BSCM

Bill of Material (BOM)

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. A variety of display formats exist for bills of material, including the single-level BOM, indented BOM, modular BOM, transient BOM, matrix BOM, costed BOM 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. The bill of material may also be called the formula, recipe, or ingredients list in certain process industries.

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 constaints, buffers can be time or material and support throughput and/or due date performance. Buffers can be maintained at the constraint, convergent points, divergent points, and shipping points

Batch

1) A quantity scheduled to be produced or in productions 2) for discrete products, the batch is planned to be the standard batch quantity, but during production the standard batch quantity may be broken into smaller lots 3) in non-discrete products, the batch is a quantity that is planned to be produced in a given time period based on a formula or recipe that often developed to produce a given number of end items 4) A type of manufacturing process used to produce items with similar designs and that may cover a wide range of order volumes. Typically, items ordered are a repeat nature, and production may be for a specific customer order or for stock replenishment

Open Order

1) A released manufacturing order or purchase order

Consignment

1) A shipment that is handled by a common carrier 2) The process of a supplier placing gods at a customer location without receiving payment until after the goods are used or sold

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 statement. A business plan is then translated into synchronized tactical functional plans through the production planning process. 2) A document consisting of business details prepared by an entrepreneur for business

Zone

1) A warehouse location methodology that includes some of the characteristics of fixed and random location methods. SSZone locations hold certain kinds of items, depending on physical characteristics or frequency of use 2) the specific warehouse location assigned to an order picker. In picking items for each order that are within his/her zone. The picker then fills the next order for items from his/her zone

Remanufacturing

1) An industrial process in which worn-out products are restored to like-new condition. In contrast, a repaired product normally retains its identity, and only those parts that have failed or are badly worn are replaced or serviced 2) The manufacturing environment where worn-out products are restored to like-new condition

Stockkeeping Unit (SKU)

1) An inventory item. For example, a shirt in 6 colors and 5 sizes would represent 30 different SKUs 2) In a distribution system, an item at a particular geographic location, for example one product stocked at a plant and at 6 different distribution centers would represent 7 different SKUs

Work Order

1) An order to the machine shop for tool manufacture or equipment maintenance, not to be confused with a manufacturing order

Waste

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 production can usually be planned and somewhat controlled. Scrap is typically not planned and may result from the same production run as waste

Constraint

1) Any element or factor that prevents a system from achieving a higher level of performance with respect to its goal. Constraints can be physcial such as a machine center or lack of material, but they can also be managerial, such as a policy or procedure 2) One of a set of equations that cannot be violated in an optimization procedure

Reorder Quantity

1) In a fixed-reorder quantity system of inventory control, the fixed quantity that should be ordered each time the available stock (on-hand plus order) falls to or below the reorder point 2) In a variable reorder quantity system, the amount ordered from time period to time period will vary

Value Added

1) In accounting, the addition of direct labor, materials, 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. It is the contribution made by an operation or a plant to the final usefulness and value of a product, as seen by the customer. The objective is to eliminate all non-value-added activities in producing and providing a good or service

Total Cost Curve

1) In cost-volume-profit analysis, the total cost curve is composed of total fixed and variable costs perunit multiplied by the number of units provided. Breakeven quantity occurs where the total cost curve and total sales revenue curve intersect. 2) In inventory theory, the total cost curve for an inventory item is the sum of the costs of acquiring and carrying the item

Safety Stock

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. Overplanning can be used to create safety stock.

Cycle Time

1) In industrial engineering, the time between completion of two discrete units of production. 2) In materials management, it refers to the length of time from when material enters a production facility until it exists

Service Industry

1) In its narrowest sense, an organization that provides an intangible product 2) In its broadest sense all organizations except farming, mining, and manufacturing. This definition of service industry includes retail trade; wholesale trade; transportation and utilities; finance; insurance and real estate; construction; professional, personal and social services; and local, state and federal governments

Pull System

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. Materials 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

Push System

1) In production, the production of items 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

Routing

1) Information detailing the method of manufacture of a particular item. It includes the operations to be performed, their sequence, the various work centers involved and the standards for setup and run. In some companies, the routin also includes information on tooling, operator skill levels, inspection operaitons and testing requirements etc.

Supplier

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

5 Ss of Lean Production

1) Sort - means to separate needed items from unneeded 2) Simplify means to neatly arrange items 3) scrub means to clean up mess 4) standardize means to sort, simplify and scrub daily 5) sustain means to always follow the first four

Customer Service

1) The ability of a company to address the needs, inquiries, and requests from customers 2) A measure of the delivery of a product to the customer at the time the customer specified

Distribution

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, etc. 2) The systematic division of a whole into discrete parts having distinctive characteristics

Distribution Requirement Planning (DRP)

1) The function of determining the needs to replenish inventory at branch warehouses. A time-phased order point approach is used where the planned orders at the branch warehouse level are 'exploded' via MRP logic to become gross requirements on the supplying source. Demand on the supplying sources is recognized as dependent and standard MRP logic applies 2) More generally replenishment inventory clculations which may be based on other planning approaches such as period order quantities or "replace exactly what was used" rather than being limited to the time-phased order point approach.

Demand Management

1) The function of recognizing all demands for goods and services to support a marketplace. It involves prioritizing demand when supply is lacking. Proper demand management facilitates the plannings 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

Utilization

1) a measure 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 ration of direct time charged to the clock time available. Utilization is a percentage between 0-100 that is equal to 100 minus the percentage of time lost due to unavailability of labor, machines etc.

Lead Time

1) a span of time required to perform a process 2) in a logistics context the time between recognition of the need for an order and receipt of goods. Individual components of lead time can include order prep time, queue time, processing time, move or transportation time and receiving and inspection time

Job Shop

1) an org in which similar equipment is organized by function. Each job follows a distant routing through the shop 2) type of manufacturing process used to produce items to each customers specifications. Production operations are designed to handle a wide range of product designs and are performed at fixed plant locations using general purpose equipment

Productivity

1) an overall measure of the ability to produce a good or a service. It is the actual output of production compared to the actual input of resources. Productivity is a relative measure across time or against common entitites. In the production literature, attempts have been made to define total productivity where the effects of labor and capital are combined and divided into the output. One example is a ration that is calculated by adding the dollar value of labor, capital equipment, energy, and material, and so forth and dividing it into the dollar value of output in a given time period. This is one measure of total factor productivity

Logistics

1) in an industrial context, the art and science of obtaining, producing and distributing material and product in the proper place and in proper quant 2) In a military sense its meanings can also mean the movement of personnel

Level Schedule

1) in tradition mangement, a production schedule or master production schedule that generates material and labor requirements that are as evenly spread over time as possible. Finished goods inventories buffer the production system against seasonal demand 2) in JIT a level schedule in which each days customer demand is scheduled to be built on the day it will be shipped. A level schedule is the output of the load leveling process

Intermodal Transport

1) shipments moved by different types of equipment combining the best features of each mode 2) the use of two or more different carrier modes in the through movement of a shipment

Physical Inventory

1) the actual inventory itself 2) the determination of inventory quantity by actual count. Physical inventories can be taken on a continuous, periodic, or annual basis

Traceability

1) the attribute following the ongoing location of a shipment to be determined 2) the registering and tracking or parts, processes, and materials used in production, by lot or serial number

Variance

1) the difference between the expected value and actual 2) in statistics, a measurement of dispersion of data

Profit Margin

1) the difference between the sales and COGS for an organization, sometimes expressed as a percentage of sales 2) in traditional accounting the product profit margin is the product selling price minus the direct material, direct labor, and allocated overheard for the product, sometimes expressed as a percentage of selling price

Operations Management

1) the planning, scheduling, and control of the activities that transform inputs into finished goods and services 2) a field of study that focuses on the effective planning, scheduling, use and control of a manufacturing or service organization through the study of concepts from design engineering, industrial eng, MIS, quality management, production management, inventory management, accounting etc

Velocity

1) the rate of change of an item with respect to time 2) in scm, a term used to indicate the relative speed in all transactions

Product Life Cycle

1) the stages a new product goes through from beginning to end 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 profitabiltiy

Setup

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

Theory of Constraints Accounting

A cost and managerial accounting system that accumulates costs and revenues into three areas - throughput, inventory, and operating expense. It does not create incentives to build up inventory. The system is considered to provide a truer reflection of actual revenues and costs than traditional cost accounting. It is closer to a cash flow concept of income than is traditional accounting. The theory of constrainst accounting provides a simplified and more accurate form of direct costing that subtracts true variable costs. Unlinke traditional cost accounting systems in which the focus is generally placced on reducting costs in all the various accounts, the primary focus of TOC accounting is on aggressively exploiting the constraints to make more money for the firm

Traffic

A department or function charged with the responsibility for arranging the most economic classification and method for shipment for both incoming and outgoing material and products

Multilevel BOM

A display of all the components directly or indirectly used in a parent, together with the quantity required of each component. If a component is a subassembly, blend, intermediate, etc. all its components and all their components also will be exhibited, down to purchase parts and raw materials

Single-Level BOM

A display of components that are directly used in a parent item. It shows only the relationships one level down

Transaction Channel

A distribution network that deals with change of ownership of goods and services including the activities of negotiation, selling and contracting

Waybill

A document containing a list of goods with shipping instructions related to a shipment

Picking List

A document that lists the material to be picked for manufacturing or shipping orders

Shipping Manifest

A document that lists the pieces in a shipment. A manifest usually covers an entire load regardless of whetehr the load is to be delivered to a single destination or too many destinations. Manifests usually list the items, piece count, total wieght, and the destination name and address for each destination in the load

Request for Quote (RFQ)

A document used to solicit vendor responses when a product has been selected and price quotations are needed from several vendors

Functional Layout

A facility configuration in which operations of a similar nature or function are grouped together, an organizational structure based on departmental specialty

Distribution Warehouse

A facility where goods are received in large-volume uniform lots, stored briefly, and then broken down into smaller order of different items required by the customer. Emphasis is on expeditious movement and handling

Bottleneck

A facility, function, department, or resource whose capacity is less than the demand placed upon it. For ex. a bottleneck machine or work center exists where jobs are processed at a slower rate than they are demanded

Key Performance Indicator (KPI)

A financial or nonfinancial measure that is used to define and assess progress towards specific organizational goals and typically is tied to an organizations strategy and business stakeholders. A KPI should not be contradictory to other departmental or strategic business unit performance measures

Income Statement

A financial statement showing the net income for a business over a given period of time

Balance Sheet

A financial statement showing the resources owned, the debts owed, and the owner's share of a company at a given point in time

Random Variation

A fluctuation in data that is caused by uncertain or random occurences

Intrinsic Forecast Method

A forecast based on internal factors, such as an average of past sales

Extrinsic Forecasting Method

A forecast method 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

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 severley impair a company;s strategic initatives. Risk and consequences are unusually high, and top management approval is often required.

Intermittent Production

A form of manufacturing in which the job pass through the functional departments in lots, and each lot may have a different routing

Flow Shop

A form of manufacturing organization in which machines and operators handle a standard, usually uninterrupted material flow. The operators usually perform the same function over and over.

Summarized BOM

A form of multilevel BOM that lists all the parts and their quantities required in a given product structure. Unlike the indented BOM, it does not list the levles of manufacture and lists a component only once for the total quantity used

Indented BOM

A form of multilevl BOM. Exhibits the highest level parent closest to the left margin and all the components underneath and down to the right. All subsequent levels of components are indented farther to the right. If a component is used more than one parent within a given structure it will appear more than once

Plan-Do-Check-Action (PDCA)

A four step process for quality improvement. In the first step (plan), a plan to effect improvement is developed. In the second step (do), the plan is carried out, preferably on a small scale. In the thrid step (check) the effects of the plan are observed. In the last step (action) the results are studied to determine what was learned and what can be predicted. The plan-do-check-action cycle is sometimes referred to as the Shawhart cycle and as the Dening circle

Work in Process WIP

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 a completely processed material awaiting final inspection and acceptance as finished goods inventory. Many accounting systems also include the value of semifinished stock and components in this category

Histogram

A graph of contiguous vertical bars representing a frequency distribution in which the groups or classes of items are marked on the x axis and the number of items in each class is indicated on the y axis. The pictoral nature lets people see patterns that are often difficult to see in a simple numbers table

Control Chart

A graphic comparison of process performance data with predetermined computed control limits. The process performance data usually consists of groups of measurements selected in regular sequence of production that preserve the order. The primary use of control charts is to detect assignable causes of variation in the process as opposed to random variations. The control chart is one of the 7 tools of quality.

Process Flow Diagram

A graphical and progressive representation of the various steps, events, and tasks that make up an operations process. This diagram provides the viewer with a picture of what actually occurs when a product is manufactured or a service is performed

Scatter chart

A graphical technique to analyze the relationship between two variables. Two sets of data are plotted on a graph, with the y axis used for the variable to be predicted and the x axis used for the variable to make the prediction. The graph will show possible relationships

Master Planning

A group of business processes that includes the following activities: demand managment (forecasting, order servicing etc.) production and resource planning, master scheduling (master schedule, rough-cut capacity plan etc)

Product Family

A group of products with similar characteristics, often used in production planning

Private Carrier

A group that provides transportation exclusively within an organization

Theory of Constraints (TOC)

A holistic management philosophy developed by Dr. Eliyahu Godratt that is based on the principle that complex systems exhibit inherent simplicity. Even a very complex system comprimising thousands of people and pieces of equipment can have, at any given time, only a very, very small number of variables- perhaps only one, known as a constraint, that actually limit the ability to generate more of the system's goal

Genchi Genutsu

A japanese phrase meaning visit the shop floor to observe what is occuring

Two-Card Kanban System

A kanban system where a move card and production card are employed. The move card authorizes the movement of a specific number of parts from a source to a point of use. The move card is attached to the standard container of parts during movement to the point of use of the parts. The production card authorizes the production of a given number of parts for use or replenishement

One-Card Kanban System

A kanban system where only a move card is employed. Typically the work centers are adjacent, therefore no production card is required. In many cases, squares located between work centers are used as the kanban system. An empty square signals the supplying work center to produce a standard container of the item

Value Stream Mapping

A lean production tool to visually understand the flow of materials from supplier to customer that includes the current process and flow as well as the value-added and non-value-added time of all the process steps. Used to lead to reduction of waste, decrease flow time, and make the process flow more efficient and effective

Where-Used List

A listing of every parent item that calls for a given component, and the respective quantity required, from a BOM file

Distribution Center

A location used to store inventory. Decisions driving warehouse management include site selection, number of facilities in the system, layout, and methods of receiving, storing and retrieving goods

Period Order Quantity

A lot-sizing technique under which the lot size is equal to the net requirements for a given number of periods. The number of periods to order is variable, each order size equalizing the holding costs and the ordering costs fro the interval

Split Lot

A manufacturing order quantity that has been divided into two or more smaller quantities, usually after the order has been released. The quantities of a split lot may be worked on in parallel, or a portion of the original quantity may be sent ahead to a subsequent operation to be worked on while work on the remainder of the quantity is being completed at the current operation. The purpose of splitting a lot is to reduce the lead time of the order

Cellular Manufacturing

A manufacturing process that produces families of parts within a single line or cell of machines controlled by operators who work only within the line or cell

Overlapped Schedule

A manufacturing schedule that overlaps successive operations. Overlapping occurs when the completed portion of an order at one work center is processed at one or more succeeding work centers before the pieces left behind are finished at the preceding work centers

Customer Relationship Management (CRM)

A marketing philosophy based on putting the customer first. The collection and analysis of information designed for sales and marketing decision support to understand and support existing and potential customer needs

Vendor Managed Inventory VMI

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. This activity is accomplished by a process in which resupply is done by the vendor through regularly scheduled reviews of the on-site inventory. The on-site inventory is counted, damaged or outdated goods are removed and the inventory is restocked to predefined levels. The vendor obtains a receipt for the restocked inventory and accordingly invoices the customer

On-Time Schedule Performance

A measure (%) of meeting the cutomer's originally negotiated request date. Performance can be expressed as a percentage based on the number of orders, line items, or dollar value shipped on time

Level of Service

A measure of satisfying demand through inventory or by the current production schedule in time to satistfy the customers requested delivery dates and quantities. In a make-to-stock environment, level of service is osmetimes calculated as the percentage of orders picked complete from stock upon receipt of the customers order, the percentage of line items picked complete or the percentage of total dollar demand picked complete. In make-to-order and design-to-order environments, level of service is the percentage of times the customer requested or acknowledged date was met by shipping complete product quantities

Record Accuracy

A measure of the conformity of recorded values in a bookkeeping system to the actual values; for example, the on-hand balance of an item maintained in a computer record relative to the actual on-hand balance of the items in the stockroom

Stockout Percentage

A measure of the effectiveness with which a company responds to actual demand or requirements. The stockout percentage can be a measurement of total orders containing a stockout to total orders, or of line items incurring stockouts to total line items ordered during a period. One formula is stockout percentage - (1 - customer service raction) x 100 percent

Efficiency

A measurement of the actual output to the standard output expected. Efficiency measures how well something is performing relative to existing standards; in contract productivity measures output relative to a specific input.

Manufacturing Resource Planning (MRP II)

A method for the effective planning of all resources of a manufacturing company. Ideally, it addressed operation 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, busines planning, production planning, mps, mrp, cpp, the execution support systmes. Output from these systems is integrated with financial reports such sa the business plan, purchase commitment report, shipping budget, and inventory projections in $. Manufacturing resource planning is a direct outgrowth and extension of closed-loop MRP

Periodic Replenishment

A method of aggregating requirements to place deliveries of varying quantities at evenly spaced time intervals, rather than variably spaced deliveries of equal quantities

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 (Syn. exlode-to-deduct, post-deduct inventory, transaction processing)

Discrete Order Picking

A method of picking orders in which the items on one order are picked before the next order is picked

Wave Picking

A method of selecting and sequencing picking lists to minimize the waiting time of delivered material. Shipping orders may be picked in waves combined by common carrier or destination and manufacturing orders in waves related to work centers

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, therefore a locator file may not be needed

Zone Picking

A method of subdividing a picking list by areas within a storeroom for more efficient and rapid order picking. A zone-picked order must be grouped to a single location before delivery or must be delivered to different locations, such as work centers

Batch Picking

A method or 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

Quality Function Deployment (QFD)

A methodology designed to ensure that all the major requirements of the customer are identified and subsequently met or exceedd through the resulting product design process and the design and operation of the supporting production management system. QFD can be viewed as a set of communication and translation tools. QFD tries to eliminate the gap between what the customer wants in a new product and what the product is capable of delivering. QFD often leads to a clear identification of the major requirements of the customers. These expectations are referred to as the voice of the customer (VOC)

Six Sigma

A methodology that furnishes tools for improvement of business processes. The intent is to decrease process variation and improve product quality

Critical Path Method (CPM)

A network planning technique for the analysis of a project's completion time used for planning and controlling the activities in a project. By showing each of these activities and their associated times, the critical path, which identifies the project, can be determined

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

Time Bucket

A number of days of date summarized into a columnar or row-wise display. A weekly time bucket would contain all of the relevant data for an entire week. Weekly time buckets are considered to be the largest possible to permit effective MRP

Customs Broker

A person who manages the paperwork required for international shipping and tracks and moves the shipments through the proper channels

Lean Production

A philosophy of production that emphasizes the minimization of the amount of all the resources used in the various activities of the enterprise. It involves identifying and eliminating non-value adding activities in design, production, scm, and dealing with customers. Lean producers employ teams of multiskilled workers at all levels in the org and use highly flexible increasingly automated machines to produce volumes of products in potentially enormous variety. It 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

Firm Planned Order (FPO)

A planned order that can be frozen in quantity and time. The computer is not allowed to change it automatically; this is the responsibility of the planner in charge of the item being planned

Time Fence

A policy of guideline established to note where various restrictions or changes in operating procedures take place. For ex. changes to the master production schedule can be accomplished easily beyond the cumulative lead time, while changes inside the cumulative lead time become increasingly more difficult to a point where changes should be resisted. Time fences can be used to define these points

Quantity Discount

A price reduction allowance determined by the quantity or value of a purchase

Continuous Replenishment

A process by which a supplier is notified daily of actual sales or warehouse shipments and commits to replenishing these sales without stockouts and without receiving replenishment orders. The results is a lowering of associated costs and an improvement in inventory turnover

Production Planning

A process to develop tactical plans based on seetting the overall level of manufacturing output and other activities to best satisfy the current planned levels of sales, while meeting general business objectives of profitability, productivity, competitive customer lead times, and son, as expressed in the overall business plan.

Sales and Operations Planning (S&OP)

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 managment of the supply chain. The process brings together all the plans for new and existing products with the management of the uspply chain. The process brings together all the plans for the business into one integrated set of plans. It is performed at least once a month and is reviewed by management at an aggregrate level. The process must reconcile all supply, demand, and new-product plans at both the detail and aggregate levels and tie to the business plan. It is the definitive statement of the company's plans for the near to immediate term, covering a horizon sufficient to plan for resources and to support the annual business planning process. Executed properly, the sales and operation planning process links the strategic plans for the business with execution and reviews performance measurements for continuous improvement

Quality at the Source

A producer's responsibility to provide 100% acceptable quality material to the consumer of the material. The objective is to reduce or eliminate shipping or receiving quality inspections and line stoppages as a result of supplier defects

Postponement

A product design strategy that shifts product differentiation closer to the consumer by postponing identity changes, such as assembly or packaging, to the last possible supply chain location

Make-To-Order

A production environemnt where a good or service can be made after receipt of a customer's order. The final product isusually a combination of standard items and items custom-designed to meet the special needs of the customer, where options or accessories are stocked before the customer orders arive. The term assemble-to order is frequently used

Package to Order

A production environment in which a good or service can be packaged after receipt of a customer order. The item is common accross many different customers, packaging determines the end product

Assemble to Order

A production environment where a good or service can be assembled after receipt of a customer's order. The key componenets (bulk, semi-finished, intermediate, subassembly, fabricated, purchased, packing and so on) used in assembling 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 can be assembled from common components. (Syn. finish-to-order)

Make-To-Stock

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 these stocks

Chase Production Method

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.

Level Production Method

A production planning method that maintains a stable production rate while varying inventory levels to meet demand

Continuous Production

A production system in which the productive equipment is organized and sequenced according to the steps involved to produce the product. This term denotes that material flow is continuous during the production process. The routing of the jobs is fixed and setups are seldom changed

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

Lot

A quantity produced together and sharing the same production costs and specification

Sawtooth Diagram

A quantity-versus-time graphic representation of the order point/order quantity inventory system showing inventory being received and then used up and reordered

Milk Run

A regular route for pickup of mixed loads from several suppliers. (Ex. instead of 5 nearby factories sending one truck each with each load, one truck will pick up from all 5 locations)

Seasonality

A repetitive patterm of demand from year to year wiht some periods considerably higher than others

Planned Order Release

A row on an MRP table that is derived from planned order receipts by taking the planned receipt quantity and offsetting to the left by the appropriate lead time

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 the final assembly (which it may bot involve).

Forward Scheduling

A scheduling technique where the scheduler proceeds from a known start date and computes the completion date for an order, usually proceeding from the first operation to the last. Usually the earliest start dates for production

Bar Code

A series of alternating bars and spaces printed or stamped on parts, containers, labels or other media, representing encoded information that can be read by electronic readers. A bar code is used to facilitate timely and accurate input of data to a computer system

Production Line

A series of pieces of equipment dedicated to the manufacture of a specific number of products or families

Order Point

A set inventory level where, if the total stock on hand plus on order falls to or below that point, action is taken to replenish the stock. The order point is normally calculated as forecasted usage during the replenishment lead time plus safety stock

4 Ps

A set of marketing tools to direct the business offering to the customer. Product, Price, Place, Promotion

Lot control

A set of procedures used to maintain lot integrity from raw materials from the supplier through manufacturing to consumers

Material Requirements Planning (MRP)

A set of techniques that uses bill of material data, inventory data, and the master production schedule to calculate requirements for materials. It makes recommendations to release replenishment orders for material. time phased MRP begins with 1) the quantity of all components and materials 2) the date of the components and material

Unit Load

A shipping unit made up of a number of items, or bulky material, arranged or constrained so the mass can be picked up or moved as a single unit. Reduces material handling costs. Often shrink-packed on a pallet before shipment.

Andon

A sign board with signal lights used to make workers and management aware of a quality, quality, or process problem

Visual Review System

A simple inventory control system where the inventory reordering is based on actually looking at the amount of inventory on hand. Usually used for low-value items, such as nuts and bolts

Assignable Cause

A source of variation in a process that can be isolated, especially when its significantly larger magnitude or different origin readily distinguished it from random causes of variation

Work Center

A specific production area, consisting of one or more people and/or machines with similar capabilities, that can be considered as one unit for purposes of capacity/requirements planning and detailed scheduling

Transit Time

A standard allowance that is assumed on any given order for the movement of items from one operation to the next

Control Limit

A statistically determined line on a control chart. If a value occurs outside of this limit, the process is deemed to be out of control

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

Store

A storage point located upstream of a work station intended to make it easier to see customer requirements

Random-Location Storage

A storage technique in which parts are placed in any space that is empty when they arrive at the storeroom. Although this random method requires the use of a locator file to identify part locations, it often requires less storage space than a fixed location storage method

Product Differentiation

A strategy of making a product distinct from the competition on a nonprice basis such as availability, durability, quality or reliability

Planned Order

A suggested order quantity, release date, and due date created by the planning system's logic when it encounters net requirements in processing MRP. In some cases, it can also be created by a paster scheduling module. Planned orders are created by the computer, exist only within the computer, and may be changed or deleted by the computer during subsequent processing if the conditions change. Planned orders at one level will be exploded into gross requirements for components at the next level. Planned orders, along with released orders, serve as input to capacity requirements planning to show the total capacity requirements by work center in future time periods

Closed Loop MRP

A system built around material requirements planning that includes the additional planning processes of production, master production scheduling, and capacity requirements planning. Once the planning is complete and the plans accepted as realistic and attainable, the execution processes come into play. These processes include the manufacturing control of processes of input-output 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 the feedback is provided by the execution processes so that the planning can be kept valid at all times.

Radio Frequency Identification (RFID)

A system using electronic tags to store data about items. Accessing these data is accomplished through a specific radio frequency and does not require close proximity or line-of-sight access for data retrieval

Duty

A tax levied by a government on the importation, exportation, or use and consumption of goods

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 (Syn. backward scheduling)

Input, Output Control (I/O Control)

A technique for capacity control where planned and actual inputs are planned and actual outputs of a work center are monitored. Planned inputs and outputs for each work center are developed by capacity requirements planning and approved by manufacturing management. Actual input is compared to planned input to identify when work center output might vary from the plan because work is not available at the work center. Actual output is also compared to planned output to identify problems within the work center

Lead-Time Offset

A technique used in MRP where a planned order receipt in one time period will require the release of that order in an earlier time period based on the lead time for the item

Sales Plan

A time-phased statement of expected customer orders anticipated to be received for each major product family or time. It represents sales and marketing management's commitment to take all reasonable steps necessary to achieve this level of actual customer orders. The sales plan is a necessary input to the production planning process. It is expressed in units identical to those used for the production plan

Cause and Effect Diagram

A tool for analyzing process dispersion. It is also referred to as the ishiwaka diagram and the fishbone diagram. The diagram illustrates main causes and subcauses leading to an effect. One of 7 tools used in quality

Economic Order Quantitiy (EOQ)

A type of fixed order quantity model that determines the amount of an item to be purchased or manufactured at one time. The intent is to minimze the combined costs of acquiring and carrying inventory.

Two-Bin Inventory

A type of fixed-order system in which inventory is carried in two bins. A replenishment quantity is ordered when the first bin is empty. During the replenishment lead time, material is used from the second bin. When the material is received, the second bin is refilled and the excess is put into the working bin. At this time, stock is withdrawn from the first bin until it is exhausted. This term is also used loosely to describe any fixed-order system even when physical "bins" do not exist

Min-Max System

A type of order point replenishment system where the minimum is the order point and maximum is the "order up to" inventory level. The order quantity is variable and is the result of the max minus available and on-order inventory. An order is recommended when the sum of the available and on-order inventory is at or below the min

UN Global Compact Management Model

A voluntary initiative whereby companies embrace, support, and enact, within their sphere of influence, a set of core value in the areas of human rights, labor standard, the environment and anticorruption

Queue

A waiting line. In manufacturing, the jobs at a given work center waiting to be processed. As queues increase, so do average queue time and work-in-progress inventory

SMART

Abbrv. Simple, Measurable, Achievable, Reasonable, Trackable

GAAP

Accounting practices that conform to conventions, rules and procedures that have general acceptability by the accounting profession

Sustainability

Activities that provide present benefit without compromising the needs of future generations

Voice of the Customer VOC

Actual customer descriptions in words for the functions and features customers desire for goods and services. In the strict definition, as relates to QFD, the term customer indicates the external customer of the supplying entity

Anticipation Inventories

Additional inventory above pipeline stock to cover projected trends of increasing sales, planned sales promotional programs etc. (Any supply shocks)

Backlog

All the customer orders received but not yet shipped. Sometimes referred to as open orders or the order board.

Terms and Conditions

All the provisions and agreements of a contract

Tolerance

Allowable departure from a nominal value established by design engineers that is deemed acceptable for the functioning of the good or service over its life cycle

Bucketed System

An MRP, DRP, or other time-phased system in which all time-phased data are accumulated into time periods called buckets. If the period of accumulation is one week, then the system is said to have weekly budgets

COGS

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

Liabilities

An accounting/financial term representing debts or obligations owed by a company to creditors. Liabilities may have a short-term horizon, such as accounts payable, or a longer-term obligation, such as mortgage payable or bonds payable

Decoupling Inventory

An amount of inventory kept between entities in a manufacturing or distribution network to create interdepence between processes or entities. The objective of decoupling inventory is to disconnect the rate of use from the rate of supply of the item

Planning BOM

An artificial grouping of items or events in BOM format used to facilitate master scheduling and material planning. It may include the historiacal average of demand expressed as a percentage of total demand for all options within a feature or for a specific end item within a product family is used as the quantity per in the planning BOM

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

Purchase Requisition

An authorization to the purchasing department to purchase specified materials in specified quantities within a specified time

Advance Ship Notice (ASN)

An electronic data interchange (EDI) notification of shipment of product

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 Gannt chart may be used with this technique

Forecast

An estimate of future demand. Can be constructed using quant methods, qual methods, and can be based on external or internal factors. Various forecasting techniques attempt to predict one or more of the four components of demand.

Value Chain Analysis

An examination of all links a company uses to produce and deliver its products and services starting from the origination point and continuing through delivery to the final customer

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.

Reverse Auction

An internet auction in which suppliers attempt to underbid their competitors. Companies identities are known only by the buyer

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. 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

Projected Available Balance

An inventory balance projected into the future. It is the running sum of on-hand inventory minus requirements plus scheduled receipts and planned orders

Wall-To-Wall Inventory

An inventory management technique in which material enters a plant and is processed through the plant into finished goods without ever having entered a formal stock area

Fixed Order Quantity

An inventory system, such as EOQ, in which the same order quantity is used from order to order. The time between orders then varies from order to order

Tariff

An official schedule of taxes and fees imposed by a country on imports or exports

Scheduled Receipt

An open order that has an assigned due date

Variable Cost

An operating cost that varies directly with a change of one unit in the production volume

Backorder

An unfilled customer order or commitment. A backorder is an immediate (or past due) demand against and item whose inventory is insufficient to satisfy the demand

Root Cause Analysis

Analytical methods to determine the core problems of an organization, process, product, market and so forth

Finite Loading

Assigning no more work to a work center than the work center can be expected to execute in a given time period. The specific term usually refers to a computer technique that involves calculating shop priority revisions in order to level load operation by operation

Total Line-Haul Cost

Basic costs of carrier operation to move a container of freight, including driver's wages and usage depreciation, which vary with the distance shipped and the cost per mile

Line Haul Costs

Basic costs of carrier operation to move a container of freight, including drivers wages and usage depreciation. These vary with the cost per mile, the distance shipped, and the weight moved.

Hoshin Planning

Breakthrough planning. A japanese strategic planning process in which a company develops up to 4 vision statements that indicate where the company should be in the next 5 years. Company goals and work plans are developed based on the vision statemetns. Periodic audits are then conducted to monitor progress

Bonded Warehouse

Building or parts or buildings ignated by the US Sec. of Treasury for storing imported merch, operated under US Customs Supervision

Infinite Loading

Calculation of the capacity requires work centers in the time periods required regardless of capacity available to perform this work

Resource Planning

Capacity planning conducted at the business plan level. The process of establishing, measuring, and adjusting limits or levels of long-range capacity. Resource planning is normally based on the production plan but may be driven by higher level plans beyond the time horizon for the production plan. It addresses those resources that take long periods of time to acquire. Resource planning decision always require top management approval

Detention

Carrier charges and fees applied when truck trailers are retained beyond a specified loading or unloading time

Terminal-Handling Costs

Carrier charges dependent on the number of times a shipment must be loaded, handled and unloaded. Cost can be reduced by consolidating shipments into fewer parcels or by shipping in truckload quantities

Pickup and Delivery Costs

Carrier charges for each shipment pickup and the weight of that shipment. Costs can be reduced if several smaller shipments are consolidated and picked up in one trip

Truckload Carriers

Carriers that deliver/charge only for full truckload shipments

Supplier Certification

Certification procedures verifying that a supplier operates, maintains, improves and documents effective procedures that relate to the customer's requirements. Such requirements can include cost, quantity, delivery, flexibility, maintenance, safety, and ISO quality and environmental standards

Quality

Conformance to requirements or fitness for use. Quality can be defined through five principal approaches 1) transcendent quality is an ideal, a condition of excellence 2) product-based quality is based on a product attribute 3) user-based quality is fitness for use 4) manufacturing-based quality is conformance to requirements 5) value-based qualityt is the degree of excellence at an acceptable price. Also, quality has 2 majore components 1) quality of conformance - quality is defined by the absence of defects 2) quality of design - quality is measured by the degree of customer sanctification with a product's characteristics and features

Total Costs

Considering all cost impacts, rather than just one cost impact, on customer service improvement

Product Cost

Cost allocated by some method to the products being produced. Initially recorded in asset accounts, product costs become an expense when the product is sold

Dependent Demand

Demand that is directly related to or derived from the BOM structure for other items and products. Such demands are therefore calculated and need not and should not be forecast. A given inventory item may have both dependent and independent demand at any given time.

Work Cell

Dissimilar machines grouped together into a production unit to produce a family of parts having similar routing

Break-Bulk

Dividing truckloads of homogenous items into smaller, more appropriate quantities for use

Enterprise Resource Planning (ERP)

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

Trend

General upward or downward movement of a variable over time

Uniform Plant Loading

IN lean, the distribution of work between work stations so that the time required for each station to complete all tasks is as close to equal as possible

Pegging

In MRP and MPS, the capability to identify for a given item the sources of its gross requirements and/or allocations. Pegging can be thought of as active where-used information

Net Requirements

In MRP, the net requirements for a part or an assembly are derived as a result of applying gross requirements and allocations against inventory on hand, scheduled receipts, and safety stock. Net requirements, lot-sized and offset for lead time, become planned orders

Performance Standard

In a performance measurement system, the accepted, targeted or expected value for the crieterion

Flow Processing

In process systems development, work flows from one workstation to another at nearly constant rate with no delays. When producing discrete units, the process is called repetitive manufacturing, when producing non-geometric units over time, the process is called continuous manufacturing. A physical-chemical reaction takes place in the continuous flow processes

Modularization

In product development, the use of standardized parts for flexibility and variety. Permits product development costs reductions by using the same items to build a variety of finished goods. This is the first step in developing a planning BOM process

Start Date

In product management, the time an activity begins, this may be defined as an actual start date or a planned start date

Balancing Operations

In repetitive manufacturing, regulating the assignments given to each workstation in order to ensure that all tasks at each workstation on the line are done in as close to the same time as possible.

Total Cost of Ownership (TCO)

In supply chain management, the total cost of ownership of the supply delivery system is the sum of all the costs associated with every activity of the supply stream. The main insight that TCO offers to the supply chain manager is the understanding that the acquisition cost is often a very small portion of the total cost of ownership

Buffer Management

In the theory of constaints, 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 dates. In addition, the causes of items missing from the buffer are identified, and the frequency of occurence is used to prioritize improvement activities.

Critical Chain Method

In the theory of constraints, a planning network planning technique for the analysis of a project's completion time, used for planning and controlling project activities. The critical chain, which determines project duration, is based on technological and resource constraints. Strategic buffering of paths and resources is used to increase project completion success.

VATI Analysis

In the theory of constraints, a procedure for determining the general flow of parts and products from raw materials to finished products. A V logical structure starts with one or a few raw materials, and the product expands into a number of different products as it flows through divergent points in its routings. The shape of an A logical structure is dominated by converging points. Many raw materials are fabricated and assembled into a few finished products. A T logical structure consists of numerous similar finished products assembled from common assemblies, subassemblies, and parts. An I logical structure is the simplest of production flows, where resources are shared between different products and the flows is in a straight line sequence, such as an assembly line. Once the general parts flow is determined, the system control points can be identified and managed

5 focusing steps

In the theory of constraints, a process to continuously improve organizational profit by evaluating the production system and market mix to determine how to make the most profit using the system constraint 1) identifying constraint 2) deciding how to exploit the constraint 3) subordinating all nonconstraints to the constraint 4) elevating the constraint to the system 5) returning to step 1 if the constraint is broken in any previous step, while not allowing inertia to set in

Protective Inventory

In the theory of constraints, the amount of inventory required relative to the protective capacity in the system to achieve a specific throughput rate at the constraint

Productive Capacity

In the theory of constraints. The maximum of the output capabilities of a resource or the market demand for that output for a given time period

Terminals

In transportation, locations where carriers load and unload goods to and from vehicles. Also used to make connections between local pickup and delivery service and line-haul service. Functions performed in terminals include weighing connections with other routes and carriers, vehicle routing, dispatching, maintenance, paperwork, and administration. Terminals may be owned and operated by the carrier or the public.

Unitization

In warehousing, the consolidation of several units into larger units for fewer handlings

Seasonal Inventory

Invenotry built up to smooth production in anticipation of a peak seasonal demand

Decentralized Inventory Control

Inventory Decision Making exercised at each stocking location for SKUs at that location

Centralized Inventory Control

Inventory decision making for all stockkeeping unites exercised from one office or department for an entire company

Pipeline Stock

Inventory in the transportation network and the distribution system, including the flow through intermediate stocking points. The flow time through the pipeline has a major effect on the amount of inventory required in the pipeline. Time factors involve order transmission, order processing, scheduling, shipping, transportation, receiving, stocking, review time etc.

Transit Inventory

Inventory in transit between manufacturing and stocking location

Inventory Ordering System

Inventory models for the replenishement of inventory, independent demand inventory ordering models include but are not limited to fixed reorder cycle, fixed reorder quant, optional replenishment, and hybrid models, Dependent demand inventory ordering models include material requirements, planning, kanban, and drum-buffer rope.

Days of Supply

Inventory on-hand metric converted from unites to how long the units will last

Fluctuation Inventory

Inventory that is carried as a cushion to protect against forecast error

Inventory Buffer

Inventory used to protect the throughput of an operation or the schedule against the negative effects caused by delays in delivery, quality problems, delivery of incorrect quantity and so on

Distribution Inventory

Inventory, usually spare parts and finished goods, located in the distribution system

Hansei

Jap. Reflection

Sensei

Jap. Teacher

Kaizen

Jap. improvement, continuing improvement involving everyone - managers and workers in manufacturing. Kaizen relates to finding and eliminating waste in machinery, labor or production methods

Hoshin

Jap. statement of objectives

muri

Jap. strain or overburden

Jidoka

Jap. the practice of stopping production line when a defect occurs

mura

Jap. unevenness or variability

Jishuken

Jap. voluntary study groups

muda

Jap. waste

Direct Labor

Labor that is specifically applied to the good being manufactured or used in the performance of the service

Time Phased Order Point (TPOP)

MRP like time planning logic for independent demand items, where gross requirements come from a forecast, not via explosion. This technique can be used to plan distribution center inventories as well as to plan for service parts, because MRP logic can readily handle items with dependent demand, independent demand, or a combination of both. Time-phased order point is an approach that uses time periods, thus allowing for lumpy withdrawals instead of average demand. When used in distribution environments, the planned order releases are input to the master schedule dependent demands

Mixed Model Production

Making several different parts or products in varying lot sizes so that a factory produces close to the same mix of products that will be sold that day. The mixed model schedule governs the making and the delivery of component parts, including those provided by outside suppliers. The goal is to build every model every day, according to daily demand

In-transit Inventory

Material moving between 2 or more locations, usually separated geographically

Scrap

Material outside of specifications and possessing characteristics that make rework practical

Direct Material

Material that becomes a part of the final product in measurable quantities

Cycle Stock

One of the two main conceptual components of any item inventory, the cycle stock is the most active component. The cycle stock depletes gradually as customer orders are received and is replenished cyclically when supplier orders are receieved. The other conceptual component of the item inventory is the safety stock, which is a cushion against uncertainty in the demand or in the replenishment lead time

Interplant Demand

One plant's need for a part or product that is produced by another plant or division within the same organization. Although its not a customer order, it is usually handled by the master production scheduling system in a similar manner

Average Inventory

One-half the average lot size plus the safety stock, when demand and lot sizes are expected to be relatively uniform over time. The average can be calculated as an average of several inventory observations taken over several historical time periods; for example, 12-month endeing inventories may be averaged. When demand and lot sizes are not uniform, the stock level versus time can be graphed to determine the average

Total Productive Maintenance TPM

Preventative mainenance plus continuing efforts to adapt, modify, and refine equipment to increase flexibility, reduce material handling, and promote continuous flows. It is operator oriented maintenance with the involvement of all qualified employees in all maintenance activiites

multisourcing

Procurement of a good or service from more than one independent supplier

U-Lines

Production lines shaped like the letter "U". The shape allows workers to easily perform several nonsequential tasks without much walk time. The number of work stations in a U-line is usually determined by line balancing. Promotes communication

Engineer-To-Order

Products whose customer specifications require unique engineering design, significant customization, or new purchased material. Each customer order results in a unique set of part numbers, BOM, and routings

Time Buffer

Protection against uncertainty that takes the form of time

Demonstrated Capacity

Proven capacity calculated from actual performance data, usually expressed as the average number of items produced multiplied by the standard hours per item

Raw Material

Purchased items or extracted materials that are converted via the manufacturing process into components and products

Market Driven

Responding to customers' needs

Subcontracting

Sending production work outside to another manufacturer

Takt Time

Sets the pace of production to match the customer demand and becomes the heartbeat of any lean production system. It is computed as the available production time divided by the rate of customer demand.

Shingo's Seven Wastes

Shigeo Shing, a pioneer in Jap. JIT philosophy, identified 7 barriers to improving manufacturing. They are the waste of overproduction, waste of waiting, waste of transportation, waste of stocks, waste of motion, waste of making defects and waste of processing itself

Fixed-Position Manufacturing

Similar to project manufacturing, this type of manufacturing is mostly used for large, complex projects, where the product remains in one locations for its full assembly period or may move from location to location after considerable work and time is spent on it. ex. shipbuilding, aircraft etc.

Service

Sometimes used to describe those activities that support the production or distribution functions in any organization. Such as customer service and field service

Load Leveling

Spreading orders out in time or rescheduling ops so that the amount of work to be done in sequential time periods tends to be distributed evenly and is then achievable. Although both material and labor are ideally level loaded, specific businesses and industries may load to one or the other exclusively

Advanced Planning and Scheduling (APS)

Techniques that deal with analysis and planning of logistics and manufacturing during 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, others. 5 main components are 1.) demand planning 2.) production planning 3.) production scheduling 4.) distribution planning 5.) transportation planning

Quick Changeover

The ability to shorten machine setups between different machine operation requirements to increase process flexibility. Most concentration is on reducing external setup time first, then on internal setup issues. This reduces economic order quantity, queue and manufacturing lead times, and work in process inventory, it improves quality, process and material flows

Inventory Control

The activities and techniques of maintaining the desired levels of items, whether raw materials, work in process, or finished products

Project Management

The activities involved in the realization of a product or service offered to customers. The responsibilities include planning, directing, and controlling one or more projects of a new or continuing nature; initiating any acquisition processes necessary to get the project work under way and monitoring performance

Warehousing

The activities related to receiving, storing and shipping materials to and from productions or distribution locations

Preventative Maintenance

The activities, including adjustments, replacements, and basic cleanliness, that forestall machine breakdwons. The purpose is to ensure that production quality is maintained and that delivery schedules are met. In addition, a machine that is well cared for will last longer and cause fewer problems

Production Plan

The agreed-upon plan that comes from the production planning process, specifically the overall level of manufacturing output planned to be produced, usually stated as a monthly rate for each product family. Various units of measurement can be used to express the plan; units, tonnage, standard hours, number of workers, and so on. The production plan is management's authorization for the master scheduler to convert it into a more detailed plan, that is, the master production schedule.

Yield

The amount of good or acceptable material available after the completion of a process. Usually computed as the final amount divided by the initial amount converted to a decimal or percentage. In manufacturing planning and control systems, yield is usually related to specific routing steps or to the parent item to determine how many units should be scheduled to produce a specific # of finished goods

Load

The amount of planned work scheduled for and actual work released to a facility, work center, or operation for a specific span of time. Usually expressed in terms of standard hours of work or, when items consume similar resources at the same rate, units of production

Planning Horizon

The amount of time a plan extends into the future. For a master schedule this is normally set to cover a minimum of cumulative lead time plus time for lot sizing low-level components and for capacity changes of primary work centers or of key suppliers. For longer term plans the planning horizon must be long enough to permit any needed additions to capacity

Demand Lead Time

The amount of time potential customers are willing to wait for the delivery of a good or a service

Supplier Lead Time

The amount of time that normally elapses between the time an order is received by a supplier and the time the order is shipped

Statistical Process Control (SPC)

The application of statistical techniques to monitor and adjust an operation. Often the term statistical process control is used interchangably with statistical quality control

Component

The availability of component inventory for the manufacture of a specific parent order or group of orders or schedules

Idle Capacity

The available capacity that exists on non-constraint resources beyond the capacity required to support the constraint. Idle capacity has 2 components, protective capacity and excess capacity

Mean Absolute Deviation (MAD)

The average of the absolute values of the deviations of observed values from some expected value. MAD can be calculated based on observations and the arithemetic 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

Marketing Strategy

The basic plan marketing expects to use to achieve its business and marketing objectives in a particular market. This plan includes marketing expenditures, marketing mix, and marketing allocation

Inventory Mangement

The branch of business management concerned with planning and controlling inventories

Procurement

The business functions of procurement planning, purchasing, inventory control, traffic, receiving, incoming inspection and salvage operations

Capacity Available

The capability of a system or resource to produce a quantity of output in a particular time period.

Demurage

The carrier charges and fees applied when rail freigh cars and ships are retained beyond a specified loading or unloading time

General and Admin Expenses (G&A)

The category of expenses on an income statement that includes the costs of general managers, computer systems, research and development

ABC Classification

The classification of a group of items in decreasing order of annual dollar volume (price x projected volume) and split into 3 classes called A (10-20% of items, 50-70% of projected dollar volume),B (20% items and 20% of dollar volume), C (60-70% of items, 10-305 of dollar volume). The ABC principle states that effort and money can be saved through applying looser controls to the low dollar-volume class than will be applied to high dollar-volume class. This is applicable to inventories, purchasing, sales etc. (Syn. ABC analysis, distribution by value)

5 whys

The common practice in tqm is to ask "why" 5 times when confronted with a problem. By the time the answer to the 5th why is found, the ultimate cause will be identified

Cross-Docking

The concept of packing products on the incoming shipments so they can be easily sorted at an intermediate warehouse or for outgoing shipments based on final destination. The items are carried from the incoming vehicle docking point without being stored in inventory at the warehouse. Cross-docking reduces inventory investment and storage space requirements

Employee Involvement (EI)

The concept of using the experience, creative energy, and intelligence of employees by treating them with respoect, keeping them informed, and including them and thier ideas in the decision making processes appropriate ot their areas of expertise. EI focuses on quality and productivity improvements

Cost of Poor Quality

The cost associated with providing poor quality products or services. There are 4 categories of costs 1) internal failure costs 2) external failure costs 3) appraisal costs 4) prevention costs

Carrying Cost

The cost of holding inventory, usually defined as a percentage of dollar value of inventory per unit of time (usually one year). Depends greatly on capital invested, costs of maintaining inventory etc.

Stockout Costs

The costs associated with a stockout. Those costs may include lost sales, backorder costs, expediting, and additional manufacturing and purchasing costs

Prevention Costs

The costs caused by improvement activities that focus on the reduction of failure and appraisal costs. Typical costs include education, quality training, and supplier certification. Prevention costs are one of four categories of quality costs.

External Failure Costs

The costs related to problems found after the product reaches the customer. This usually includes such costs as warranty and returns

Mass Customization

The creation of a high-volume product with large variety so that a customer may specify an exact model out of a large volume of possible and items while manufacturing cost is low due to large volume.

Process Flexibility

The design of the manufacturing system, including operators and machinery, that allows quick changeovers to respond to near-term changes in product volume and mix. A necessary tool in lean and JIT

Supply Chain Management

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

Drum Schedule

The detailed production schedule for a resource that sets the pace for the entire system. The drum schedule must reconcile the customer requirements with the sytems constraints

Forecast Error

The difference between actual demand and forecast demand

Distribution Channel

The distribution route, from raw materials through consumption, along which products travel

Gannt Chart

The earliest and best known type of planning and control chart, especially designed to show graphically the best relationship between planned performance and actual performance over time. used for 1)machine loading, horizontal line represents capacity and other to represent load against capacity 2) monitoring job progress in which one horizontal line represents the production schedule and 2nd represents actual completion

Supplier Partnership

The establishment of a working relationship with a supplier organization whereby two organizations act as one

Rated Capacity

The expected output capability of a resource or system. Capacity is traditionally calculated from such data as planned hours, efficiency, and utilization. The rated capacity is equal to hours available x efficiency x utilization

Receiving

The function encompassing the physical receipt of material, the inspection of hte shipment for conformance with the purchase order, the identification and delivery to destination and the preparation of receiving reports

Priority Planning

The function of determining what material is needed and when. Master production scheduling and material requirements planning are the elements used for the planning and replanning process to maintain proper due dates on required materials

Capacity Requirements Planning (CRP)

The function of establishing, measuring, and adjusting limits or levels of capacity. The term in this context refers to the process of determining the amount of labor and machine resources required to accomplish the tasks of production.

Capacity Management

The function of establishing, measuring, monitoring and adjusting limits or levels of capacity in order to execute all manufacturing schedules. Capacity management is executed at 4 levels: Resource Requirements Planning, Rough-Cut Capacity Planning, Capacity Requirements Planning, Input/Output control

Production Activity Control (PAC)

The function of routing and sipatching the owkr to be accomplished through the production facility and of performing supplier control. PAC encompasses the principles, approaches, and techniques needed to schedule, control, measure, and evaluate the effectiveness of production operations

Field Service

The functions of installing and maintaing a product for a customer after the sale or during the lease. Field service may also include training and implementation assistance

Supply Chain

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

Materials Management

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

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 3pl services such as public warehouses and freight forwarders

Standard Time

The length of time that should be requiered to 1) set up a given machine or operation and 2) run one batch or one or more parts, assemblies, or end products through that operation. This time is ued in determining machine requirements and labor requirements. Standard time assumes an average worker following prescribed methods and allows for personal rest to overcome fatigue and unavoidable delays. It is also frequently used as a basis for incentive pay systems and as a basis of allocating overhead in cost accounting systems

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.

Cumulative Lead Time

The longest planned length of time to accomplish the activity in question. It is found by reviewing the lead time for each BOM path below the item; whichever path adds up to the greatest number defines cumulative lead time

Master Production Schedule (MPS)

The master production schedule is 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 a company plans to produce, expressed in specific configs, quantities and dates. Not a sales forecast, but takes into account the forecast, production plan, backlog etc.

Freight Forwarder

The middle man between the carrier and the organization shipping the product. Often combines smaller shipments to take advantage of lower bulk costs.

Physical Supply

The movement and storage of goods from suppliers to manufacturing. The cost of physical supply is ultimately passed on to the customer

Cash Flow

The net flow of dollars into or out of the proposed project. The algebraic sum, in any time period, of all cash receipts, expenses, investments. Also called cash proceeds or cash generated.

Available Inventory

The on-hand inventory balance minus allocations, reservations, backorders, and (usually) quantities held for quality problems. Often called beginning available balance (syn. beginning available balance, net inventory)

Flowchart

The output of a flowcharting process, a chart that shows the operations, transportation, storages, delays, inspections and so on related to a process. Flowcharts are drawn to better understand processes. The flowchart is one of the 7 tools of quality

Quality Costs

The overall costs associated with prevention activities and the improvement of quality throughout the firm before, during, and after production of a product. These costs fall into four recognized categories; internal failure costs, external failure costs, appraisal costs, and prevention costs. Internal failure costs relate to problems before the product reaches the customer. These usually include rework, scrap, downgrades, reinspection, retest, and process losses. External faulure costs relate to problems found after the product reaches the customer. These usually include such costs as warranty and returns. Appraisal costs are associated with the formal evaluation and audit of quality in the firm. Typical costs include inspection, quality audits, testing, calibration, and checking time. Prevention costs are those caused by improvement activities that focus on reducing failure and appraisal costs. Typical costs include education, quality training, and supplier certification

Electronic Data Interchange (EDI)

The paperless exchange of trading documents, such as purchase orders, shopment authorizations, advanced shipment notices, and invoices, using standardized document formats

Strategic Plan

The plan for how to marshal and determine actions to support the mission, goals, and objectives of an organization. Generally includes an organization's explicit mission, goals, and objectives and the specific actions needed to achieve those goals and objectives

Employee Empowerment

The practice of giving non-managerial employees the responsibility and the power to make decision regarding their jobs and tasks.

Backhauling

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

Requirements Explosion

The process of calculating the demand for the components of a parent item by multiplying the parent item requirements by the component usage quantity specified in the BOM

Demand Planning

The process of combining statistical forecasting techniques and judgement to construct demand estimates for products or services across the supply chain from the suppliers raw materials to the consumers needs. Items can be aggregated by product family, geographical location, product life cycle, and so forth, to determine an estimate of consumer demand for finished products, service parts, and services. Numerous forecasting models are tested and combined with judgement from market. Actual sales are compared with forecasts provided by various models to determine which techniques minimize forecast error.

Capacity to Promise

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. The resulting delivery date takes into account consideration production capacity, current manufacturing environment and future order commitments. The objective is to reduce time spent by production planners in expediting orders.

Priority Control

The process of communicating start and completion dates to manufacturing departments in order to execute a plan. The dispatch list is the tool normally used to provide these dates and priorities based on the current plan and status of all open orders

Rough-Cut Capacity Planning (RCCP)

The process of converting the master production schedule into requirements for key resources, often including labor, machinery, warehouse space, suppliers capabilities, and in some cases money. Comparison to available or demonstrated capacity is usually done for each key resource. This comparison assists the master scheduler in establishing a feasible master production schedule. These approaches to performing RCCP are hte bill of labor approach, the capacity planning using overall factors approach, and the resource profile approach.

Value Stream

The process of creating, producting and delivering a good or service to market. For a good, the value stream encompasses the raw material supplier, the manufacture and assembly of the good and the distribution network. For a service, the value stream consists of suppliers, support personnel and technology, the service "producer" and the distribution channel. The value stream may be controlled by a single business or a network of several businesses

Mixed Model Scheduling

The process of developing one or more schedules to enable mixed-model production. The goal is to achieve a day's production each day

What-If Analysis

The process of evaluating alternate strategies by answering the consequences of changes to forecasts, manufacturing plans, inventory levels and so-forth

Order Promising

The process of making a delivery commitment. For m-t-o products, this usually involves a check of uncommitted material and availability of capacity, often as represented by the master schedule ATP

Quality Control

The process of measuring quality conformance by comparing the actual with a standard for the characteristic and acting on the difference

Discrete Manufacturing

The production of distinct items such as a automobiles, appliances, or computers

Product Mix

The proportion of individual products that make up the total production or sales volume. Changes in the product mix can mean drastic changes in the manufacturing requirements for certain types of labor and material

Purchase Order

The purchaser's authoritization used to formalize a purchase transaction with a supplier. A purchase order, when given to a supplier, should contain statements of the name, part number, quantity, description, and price of the goods or services ordered; agreed to terms as a payment, discounts, date of performance, and transportation, and all other agreements pertinent to the purchase and its execution by the supplier

Process Batch

The quantity or volume of output that is to be completed at a workstation before switching to a different type of work or changing an equipment setup

Planned Order Receipt

The quantity planned to be received at a future date as a result of a planned order release. Planned order receipts differ from scheduled receipts in that they have not been released

Tracking Signal

The ratio of the cumulative algebraic sum of the deviations between forecasts and actual values to the mean absolute deviation. Used to signal when the validity of the forecasting model might be ind doubt

Repetitive Manufacturing

The repeated production of the same discrete products or families of products. Repetitive methodology minimizes setups, inventory, and manufacturing lead times by using production lines, assembly lines, or cells. Work orders are no longer necessary production scheduling and control are based on production rates. Products may be standard or assembled from modules. Repetitive is not a function of speed or volume

Protective Capacity

The resource capacity needed to protect system throughout - ensuring that some capacity above the capacity required to exploit the constraint is available to catch up when disruptions inevitably occur. Nonconstraint resources need protective capacity to rebuild the bank in front of the constraint or capacity - constrained resource (CDR) and/or on the shipping dock before throughput is lost and to empty the space buffer when it fills

Green Reverse Logistics

The responsibility of the supplier to dispose of packaging materials or environmentally sensitive materials such as heavy metals

Dispatching

The selecting and sequencing of available jobs to be run at individual workstations and the assignment of those jobs to workers

Tactical Plans

The set of functional plans synchronizing activities across functions that specify production levels, capacity levels, staffing levels, funding levels, and so on, for achieving the intermediate goals and objectives to support the organization's strategic plan

Manufacturing Philosophy

The set of guiding principles, driving forces, and ingrained attitudes that helpes communicate goals, plans, and policies to all employees and that is reinforced through conscious and subconscious behavior within the manufacturing organization

Value Analysis

The systematic use of techniques that identify a required function, establish a value for that function and finally provide that function at the lowest overall cost. This approach focuses on the functions of an item rather than the methods of producing the present product design

Standard Costs

The target costs of an operation, process, or product including direct material, direct labor, and overhead charges

Drum-Buffer-Rope (DBR)

The theory of constraints method for scheduling and managing operations that have an internal constraint or capacity constrained resource

Wait Time

The time a job remains at a work center after an operation is completed, until it is moved to the next operation. It is often expressed as a part of move time

Internal Setup Time

The time associated with elements of a setup procedure performed while the process or machine is not running

External Setup Time

The time associated with elements of a setup procedure performed while the process or machine is running

Delivery Lead Time

The time from the receipt of a customer order to the delivery of the product

Procurement Lead TIme

The time required to design a product, modify or design equipment, conduct market research, and obtain all necessary materials. Lead time begins when a decision has been made to accept an order to produce a new product and ends when production commences

Run Time

The time required to process a piece or lot at a specific operation. Run time does not include setup time

Purchasing Lead Time

The total lead time required to obtain a purchased item. Included here are order preparation and release time, supplier lead time, transportation time, and receiving, inspection, and put-away time

Replenishment Lead Time

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

Manufacturing Lead Time

The total time required to manufacture an item, exclusive of lower level purchasing lead time. For m-t-o 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 inventory. Included here are order preparation time, inspection time, and put-away time

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 balance in the first period and is normally calculated for each period in which and MPS receipt is scheduled. In the 1st 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 look-ahead, and cumulative ATP without look-ahead

Unit of Measure

The unit in which the quantity of an item is managed

Inventory Valuation

The value of the inventory at either its cost or its market value. Because inventory value can change with time, some recognition is taken of the age distribution of inventory. Therefore, the cost value of inventory is usually computed on a FIFO basis, LIFO basis, or a standard cost basis to establish the COGS

Order Winners

Those competitive characteristics that cause a firms customers to choose that firms goods and services over those of its competitors. Order winners can be considered to be competitive advantages for the firm. Order winners usually focus on one of the following strategic initiatives (price, cost, quality, delivery speed, delivery reliability, product design, flexibility, after-market service, and image)

Finished Goods Inventory

Those items on which all manufacturing operations, including final test, have been completed. These products are available for shipment to the customer as either end items or repair parts

Service Parts

Those modules, componenets, and elements that are planned to be used without modification to replace an original part

Explode

To perform a BOM explosion

Drop Ship

To take the title of the product but not actually handle, stock, or deliver it

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 neccessary to produce the product, it cannot be directly traced to the final product

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 FTC for interstate traffic

Upstream

Used as a relative reference within a firm or supply chain to indicate moving in the direction of the raw material supplier

Ordering Cost

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.

Spread

Variability of an action. Often measured by the range or standard deviation of a particular dimension

Inventory Accuracy

When the on-hand quantity is within an allowed tolerance of the recorded balance. This important metric usually is measured as the percent of items with inventory levels that fall within tolerance. Target values usually are 95-99% depending of the value of the item

Protective Packaging

Wrapping or covering of material that provides containment, protection, and identification of inventory in a warehouse. The material must be contained in such a way that will support movement and storage and will fit into the dimension of storage space and transportation vehicles

Pallet Position

a calculation that determines the space needed for the number of pallets for inventory storage or transportation based on a standard pallet size. Pallet dimensions vary around the globe, but are typically a constant in regional markets. The term is frequently used to quote storage and transportation rates

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

Participative design/engineering

a concept that refers to the simultaneous participation of all the functional areas of the firm in the product design activity. Suppliers and customers are often also included. The intent is to enhance the design with the inputs of all key stakeholders. Such a process should ensure that the final design meets all the needs of stakeholders and should ensure a product can be quickly brought to the marketplace by maximizing quality and minimizing cost

Manufacturing order

a doc, group of doc, or schedule conveying authority for the manufacture of specified parts or products in specific quants

Gemba

a japanese word meaning shop floor

lot-for-lot

a lot-sizing technique that generates planned orders in quantities equal to the net requirements in each period

Leading Indicator

a specific business activity index that indicates future trends. For example, housing starts is a leading indicator for the industry that supplies builders hardware

Operating Expense

all the money an organization spends in generating "goal units"

Owner's Equity

an accounting/financial term representing the residual claim by the company's owners, shareholders, etc to the company's assets less its liabilites

Pacemaker

in lean, the resource that is scheduled based on the customer demand rate for that specified value stream. It is that resource which performs an operation or process that governs the flow of materials along the value stream. Its purpose is to maintain a smooth flow through the manufacturing plant, a larger buffer is provided for the pacemaker than other resources so that it can maintain continuous operation

Transportation inventory

inventory that is in transit between locations

lot size inventory

inventory that results whenever quantity price discounts, shipping costs, setup costs, or similar considerations make it more economical to purchase or produce in larger lots than are needed for immediate purposes.

Maintenance, Repair and Operating (MRO) supplies

items used in support of general operations and maintenance such as maintainenance supplies, spare parts, and consumables used in the manufacturing process and supporting operations

Product Layout

layout of resources arranged sequentially based on the products routin

Materials Handling

movement and storage of goods inside the distribution center. This represents a capital cost and is balanced against the operating costs of the facility

Ways

paths over which a carrier operates, including right-of-way, roadbed, tracks, and other physical facilities. May be owend by the government or privately held by the carrier or provided by nature

Order Picking

selecting or picking the required quantity of specified products for movement to a packaging are and documenting that the material was moved from one location to shipping

Incoterms

short for Intl Commercial Terms; created to simplify international transactions

Nesting

the act of combining several small processes to form one larger process

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

lot size

the amount of a particular item that is ordered from the plant of a supplier or issued as a standard quantity to the production process

Landed Cost

the cost includes the product cost plus the cost of logistics such as warehousing, transportation, and handling fees

Internal Failure Costs

the cost of things that go wrong before the production reaches the customer, internal failure costs usually include rework, scrap, downgrades, reinspection, retest and process losses

Overhead

the costs incurred in the operation of a business that cannot be directly related to the individual goods or services produced. These costs, such as light, heat, supervision, and maintenance are grouped into several pools and distributed to units of goods or services by some standard allocation method such as direct labor hours, direct labor dollars, or direct materials dollars

Independent Demand

the demand for an item that is unrelated to the demand for other items. Demand for finished gods, parts required for destructive testing and service parts requirements are examples of independent demand

Gross Margin

the difference between total revenue and the COGS

Transportation

the function of planning scheduling, and controlling activities related to mode, vendor, and movement of inventories into and out of an org

Parent Item

the item produced from one or more components

Order Entry

the process of accepting and translating what a customer wants into terms used by the manufacturer or distributor. The commitment should be based on the ATP line in the master schedule. This can be as simple as creating shipping documents for finished goods in a m-t-s environment, or it could be a more complicated series of activities including design efforts for m-t-s products

Outsourcing

the process of having suppliers provide goods and services that were previously provided internally. Outsourcing involves substitution - the replacement of internal capacity and production by that of the supplier

Job Shop Scheduling

the production planning and control techniques used to sequence and prioritize production quantities across operations in a job shop

On-Hand Balance

the quantity shown in the inventory records as being physically in stock

throughput

the rate at which the system generates "goal units". Because throughput is a rate, it is always expressed for a given time period - such as, per month, week day etc. If the goal units are money, throughput will be an amount of money per time period. In that case, throughput is calculated as revenues received minus totally variable costs divided for the chosen time period

Point-Of-Sale (POS)

the relief of inventory and computation of sales data at the same time and place of sale, generally through the use of bar coding or magnetic media and equipment

Manufacturing Process

the series of operations performed upon material to convert it from the raw materials or a semifinished state to a state of further completion. Manufacturing processes can be arranged in a process layout, product layout, cellular layout, or fixed position layout. Manufacturing processes can be planned to support m-t-s, m-t-o, a-t-o, and so forth based on strategic use and placement of inventories

Move Time

the time that a job spends in transit from one operation to another in the plant

Gross Requirement

the total of independent and dependent demand for a component before the netting of the on-hand inventory and scheduled receipts

Order Qualifiers

those competitive characteristics that a firm must exhibit to be a viable competitor in the marketplace

Unit Cost

total labor, material and overhead cost for one unit of production

Operator flexibility

training machine workers to perform tasks outside their immediate jobs and in problem solbing techniques to improve process flexibility. This is a necessary process in developing a fully cross-trained workforce

Supplier Relationship Management (SRM)

A comprehensive approach to managing an enterprise's interactions with the ororganizations that supply the goods and services the enterprise uses. The goal of SRM is to streamline and make more effective the processes between an enterprise and its suppliers. SRM is often associated with automating procure-to-pay business processes, evaluating supplier performance and exchanging information with suppliers. An e-procurement system often comes under the umbrella of a supplier relationship management family of applications

Perpetual Inventory Record

A computer record or manual document on which each inventory transaction is posted so that a current record of the inventory is maintained

Pareto's Law

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, and so on. In an ABC classification, for ex. 20% of the inventory items may constitute 80% of inventory value

Kanban

A JIT production method that uses standardized containers or lot sizes with a single card attached to each. It is a pull system where work centers signal with a card that they withdraw parts from feed operations or suppliers. Loosely means card or billboard. Synonymous with specific scheduling system developed and used by Toyota

3PL

A buyer and supplier team with a third party that provides product delivery services. This third party may provide added supply chain expertise

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

Bill of Lading (uniform)

A carriers 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 bill of lading in the basis for filing freight claims

Inventory Adjustment

A change made to an inventory record to correct the balance, to bring it in line with actual physical inventory balances. The adjustment either increases or decreases the item record on-hand balance

Single-Source Supplier

A company that is selected to have 100% of the business for a part although alternate suppliers are available

Reverse Logistics

A complete supply chain dedicated to the reverse flow of products and materials for the purpose of returns, repair, remanufacture, and/or recycling

Bias

A consistent deviation from the mean in one direction (high or low). A normal property of a good forecast is that it is not biased

Job Costing

A cost accounting system in which costs are assigned to specific jobs. This system can be used with either actual or standard costs in the manufacturing of distinguishable units or lots of products

Heijunka

A JIT philosophy, an approach to level production throught a supply chain to matched the planned rate end product sales