network (or a secured link on the public
internet) that links separate
organizations and
that uses the same software and protocols as the Internet. Used for improving
supply chain management. For example, extranets are used to provide access to a
supply chain partner’s internal inventory data which is not available to
unrelated parties. Antonym: Intranet.
Extrinsic
Forecast:
In forecasting, a
forecast based on a correlated leading indicator, such as estimating furniture
sales based on housing starts. Extrinsic forecasts tend to be more useful for
large aggregations, such as total company sales, than for individual product
sales. Ant: intrinsic forecast method.
F
FA:
See
Functional Acknowledgment
Fabricator:
A
manufacturer that turns the product of a raw materials supplier into a larger
variety of products. A fabricator may turn steel rods into nuts, bolts, and
twist drills, or may turn paper into bags and boxes.
Facilities:
The
physical plant, distribution centers, service centers, and related equipment.
Failure Modes
Effects Analysis (FMEA):
A pro-active method of predicting faults and failures so that
preventive action can be taken.
Fair return:
A level
of profit that enables a carrier to realize a rate of return on investment or
property value that the regulatory agencies deem acceptable for that level of
risk.
Fair-share
Quantity Logic:
In inventory
management, the process of equitably allocating available stock among field
distribution
centers. Fair-share quantity logic is normally used when stock available from a
central inventory location is less than the cumulative requirements of the field
stocking locations. The use of fair-share quantity logic involves procedures
that “push” stock out to the field, instead of allowing the field to “pull” in
what is needed. The objective is to maximize customer service from the limited
available inventory.
Fair value:
The value
of the carrier’s property; the basis of calculation has included original cost
minus depreciation,
replacement cost,
and market value.
FAK:
See
Freight all kinds
FAS:
See
Final Assembly Schedule
FAS:
See
Free Alongside Ship
FAST:
See
Fast and Secure Trade
FAS:
See
Free Alongside Ship
Fast and Secure
Trade (FAST):
U.S. Customs program
that allows importers on the U.S./Canada border to obtain expedited release for
qualifying commercial shipments.
Feature:
A distinctive
characteristic of a good or service. The characteristic is provided by an
option, accessory, or attachment. For example, in ordering a new car, the
customer must specify an engine type and size (option), but need not necessarily
select an air conditioner (attachment).
Federal
Aviation Administration:
The federal agency
charged with administering federal safety regulations governing air
transportation.
Federal
Maritime Commission:
A regulatory agency
that controls services, practices, and agreements of international water common
carriers and noncontiguous domestic water carriers.
Feeder Railroad
Development Program:
Any financially
responsible person (except Class I and Class II carriers) with ICC approval can
acquire a rail line having a density of less than 3 million gross ton-miles per
year.
FEU:
See
Forty-foot equivalent unit
FG:
See
Finished Goods Inventory
FGI:
See
Finished Goods Inventory
Field Finished
Goods:
Inventory which is kept at locations outside the four walls of the manufacturing
plant (i.e., distribution center or warehouse).
Field Service:
See
After-Sale Service
Field Service
Parts:
Parts inventory kept at locations outside the four walls of the manufacturing
plant (i.e., distribution center or warehouse).
Field
warehouse:
A warehouse on the
property of the owner of the goods that stores goods that are under the custody
of a bona fide public warehouse manager. The public warehouse receipt is used as
collateral for a loan.
FIFO:
See
First In, First Out
File Transfer
Protocol (FTP):
The Internet service
that transfers files from one computer to another, over standard phone lines.
Filed rate
doctrine:
The legal rate the
common carrier may charge; is the rate published in the carrier’s tariff on file
with the ICC.
Fill Rate:
The
percentage of order items that the picking operation actually fills within a
given period of time.
Fill Rates by
Order:
Whether orders are received and released consistently, or released from a
blanket purchase order, this metric measures the percentage of ship-from-stock
orders shipped within 24 hours of order "release”. Make-to-Stock schedules
attempt to time the availability of finished goods to match forecasted customer
orders or releases. Orders that were not shipped within 24 hours due to
consolidation but were available for shipment within 24 hours are reported
separately. In calculating elapsed time for order fill rates, the interval
begins at ship release and ends when material is consigned for shipment.
Calculation:
[Number of
orders filled from stock shipped within 24 hours of order release] / [Total
number of stock orders]
Note: The same
concept of fill rates can be applied to order lines and individual products to
provide statistics on
percentage of lines
shipped completely and percentage of products shipped completely.
Final Assembly:
The
highest level assembled product, as it is shipped to customers. This terminology
is typically used when products consist of many possible features and options
that may only be combined when an actual order is received.
Also see: End Item, Assemble to
Order
Final Assembly
Schedule (FAS):
A schedule of end
items to finish the product for specific customers’ orders in a make-to-order or
assemble-to-order environment. It is also referred to as the finishing schedule
because it may involve operations other than just the final assembly; also, it
may not involve assembly, but simply final mixing, cutting, packaging, etc. The
FAS is prepared after receipt of a customer order as constrained by the
availability of material and capacity, and it schedules the operations required
to complete the product from the level where it is stocked (or master scheduled)
to the end-item level.
Finance lease:
An
equipment-leasing arrangement that provides the lessee with a means of financing
for the leased equipment; a common method for leasing motor carrier trailers.
Financial
responsibility:
Motor carriers are
required to have body injury and property damage (not cargo) insurance or not
less than $500,000 per incident per vehicle; higher financial responsibility
limits apply for motor carriers transporting oil or hazardous materials.
Finished Goods
Inventory (FG or FGI):
Products completely manufactured, packaged, stored, and ready
for distribution.
Also see: End Item
Finite Forward
Scheduling:
An equipment
scheduling technique that builds a schedule by proceeding sequentially from the
initial period to the final period while observing capacity limits. A Gantt
chart may be used with this technique.
Also see:
Finite Scheduling
Finite
Scheduling:
A scheduling
methodology where work is loaded into work centers such that no work center
capacity requirement exceeds the capacity available for that work center. See:
drum-buffer-rope, finite forward scheduling.
Firewall:
A
computer term for a method of protecting the files and programs on one network
from users on another network. A firewall blocks unwanted access to a protected
network while giving the protected network access to networks outside of the
firewall. A company will typically install a firewall to give users access to
the Internet while protecting their internal information.
Firm Planned
Order: A
planned order which has been committed to production.
Also see: Planned Order
First In, First
Out (FIFO):
Warehouse term
meaning first items stored are the first used. In accounting this tem is
associated with the valuing of inventory such that the latest purchases are
reflected in book inventory.
Also see: Book Inventory
First Mover
Advantage:
Market innovator,
putting the company in the leadership position.
First Pass
Yield:
The ratio of usable, specification conforming output from a process to its
input, achieved without rework or reprocessing.
Fixed Costs:
Costs,
which do not fluctuate with business volume in the short run. Fixed costs
include items such as depreciation on buildings and fixtures.
Fixed interval
inventory model:
A setup wherein each
time an order is placed for an item, the same (fixed) quantity is ordered.
Fixed Interval
Order System:
See Fixed
Reorder Cycle Inventory Model
Fixed Order
Quantity:
A lot-sizing
technique in MRP or inventory management that will always cause planned or
actual orders to be generated for a predetermined fixed quantity, or multiples
thereof if net requirements for the period exceed the fixed order quantity.
Fixed Order
Quantity System:
See Fixed
Reorder Cycle Inventory Model
Fixed Overhead:
Traditionally, all manufacturing costs, other than direct labor and direct
materials, that continue even if products are not produced. Although fixed
overhead is necessary to produce the product, it cannot be directly traced to
the final product.
Also see:
Indirect Cost
Fixed-Period
Requirements:
A lot-sizing
technique that sets the order quantity to the demand for a given number of
periods.
Also see:
Discrete Order Quantity
Fixed Reorder
Cycle Inventory Model:
A form of
independent demand management model in which an order is placed every “n” time
units. The order quantity is variable and essentially replaces the items
consumed during the current time period. Let “M” be the maximum inventory
desired at any time, and let x be the quantity on hand at the time the order is
placed. Then, in the simplest model, the order quantity will be M – x. The
quantity M must be large enough to cover the maximum expected demand during the
lead time plus a review interval. The order quantity model becomes more
complicated whenever the replenishment lead time exceeds the review interval,
because outstanding orders then have to be factored into the equation. These
reorder systems are sometimes called fixed-interval order systems, order level
systems, or periodic review systems. Synonyms: Fixed-Interval Order System,
Fixed-Order Quantity System, Order Level System, Periodic Review System,
Time-Based Order System.
Also see:
Fixed Reorder Quantity Inventory Model, Hybrid Inventory System, Independent
Demand Item Management Models, Optional Replenishment Model
Fixed Reorder
Quantity Inventory Model:
A form of independent demand item management model in which
an order for a fixed quantity is placed whenever stock on hand plus on order
reaches a predetermined reorder level. The fixed order quantity may be
determined by the economic order quantity, by a fixed order quantity (such as a
carton or a truckload), or by another model yielding a fixed result. The reorder
point may be deterministic or stochastic, and in either instance is large enough
to cover the maximum expected demand during the replenishment lead time. Fixed
reorder quantity models assume the existence of some form of a perpetual
inventory record or some form of physical tracking, e.g., a two-bin system that
is able to determine when the reorder point is reached. Synonym: Fixed Order
Quantity System, Lot Size System, Order Point-Order Quantity System, Quantity
Based Order System.
Also see: Fixed Reorder Cycle Inventory
Model, Hybrid Inventory System, Independent Demand Item Management Models,
Optional Replenishment Model, Order Point – Order Management System
Fixed-Location
Storage:
A method of storage in which a relatively permanent location is assigned for the
storage of each item in a storeroom or warehouse. Although more space is needed
to store parts than in a random-location storage system, fixed locations become
familiar, and therefore a locator file may not be needed.
Also see:
Random-Location Storage
Flag of
convenience:
A ship owner
registers a ship in a nation that offers conveniences in the areas of taxes,
manning, and safety requirements; Liberia and Panama are two nations known for
flags of convenience.
Flat:
A loadable
platform having no superstructure whatever but having the same length and width
as the base of a container and equipped with top and bottom corner fittings.
This is an alternative term used for certain types of specific purpose
containers -namely platform containers and platform-based containers with
incomplete structures
Flatcar:
A rail car
without sides; used for hauling machinery.
Flat File:
A
computer term which refers to any file having fixed-record length, or in EDI,
the file produced by EDI translation software to serve as input to the
interface. Usually includes the same fields as the original file, but each field
is expanded to its maximum length. Does not have delimiters.
Flexibility:
Ability
to respond quickly and efficiently to changing customer and consumer demands.
Flexible-path
equipment:
Materials handling
devices that include hand trucks and forklifts.
Flexible
Specialization:
a strategy based on
multi-use equipment, skilled workers and innovative senior management to
accommodate the continuous change that occurs in the marketplace.
Float:
The time
required for documents, payments, etc. to get from one trading partner to
another.
Floor-Ready
Merchandise (FRM):
Goods shipped by
suppliers to retailers with all necessary tags, prices, security devices, etc.
already attached, so goods can be cross docked rapidly through retail DCs, or
received directly at stores.
Flow rack:
Storage
rack that utilizes shelves (metal) that are equipped with rollers or wheels.
Such an arrangement allows product and materials to "flow" from the back of the
rack to the front and therein making the product more accessible for small
quantity
order-picking.
FMEA:
See
Failure Modes Effects Analysis
FOB:
See
Free on Board
FOB
Destination:
Title passes at
destination, and seller has total responsibility until shipment is delivered.
FOB Origin:
Title
passes at origin, and buyer has total responsibility over the goods while in
shipment.
For-hire
carrier:
A carrier that provides transportation service to the public on a fee basis.
Forecast:
An
estimate of future demand. A forecast can be constructed using quantitative
methods, qualitative methods, or a combination of methods, and it can be based
on extrinsic (external) or intrinsic (internal) factors. Various forecasting
techniques attempt to predict one or more of the four components of demand:
cyclical, random, seasonal, and trend.
Also see: Box-Jenkins Model, Exponential Smoothing
Forecast, Extrinsic Forecasting Method, Intrinsic Forecasting Method,
Qualitative Forecasting Method, Quantitative Forecasting Method
Forecast
Accuracy:
Measures how
accurate your forecast is as a percent of actual units or dollars shipped,
calculated as 1 minus the absolute value of the difference between forecasted
demand and actual demand, as a percentage of actual demand.
Calculation:
[1-(|Sum of
Variances|/Sum of Actual)]
Forecast Cycle:
Cycle
time between forecast regenerations that reflect true changes in marketplace
demand for shippable end products.
Forecasting:
Predictions of how much of a product will be purchased by customers. Relies upon
both quantitative and
qualitative methods.
Also see: Forecast
Foreign Trade
Zone (FTZ):
An area or zone set
aside at or near a port or airport, under the control of the U.S. Customs
Service, for holding goods duty-free pending customs clearance.
Forklift truck:
A
machine-powered device that is used to raise and lower freight and to move
freight to different warehouse locations.
Form utility:
The value
created in a good by changing its form, through the production process.
Four P’s:
A set of
marketing tools to direct the business offering to the customer. The four P’s
are product, price, place, and promotion.
Fourier Series:
In
forecasting, a form of analysis useful for forecasting. The model is based on
fitting sine waves with
increasing
frequencies and phase angles to a time series.
Four Wall
Inventory:
The stock which is
contained within a single facility or building.
Fourth-Party
Logistics (4PL):
Differs from third
party logistics in the following ways; 1)4PL organization is often a separate
entity established as a joint venture or long-term contract between a primary
client and one or more partners; 2)4PL organization acts as a single interface
between the client and multiple logistics service providers; 3) All aspects
(ideally) of the client’s supply chain are managed by the 4PL organization; and,
4) It is possible for a major third-party logistics provider to form a 4PL
organization within its existing structure (Strategic Supply Chain Alignment;
John Gattorna).
Also see: Lead Logistics Provider
Forty-foot
equivalent unit (FEU):
A standard size intermodal container.
Free Alongside
Ship (FAS):
A term of sale
indicating the seller is liable for all changes and risks until the goods sold
are delivered to the port on a dock that will be used by the vessel. Title
passes to the buyer when the seller has secured a clean dock or ship’s receipt
of goods.
Free on Board
(FOB):
Contractual terms between a buyer and a seller, that define where title transfer
takes place.
Freezing
inventory balances:
In most cycle
counting programs the term "freezing" refers to copying the current on-hand
inventory balance into the cycle count file. This may also be referred to as
taking a snapshot of the inventory balance. It rarely means that the inventory
is actually frozen in a way that prevents transactions from occurring.
Freight-all-kinds (FAK):
An approach to rate
making whereby the ante is based only upon the shipment weight and distance;
widely used in TOFC service.
Freight bill:
The
carrier’s invoice for transportation charges applicable to a freight shipment.
Freight
Consolidation:
The grouping of
shipments to obtain reduced costs or improved utilization of the transportation
function. Consolidation can occur by market area grouping, grouping according to
scheduled deliveries, or using third-party pooling services such as public
warehouses and freight forwarders.
Freight
Forwarder:
An organization
which provides logistics services as an intermediary between the shipper and the
carrier, typically on international shipments. Freight forwarders provide the
ability to respond quickly and efficiently to changing customer and consumer
demands and international shipping (import/export) requirements.
Freight
Forwarders Institute:
The freight
forwarder industry association.
FRM:
See
Floor Ready Merchandise
Frozen Zone:
In
forecasting, this is the period in which no changes can be made to scheduled
work orders based on changes in demand. Use of a frozen zone provides stability
in the manufacturing schedule.
FTE:
See
Full Time Equivalents
FTP:
See
File Transfer Protocol
FTZ:
See
Free Trade Zone
Fulfillment:
The act
of fulfilling a customer order. Fulfillment includes order management, picking,
packaging, and shipping.
Full-Service
Leasing:
An equipment-leasing arrangement that includes a variety of services to support
leased equipment (i.e., motor carrier tractors).
Full-time
Equivalents (FTE):
Frequently
organizations make use of contract and temporary employees; please convert
contract, part-time, and temporary employees to full-time equivalents. For
example, two contract employees who worked for six months full-time and a
half-time regular employee would constitute 1.5 full-time equivalents. 1FTE =
2000 hours per year.
Fully allocated
cost: The
variable cost associated with a particular unit of output plus an allocation of
common cost.
Functional
Acknowledgment (FA):
A specific EDI
Transaction Set (997) sent by the recipient of an EDI message to confirm the
receipt of data but with no indication as to the recipient application’s
response to the message. The FA will confirm that the message contained the
correct number of lines, etc. via control summaries, but does not report on the
validity of the data.
Functional
Group:
Part of the hierarchical structure of EDI transmissions, a Functional Group
contains one or more related Transaction Sets preceded by a Functional Group
header and followed by a Functional Group trailer
Functional
Silo: A
view of an organization where each department or functional group is operated
independent of other groups within the organization. Each group is referred to
as a “Silo”. This is the opposite of an integrated structure.
Future order:
An order
entered for shipment at some future date. This may be related to new products
which are not currently available for shipment, or scheduling of future needs by
the customer.
G
Gain Sharing:
A method
of incentive compensation where supply chain partners share collectively in
savings from productivity improvements. The concept provides an incentive to
both the buying and supplier organizations to focus on continually reevaluating,
re-energizing, and enhancing their business relationship. All aspects of value
delivery are scrutinized, including specification design, order processing,
inbound transportation, inventory management, obsolescence programs, material
yield, forecasting and inventory planning, product performance and reverse
logistics. The focus is on driving out limited value cost while protecting
profit margins.
Gateway:
The connection
that permits messages to flow freely between two networks.
Gathering
lines:
Oil pipelines that bring oil from the oil well to storage areas.
General
commodities carrier:
A common motor
carrier that has operating authority to transport general commodities, or all
commodities not listed as special commodities.
General-merchandise warehouse:
A warehouse that is
used to store goods that are readily handled, are packaged, and do not req1ire a
controlled environment.
GIF:
See
Graphics Interchange Format.
Global
Strategy:
A strategy that
focuses on improving worldwide performance through the sales and marketing of
common goods and services with minimum product variation by country. Its
competitive advantage grows through selecting the best locations for operations
in other countries.
Global Trade
Item Number (GTIN):
A unique number that
comprises up to 14 digits and is used to identify an item (product or service)
upon which there is a need to retrieve pre-defined information that may be
priced, ordered or invoiced at any point in the supply chain. The definition
covers raw materials through end user products and includes services, all of
which have pre-defined characteristics. GTIN is the globally-unique EAN.UCC
System identification number, or key, used for trade items (products and
services). It’s used for uniquely identifying trade items (products and
services) sold, delivered, warehoused, and billed throughout the retail and
commercial distribution channels. Unlike a UPC number, which only provides
information specific to a group of products, the GTIN gives each product its own
specific identifying number, giving greater accuracy in tracking.
See EPC
Global
Positioning System (GPS):
A system which uses
satellites to precisely locate an object on earth. Used by trucking companies to
locate over-the-road equipment.
Globalization:
The
process of making something worldwide in scope or application.
Going-concern
value:
The value that a firm has as an entity, as opposed to the sum of the values of
each of its parts taken separately; particularly important in determining what
constitutes a reasonable railroad rate.
Gondola:
A rail car with
a flat platform and sides three to five feet high; used for top loading of items
that are long and heavy.
Good
manufacturing practices (GMP) or 21 CFR, parts 808, 812, and 820:
Requirements
governing the quality procedures of medical device manufacturers.
Goods Received
Note (GRN):
Documentation raised
by the recipient of materials or products.
GMP:
See
Good manufacturing practices.
GNP:
See
Gross National Product.
GPS:
See
Global Positioning System.
Grandfather
clause: A
provision that enabled motor carriers engaged in lawful trucking operations
before the passage of the Motor Carrier Act of 1935 to secure common carrier
authority without proving public convenience and necessity; a similar provision
exists for other modes.
Granger laws:
State
laws passed before 1870 in Midwestern states to control rail transportation.
Graphics
Interchange Format (GIF):
A graphical file
format commonly used to display indexed-color images on the World Wide Web. GIF
is a compressed format, designed to minimize file transfer time over standard
phone lines.
Great Lakes
carriers:
Water carriers that
operate on the five Great lakes.
Grid technique:
A
quantitative technique to determine the least-cost center, given raw materials
sources and markets, for locating a plant or warehouse.
GRN:
See
Goods Received Note
GPS:
See
Global Positioning System.
Groupthink:
A
situation in which critical information is withheld from the team because
individual members censor or restrain themselves, either because they believe
their concerns are not worth discussing or because they are afraid of
confrontation.
Gross
Inventory:
Value of inventory
at standard cost before any reserves for excess and obsolete items are taken.
Gross Margin:
The
difference between total revenue and the cost of goods sold. Syn: gross profit
margin.
Gross National
Product (GNP):
A measure of a
nation’s output; the total value of all final goods and services produced during
a period of time.
Gross weight:
The total weight of the vehicle and the payload of freight or passengers.
GTIN:
See
Global Trade Item Number
GTM:
Global Trade
Management.
Guaranteed
loans:
Loans made to railroads that are cosigned and guaranteed by the federal
government.
H
Handling Costs:
The cost
involved in moving, transferring, preparing, and otherwise handling inventory.
Hard copy:
Computer
output printed on paper.
Hawaiian
carrier:
A for-hire air carrier that operates within the state of Hawaii
Hawthorne
Effect:
From a study conducted at the Hawthorne Plant of Western Electric Company in
1927-1932 which found that the act of showing people that you are concerned
usually results in better job performance. Studying and monitoring of activities
are typically seen as being concerned and results in improved productivity.
Hazardous
Material:
A substance or
material, which the Department of Transportation has determined to be capable of
posing a risk to health, safety, and property when stored or transported in
commerce.
Also see:
Material Safety Data Sheet
Hedge
Inventory:
A form of inventory
buildup to buffer against some event that may not happen. Hedge inventory
planning involves speculation related to potential labor strikes, price
increases, unsettled governments, and events that could severely impair a
company’s strategic initiatives. Risk and consequences are unusually high, and
top management approval is often required.
Heijunka:
In the
Just-in-Time philosophy, an approach to level production throughout the supply
chain to match the planned rate of end product sales.
Hierarchy of
Cost Assignability:
In cost accounting,
an approach to group activity costs at the level of an organization where they
are incurred, or can be directly related to. Examples are the level where
individual units are identified (unit-level), where batches of units are
organized or processed (batch-level), where a process is operated or supported
(process-level), or where costs cannot be objectively assigned to lower level
activities or processes (facility-level). This approach is used to better
understand the nature of the costs, including the level in the organization at
which they are incurred, the level to which they can be initially assigned
(attached) and the degree to which they are assignable to other activity and/or
cost object levels, i.e. activity or cost object cost, or sustaining costs.
Highway Trust
Fund:
Federal highway use tax revenues are paid into this fund, and the federal
government’s share of highway construction is paid from the fund.
Highway use
taxes:
Taxes assessed by federal and state governments against users of the highway
(the fuel tax is an example). The use tax money is used to pay for the
construction, maintenance, and policing of highways.
Hi-low:
Usually refers
to a forklift truck on which the operator must stand rather than sit.
Home Page:
The
starting point for a website. It is the page that is retrieved and displayed by
default when a user visits the website. The default home-page name for a server
depends on the server's configuration. On many web servers, it is index.html or
default.htm. Some web servers support multiple home pages.
Honeycombing:
1. The
practice of removing merchandise in pallet load quantities where the space is
not exhausted in an orderly fashion. This results in inefficiencies due to the
fact that the received merchandise may not be efficiently stored in the space
which is created by the honey-combing. 2. The storing or withdrawal or supplies
in a manner that results in vacant space that is not usable for storage of other
items. 3. Creation of unoccupied space resulting from withdrawal of unit loads.
This is one of the major hidden costs of warehousing.
Hopper cars:
Rail cars
that permit top loading and bottom unloading of bulk commodities; some hopper
cars have permanent tops with hatches to provide protection against the
elements.
Horizontal
Play/Horizontal Hub:
This is a term for a
function that cuts across many industries, usually defines a facility or
organization that is providing a common service.
Hoshin
Planning:
Breakthrough
planning. A Japanese strategic planning process in which a company develops up
to four vision statements that indicate where the company should be in the next
five years. Company goals and work plans are developed based on the vision
statements. Periodic audits are then conducted to monitor progress.
Hostler:
An individual
employed to move trucks and trailers within a terminal or warehouse yard area.
Household goods
warehouse:
A warehouse that is
used to store household goods.
HR:
See Human
Resources
HTML:
See
HyperText Markup Language
HTTP:
See
HyperText Transport Protocol
Hub:
1) A large
retailer or manufacturer having many trading partners. 2) A reference for a
transportation network as in “hub and spoke” which is common in the airline and
trucking industry. For example, a hub airport serves as the focal point for the
origin and termination of long-distance flights where flights from outlying
areas are fed into the hub airport for connecting flights. 3) A common
connection point for devices in a network. 4) A Web "hub" is one of the initial
names for what is now known as a "portal". It came from the creative idea of
producing a website, which would contain many different "portal spots" (small
boxes that looked like ads, with links to different yet related content). This
content, combined with Internet technology, made this idea a milestone in the
development and appearance of websites, primarily due to the ability to display
a lot of useful content and store one's preferred information on a secured
server. The web term "hub" was replaced with portal.
Hub airport:
An
airport that serves as the focal point for the origin and termination of
long-distance flights; flights from outlying areas are fed into the hub airport
for connecting flights.
Human-machine
interface:
Any point where data
is communicated from a worker to a computer or from a computer to a worker. Data
entry programs, inquire programs, reports, documents, LED displays, and voice
commands are all examples of human-machine interfaces.
Human Resources
(HR): The
function broadly responsible for personnel policies and practices within an
organization.
Hundredweight
(cwt): A
pricing unit used in transportation (equal to 100 pounds).
Hybrid
Inventory System:
An inventory system
combining features of the fixed reorder quantity inventory model and the fixed
reorder cycle inventory model. Features of the fixed reorder cycle inventory
model and the fixed reorder quantity inventory model can be combined in many
different ways. For example, in the order point-periodic review combination
system, an order is placed if the inventory level drops below a specified level
before the review date; if not, the order quantity is determined at the next
review date. Another hybrid inventory system is the optional replenishment
model.
Also see: Fixed Reorder Cycle Inventory
Model, Fixed Reorder Quantity Inventory Model, Optional Replenishment Model
Hyperlink:
A
computer term. Also referred to as “link”. The text you find on a website which
can be "clicked on" with a mouse which, in turn, will take you to another web
page or a different area of the same web page. Hyperlinks are created or "coded"
in HTML
Hyperlink:
Also
known as link. The text you find on a website which can be "clicked on" with a
mouse which, in turn, will take you to another web page or a different area of
the same web page. Hyperlinks are created or "coded" in HTML
HyperText
Markup Language (HTML):
The standard
language for describing the contents and appearance of pages on the World Wide
Web.
HyperText
Transport Protocol (HTTP):
The Internet
protocol that allows World Wide Web browsers to retrieve information from
servers.
I
ICC:
See
Interstate Commerce Commission
Igloos:
Pallets and
containers used in air transportation; the igloo shape is designed to fit the
internal wall contours of a narrowbody airplane.
Image
Processing:
allows a company to
take electronic photographs of documents. The electronic photograph then can be
stored in a computer and retrieved from computer storage to replicate the
document on a printer. The thousands of bytes of data composing a single
document are encoded in an optical disk. Many carriers now use image processing
to provide proof-of delivery documents to a shipper. The consignee signs an
electronic pad that automatically digitizes a consignee's signature for
downloading into a computer. A copy of that signature then can be produced to
demonstrate that a delivery took place.
IMC:
See
Intermodal marketing company
Import:
Movement of
products from one country into another. The import of automobiles from Germany
to the U.S. is an example.
Import/Export
License:
Official authorization issued by a government allowing the shipping or delivery
of a product across national boundaries.
Impressions:
With
regard to online advertising, it is the number of times an ad banner is
downloaded and presumably seen by users. Guaranteed impressions refer to the
minimum number of times an ad banner will be seen by users.
Inbound
Logistics:
The movement of
materials from suppliers and vendors into production processes or storage
facilities .
Incentive rate:
A rate
designed to induce the shipper to ship heavier volumes per shipment.
INCOTERMS:
International terms of sale developed by the International Chamber of Commerce
to define sellers' and buyers' responsibilities.
Independent
action: A
carrier that is a member of a rate bureau has the right to publish a rate that
differs from the rate published by the rate bureau.
Independent
Demand Item Management Models:
Models for the management of items whose demand is not
strongly influenced by other items managed by the same company. These models can
be characterized as follows: (1) stochastic or deterministic, depending on the
variability of demand and other factors; (2) fixed quantity, fixed cycle, or
hybrid - (optional replenishment).
Also see: Fixed Reorder Cycle Inventory
Model, Fixed Reorder Quantity Inventory Model, Optional Replenishment Model
Independent
Trading Exchange (ITE):
Often used
synonymously with B2B, e-marketplace or Virtual Commerce Network (VCN). ITE is a
more precise term, connoting many-to-many transactions, whereas the others do
not specify the transactions.
Indirect Cost:
A
resource or activity cost that cannot be directly traced to a final cost object
since no direct or repeatable causeand-effect relationship exists. An indirect
cost uses an assignment or allocation to transfer cost.
Also see: Direct Cost, Support Costs
Indirect/Distributor Channel:
Your company sells
and ships to the distributor. The distributor sells and ships to the end user.
This may occur in multiple stages. Ultimately your products may pass through the
Indirect/Distributor Channel and arrive at a retail outlet. Order information in
this channel may be transmitted by electronic means. These means may include
EDI, brokered systems, or linked electronic systems.
Indirect Retail
Locations:
A retail location
that ultimately sells your product to consumers, but who purchases your products
from an intermediary, like a distributor or wholesaler.
Infinite
Loading:
Calculation of the capacity required at work centers in the time periods
required regardless of the capacity available to perform this work.
Information
systems (IS):
Managing the flow of
data in an organization in a systematic, structured way to assist in planning,
implementing, and controlling.
Inherent
advantage:
The cost and service
benefits of one mode compared with other modes.
Insourcing:
The
opposite of outsourcing, that is, a serve performed in-house.
Integrated
Logistics:
A comprehensive,
system-wide view of the entire supply chain as a single process, from raw
materials supply through finished goods distribution. All functions that make up
the supply chain are managed as a single entity, rather than managing individual
functions separately.
Integrated
Services Digital Network (ISDN):
A computer term describing the networks and equipment for
integrated
broadband
transmissions of data, voice, and image, from rates of 144 Kbps to 2 Mbps. ISDN
allows integration of data, voice, and video over the same digital links.
Integrated tow
barge: A
series of barges that are connected together to operate as one unit.
Intellectual
Property (IP):
Property of an
enterprise or individual which is typically maintained in a digital form. This
may include software program code or digital documents, music, videos, etc.
Interchange:
In EDI,
the exchange of electronic information between companies. Also, the group of
transaction sets transmitted from one sender to one receiver at one time.
Delineated by interchange control segments.
Intercoastal
carriers:
Water carriers that
transport freight between East and West Coast ports, usually by way of the
Panama Canal.
Intercorporate
hauling:
A private carrier hauling the goods of a subsidiary and charging the subsidiary
a fee: this is legal if the subsidiary is wholly owned (100%) or if the private
carrier has common carrier authority.
Interleaving:
The
practice of assigning an employee multiple tasks which are performed
concurrently.
Interline:
Two or
more motor carriers working together to haul the shipment to a destination.
Carrier equipment may be interchanged from one carrier to the next, but usually
the shipment is rehandled without the equipment.
Intermediately
Positioned Warehouse:
A warehouse located
between customers and manufacturing plants to provide increased customer service
and reduced distribution cost.
Intermittent-flow, fixed-path equipment:
Materials handling
devices that include cranes, monorails, and stacker cranes.
Intermodal
marketing company (IMC):
An intermediary that
sells intermodal services to shippers.
Intermodal
Transportation:
Transporting freight
by using two or more transportation modes such as by truck and rail or truck and
oceangoing vessel.
Intermodal
transport unit (ITU):
Container, swap body
or semi-trailer/goods road motor vehicle suitable for intermodal transport.
Internal
customer:
The recipient
(person or department) of another person’s or department’s output (good,
service, or
information) within
an organization.
Also see:
Customer
Internal Labor
and Overhead:
The portion of COGS
that is typically reported as labor and overhead, less any costs already
classified as "outsourced."
Internal water
carriers:
Water carriers that
operate over internal, navigable rivers such as the Mississippi, Ohio, and
Missouri.
International
Air Transport Association:
An international air carrier rate bureau for passenger and
freight movements.
International
Civil Aeronautics Organization:
An international agency that is responsible for air safety
and for standardizing air traffic control, airport design, and safety features
worldwide.
International
Standards Organization (ISO):
An organization within the United Nations to
which all national and other standard setting bodies (should) defer. Develops
and monitors international standards, including OSI, EDIFACT, and X.400
Internet:
A
computer term which refers to an interconnected group of computer networks from
all parts of the world, i.e. a network of networks. Accessed via a modem and an
on-line service provider, it contains many information resources and acts as a
giant electronic message routing system.
Interstate
commerce:
The transportation
of persons or property between states; in the course of the movement, the
shipment cresses a state boundary line.
Interstate
Commerce Commission (ICC):
An independent
regulatory agency that implements federal economic regulations controlling
railroads, motor carriers, pipelines, domestic water carriers, domestic surface
freight forwarders, and brokers.
Interstate
System:
The National System of Interstate and Defense Highways, 42,000 miles of
four-lane, limited-access roads connecting major population centers.
Intra-Manufacturing Re-plan Cycle:
Average elapsed
time, in calendar days, between the time a regenerated forecast is accepted by
the end-product manufacturing/assembly location, and the time that the revised
plan is reflected in the Master Production Schedule of all the affected internal
sub-assembly/component producing plant(s). (An element of Total Supply Chain
Response Time)
Intrastate
commerce:
The transportation
of persons or property between points within a state. A shipment between two
points within a state may be interstate if the shipment had a prior or
subsequent move outside of the state and the intent of the shipper was an
interstate shipment at the time of shipment.
In-transit
Inventory:
Material moving
between two or more locations, usually separated geographically; for example,
finished goods being shipped from a plant to a distribution center. In-transit
inventory is an easily overlooked component of total supply chain availability.
Intrinsic
Forecast Method:
In forecasting, a
forecast based on internal factors, such as an average of past sales.
Inventory:
Raw
materials, work in process, finished goods and supplies required for creation of
a company's goods and services; The number of units and/or value of the stock of
goods held by a company.
Inventory
Accuracy:
When the on-hand
quantity is equivalent to the perpetual balance (plus or minus the designated
count tolerances).
Inventory
Balance Location Accuracy:
When the on-hand
quantity in the specified locations is equivalent to the perpetual balance (plus
or minus the designated count tolerances).
Inventory
Carrying Cost: One
of the elements
comprising a company's total supply-chain management costs. These costs consist
of the following:
1. Opportunity Cost:
The opportunity cost of holding inventory. This should be based on your
company's own cost of capital standards using the following formula.
Calculation: Cost of Capital x Average Net Value of Inventory
2. Shrinkage: The
costs associated with breakage, pilferage, and deterioration of inventories.
Usually pertains to the loss of material through handling damage, theft, or
neglect.
3. Insurance and
Taxes: The cost of insuring inventories and taxes associated with the holding of
inventory.
4. Total
Obsolescence for Raw Material, WIP, and Finished Goods Inventory: Inventory
reserves taken due to obsolescence and scrap and includes products exceeding the
shelf life, i.e. spoils and is no good for use in its original purpose (do not
include reserves taken for Field Service Parts).
5. Channel
Obsolescence: Aging allowances paid to channel partners, provisions for buy-back
agreements, etc. Includes all material that goes obsolete while in a
distribution channel. Usually, a distributor will demand a refund on material
that goes bad (shelf life) or is no longer needed because of changing needs.
6. Field Service
Parts Obsolescence: Reserves taken due to obsolescence and scrap. Field Service
Parts are those inventory kept at locations outside the four walls of the
manufacturing plant i.e., distribution center or warehouse.
Inventory Days
of Supply (for RM, WIP, PFG, and FFG):
Total gross value of inventory for the category
(raw materials, work in process, partially finished goods, or fully-finished
goods) at standard cost before reserves for excess and obsolescence. It includes
only inventory that is on the books and currently owned by the business entity.
Future liabilities such as consignments from suppliers are not included.
Calculation:
[5
Point Annual Average Gross Inventory] / [Calendar Year Value of Transfers / 365]
Inventory
Deployment:
A technique for
strategically positioning inventory to meet customer service levels while
minimizing inventory and storage levels. Excess inventory is replaced with
information derived through monitoring supply, demand and inventory at rest as
well as in motion.
Inventory
Management:
The process of
ensuring the availability of products through inventory administration.
Inventory
Planning Systems:
The systems that
help in strategically balancing the inventory policy and customer service levels
throughout the supply chain. These systems calculate time-phased order
quantities and safety stock, using selected inventory strategies. Some inventory
planning systems conduct what-if analysis and that compares the current
inventory policy with simulated inventory scenarios and improves the inventory
ROI.
Inventory
Turns:
The cost of goods sold divided by the average level of inventory on hand. This
ratio measures how many times a company's inventory has been sold during a
period of time. Operationally, inventory turns are measured as total throughput
divided by average level of inventory for a given period; How many times a year
the average inventory for a firm changes over, or is sold.
Inventory
Turnover:
See Inventory
Turns
Inventory
Velocity:
The speed with which
inventory moves through a defined cycle (i.e., from receiving to shipping).
IP:
See
Intellectual Property
Irregular route
carrier:
A motor carrier that is permitted to provide service utilizing any route.
IS:
See
Information Systems
ISDN:
See
Integrated services digital network
ISO:
See
International Standards Organization
ISO 9000:
A series
of quality assurance standards compiled by the Geneva, Switzerland-based
International Standardization
Organization. In the
United States, ISO is represented by the American National Standards Institute
based in Washington, D.C.
ISO 14000
Series Standards:
A series of generic
environmental management standards under development by the International
Organization of
Standardization, which provide structure and systems for managing environmental
compliance with legislative
and regulatory
requirements and affect every aspect of a company’s environmental operations.
IT:
Information
Technology.
ITL:
International
Trade Logistics
ITE:
See
Independent Trading Exchange
ITU:
See
Intermodal Transport Unit
Item:
Any unique
manufactured or purchased part, material, intermediate, subassembly, or product.
J
Java:
A computer term
for a general-purpose programming language created by Sun Microsystems. Java can
be used to create Java applets. A Java program is downloaded from the web server
and interpreted by a program running on the computer running the Web browser.
Java Applet:
A
computer term for a short program written in Java that is attached to a web page
and executed by the computer on which the Web browser is installed.
Java Script:
A
computer term for a cross-platform, World Wide Web scripting language developed
by Netscape
Communications.
JavaScript code is inserted directly into an HTML page.
Jidoka:
The concept of
adding an element of human judgment to automated equipment. In doing this, the
equipment becomes capable of discriminating against unacceptable quality, and
the automated process becomes more reliable. This concept, also known as
autonomation, was pioneered by Sakichi Toyoda at the turn of the twentieth
century when he invented automatic looms that stopped instantly when any thread
broke. This permitted one operator to oversee many machines with no risk of
producing large amounts of defective cloth. The term has since been extended
beyond its original meaning to include any means of stopping production to
prevent scrap (for example the andon cord which allows assembly-plant workers to
stop the line), even where this capability is not built-in to the production
machine itself
JIT:
See
Just-In-Time
JIT II:
See
Just-In-Time II
JIT/QC:
Just-In-Time/Quality Control.
Joint cost:
A type of
common cost where products are produced in fixed proportions, and the cost
incurred to produce on product necessarily entails the production of another;
the backhaul is an example.
Joint
Photographic Expert Group (JPEG):
A computer term
which is an abbreviation for the Joint Photographic Expert Group. A graphical
file format used to display high-resolution color images on the World Wide Web.
JPEG images apply a user specified compression scheme that can significantly
reduce the large file size usually associated with photo-realistic color images.
A higher level of compression results in lower image quality, whereas a lower
level of compression results in higher image quality.
Joint rate:
A rate over a route that involves two or more carriers to transport the
shipment.
Joint Supplier
Agreement (JSA):
Indicative of Stage
3 Sourcing Practices, the JSA includes terms & conditions, objectives, process
flows, performance targets, flexibility, balancing and incentives.
JPEG:
See
Joint Photographic Expert Group
JSA:
See
Joint Supplier Agreement
Just-in-Time
(JIT): An
inventory control system that controls material flow into assembly and
manufacturing plants by coordinating demand and supply to the point where
desired materials arrive just in time for use. An inventory reduction strategy
that feeds production lines with products delivered "just in time”. Developed by
the auto industry, it refers to shipping goods in smaller, more frequent lots.
Just-in-Time II
(JIT II):
Vendor-managed
operations taking place within a customer's facility. JIT II was popularized by
the Bose Corporation. The supplier reps, called "inplants," place orders to
their own companies, relieving the customer's buyers from this task. Many also
become involved at a deeper level, such as participating in new product
development projects, manufacturing planning (concurrent planning).
K
Kaizen:
The Japanese
term for improvement; continuing improvement involving everyone—managers and
workers. In
manufacturing,
kaizen relates to finding and eliminating waste in machinery, labor, or
production methods.
Also see:
Continuous Process Improvement
Kaizen Blitz:
A rapid
improvement of a limited process area, for example, a production cell. Part of
the improvement team consists of workers in that area. The objectives are to use
innovative thinking to eliminate non-value-added work and to immediately
implement the changes within a week or less. Ownership of the improvement by the
area work team and the development of the team’s problem-solving skills are
additional benefits.
Keiretsu:
A form of
cooperative relationship among companies in Japan where the companies largely
remain legally and economically independent, even though they work closely in
various ways such as sole sourcing and financial backing. A member of a keiretsu
generally owns a limited amount of stock in other member companies. A keiretsu
generally forms around a bank and a trading company but “distribution” (supply
chain) keiretsus exist linking companies from raw material suppliers to
retailers.
Kanban:
Japanese word
for "visible record", loosely translated means card, billboard or sign.
Popularized by Toyota
Corporation, it uses
standard containers or lot sizes to deliver needed parts to assembly line "just
in time" for use.
Key Custodians:
The
persons, assigned by the security administrators of trading partners, that send
or receive a component of either the master key or exchange key used to encrypt
data encryption keys. This control technique involves dual control, with split
knowledge that requires two key custodians.
Key Performance
Indicator (KPI):
A measure which is
of strategic importance to a company or department. For example, a supply chain
flexibility metric is Supplier On-time Delivery Performance which indicates the
percentage of orders that are fulfilled on or before the original requested
date.
Also see: Scorecard
Kitting:
Light assembly
of components or parts into defined units. Kitting reduces the need to maintain
an inventory of pre-built completed products, but increases the time and labor
consumed at shipment.
Also see:
Postponement
KPI:
See
Key Performance Indicator
L
Lading:
The cargo
carried in a transportation vehicle.
Laid-down cost:
The sum
of the product and transportation costs. The laid-down cost is useful in
comparing the total cost of a product shipped from different supply sources to a
customer’s point of use.
LAN:
See
Local Area Network
Land bridge:
The
movement of containers by ship-rail-sip on Japan-to-Europe moves; ships move
containers to the U.S. Pacific Coast, rails move containers to an East Coast
port, and ships deliver containers to Europe.
Land grants:
Grants of
land given to railroads during their developmental stage to build tracks.
Landed Cost:
Cost of
product plus relevant logistics costs such as transportation, warehousing,
handling, etc. Also called Total Landed Cost or Net Landed Costs
Lash barges:
Covered
barges that are loaded on board oceangoing ships for movement to foreign
destinations.
Last In, First
Out (LIFO):
Accounting method of
valuing inventory that assumes latest goods purchased are first goods used
during accounting period.
LCL:
See
Less-Than-Carload
LDI:
See
Logistics data interchange
Lead Logistics
Partner (LLP):
An organization that
organizes other 3rd party logistics partners for outsourcing of logistics
functions.
Also see: Fourth Party Logistics
Lead Time:
The total
time that elapses between an order's placement and its receipt. It includes the
time required for order transmittal, order processing, order preparation, and
transit.
Lead Time from
Complete Manufacture to Customer Receipt:
Includes time from when an order is ready
for shipment to customer receipt of order. Time from complete manufacture to
customer receipt including the following elements: pick/pack time, prepare for
shipment, total transit time (all components to consolidation point),
consolidation, queue time, and additional transit time to customer receipt.
Lead Time from
Order Receipt to Complete Manufacture:
Includes times from order receipt to order entry
complete, from order entry complete to start to build, and from start to build
to ready for shipment. Time from order receipt to order entry complete includes
the following elements: order revalidation, configuration check, credit check,
and scheduling. Time from order entry complete to start to build includes the
following elements: customer wait time and engineering and design time. Time
from start to build to ready for shipment includes the following elements:
release to manufacturing or distribution, order configuration verification,
production scheduling, and build or configure time.
Least Total
Cost: A
dynamic lot-sizing technique that calculates the order quantity by comparing the
setup (or ordering) costs and the carrying cost for various lot sizes and
selects the lot size where these costs are most nearly equal.
Also see: Discrete
Order
Quantity, Dynamic Lot Sizing
Least Unit
Cost: A
dynamic lot-sizing technique that adds ordering cost and inventory carrying cost
for each trial lot size and divides by the number of units in the lot size,
picking the lot size with the lowest unit cost.
Also see: Discrete Order Quantity, Dynamic
Lot Sizing
Less-Than-Carload (LCL):
Shipment that is
less than a complete rail car load (lot shipment).
Less-Than-Truckload (LTL) Carriers:
Trucking companies
that consolidate and transport smaller (less than truckload) shipments of
freight by utilizing a network of terminals and relay points.
Lessee:
A person or firm
to whom a lease is granted.
Lessor:
A person or firm
that grants a lease.
Letter of
credit:
An international business document that assures the seller that payment will be
made by the bank issuing the letter of credit upon fulfillment of the sales
agreement.
Leverage:
Taking
something small and exploding it. Can be financial or technological.
Life Cycle
Cost: In
cost accounting, a product’s life cycle is the period that starts with the
initial product conceptualization and ends with the withdrawal of the product
from the marketplace and final disposition. A product life cycle is
characterized by certain defined stages, including research, development,
introduction, maturity, decline, and abandonment. Life cycle cost is the
accumulated costs incurred by a product during these stages.
Lighter:
A flat-bottomed
boat designed for cross-harbor or inland waterway freight transfer.
LIFO:
See
Last In, First Out
Lift truck:
Vehicles
used to lift, move, stack, rack, or otherwise manipulate loads. Material
handling people use a lot of terms to describe lift trucks, some terms describe
specific types of vehicles, others are slang terms or trade names that people
often mistakenly use to describe trucks. Terms include industrial truck,
forklift, reach truck, motorized pallet trucks, turret trucks, counterbalanced
forklift, walkie, rider, walkie rider, walkie stacker, straddle lift, side
loader, order pickers, high lift, cherry picker, Jeep, Towmotor, Yale, Crown,
Hyster, Raymond, Clark, Drexel.
Line:
1) A specific
physical space for the manufacture of a product that in a flow shop layout is
represented by a straight line. In actuality, this may be a series of pieces of
equipment connected by piping or conveyor systems. 2) A type of manufacturing
process used to produce a narrow range of standard items with identical or
highly similar designs. Production volumes are high, production and material
handling equipment is specialized, and all products typically pass through the
same sequence of operations.
Also see: Assembly Line
Line functions:
The
decision-making areas associated with daily operations. Logistics line functions
include traffic
management,
inventory control, order processing, warehousing, and packaging.
Line-haul
shipment:
A shipment that
moves between cities and distances over 100 to 150 miles.
Line Scrap:
Value of
raw materials and work-in-process inventory scrapped as a result of improper
processing or assembly, as a percentage of total value of production at standard
cost.
Liner service:
International water carriers that ply fixed routes on published schedules.
Link:
The
transportation method used to connect the nodes (plants, warehouses) in a
logistics system.
Linked
Distributed Systems:
Independent computer
systems, owned by independent organizations, linked in a manner to allow direct
updates to be made to one system by another. For example, a customer's computer
system is linked to a supplier's system, and the customer can create orders or
releases directly in the supplier's system.
Little Inch:
A
federally built pipeline constructed during World War II that connected Corpus
Christi and Houston, Texas.
Live:
A situation in
which the equipment operator stays with the trailer or boxcar while it is being
loaded or unloaded.
LLP:
See
Lead Logistics Partner
Load factor:
A measure
of operating efficiency used by air carriers to determine the percentage of a
plane’s capacity that is utilized, or the number of passengers divided by the
total number of seats.
Load Tendering:
The
practice of providing a carrier with detailed information and negotiated pricing
(the tender) prior to scheduling pickup. This practice can help assure contract
compliance and facilitate automated payments (self billing).
Loading
allowance:
A reduced rate
offered to shippers and/or consignees who load and/or unload LTL or AQ
shipments.
Local Area
Network (LAN):
A data
communications network spanning a limited geographical area, usually a few miles
at most, providing communications between computers and peripheral devices.
Local rate:
A rate
published between two points served by one carrier.
Local service
carriers:
An air carrier
classification of carriers that operate between areas of lesser and major
population centers. These carriers feed passengers into the major cities to
Locational
determinant:
The factors that
determine the location of a facility. For industrial facilities, the
determinants include logistics.
Locator System:
Locator
systems are inventory-tracking systems that allow you to assign specific
physical locations to your inventory to facilitate greater tracking and the
ability to store product randomly. Location functionality in software can range
from a simple text field attached to an item that notes a single location, to
systems that allow multiple locations per item and track inventory quantities by
location. Warehouse management systems (WMS) take locator systems to the next
level by adding functionality to direct the movement between locations.
Logbook:
A daily record
of the hours an interstate driver spends driving, off, duty, sleeping in the
berth, or on duty but not driving.
Logistics
Channel:
The network of supply chain participants engaged in storage, handling, transfer,
transportation, and
Communication
functions that contribute to the efficient flow of goods.
Logistics data
interchange (LDI):
A computerized
system to electronically transmit logistics information.
Logistics
Management:
As defined by the
Council of Supply Chain Management Professionals (CSCMP): “Logistics management
is that part of supply chain management that plans, implements, and controls the
efficient, effective forward and reverse flow and storage of goods, services,
and related information between the point of origin and the point of consumption
in order to meet customers’ requirements. Logistics management activities
typically include inbound and outbound transportation management, fleet
management, warehousing, materials handling, order fulfillment, logistics
network design, inventory management, supply/demand planning, and management of
third party logistics services providers. To varying degrees, the logistics
function also includes sourcing and procurement, production planning and
scheduling, packaging and assembly, and customer service. It is involved in all
levels of planning and execution—strategic, operational, and tactical. Logistics
management is an integrating function which coordinates and optimizes all
logistics activities, as well as integrates logistics activities with other
functions, including marketing, sales, manufacturing, finance, and information
technology.”
Long ton:
Equals
2,240 pounds.
Lot Control:
A set of
procedures (e.g., assigning unique batch numbers and tracking each batch) used
to maintain lot integrity from raw materials, from the supplier through
manufacturing to consumers.
Lot-for-Lot:
A
lot-sizing technique that generates planned orders in quantities equal to the
net requirements in each period.
Also see:
Discrete Order Quantity
Lot Number:
See Batch
Number
Lot size:
The
quantity of goods purchased or produced in anticipation of use or sale in the
future.
Lot Sized
System:
See Fixed
Reorder Quantity Inventory Model
LTL:
See
Less-than-truckload Carriers
Lumping:
A term applied
to a person who assists a motor carrier owner-operator in the loading and
unloading of property: quite commonly used in the food industry
Lumpy demand:
See
Discontinuous Demand
M
M2M:
See
Machine-to-Machine interface
Machine
Downtimes:
Time during which a
machine cannot be utilized. Machine downtimes may occur during breakdowns,
maintenance, changeovers, etc.
Machine-to-Machine interface (M2M):
A term describing
the process whereby machines are remotely monitored for status and problems
reported and resolved automatically or maintenance scheduled by the monitoring
systems.
Macro
environment:
The environment
external to a business including technological, economic, natural, and
regulatory forces that marketing efforts cannot control.
Mainframe:
A term
sometimes generically used to refer to an organization’s central computer
system. Specifically the largest class of computer systems manufactured.
Maintenance,
Repair, and Operating supplies (MRO):
Items used in support of general operations and
maintenance such as maintenance supplies, spare parts, and consumables used in
the manufacturing process and supporting operations.
Major carrier:
A
for-hire certificated air carrier that has annual operating revenues of $1
billion or more: the carrier usually operates between major population centers.
Make-or-buy
decision:
The act of deciding
whether to produce an item internally or buy it from an outside supplier.
Factors to consider in the decision include costs, capacity availability,
proprietary and/or specialized knowledge, quality considerations, skill
requirements, volume, and timing.
Make-to-Order
(Manufacture-to-order):
A manufacturing process strategy where the trigger to begin
manufacture of a product is an actual customer order or release, rather than a
market forecast. For Make-to-Order products, more than 20% of the valueadded
takes place after the receipt of the order or release, and all necessary design
and process documentation is available at time of order receipt.
Make-to-Stock
(Manufacture-to-stock):
A manufacturing process strategy where finished product is
continually held in plant or warehouse inventory to fulfill expected incoming
orders or releases based on a forecast.
Manifest:
A
document which describes individual orders contained within a shipment.
Manufacturer’s
Representative:
One who sells goods
for several firms but does not take title to them.
Manufacturing
Calendar:
A calendar used in
inventory and production planning functions that consecutively numbers only the
working days so that the component and work order scheduling may be done based
on the actual number of workdays available.
Synonyms: M-Day
Calendar, Planning Calendar, Production Calendar, Shop Calendar.
Manufacturing
Capital Asset Value:
The asset value of
the "Manufacturing fixed assets" after allowance for depreciation. Examples of
equipment are SMT placement machines, conveyors, Auto guided vehicles, robot
cells, testers, X-ray solder machines, Burn-in chambers, Logic testers, Auto
packing equipment, PLC station controllers, Scanning equipment, PWB magazines.
Manufacture
Cycle Time:
The average time
between commencement and completion of a manufacturing process, as it applies to
make-to-stock products.
Calculation:
[Average # of
units in WIP] / [Average daily output in units]
Manufacturing
Execution Systems (MES):
Programs and systems that participate in shop floor control,
including programmed logic controllers and process control computers for direct
and supervisory control of manufacturing equipment; process information systems
that gather historical performance information, then generate reports; graphical
displays; and alarms that inform operations personnel what is going on in the
plant currently and a very short history into the past. Quality control
information is also gathered and a laboratory information management system may
be part of this configuration to tie process conditions to the quality data that
are generated. Thereby, cause-and-effect relationships can be determined. The
quality data at times affect the control parameters that are used to meet
product specifications either dynamically or off line.
Manufacturing
Lead Time:
The total time
required to manufacture an item, exclusive of lower level purchasing lead time.
For make-to-order products, it is the length of time between the release of an
order to the production process and shipment to the final customer. For
make-to-stock products, it is the length of time between the release of an order
to the production process and receipt into finished goods inventory. Included
here are order preparation time, queue time, setup time, run time, move time,
inspection time, and put-away time. Synonyms: Manufacturing Cycle Time.
Also see:
Lead Time
Manufacturing
Resource Planning (MRP II):
A method for the effective planning of all resources of a
manufacturing company. Ideally, it addresses operational planning in units,
financial planning in dollars, and has a simulation capability to answer what-if
questions. It is made up of a variety of processes, each linked together:
business planning, production planning (sales and operations planning), master
production scheduling, material requirements planning, capacity requirements
planning, and the execution support systems for capacity and material. Output
from these systems is integrated with financial reports such as the business
plan, purchase commitment report, shipping budget, and inventory projections in
dollars. Manufacturing resource planning is a direct outgrowth and extension of
closed-loop MRP.
Mapping:
A computer term
referring to diagramming data that is to be exchanged electronically, including
how it is to be used and what business management systems need it. Preliminary
step for developing an applications link. Performed by the functional manager
responsible for a business management system.
Marginal Cost:
The cost
to produce one additional unit of output. The change in total variable cost
resulting from a one-unit change in output.
Marine
insurance:
Insurance to protect
against cargo loss and damage when shipping by water transportation.
Maritime
Administration:
A federal agency
that promotes the merchant marine, determines ocean ship routes and services,
and awards maritime subsidies.
Market Demand:
In
marketing, the total demand that would exist within a defined customer group in
a given geographical area during a particular time period given a known
marketing program.
Market
dominance:
In transportation
rating this refers to the absence of effective competition for railroads from
other carriers and modes for the traffic to which the rate applies. The Staggers
Act stated that market dominance does not exist if the rate is below the
revenue-to-variable-cost ratio of 160% in 1981 and 170% in 1983
Market Segment:
A group
of potential customers sharing some measurable characteristics based on
demographics,
psychographics,
lifestyle, geography, benefits, etc.
Market-Positioned Warehouse:
Warehouse positioned
to replenish customer inventory assortments and to afford maximum inbound
transport consolidation economies from inventory origin points with relatively
short-haul local delivery.
Marquis
Partners:
Key strategic
relationships. This has emerged as perhaps the key competitive advantage and
barrier to entry of e-marketplaces. Get the big players in the fold first,
offering equity if necessary.
Marshaller or
Marshalling Agent:
This is a service
unique to international trade and relates to an individual or firm that
specializes in one or more of the activities preceding Main Carriage, such as
consolidation, packing, marking, sorting of merchandise, inspection, storage,
etc. References state that Marshaling Agent, Consolidation Agent and Freight
Forwarder all have the same meaning.
Mass
Customization:
The creation of a
high-volume product with large variety so that a customer may specify his or her
exact model out of a large volume of possible end items while manufacturing cost
is low because of the large volume. An example is a personal computer order in
which the customer may specify processor speed, memory size, hard disk size and
speed, removable storage device characteristics, and many other options when PCs
are assembled on one line and at low cost.
Master pack:
A large
box that is used to pack a number of smaller boxes or containers. Aids in
protecting the smaller cartons or packages and reduces the number of cartons to
be handled during the material handling process.
Master
Production Schedule (MPS):
The master level or
top level schedule used to set the production plan in a manufacturing facility.
Material
Acquisition Costs:
One of the elements
comprising a company's total supply-chain management costs. These costs consist
of the following:
1. Materials
(Commodity) Management and Planning: All costs associated with supplier
sourcing, contract negotiation and qualification, and the preparation,
placement, and tracking of a purchase order, including all costs related to
buyer/planners.
2. Supplier Quality
Engineering: The costs associated with the determination,
development/certification, and monitoring of suppliers' capabilities to fully
satisfy the applicable quality and regulatory requirements.
3. Inbound Freight
and Duties: Freight costs associated with the movement of material from a vendor
to the buyer and the associated administrative tasks. Duties are those fees and
taxes levied by government for moving purchased material across international
borders. Customs broker fees should also be considered in this category.
4. Receiving and Put
Away: All costs associated with taking possession of material and storing it.
Note that carrying costs are not a part of acquisition, and inspection is
handled separately.
5. Incoming
Inspection: All costs associated with the inspection and testing of received
materials to verify compliance with specifications.
6. Material Process
and Component Engineering: Those tasks required to document and communicate
component
specifications, as
well as reviews to improve the manufacturability of the purchased item.
7. Tooling: Those
costs associated with the design, development, and depreciation of the tooling
required to produce a
purchased item. A
tooling cost would be incurred by a company if they actually paid for equipment
and/or maintenance
for a contract
manufacturer that makes their product. Sometimes, there isn’t enough incentive
for a contract manufacturer to upgrade plant equipment to a level of quality
that a company requires, so the company will pay for the upgrades and
maintenance to ensure high quality. May not be common in some industries such as
the Chemicals
Material index:
The ratio
of the sum of the localized raw material weights to the weight of the finished
product.
Material Safety
Data Sheet (MSDS):
A document that is
part of the materials information system and accompanies the product. Prepared
by the manufacturer, the MSDS provides information regarding the safety and
chemical properties and (if necessary) the long-term storage, handling, and
disposal of the product. Among other factors, the MSDS describes the hazardous
components of a product; how to treat leaks, spills, and fires; and how to treat
improper human contact with the product.
Also see:
Hazardous Materials
Materials
Handling:
The physical
handling of products and materials between procurement and shipping.
Materials
Management:
Inbound logistics
from suppliers through the production process. The movement and management of
materials and products from procurement through production.
Materials
planning:
The materials
management function that attempts to coordinate the supply of materials with the
demand for materials.
Materials
Requirements Planning (MRP):
A decision-making methodology used to determine
the timing and quantities of materials to purchase.
Metrics:
See
Performance Measures.
Matrix
Organizational Structure:
An organizational structure in which two (or more) channels
of command, budget
responsibility, and
performance measurement exist simultaneously. For example, both product and
functional forms of
organization could
be implemented simultaneously, that is, the product and functional managers have
equal authority and employees report to both managers.
MAX:
The lowest
inventory quantity that is desired at a ship to location or selling location.
This quantity will over-ride the forecast number if the forecast climbs above
the MAX. Maximum stock
Maximum
Inventory:
The planned maximum
allowable inventory for an item based on its planned lot size and target safety
stock.
Maximum Order
Quantity:
An order quantity
modifier applied after the lot size has been calculated, that limits the order
quantity to a pre-established maximum.
m-Commerce:
Mobile
commerce applications involve using a mobile phone to carry out financial
transactions. This usually means making a payment for goods or transferring
funds electronically. Transferring money between accounts and paying for
purchases are electronic commerce applications. An emerging application,
electronic commerce has been facilitated by developments in other areas in the
mobile world, such as dual slot phones and other smarter terminals and more
standardized protocols, which allow greater interactivity and therefore more
sophisticate services.
M-Day Calendar:
See
Manufacturing Calendar
Mean:
The arithmetic
average of a group of values. Syn: arithmetic mean.
Measurement
ton:
Equals 40 cubic feet; used in water transportation rate making.
Median:
The middle value
in a set of measured values when the items are arranged in order of magnitude.
If there is no single middle value, the median is the mean of the two middle
values.
MES:
See
Manufacturing Execution Systems
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