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308 Cards in this Set
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The classification of a group of items, decreasing order of annual dollar volume (price multiplied by projected volume) or other criteria. This array is then split into three classes, called A, B, and C. The A group usually represents 10% to 20% by number of items and 50% to 70% by projected dollar volume. The next grouping, B, usually 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 Classification |
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An RFID tag which broadcasts information and contains its own power source.
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Active tag
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Techniques that deal with analysis and planning of logistics and manufacturing over the short-, intermediate-, and longterm time periods and describe 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.
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Advanced planning and scheduling
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One who acts on behalf of another (the principal) in dealing with a third party.
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Agent
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Additional inventory above basic pipeline stock to cover projected trends of increasing sales, planned sales promotion programs, seasonal fluctuations, plant shutdowns, and vacations.
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Anticipation inventories
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Computer programs that can learn and reason in a manner similar to humans. The problem is defined in terms of states and operators to generate a search space that is examined for
the best solution. In contrast, conventional programming collects and processes data by algorithm or fixed step-by-step procedures. |
Artificial intelligence
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A production environment where a good or service can be assembled after receipt of a customer’s order. |
Assemble-To-Order |
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A set of technologies that collect data about objects and then send these data to a computer without human intervention. Examples include radio frequency wireless devices and terminals, bar code scanners, and smart cards. |
Automatic identification and data |
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The on-hand inventory balance minus allocations, reservations, back-orders, and (usually) quantities held for quality problems. |
Available Inventory |
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The uncommitted portion of a company's inventory and planned production maintained in the master schedule to support customer-order promising. |
Availabe-To-Promise |
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All the customer orders received but not yet shipped. Sometimes referred to as open orders or the order board. |
Backlog |
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An immediate (or past due) demand against an item whose inventory is insufficient to satisfy the demand. |
Backorder |
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A financial statement showing the resources owned, the debts owed, and the owner’s share of a company at a given point in time. |
Balance Sheet |
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A method of encoding data using bar code for fast and accurate readability. |
Bar Coding |
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1) A manufacturing technique in which parts are accumulated and processed together in a lot. 2) A computer technique in which transactions are accumulated and processed together or in a lot. |
Batch Processing |
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A carrier’s contract and receipt for goods the carrier agrees to transport from one place to another and to deliver to a designated person. In case of loss, damage, or delay; the basis for filing freight claims. |
Bill of Lading |
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1) A listing of all the subassemblies, intermediates, parts, and raw materials that go into a parent assembly showing the quantity of each required to make an assembly. It is used in conjunction with the master production schedule to determine the items for which purchase requisitions and production orders must be released. 2) A list of all the materials needed to make one production run of a product, by a contract manufacturer, of piece parts components for its customers. |
Bill of Material |
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A long-term commitment to a supplier for material against which short-term releases will be generated to satisfy requirements. Often covers only one item with predetermined delivery dates. |
Blanket Order |
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A facility, function, department, or resource whose capacity is less than the demand placed upon it. Jobs are processed at a slower rate than they are demanded |
Bottleneck |
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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, time or material and support throughput and/or due date performance. Can be maintained at the constraint, convergent points (with a constraint part), divergent points, and shipping points. |
Buffer |
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Information collected by an organization on customers, competitors, products or services, and processes. |
Business Intelligence |
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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. 2) A document consisting of the business details (organization, strategy, and financing tactics) prepared by an entrepreneur to plan for a new business. |
Business Plan |
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Business being conducted over the Internet between businesses. The implication is that this connectivity will cause businesses to transform themselves via supply chain management to become virtual organizations, reducing costs, improving quality, reducing delivery lead time, and improving due-date performance. |
Business-To-Business Commerce |
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1) The ability of a system to perform its expected function. 2) The ability of a worker, machine, work center, plant, or organization to produce output per time period. 3) Required mental ability to enter into a contract. |
Capacity |
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A percentage of the dollar value of inventory per unit of time (generally one year). The total cost of holding inventory. |
Carrying Cost |
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The net flow of dollars into or out of the proposed project. The algebraic sum, in any time period, of all cash receipts, expenses, and investments. Also called cash proceeds or cash generated. |
Cash Flow |
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1) An indicator of how efficiently a company manages its assets to improve cash flow. Inventory days + accounts receivable days - accounts payable days. 2) The time it takes for an investment to flow back into a company. Inventory days of supply+Days of sales outstanding-Days of Payable Outstanding |
Cash-To-Cash Cycle Time |
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A production planning method that maintains a stable inventory level while varying production to meet demand. |
Chase Production Method |
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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. |
Collaborative Planning, Forecasting, and Replenishment |
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A holistic process that brings together supply chain partners and service providers to drive inefficiencies out of transport planning and execution process. |
Collaborative Transportation Management |
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An analysis of a competitor that includes its strategies, capabilities, prices, and costs. |
Competitive Analysis |
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A form of design standardization where a single part is used to replace a variety of similar parts. |
Component Commonality |
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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. |
Consignment |
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A Web-based marketplace, usually owned by a third party, that allows members to trade with each other. |
Consortia trade exchange |
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Any element or factor that prevents a system from achieving a higher level of performance with respect to its goal. |
Constraint |
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Applications that support the evolutionary life cycle of digital based information and make information dynamically updatable online includes the ability to publish content to a repository and support access to digital-based content. |
Content Management |
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A graphic comparison of process performance data with predetermined computed limits. |
Control Chart |
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An accounting classification useful for determining the amount of direct materials, direct labor, and allocated overhead associated with the products sold during a given period of time. |
Cost of Goods Sold |
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The costs associated with providing poor quality products or services. |
Cost of Poor Quality |
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A selling method that occurs when customers buy additional products or services after the initial purchase. |
Cross-Selling |
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The longest planned length of time to accomplish the activity in question. It is found by reviewing the lead time for each bill of material path below the item; whichever path adds up to the greatest number. |
Cumulative Lead-time |
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A marketing philosophy based on putting the customer first and to understandand support existing and potential customer needs. |
Customer Relationship Management (CRM). |
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1) The ability of a company to address the needs of and inquiries and requests from customers. 2) A measure of the delivery of a product to the customer at the time the customer specifies. |
Customer Service |
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A measure of delivery performance of finished goods, usually expressed as a percentage. Also know as Fill-rate Ratio |
Customer Service Ratio |
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1) The interval of time during which a system or process, such as seasonal demand or a manufacturing operation, periodically returns to similar initial conditions. 2) The interval of time during which an event or set of events is completed. |
Cycle |
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An inventory accuracy audit technique where inventory is counted on a cyclic schedule rather than once a year. |
Cycle Counting |
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The most active component of inventory which depletes gradually as customer orders are received and is replenished cyclically when supplier orders are received. |
Cycle Stock |
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1) In materials management, it refers to the length of time from when material enters a production facility until it exits. 2) In industrial engineering, the time between completion of two discrete units of production. |
Cycle Time |
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Sifting through a database to find and fix mistakes such as misspelling, missing information, and false data. |
Data Cleansing |
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1) A catalog of requirements and specifications for an information system. 2) A file that stores facts about the files and databases for all systems that are currently being used or for the software involved. |
Data Dictionary |
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Hardware or software enabling one device or software application to transfer data to another device or software application. |
Data Interface Device |
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A database maintenance term used in the context of relational databases, which helps to minimize the duplication of information or safeguard the database against certain types of logical or structural data anomalies. |
Data Normalization |
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A repository of data that has been specially prepared to support decision-making applications. |
Data Warehouse |
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Software designed for organizing data and providing the mechanism for storing, maintaining, and retrieving that data on a physical medium. |
Database Management |
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Creating independence between supply and use of material. Commonly denotes providing inventory between operations so that fluctuations in the production rate of the supplying operation do not constrain production or use rates of the next operation. |
Decoupling |
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A need for a particular product or component. |
Demand |
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Forecasting the demand for a particular good, component, or service. |
Demand Forecasting |
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1) The function of recognizing all demands for goods and services to support the marketplace. It involves prioritizing demand when supply is lacking and can facilitate the planning and use of resources for profitable business results. 2) In marketing, the process of planning, executing, controlling, and monitoring the design, pricing, promotion, and distribution of products and services to bring about transactions that meet organizational and individual needs. |
Demand Management |
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Approach to production planning where output is increased and decreased to closely match demand. |
Demand Matching |
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The process of planning all demands for products and services to support the marketplace. The process involves updating the supporting plans and assumptions and reaching consensus on an updated demand plan. |
Demand Planning |
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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 Pull |
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Demand that is directly related to or derived from the bill of material structure for other items or end products. Such demands are therefore calculated and need not to be forecast. Pant pockets and buttons for Jeans |
Dependent Demand |
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A term used in conjunction with the concurrent design of a firm’s products, enhancing the product design in consideration of the issues that will arise in the overall supply chain, from raw material to the final stage of the product’s life cycle. |
Design for the Supply Chain |
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Material that becomes a part of the final product in measurable quantities. |
Direct Material |
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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. 2) The systematic division of a whole into discrete parts having distinctive characteristics. |
Distribution |
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Product, usually spare parts and finished goods, located in the distribution system (e.g., in warehouses, in-transit between warehouses and the consumer). |
Distribution Inventory |
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1) The function of determining the need to replenish inventory at branch warehouses.
2) More generally, replenishment inventory calculations, which may be based on other planning approachessuch as period order quantities or "replace exactly what was used,” |
Distribution Requirements Planning |
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A business that does not manufacture its own products, but purchases and resells these products. Such a business usually maintains a finished goods inventory. |
Distributor |
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A measurement (usually expressed as a percentage) of the actual output compared to the standard output expected. It measures how well something is performing relative to existing standards. |
Efficiency |
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The backbone system for other information technology applications. |
Electronic Business System |
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The use of computer and telecommunication technologies to conduct business via electronic transfer of data and documents. |
Electronic Commerce (ECOMMERCE) |
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The paperless (electronic) exchange of trading documents, such as purchase orders, shipment authorizations, advanced shipment notices, and invoices, using standardized document formats. |
Electronic Data Interchange (EDI) |
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The electronic representation of a document that can be printed. |
Electronic Document |
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Codes that are used with RFID tags to carry information on the product that will support warranty programs. |
Electronic Product Code |
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Products whose customer specifications require unique engineering design, significant customization, or purchased materials. Each customer order results in a unique set of part numbers, bills of material, and routings. |
Engineer-to-Order |
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Framework for organizing, defining, and standardizing the business processes necessary to effectively plan and control an organization so the organization can use its internal knowledge to seek external advantage. |
Enterprise Resource Planning (ERP) |
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A language that facilitates direct communication among computers on the Internet. Unlike the older hypertext markup language (HTML), which provides HTML tags giving instructions to a Web browser about how to display information, tags in this language give instructions to a Web browser about the category of information. |
Extensible Markup Language (EML) |
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A network connection to a partner’s network using secure information processing and Internet protocols to do business. |
Extranet |
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A forecast method on a correlated leading indicator, such as estimating furniture sales based on housing starts. Tend to be more useful for large aggregations, such as total company sales, than for individual product sales. |
Extrinsic Forecast Method |
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The flow of information back into the control system so that actual performance can be compared with planned performance. |
Feedback |
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The manner in which records are stored within a file (e.g., sequential, random, index-sequential). |
File Structure |
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A protocol used to transfer files over the Internet. |
File Transfer Protocol (FTP) |
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A production environment where a good or service can be assembled after receipt of a customer’s order. The key components (bulk, semifinished, 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. |
Finish-to-Order |
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Inventory that is carried as a cushion to protect against forecast error. |
Fluctuation Inventory |
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The difference between actual demand and forecast demand, stated as an absolute value or as a percentage. |
Forecast Error |
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The business function that attempts to predict sales and use of products so they can be purchased or manufactured in appropriate quantities in advance. |
Forecasting |
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A supply chain integrator that assembles and manages the resources, capabilities, and technology of its own organization with those of complementary service providers to deliver a comprehensive supply chain solution. |
Fourth-party logistics (4PL) provider |
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The category of expenses on an income statement that includes the costs of general managers, computer systems, research and development, and others. |
General and administrative expenses |
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A connection between the computer and the user employing a mouse and icons so that the user makes selections by pointing at icons and clicking the mouse. |
Graphical user interface (GUI) |
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The difference between total revenue and the cost of goods sold. |
Gross Margin |
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An internationally standardized description of goods that uses a system of numbers to provide increasingly detailed classification and descriptions. |
Harmonized system classification |
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A Web-based marketplace used by buyers and sellers from multiple industries. This marketplace lowers prices by lowering transaction costs. |
Horizontal marketplace |
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A financial statement showing the net income for a business over a given period of time. |
Income Statement |
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Short for International Commercial Terms; created to simplify international transactions.
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Incoterms
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The International Chamber of Commerce Official Rules for Interpretation of Trade Terms. |
Incoterms 2000 |
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The demand for an item that is unrelated to the demand for other items. Demand for finished goods, parts required for destructive testing, and service parts requirements are examples of independent demand. |
Independent Demand |
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Interrelated computer hardware and software along with people and processes designed for the collection, processing, and dissemination of information for planning, decision making, and control. |
Information System |
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A model of how an organization operates regarding information. Considers four factors: (1) organizational functions (2) communication of coordination requirements (3) data modeling needs (4) management and control structures. |
Information system architecture |
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The technology of computers, telecommunications, and other devices that integrate data, equipment, personnel, and problem-solving methods in planning and controlling business activities. Provides the means for collecting, storing, encoding, processing, analyzing, transmitting, receiving, and printing text, audio, or video information. |
Information Technology (IT) |
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One plant’s need for a part or product that is produced by another plant or division within the same organization. Although it is not a customer order, it is usually handled by the master production scheduling system in a similar manner. |
Interplant Demand |
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A privately owned network that makes use of Internet technology and applications to meet the needs of an enterprise. It resides entirely within a department or company, providing communication and access to information, similar to the Internet, with Web pages, and so on for internal use only. |
Intranet |
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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 |
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A forecast based on internal factors, such as an average of past sales. |
Intrinsic forecasting method |
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1) Those stocks or items used to support production (raw materials and work-in-process items), supporting activities (maintenance, repair, and operating supplies), and customer service (finished goods and spare parts). Demand for inventory may be dependent or independent. Inventory functions are anticipation, hedge, cycle (lot size), fluctuation (safety, buffer, or reserve), transportation (pipeline), and service parts. 2) All the money currently tied up in the system. |
Inventory |
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The branch of business management concerned with planning and controlling inventories.
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Inventory Management
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The number of times that an inventory cycles during the year. Frequently computed by dividing the average inventory level into the annual cost of sales. |
Inventory Turnover |
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Coordinating the lot sizing and order release decision for
related items and treating them as a family of items. The objective is to achieve lower costs because of ordering, setup,shipping, and quantity discount economies. |
Joint Replenishment
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A philosophy of manufacturing based on planned elimination of all waste and on continuous improvement of productivity.
The primary elements include having only the required inventory when needed; to improve quality to zero defects; to reduce lead times by reducing setup times, queue lengths, and lot sizes; to incrementally revise the operations themselves; and to accomplish these activities at minimum cost. |
Just-in-Time (JIT)
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The Japanese term for improvement; continuing improvement involving everyone: managers and workers. In manufacturing, relates to finding and eliminating waste in machinery, labor, or production methods.
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Kaizen
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A method of Just-in-Time production that uses standard containers or lot sizes with a single card attached to each. It is a pull system in which work centers signal with a card that they wish to withdraw parts from feeding operations or
suppliers. |
Kanban
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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 generally owns a limited amount of stock in other member companies.
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Keiretsu
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Financial and non-financial measures that are used to define and assess progress toward specific organizational goals and are typically tied to an organization's strategy and business stakeholders.
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Key performance indicator
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Product cost plus the costs of logistics, such as warehousing, transportation, and handling fees.
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Landed cost
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1) A span of time required to perform a process (or series of operations). 2) In a logistics context, the time between recognition of the need for an order and the receipt of goods. Individual components can include order preparation time, queue time, processing time, move or transportation time, and receiving and inspection time.
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Lead-time
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A philosophy of production that emphasizes the minimization of the amount of all the resources (including time) used in the various activities of the enterprise. Involves identifying and eliminating non-value-adding activities in design, production, supply chain management, and dealing with customers. Contains a set of principles and practices to reduce cost through the relentless removal of waste and through the simplification of all manufacturing and support processes.
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Lean production
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A computer application program that is old and interfaces poorly with other applications but is too expensive to replace. It often runs on antiquated hardware.
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Legacy system
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A measure (usually expressed as a percentage) of satisfying demand through inventory or by the current production schedule in time to satisfy the customers’ requested delivery dates and quantities.
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Level of Service
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Mathematical models for solving linear optimization problems through minimization or maximization of a linear function subject to linear constraints.
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Linear Programming
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The amount of planned work scheduled for and actual work released to a facility, work center, or operation for a specific span of time.
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Load
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Spreading orders out in time or rescheduling operations so that the amount of work to be done in sequential time periods tends to be distributed evenly and is achievable.
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Load Leveling
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A high-speed data communication system for linking computer terminals, programs, storage, and graphic devices at multiple workstations distributed over a relatively small geographic area such as a building or campus.
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Local Area Network (LAN)
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In an industrial context, the art and science of obtaining, producing, and distributing material and product in the proper place and in proper quantities.
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Logistics
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The planning and coordination of the physical movement aspects of a firm's operations such that a flow of raw materials, parts, and finished goods is achieved in a manner that minimizes total costs for the levels of service desired.
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Logistics System
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The amount of a particular item that is ordered from the plant or a supplier or issued as a standard quantity to the production process.
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Lot Size
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A production environment where a good or service can be made after receipt of a customer's order. The final product is usually a combination of standard items and items custom designed to meet the special needs of the customer.
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Make-to-Order
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A production environment where products can be and usually are finished before receipt of a customer order. Customer orders are typically filled from existing stocks, and production orders are used to replenish those stocks. |
Make-to-stock |
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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 and 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. |
Manufacturing Execution system (MES) |
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The total time required to manufacture an item, exclusive of lower-level purchasing lead time.
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Manufacturing Lead-time
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The series of operations performed upon material to convert it from the raw material or a semifinished state to a state of further completion.
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Manufacturing process
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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.
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Manufacturing resource planning (MRP)
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Responding to customers’ needs.
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Market Driven
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The actual portion of current market demand that a company or product achieves.
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Market Share
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The systematic gathering, recording, and analyzing of data about problems relating to the marketing of goods and services.
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Marketing research
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A group of business processes that includes demand management (which includes forecasting and order servicing); production and resource planning; and master scheduling (which includes the master schedule and the rough-cut capacity plan).
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Master Planning
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A line on the master schedule grid that reflects the anticipated build schedule for those items assigned to the master scheduler. The master scheduler maintains this schedule, and in turn, it becomes a set of planning numbers that drives material requirements planning. It represents what the company plans to produce expressed in specific configurations, quantities, and dates.
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Master Production Schedule (MPS)
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A schedule format that includes time periods (dates), the forecast, customer orders, projected available balance, available-to-promise, and the master production schedule. It takes into account the forecast; the production plan; and other important considerations such as backlog, availability of material, availability of capacity, and management policies and goals. |
Master schedule |
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A set of techniques that uses bill of material data, inventory data, and the master production schedule to calculate requirements for materials.
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Materials Requirements Planning (MRP)
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The grouping of management functions supporting the complete cycle of material flow, from the purchase and internal control of production materials to the planning and control of work in process to the warehousing, shipping, and distribution of the finished product. |
Materials Management |
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The general problem of optimizing a function of several variables subject to a number of constraints.
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Mathematical programming
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The average of the absolute values of the deviations of observed values from some expected value. It can be calculated based on observations and the arithmetic mean of those observations. An alternative is to calculate absolute deviations of actual sales data minus forecast data. These data can be averaged in the usual arithmetic way or with exponential smoothing. |
Mean absolute deviation (MAD) |
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Software that interconnects incompatible applications software and databases from various trading partners into decision support tools such as ERP.
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Middleware
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The strategy of planning products so the components can be used in current and future products or that the components can be assembled or arranged to produce multiple configurations of a product.
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Modular design strategy
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A system architecture design in which related tasks are grouped in self-contained packages. Each package of tasks performs all of the tasks related to a specific function, and advances in functions can be implemented without affecting
other packages. |
Modular system
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A display of all the components directly or indirectly used in a parent, together with the quantity required of each component.
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Multilevel Bill of Material
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The simultaneous use by a computer of two or more central processing units, with each executing its own instruction set and each controlled by a single operating system.
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Multiprocessing
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Procurement of a good or service from more than one independent supplier.
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Multisourcing
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1) The interconnection of computers, terminals, and communications channels to facilitate file and peripheral device sharing as well as effective data communication. 2) A graph consisting of nodes connected by arcs.
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Network
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A software system loosely based on how the brain works.
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Neural Network
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Programming similar to linear programming but incorporating a nonlinear objective function and linear constraints or a linear objective function and nonlinear constraints or both a nonlinear objective function and nonlinear constraints.
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Nonlinear
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The capability of software and diverse hardware environments to communicate with each other through the use of standard messaging protocols respectively.
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Open system architecture
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A set of software programs that control the execution of the hardware and application programs. Manages the computer and network resources through storage management, disk input/output, communications linkages, program scheduling, and monitoring system usage for performance and cost allocations.
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Operating System (OS)
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Capabilities of an organization in which poor performance can cause loss of business.
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Order Losers
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The process of making a delivery commitment (i.e., answering the question "When can you ship?").
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Order promising
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Those competitive characteristics that a firm must exhibit to be a viable competitor in the marketplace.
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Order qualifiers
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Those competitive characteristics that cause a firm’s customers to choose that firm’s goods and services over those of its competitors.
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Order winners
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Used in calculating order quantities, the costs that increase as the number of orders placed increases. It includes costs related to the clerical work of preparing, releasing, monitoring, and receiving orders, the physical handling of goods, inspections, and setup costs, as applicable.
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Order Cost
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A production environment in which a good or service can be packaged after receipt of a customer order.
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Package-to-Order
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A concept developed by Vilfredo Pareto, an Italian economist, that states that a small percentage of a group accounts for the largest fraction of the impact, value, etc.
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Pareto's Law
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An RFID tag which does not broadcast information and does not contain its own power source.
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Passive Tag
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A system for collecting, measuring, and comparing a measure to a standard for a specific criterion for an operation, item, good, service, business, etc. Consists of a criterion, a standard, and a measure.
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Performance Measurement System
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1) The actual inventory itself. 2) The determination of inventory quantity by actual count. Can be taken on a continuous, periodic, or annual basis.
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Physical Inventory
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Inventory in the transportation network and the distribution system, including the flow through intermediate stocking points.
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Pipeline Inventory
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A multi-service Web site that provides access to data that may be secured by each user’s role. Users can aggregate data and perform basic analysis.
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Portal
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A trade exchange hosted by a single company to facilitate collaborative e-commerce with its trading partners.
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Private Trading Exchange
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A diagram of the flow of a production process or service process through the production system. Standardized symbols are used to designate processing, flow directions, branching decisions, input/output, and other aspects of the process.
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Process Map
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A strategy of making a product distinct from the competition on a nonprice basis such as availability, durability, quality, or reliability.
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Product Differentiation
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A group of products with similar characteristics, often used in production planning (or sales and operations planning).
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Product Family
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1) The stages a new product goes through from beginning to end, i.e., the stages that a product passes through from introduction through growth, maturity, and decline. 2) The time from initial research and development to the time at which sales and support of the product to customers are withdrawn. 3) The period of time during which a product can be produced and marketed profitably. |
Product Life Cycle (PLC) |
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A process to develop tactical plans based on setting the overall level of manufacturing output (production plan) and other activities to best satisfy the current planned levels of sale (sales plan or forecasts), while meeting general business objectives of profitability, productivity, competitive customer lead times, and so on, as expressed in the overall business plan. |
Production Planning |
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The difference between the sales and cost of goods sold for an organization, sometimes expressed as a percentage of sales.
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Profit Margin
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1) In production, the production of items only as demanded for use or to replace those taken for use. 2) In material control, the withdrawal of inventory as demanded by the using operations. Material is not issued until a signal comes from the user. 3) In distribution, a system for replenishing field warehouse inventories where replenishment decisions are made at the field warehouse itself, not at the central warehouse or plant. |
Pull system |
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The term used in industry and management to denote the function of and the responsibility for procuring materials, supplies, and services. |
Purchasing |
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1) In production, the production of items at times required by a given schedule planned in advance. 2) In material control, the issuing of material according to a given schedule or issuing material to a job order at its start time. 3) In distribution, a system for replenishing field warehouse inventories where replenishment decision making is centralized, usually at the manufacturing site or central supply facility. |
Push System |
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Conformance to requirements or fitness for use.
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Quality
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A system of linking final retail sales with production and shipping schedules back through the chain of supply; employs
point-of-sale scanning and electronic data interchange and may use direct shipment from a factory to a retailer. |
Quick Response Program
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A system using electronic tags to store data about items.
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Radio frequency identification
(RFID) tag |
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A fluctuation in data that is caused by uncertain or random occurrences.
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Random variation
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A software program that allows users to obtain information drawn from two or more databases that are made up of two dimensional arrays of data.
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Relational database
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The total period of time that elapses from the moment it is determined that a product should be reordered until the product is back on the shelf available for use.
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Replenishment Lead-time
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Capacity planning conducted at the business plan level. The process of establishing, measuring, and adjusting limits or levels of long-range capacity. Normally based on the production plan but may be driven by higher-level plans beyond the time horizon for the production plan, e.g., the business plan. It addresses those resources that take long periods of time to acquire. |
Resource Planning |
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Net income for the previous 12 months divided by total assets.
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Return of Assets
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A relative measure of financial performance that provides a means for comparing various investments by calculating the profits returned during a specified time period.
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Return on Investment (ROI)
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An Internet auction in which suppliers attempt to underbid their competitors.
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Reverse Auction
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A complete supply chain dedicated to the reverse flow of products and materials for the purpose of returns, repair, re-manufacture, and/or recycling.
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Reverse Logistics
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The systematic process of planning, implementing, and controlling the efficient, cost-effective flow of material or goods from their typical final destination or point of consumption for the purpose of capturing or creating value (i.e., returns, rework, remanufacture, refurbish, reconfigure,
reuse, repair, etc.) or for proper disposal (i.e., recycle, incinerate, landfill, etc.); also included is the reduction of materials used in the forward flow of materials and goods for a reduced volume of reverse flow. |
Reverse Supply Chain
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A method often associated with the management of inventory risk. Manufacturers and retailers that experience high variability in demand for their products can pool together
common inventory components associated with a broad family of products to buffer the overall burden of having to deploy inventory for each discrete product. |
Risk Pooling
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1) In general, a quantity of stock planned to be in inventory to protect against fluctuations in demand or supply. 2) In the context of master production scheduling, the additional inventory and capacity planned as protection against forecast errors and short-term changes in the backlog.
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Safety Stock
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A process to develop tactical plans that provide management the ability to strategically direct its businesses to achieve competitive advantage on a continuous basis by integrating customer-focused marketing plans for new and existing
products with the management of the supply chain. |
Sales and Operations Planning (S&OP)
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A repetitive pattern of demand from year to year (or other repeating time interval) with some periods considerably higher than others.
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Seasonality
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An RFID tag which broadcasts information, contains its own power supply, and harvests transmission power from the reader to extend its broadcast range.
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Semipassive tag
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1) In its narrowest sense, an organization that provides an intangible product (e.g., medical or legal advice). 2) In its broadest sense, all organizations except farming, mining, and manufacturing.
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Service industry
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Those modules, components, and elements that are planned to be used without modification to replace an original part.
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Service parts
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A style of information technology (IT) design that guides all aspects of creating and using business services throughout their life cycles—as well as defining and provisioning the IT infrastructure that enables different computer applications to exchange data and participate in business processes, regardless of the operating systems or programming languages
underlying those applications. |
Service-oriented architecture
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1) The work required to change a specific machine, resource, work center, or line from making the last good piece of item A to making the first good piece of item B. 2) The refitting of equipment to neutralize the effects of the last lot produced (e.g., tear down of the just-completed production, preparation of the equipment for production of the next scheduled item).
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Setup
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1) The technique of using representative or artificial data to reproduce in a model various conditions that are likely to occur in the actual performance of a system. It is frequently used to test the behavior of a system under different operating policies.
2) Within MRP II, using the operational data to perform what-if evaluations of alternative plans to answer the question, Can we do it? |
Simulations |
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A company that is selected to have 100% of the business for a part although alternate suppliers are available.
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Single-source supplier
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A methodology that furnishes tools for the improvement of business processes. The intent is to decrease process variation and improve product quality.
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Six sigma
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The programs and documentation necessary to make use of a computer.
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Software
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The target costs of an operation, process, or product including direct material, direct labor, and overhead charges.
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Standard costs
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The application of statistical techniques to monitor and adjust an operation also Used interchangeably with statistical quality control. |
Statistical process control (SPC) |
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1) An inventory item.
2) In a distribution system, an item at a particular geographic location. |
Stock Keeping Unit (SKU)
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Costs that may include lost sales, backorder costs, expediting, and additional manufacturing and purchasing costs. |
Stockout costs |
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A relationship formed by two or more organizations that share information (proprietary), participate in joint investments, and develop linked and common processes to increase the performance of both companies.
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Strategic alliance
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The process of developing a strategic plan.
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Strategic planning
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A computer language that is a relational model database language. Such a language has an English vocabulary, is non-procedural, and provides the ability to define tables, screen layouts, and indices. |
Structured query language (SQL) |
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Sending production work outside to another manufacturer.
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Subcontracting
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1) Provider of goods or services.
2) Seller with whom the buyer does business, as opposed to vendor, which is a generic term referring to all sellers in the marketplace. |
Supplier
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The amount of time that normally elapses between the time an order is received by a supplier and the time the order is shipped.
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Supplier lead time
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The establishment of a working relationship with a supplier organization whereby two organizations act as one.
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Supplier partnership
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The global network used to deliver products and services from raw materials to end customers through an engineered flow of information, physical distribution, and cash.
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Supply chain
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A term associated with supply chain management software applications where users have the ability to flag the occurrence of certain supply chain events to trigger some form of alert or action within another supply chain application.
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Supply Chain Event Management
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The design, planning, execution, control, and monitoring of supply chain activities with the objective of creating net value, building a competitive infrastructure, leveraging worldwide logistics, synchronizing supply with demand, and measuring performance globally.
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Supply Chain Management (SCM)
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A process reference model developed and endorsed by the Supply-Chain Council as the cross-industry, standard diagnostic tool for supply chain management.
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Supply-Chain Operations Reference model (SCOR®)
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The definition of the structural design of an information system. It would typically identify the system componets, how the components relate to each other, a vision of future use and integration, and how the users will interface with the system. |
System Architecture |
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The process of developing a set of tactical plans (e.g., production plan, sales plan, marketing plan, and so on).
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Tactical planning
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The length of time from when material enters a production facility until it exits.
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Throughput time
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A policy or guideline established to note where various restrictions or changes in operating procedures take place.
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Time fence
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A management approach to long-term success through customer satisfaction.
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Total Quality Management (TQM)
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The ratio of the cumulative algebraic sum of the deviations between the forecasts and the actual values to the mean absolute deviation.
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Tracking signal
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Inventory that is in transit between locations.
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Transportation inventory
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A computer application system designed to manage transportation operations.
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Transportation Management System (TMS)
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General upward or downward movement of a variable over time (e.g., demand, process attribute).
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Trend
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The strategy of designing a product initially intended for one market in such a way that it can also be sold in other markets.
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Universality
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A measure (usually expressed as a percentage) of how intensively a resource is being used to produce a good or service.
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Utilization
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1) In accounting, the addition of direct labor, direct material, and allocated overhead assigned at an operation. It is the cost roll-up as a part goes through a manufacturing process to finished inventory. 2) In current manufacturing terms, the actual increase of utility from the viewpoint of the customer as
a part is transformed from raw material to finished inventory. |
Value added
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The functions within a company that add value to the goods or services that the organization sells to customers and for which it receives payment.
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Value chain
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The processes of creating, producing, and delivering a good or service to the market. For a good, encompasses the raw material supplier, the manufacture and assembly of the good, and the distribution network. For a service, consists of suppliers, support personnel and technology, the service producer, and the distribution channel. May be controlled by a single business or a network of several businesses.
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Value stream
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A network, often supporting EDI, providing services additional to those provided by common carriers.
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Value-added network (VAN)
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1) The difference between the expected (budgeted or planned) value and the actual.
2) In statistics, a measurement of dispersion of data. |
Variance
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A means of optimizing supply chain performance in which the supplier has access to the customer's inventory data and is responsible for maintaining the inventory level required by the customer.
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Vendor-managed inventory
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A virtual or online trading exchange that enables both information integration and collaboration between multiple trading partners.
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Virtual Trading Exchange
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A computer application system designed to manage and optimize workflows and storage of goods within a warehouse.
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Warehouse Management System (WMS)
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The activities related to receiving, storing, and shipping materials to and from production or distribution locations.
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Warehousing
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1) Any activity that does not add value to the good or service in the eyes of the consumer.
2) A by-product of a process or task with unique characteristics requiring special management control. |
Waste |
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A list of Web pages that is structured hierarchically
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Web Directory
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A document containing hypertext links to certain other documents including multimedia documents.
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Web page
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A common framework that allows software developers to define software components using a set of Internet-based protocols, open standards, and extensible markup language (XML) to utilize what developers have created in order to build a new application in a more timely manner. |
Web services |
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A public or private data communication system for linking computers distributed over a large geographic area.
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Wide area network
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A good or goods in various stages of completion throughout the plant, including all material from raw material that has been released for initial processing up to completely processed material awaiting final inspection and acceptance as finished goods inventory.
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Work in process (WIP)
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Total Perfect Orders/Total Number of Orders
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Perfect Order Fulfillment
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Hours Worked / Available Hours x 100
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Utilization
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Standard Hours of Work / hours worked x 100
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Efficiency
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Available Time x Utilization x Efficiency
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Rated Capacity
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Output for n Periods / n
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Demonstrated Capacity
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Demand variablity among end user inceases at each stage in the chain because of inherent inaccuracies in each firm's demand forecasts.
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Bullwhip Effect
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*High average utilization rate
*Minimal inventory/high turns *Short Lead-time *Suppliers offering cost, quality *Products with maximum performance with minimal cost. |
Functional Product Strategy
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*Buffer capacity (safe stock)
*Aggressive lead-time reduction *Supplier chosen for speed, flexibility, quality (less on cost) *Module design with postponement or differentation. |
Innovative Product Strategy
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Inv Days of Supply + Days of Sale Outstanding - Days Payable Outstanding.
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Cash-to-Cash Cycle Time
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Accounts receivable / Sales on Credit / Number of days used
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Days Sales Outstanding
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COGS / Inventory
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Inventory Turnover
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Net Income / Assets
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Return On Assets
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Sales - COGS
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Gross Profit Margin
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Inv Days Of Supply
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Average / COGS for a day
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Shipper and seller of the cargo
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Exporter
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Non-vessel common carrier that arranges transport of cargo fro port to importer and contracts for or purchases space on the ocean vessell for resale or its own use.
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NVOCC (non-vessel operating common carrier)
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Firm that consolidates shipments to load into empty vehicles for the return trip from importer's dock to port.
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Consolidator
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Customs houe broker has the expertise to move a shipment through customs expeditiously and to ensure complete documentation.
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Customs house broker
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Company that consults with exporter on import market (EMC) or that buys cargo and resells to importer (ETC).
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EMC/ETC
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Nonprofit asociation of smaller shippers banded together to negotiated better rates fro carriers.
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Shipping Association
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Ship broker is an independent contractor who brings together the exporter with a ship operator that has a vessell available with the right services at the right time.
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Ship Broker
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Representative of a ship operator who is available to coordinate inport activities for the shipper wit cargo to export.
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Ship Agent
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Specialist in packaging cargo for export so as to combine the lightest pratice weight (for reduce duties) with maximum protection.
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Export packing company
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EXW--Seller makes goods available for export at it's facility.
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Incoterms E (exit from sellers location) Terms
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E terms plus seller arranges and Pays for export doc and delivery goods, ready for export to specified point or port in sellers country.
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Incoterms F (free; not paid by seller) Terms
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F terms plus seller arranges and pays for international transport services to point or port in buyer's country.
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Incoterms C (carriage paid by seller) Terms
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C terms plus seller arranges and pays for delivery and documentation services inside buyer's country.
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Incoterms D (delivery at seller's costs) Terms
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Containers that can cross international borders duty free and tax-free without customs inspections. Intended for passing through a jurisdiction, not being imported into it, i.e., samples, trade shows, professional equipment. |
ATA Carnet |
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A certificate which accompanies cargo exported into a country that has signed a treaty granting favorable import duty rates to the exporting country, |
Certificate of Origin |
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Document that states the value of the commodities in the shipment, and it constittues the seller's and buyer's invoice for the transaction. |
Commerical Invoice |
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All international shipments are inittiated by a bill of lading (B/L) that serves as the carrier's contract and receipt for goods the carrier will transport from one destination and shipper to another specifified destination and recipient.
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Bill of Ladding B/L's and Air waybills
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issued by a ship agent, signifies that the steamship company has received the cargo from the domestic carrier. |
Dock Receipt |
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A letter of credit is a letter which a bank assures the seller that the buyer is good for the purchase price of the goods and that the bank will therefore honor the buyer's checks to the seller up to that amount. In sum, the usual method of financing export-import transactions is the letter of credit, issued by the importer's bank and honored by the seller's bank.
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Letter Of Credit
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Shippers own Fleet
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Private Carrier
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Perform shipping, required to serve commercial shippers, most economical.
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Common Carrier
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Work on contract with specific clients. Custom services.
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Contract Carrier
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Exempt Carrier
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Free from Fed req, mostly agriculture. Limited range of operation.
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SCOR (Supply -Chain Operations Reference Model Process
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Plan, Source Make, Delivery, Return
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SCOR Activities
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*All customer interactions from orerder entry through paid invoice.
*All product tranasactions (define as physical materials and services.). Including equipment, spare parts, bulk product, and software. *All market interactions from understanding aggregate demand through order fulfillment. |
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Basic Supply Chain Entities
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Supplier, producer, customer.
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Basic Supply Chain Flows
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Information flow, cash flow, product flow, reverse product flow
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APICS SCM
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Creating net value
Building a competitive Infrastructure Leveraging WW logistics sync supply with demand Measure performance globally |
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Vertical Integration
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Degree to which a firm direclt controls multiple links in the chain from RM to retail sales.
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Lateral (Horizontal) Integration
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Coordinated management of separately owned link in the SC (outsourcing).
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*Implusive acitivity
*Pep talks, threats *No team work *Little info exchange |
Stage 1 Multiple Dysfuction
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*Mostly manual ops
*Inv reduction in owned facilities *New low-price buying stratgies *Some hard-skills training, job enhancement. *Enhanced marketing and forecasting * No coordination of initiatives |
Stage 2 Semifuctional Enterprise
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*New focus on process
*Internal process integration *MRP/ERP *Inranets, etc. across functions *Design teams *Enhanced warehousing, logistice, forecasting, etc. |
Stage 3 Integrated Enterprise
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*Process integration across entity boundaries
*Eventual electronic information connects among multiple partners. *ERP-to-ERP links *E-commerce *SC vs SC Competition. |
Stage 4 Extended Enterpise
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Low SC difficulty--Commodity materials.
High SC difficulty--Bottleneck materials |
Low Strategic Importance
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*Lows SC difficulty--*Leverageable materials
*High SC dificulty *Direct/core compentency materials (do it yourself) |
High Strategic Importance
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Upside Supply Chain Adapatability
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Amount of increases in production an Organization can achieve and sustain in 30 days. Answers "How Much"
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Upside Supply Chain Flexibility
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Number of days an Org requires to achieve an unplanned sustainable 20% increase in quantities delivered. Answers "How Long"
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EOQ
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order size that gives you the lowest total cost for holding, ordering, and setup.
*Demand is constant and known |
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A production planning method that maintains a stable inventory level while varying production to meet demand. Companies may combine chase and level production schedule methods.
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Chase production
Syn: chase strategy, chase-demand strategy. |
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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. |
Collaborative planning, forecasting, and replenishment (CPFR) |
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A form of design standardization where a single part is used to replace a variety of similar parts.
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Component commonality
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Efficiency
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A measurement (usually expressed as a percentage) of the actual
output compared to the standard output expected. It measures how well something is performing relative to existing standards. |
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Modular design strategy
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The strategy of planning products so the components can be used in current and future products or that the components can be assembled or arranged to produce multiple configurations of a
product. Automobiles and personal computers are examples of modular designs. |
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Utilization
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A measure (usually expressed as a percentage) of how intensively a resource is being used to produce a good or service. Utilization
compares actual time used to available time. Traditionally, utilization is the ratio of direct time charged (run time plus setup time) to the clock time available. Utilization is a percentage between 0% and 100% that is equal to 100% minus the percentage of time lost due to the unavailability of machines, tools, workers, and so forth. In the theory of constraints, activation of a resource that productively contributes to reaching the goal. Over-contributes to reaching the goal. Over-activation of a resource does not productively utilize a resource. |
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PSA--Product and Service Agreement
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A (PSA) Product and Service Agreement defines the business relationship between the customer and the manufacturer. It provides the guidelines for meeting, attaining and sharing benefits, and the overall plan for the product and services to be worked on in the partnership. It will detail what can and cannot be worked on.
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C-TPAT (Customs-Trade Partnership Against Terrorism)
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C-TPAT is a voluntary membership by business.
*A business must submit an on line application and agree to specific actions which include: *An assessment by the company according to C-TPAT guidelines *Submitting a supply chain questionnaire to the U.S. Customs *Developing and implementing a process of enhanced security Communicating the guidelines to all the trading partners in the supply chain |
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Six Sigma Stages (DMAIC)
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Defining, Measuring, Analyzing, Improving and Controlling the process.
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Four levels of communication in the collaboration process
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1) transactional, 2) shared process and partnership, 3) linked competitive vision and strategic alliance, and 4) backward integration
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Importer
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The exporter's customer, who buys the cargo and is resp for payment of import duties @ customs. (Usually handle by customs broker)
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Domestic Carrier
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Train, truck, or air carrier that takes cargo to the outgoing port
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Overseas carrier
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Ship operator or air carrier that take the cargo from the domestic port to the foreign port
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Freight Forwarder
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Contractor respnsible for getting goods from dock to dock and who arranges transportation for the exporter's cargo
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Shipping Association
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Nonprofit assoc of smaller shippers banded together to negiotiate better rates from carriers.
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Air waybill or airway B/L
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Air waybill is a standarized form used for all air shipments.
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