Supply Chain Part 2
5) An Internet web site that provides a central repository for data or a central planning capability in an industry or supply network.
...
International Maritime Bureau (IMB)
A special division of the International Chamber of Commerce.
International Standards Organization (ISO)
An organization within the United Nations to which all national and other standard-setting bodies (should) defer. Develops and monitors international standards, including OSI, EDIFACT, and X.400.
Calculation
Cost of Capital x Average Net Value of Inventory
Information System (I/S)
Managing the flow of data in an organization in a systematic, structured way to assist in planning, implementing, and controlling.
Home Page
The starting point for a web site. It's the page that's retrieved and displayed by default when a user visits a web site. The default home-page name for a server depends on the server's configuration. On many web servers, it is index.html or default.htm. Some web servers support multiple home pages.
Intrastate Commerce
The transportation of persons or property between points within a state. A shipment between two points within a state may be interstate if the shipment had a prior or subsequent move outside of the state and the shipper intended an interstate shipment at time of shipment.
Invoice
A detailed statement showing goods sold or shipped and amounts for each. The invoice is prepared by the seller and acts as the document that the buyer will use to make payment.
Highway Trust Fund
A fund into which highway users (carriers and automobile operators) pay; the fund pays for federal government's highway construction share.
Indirect Cost
A resource or activity cost that cannot be directly traced to a final cost object since no direct or repeatable cause-and-effect relationship exists. An indirect cost uses an assignment or allocation to transfer cost.
Indirect Retail Locations
A retail location that ultimately sells your product to consumers, but who purchases your products from an intermediary, like a distributor or wholesaler.
ISO 14000 Series Standards
A series of generic environmental management standards under development by the International Organization of Standardization which provide structure and systems for managing environmental compliance with legislative and regulatory requirements and affect every aspect of a company's environmental operations.
ISO 9000
A series of quality assurance standards compiled by the Geneva, Switzerland-based International Standards Organization. In the United States, ISO is represented by the American National Standards Institute based in Washington, DC.
Insurance
A system of protection against loss under which a number of parties agree to pay certain sums (premiums) for a guarantee that they will be compensated under certain conditions for specified loss and damage.
Insourcing
The opposite of outsourcing, that is, a service performed in house.
* Delivered in perfect condition with the correct configuration, customer ready, without damage, and faultlessly installed (as applicable)
...
* Delivered on time to customer's request date, using the customer's definition of on-time delivery
...
* Delivered with complete and accurate documentation supporting the order including packing slips, bills of lading and invoices
...
* Development costs (costs incurred in process reengineering, planning, software development, installation, implementation, and training associated with new and/or upgraded architecture, infrastructure, and systems to support the described supply chain management processes),
...
* Execution costs (operating costs to support supply chain process users, including computer and network operations, EDI and telecommunications services, and amortization/depreciation of hardware)
...
* Maintenance costs (costs incurred in problem resolution, troubleshooting, repair, and routine maintenance associated with installed hardware and software for described supply chain management processes. Includes costs associated with database administration systems configuration control, release planning, and management).
...
* Metrics that are aligned to strategy, and linked to the shop floor or line-level workers.
...
* Tools/technology in place to support easy data collection and use.
...
.
...
1) How quickly and efficiently a company can ramp up to meet demand.
...
1) In just in time, any activity that does not add value to the good or service in the eyes of the consumer.
...
1) Transcendent quality is an ideal, a condition of excellence.
...
1) Typically refers to inventory turnover
...
1. Manufacturing Planning - MRP, production scheduling, tracking, manufacturing engineering, manufacturing documentation management, inventory/obsolescence tracking.
...
1. Order Management - Order entry/maintenance, quotes, customer database, product/price database, accounts receivable, credits and collections, invoicing.
...
1. Product Data Management - Product phase-in/phase-out and release; post-introduction support and expansion; testing and evaluation; end-of-life inventory management. Item master definition and control.
...
1. Sourcing/Material Acquisition - Material requisitions, purchasing, supplier quality engineering, inbound freight management, receiving, incoming inspection, component engineering, tooling acquisition, accounts payable.
...
2) A by-product of a process or task with unique characteristics requiring special management control. Waste production can usually be planned and controlled. Scrap is typically not planned and may result from the same production run as waste.
...
2) A seller with whom the buyer does business, as opposed to vendor, which is a generic term referring to all sellers in the marketplace.
...
2) How well a solution to a problem will work when the size of the problem increases. The economies of scale don't really kick in until your reach the critical mass, then revenues start to increase exponentially.
...
2) Product-based quality is based on a product attribute.
...
2. Component and Supplier Management - Part number cross references, supplier catalogs, approved vendor lists.
...
2. Distribution and Transportation Management - DRP, shipping, freight management, traffic management.
...
2. Forecasting and Demand/Supply Manage and Finished Goods - Forecasting; end-item inventory planning, DRP, production master scheduling for all products, all channels.
...
2. Inventory Management - Perpetual and physical inventory controls and tools.
...
3) User-based quality is fitness for use.
...
3. Inventory Management - Perpetual and physical inventory controls and tools.
...
3. Manufacturing Execution - MES detailed and finite interval scheduling, process controls, and machine scheduling. DELIVER
...
4) Manufacturing-based quality is conformance to requirements.
...
4. Warehouse Management - Finished goods, receiving and stocking, pick/pack.
...
5) Value-based quality is the degree of excellence to an acceptable price.
...
5. Channel Management - Promotions, pricing and discounting, customer satisfaction surveys.
...
6. Field Service/Support - Field service, customer and field support, technical service, service/call management, returns, warranty tracking.
...
Also see the Council of Logistics Management's definition of Logistics.
...
Also, quality has two major components
...
EXTERNAL ELECTRONIC INTERFACES
...
MAKE
...
PLAN
...
Plan/Source/Make/Deliver - Interfaces, gateways, and data repositories created and maintained to exchange supply chain-related information with the outside world. E-commerce initiatives. Includes development and implementation costs.
...
SOURCE
...
Scalability
...
Supplier
...
These costs are associated with the following processes
...
Turnover
...
Waste
...
a) quality of conformance - quality is defined by the absence of defects.
...
b) quality of design - quality is measured by the degree of customer satisfaction with a product's characteristics and features.
...
Traceability
1) The attribute allowing the ongoing location of a shipment to be determined. 2) The registering and tracking of parts, processes, and materials used in production, by lot or serial number.
Sunk Cost
1) The unrecovered balance of an investment. It's a cost already paid that is not relevant to the decision concerning the future that is being made. Capital already invested that for some reason cannot be retrieved.2) A past cost that has no relevance with respect to future receipts and disbursements of a facility undergoing an economic study. This concept implies that since a past outlay is the same regardless of the alternative selected, it should not influence the choice between alternatives.
Taguchi Method
A concept of offline quality control methods conducted at the product and process design states in the product development cycle. This concept, expressed by Genichi Taguchi, encompasses three phases of product design, parameter design, and tolerance design. The goal is to reduce quality loss by reducing the variability of a product's characteristics during the parameter phase of product development.
Standard Cost Accounting System
A cost accounting system that uses cost units determined before production for estimating the cost of an order or product. For management control purposes, the standards are compared to actual costs, and variances are computed.
Variable Cost
A cost that fluctuates with the volume or activity level of business.
Joint Cost
A common cost in cases where a company produces products in fixed proportions and the cost the company incurs to produce one product entails producing another; the backhaul is an example.
Logbook
A daily record of the hours an interstate driver spends driving, off duty, sleeping in the berth, or on duty but not driving.
Local Area Network (LAN)
A data communications network spanning a limited geographical area, usually a few miles at most, providing communications between computers and peripheral devices.
Outlier
A data point that differs significantly from other data for a similar phenomenon. For example, if the average sales for a product were ten units per month, and one month the product had sales of 500 units, this sales point might be considered an outlier.
Last Updated
A date and time stamp that is recorded when a field or record was last modified by the user.
Value-Added Network (VAN)
A company that acts as a clearinghouse for electronic transactions between trading partners. A third party supplier that receives EDI transmissions from sending trading partners and holds them in a mailbox until retrieved by the receiving partners.
Multinational Company
A company that both produces and markets products in different countries.
Private Warehouse
A company-owned warehouse.
Integrated Logistics
A comprehensive, system-wide view of the entire supply chain as a single process, from raw materials supply through finished goods distribution. All functions that make up the supply chain are managed as a single entity rather than managing individual functions separately.
Spam
A computer industry term referring to the act of sending identical and irrelevant postings to many different newsgroups or mailing lists. Usually this posting is something that has nothing to do with the particular topic of a newsgroup or of no real interest to the person on the mailing list.
Transportation Management System
A computer system designed to provide optimized transportation management in various modes along with associated activities, including managing shipping units, labor planning and building, shipment scheduling through inbound, outbound, intra-company shipments, documentation management (especially when international shipping is involved), and third party logistics management.
Self Correcting
A computer term for an online process that validates data and won't allow the data to enter the system unless all errors are corrected.
Web Services
A computer term for information processing services that are delivered by third parties using Internet Portals. Standardized technology communications protocols; network services a collections of communication formats or endpoints capable of exchanging messages.
Scan
A computer term referring to the action of scanning bar codes or RF tags.
Web
A computer term used to describe the global Internet. Synonym
Online
A computer term which describes activities performed using computer systems.
Offline
A computer term which describes work done outside of the computer system or outside of a main process within the corporate system.
Internet
A computer term which refers to an interconnected group of computer networks from all parts of the world, i.e., a network of networks. Accessed via a modem and an online service provider, it contains many information resources and acts as a giant electronic message routing system.
Peer to Peer (P2P)
A computer-networking environment which allows individual computers to share resources and data without passing through an intermediate network server.
Logistics Data Interchange (LDI)
A computerized system that electronically transmits logistics information.
Total Cost Analysis
A decision-making approach that considers minimization of total costs and recognizes the inter-relationship among system variables, such as transportation, warehousing, inventory, and customer service.
Material Requirements Planning (MRP)
A decision-making methodology used to determine the timing and quantities of materials to purchase.
Returns to Scale
A defining characteristic of B2B. Bigger is better. It's what creates the "winner takes all" quality of most B2B hubs. It also places a premium on being first to market and first to achieve critical mass.
Traffic
A department or function charged with the responsibility of arranging the most economic classification and method of shipment for both incoming and outgoing materials and products.
Process Improvement
A design or activity which improves quality or reduces costs, often through the elimination of waste on non-value-added tasks.
Inspection Certificate
A document certifying that merchandise (such as perishable goods) was in good condition immediately prior to shipment.
Packing List
A document containing information about the location of each Product ID in each package. It allows the recipient to quickly find the item he or she is looking for without a broad search of all packages. It also confirms the actual shipment of goods on a line item basis.
Pick-Up Order
A document indicating the authority to pick up cargo or equipment from a specific location.
Insurance Certificate
A document issued to the consignee to certify that insurance is provided to cover loss of or damage to the cargo while in transit.
International Import Certificate
A document required by the importing country indicating that the importing country recognizes that a controlled shipment is entering their country. The importing country pledges to monitor the shipment and prevent its re-export, except in accordance with its own export control regulations.
Shipping Manifest
A document that lists the pieces in a shipment. A manifest usually covers an entire load regardless of whether the load is to be delivered to a single destination or many destinations. Manifests usually list the items, piece count, total weight, and the destination name and address for each destination in the load.
Request for Information (RFI)
A document used to solicit information about vendors, products, and services prior to a formal RFQ/RFP process.
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.
Manifest
A document which describes individual orders contained within a shipment.
Request for Proposal (RFP)
A document which provides information concerning needs and requirements for a manufacturer. This document is created in order to solicit proposals from potential suppliers. For example, a computer manufacturer may use an RFP to solicit proposals from suppliers of third party logistics services.
Intermodal Container Transfer Facility
A facility where cargo is transferred from one mode of transportation to another, usually from ship or truck to rail.
Non Vessel Operating Common Carrier (NVOCC)
A firm that offers the same services as an ocean carrier, but which does not own or operate a vessel. NVOCCs usually act as consolidators, accepting small shipments (LCL) and consolidating them into full container loads. They also consolidate and disperse international containers that originate at or are bound for inland ports. They then act as a shipper, tendering the containers to ocean common carriers. They are required to file tariffs with the Federal Maritime Commission and are subject to the same laws and statutes that apply to primary common carriers.
Pick to Light
A laser identifies the bin for the next item in the rack; when the picker completes the pick, the bar code is scanned and the system then points the laser at the next bin.
Leg
A leg has an origin, destination, and carrier and is composed of all consecutive segments of a route booked through the same carrier. Also called Bookable Leg.
LTL shipment
A less-than-truckload shipment, one weighing less than the minimum weight a company needs to use the lower truckload rate.
Vessel Manifest
A list of all cargoes on a vessel.
Pick List
A list of items to be picked from stock in order to fill an order; the pick list generation and the picking method can be quite sophisticated.
Web Site
A location on the Internet.
Marine Cargo Insurance - General Average
A loss arising out of a voluntary sacrifice made of any part of a shipment or cargo to prevent loss of the whole and for the benefit of all persons concerned.
Pallet Wrapping Machine
A machine that wraps a pallet's contents in stretch-wrap to ensure safe shipment.
Original Equipment Manufacturer (OEM)
A manufacturer that buys and incorporates another supplier's products into its own products. Also, products supplied to the original equipment manufacturer or sold as part of an assembly. For example, an engine may be sold to an OEM for use as that company's power source for its generator units.
Make to Stock (Manufacture to Stock)
A manufacturing process strategy where finished product is continually held in plant or warehouse inventory to fulfill expected incoming orders or releases based on a forecast.
Make to Order (Manufacture to Order)
A manufacturing process strategy where the trigger to begin manufacture of a product is an actual customer order or release rather than a market forecast. For make-to-order products, more than 20% of the value added takes place after the receipt of the order or release, and all necessary design and process documentation is available at the time of order receipt.
Pareto
A means of sorting data. For example, the number of quality faults by frequency of occurrence. An analysis that compares cumulative percentages of the rank ordering of costs, cost drivers, profits, or other attributes to determine whether a minority of elements have a disproportionate impact. Another example
Service Level
A measure (usually expressed as a percentage) of satisfying demand through inventory or by the current production schedule in time to satisfy the customer's requested delivery dates and quantities.
Operating Ratio
A measure of operating efficiency defined as Operating expenses divided by the Operating revenues x 100.
Load Factor
A measure of operating efficiency used by air carriers to determine a plane's utilized capacity percentage or the number of passengers divided by the total number of seats.
Passenger-Mile
A measure of output for passenger transportation that reflects the number of passengers transported and the distance traveled; a multiplication of passengers hauled and distance traveled.
Productivity
A measure of resource utilization efficiency defined as the sum of the outputs divided by the sum of the inputs.
Value Based Return (VPB)
A measure of the creation of value. It's the difference between economic profit and capital charge.
Order Fill
A measure of the number of orders processed without stockouts, or the need to back order, expressed as a percentage of all orders processed in the distribution center or warehouse.
Throughput
A measure of warehousing output volume (weight, number of units). Also, the total amount of units received, plus the total amount of units shipped divided by two.
Key Performance Indicator (KPI)
A measure which is of strategic importance to a company or department. For example, a supply chain flexibility metric is Supplier On-Time Delivery Performance which indicates the percentage of orders that fulfilled on or before the original requested date. Also see
Split Delivery
A method by which a larger quantity is ordered on a purchase order to secure a lower price, but delivery is divided into smaller quantities and is spread out over several dates to control inventory investment, save storage space, etc.
Lift on, Lift off (LO/LO)
A method by which cargo is loaded onto and unloaded from an ocean vessel, which in this case is with a crane.
Picking by Aisle
A method by which pickers pick all needed items in an aisle regardless of the items' ultimate destination; the items must be sorted later.
Manufacturing Resource Planning (MRP-II)
A method for the effective planning of all resources of a manufacturing company. Ideally, it addresses operational planning in units, financial planning in dollars, and has a simulation capability to answer what-if questions. It consists of a variety of processes, each linked together
Picking by Source
A method in which pickers successively pick all items going to a particular destination regardless of the aisle in which each item is located.
Product ID
A method of identifying a product without using a full description. These can be different for each document type and must, therefore, be captured and related to the document in which they were used. They must then be related to each other in context (also known as SKU, Item Code or Number, or other such name).
Value Chain Analysis
A method of identifying all the elements in the linkage of activities a firm relies on the secure the necessary materials and services starting from their point of origin to manufacture, and to distribution of their products and services to an end user.
Letter of Credit (LOC)
A method of payment for goods in which the buyer established his credit with a local bank, clearly describing the goods to be purchased, the price, the documentation required, and a time limit for completion of the transaction. Upon receipt of documentation, the bank is either paid by the buyer or takes title to the goods themselves and proceeds to transfer funds to the seller.
Wave Picking
A method of selecting and sequencing picking lists to minimize the waiting time of the delivered material. Shipping orders may be picked in waves combined by a common product, common carrier, or destination, and manufacturing orders in waves related to work centers.
Zone Picking
A method of subdividing a picking list by arrears within a storeroom for more efficient and rapid order picking. A zone-picked order must be grouped to a single location and the separate pieces combined before delivery, or must be delivered to different locations such as a work center.
Value Analysis
A method to determine how features of a product or service relate to cost, functionality, appeal and utility to a customer (i.e., engineering value analysis). Also see
Marine Cargo Insurance - FPA (Free of Particular Average)
A provision in a marine cargo insurance policy that no claim shall be paid for damage to goods in the course of a voyage unless a loss is sustained that totals or exceeds a certain percentage of the value as specified in the policy. The object of such a provision is the avoidance of petty claims.
Wide-Area Network (WAN)
A public or private data communications system for linking computers distributed over a large geographic area.
Sawtooth Diagram
A quantity-versus-time graphic representation of the order point/order quantity inventory system showing inventory being received, used up, and reordered.
Multiple-Car Rate
A railroad rate that is lower for shipping more than one carload at a time.
Mileage Rate
A rate based upon the number of miles the commodity is shipped.
Proportional Rate
A rate lower than the regular rate for shipments that have prior or subsequent moves; used to overcome combination rates' competitive disadvantages.
Joint Rate
A rate over a route that requires two or more carriers to transport the shipment.
Local Rate
A rate published between two points served by one carrier.
Incentive Rate
A rate that induces the shipper to ship heavier volumes per shipment.
Localized Raw Material
A raw material found only in certain locations.
Pure Raw Material
A raw material that does not lose weight in processing.
Ubiquity
A raw material that is found at all locations.
Weight-Losing Raw Material
A raw material that loses weight in processing.
No Location (No Loc)
A received item for which the warehouse has no previously established storage slot.
Loading Allowance
A reduced rate that carriers offer to shippers and/or consignees who load and/or unload LTL or Any Quantity shipments.
Seasonality
A repetitive pattern of demand from year to year (or other repeating time interval), with some periods considerably higher than others. Seasonality explains the fluctuation in demand for various recreational products which are used during different seasons.
Value Chain
A series of activities, when combined, define a business process; the series of activities from manufacturers to the retail stores that define the industry supply chain.
von Thunen's Belts
A series of concentric rings around a city to identify where agricultural products would be produced according to von Thunen's theory.
Production Line
A series of pieces of equipment dedicated to the manufacture of a specific number of products or families.
Process
A series of time-based activities linked to complete a specific output.
Negotiations
A set of discussions between two or more enterprises to determine the business relationship.
Lot Control
A set of procedures (e.g., assigning unique batch numbers and tracing each batch) used to maintain lot integrity from raw materials, from the supplier through manufacturing to consumers.
LASH Vessel
A ship measuring at least 820 feet long with a deck crane able to load and unload barges through a stern section that projects over the water. The acronym LASH stands for Lighter (barge) Aboard Ship.
Line-Haul Shipment
A shipment that moves between cities and over distances more than 100 to 150 miles in length.
Pooling
A shipping term for the practice of combining shipment from multiple shippers into a truckload in order to reduce shipping charges.
Specific, Measurable, Achievable, Realistic, Time Based (SMART)
A shorthand description of a way of setting goals and targets for individuals and teams.
Pull Signal
A signal from a using operation that triggers the issue of raw material.
Transaction
A single completed transmission, e.g., transmission of an invoice over an EDI network. Analogous to usage of the term in data processing in which a transaction can be an inquiry or a range of updates and trading transactions. The definition is important for EDI service operators who must interpret invoices and other documents.
Push Ordering System
A situation in which a firm makes inventory deployment decisions at the central distribution center and ships to its individual warehouses accordingly.
Live
A situation in which the equipment operator stays with the trailer or boxcar while it is being loaded or unloaded.
Trailer on a Flat Car (TOFC)
A specialized form of containerization in which motor and rail transport coordinate. Synonym
Reverse Logistics
A specialized segment of logistics focusing on the movement and management of products and resources after the sale and after delivery to the customer. Includes product returns for repair and/or credit.
Line Item
A specific and unique identifier assigned to a product by the responsible enterprise.
Uniform Product Code (UPC)
A standard product numbering and bar coding system used by the retail industry. UPC codes are administered by the Uniform Code Council. They identify the manufacturer as well as the item, and are included on virtually all retail packaging. Also see
Port Authority
A state or local government that owns, operates, or otherwise provides wharf, dock, and other terminal investments at ports.
Ramp Rate
A statement which quantifies how quickly you grow or expand an operation growth trajectory. Can refer to sales, profits, or margins.
Intermediate Destination
A stopping point for a shipment prior to the final destination.
Sales and Operations Planning (S&OP)
A strategic planning process that reconciles conflicting business objectives and plans future supply chain actions. S&OP usually involves various business functions, such as sales, operations, and finance to agree on a single plan/forecast that can be used to drive the entire business.
Note
Accurate assignment of IT-related cost is challenging. It can be done using activity-based costing methods or using other approaches, such as allocation based on user counts, transactions counts, or departmental headcounts. The emphasis should be on capturing all costs. Costs for any outsourced IT activities should be included.
Order Processing
Activities associated with filling customer orders.
1. Materials (Commodity) Management and Planning
All costs associated with the supplier sourcing, contract negotiation and qualification, and the preparation, placement, and tracking of a purchase order - including all costs related to buyer/planners.
Product Characteristics
All of the elements that define a product's character, such as size, shape, weight, etc.
Terms and Conditions (T's & C's)
All the provisions and agreements of a contract.
Return Product Authorization (RPA)
Also called Return Material or Goods Authorization (RMA or RGA). A form generally required with a warranty/return which helps the company identify the original product and the reason for the return. The RPA number often acts as an order form for the work required in repair situations or as a reference for credit approval.
National Railroad Corporation
Also known as Amtrak, the corporation established by the Rail Passenger Service Act of 1970 to operate most of the United States' rail passenger service.
Umbrella Rate
An ICC ratemaking practice that held rates to a particular level to protect another mode's traffic.
Sustaining Activity
An activity that benefits an organizational unit as a whole, but not any specific cost object.
Mileage Allowance
An allowance, based upon distance, that railroads give to shippers using private railcars.
SWOT Analysis
An analysis of the strengths, weaknesses, opportunities, and threats of and to an organization. SWOT analysis is useful in developing strategy.
National Industrial Transportation League
An association representing shippers' and receivers' interests in matters of transportation policy and regulation.
What You See Is What You Get (WYSIWYG)
An editing interface in which a file created is displayed as it will appear to an end user.
Motor Carrier
An enterprise that offers service via motor carriage.
Ocean Carrier
An enterprise that offers service via ocean (water) transport.
Unit Train
An entire, uninterrupted locomotive, car, and caboose movement between an origin and destination.
Total Cost Curve
1) In cost-volume-profit (break-even) analysis, the total cost curve is composed of total fixed and variable costs per unit multiplied by the number of units provided. Break-even 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.
Land Grants
Grants of land given to railroads to build tracks during their development stage.
Selling, General, and Administrative (SG&A) Expenses
Includes marketing, communication, customer service, sales, salaries and commissions, occupancy expenses, unallocated overhead, etc. Excludes interest on debt, domestic or foreign income taxes, depreciation and amortization, extraordinary items, equity gains or losses, gain or loss from discontinued operations and extraordinary items.
Warranty Costs
Includes materials, labor, and problem diagnosis for products returned for repair or refurbishment.
Value Added
Increased or improved value, worth, functionality, or usefulness.
Linked Distributed Systems
Independent computer systems owned by independent organizations linked in a manner to allow direct updates to be made to one system by another. For example, a customer's computer system is linked to a supplier's system and the customer can create orders or releases directly in the supplier's system.
Joint Supplier Agreement (JSA)
Indicative of Stage 3 Sourcing Practices, the JSA includes terms and conditions, objective, process flows, performance targets, flexibility, balancing, and incentives.
Performance Measures
Indicators of the work performed and the results achieved in an activity, process, or organizational unit. Performance measures should be both non-financial and financial. Performance measures enable periodic comparison and benchmarking. Also see
Proof of Delivery (POD)
Information supplied by the carrier containing the name of the person who signed for the shipment, the time and date of delivery and other shipment delivery-related information. POD is also sometimes used to refer to the process of printing materials just prior to shipment (Print on Demand).
Supply Chain-Related IT Costs
Information technology (IT) costs (in US dollars) associated with major supply chain management processes as described below. These costs should include
Liner Service
International water carriers that ply fixed routes on published schedules.
2) In the United Kingdom and certain other countries, turnover refers to annual sales volume. Also see
Inventory Turns.
Obsolete Inventory
Inventory for which there is no forecast demand expected. A condition of being out of date. A loss of value occasioned by new developments that place the oldeer property at a competitive disadvantage.
Maintenance, Repair, and Operating Supplies (MRO)
Items used in support of general operations and maintenance, such as maintenance supplies, spare parts, and consumables used in the manufacturing process and supporting operations.
Kanban
Japanese word for visible record, loosely translated means card, billboard, or sign. Popularized by Toyota Corporation, it uses standard containers or lot sizes to deliver needed parts to the assembly line just in time for use.
Marquis Partners
Key strategic relationships. This has emerged as perhaps the key competitive advantage and barrier to entry of e-marketplaces. Get the big players in the fold first, offering equity if necessary.
Kitting
Light assembly of components or parts into defined units, Kitting reduces the need to maintain an inventory of pre-build, completed products, but increases the time and labor consumed at shipment.
Supply Chain Integration (SCI)
Likely to become a key competitive advantage of selected e-marketplaces. Similar concept to the back-end integration, but with greater emphasis on the moving of goods and services.
Tracking and Tracing
Monitoring and recording shipment movements from origin to destination.
Zone of Rate Freedom
Motor carriers may raise or lower rates by 10 percent in one year without ICC interference; if the rate change is within the zone of freedom, the rate is presumed to be reasonable.
One-Piece Flow
Moving parts through a process in batches of one.
Payment Collection
Obtaining money, or other agreed upon medium, for provision of goods or services.
Independent Trading Exchange (ITE)
Often used synonymously with B2B, e-marketplace, or Virtual Commerce Network (VCN). ITE is a more precise term, connoting many-to-many transactions, whereas the others do not specify the transactions.
Material Acquisition Costs
One of the elements comprising a company's total supply chain management costs. These costs consist of the following
Order Management Costs
One of the elements comprising a company's total supply chain management costs. These costs consist of the following
Supply Chain-Related Finance and Planning Cost Element
One of the elements comprising a company's total supply chain management costs. These costs consist of the following
Manufacturer's Representative
One who sells goods for several firms but does not take title to them.
POS
Point of Shipment, or Point of Sale
Port of Loading
Port where cargo is loaded aboard the vessel.
Port of Discharge
Port where vessel is off loaded.
Also see
Postponement
Point of Sale Information (POS)
Price and quantity data from the retail location as sales transactions occur.
Value-of-Service Pricing
Pricing according to the value of the product the company is transporting; third-degree price discrimination; demand-oriented pricing; charging what the traffic will bear.
Upstream
Principal direction of movement for customer orders which originate at point of demand or use, as well as other flows, such as return product movements, payments for purchases, etc. Opposite of downstream.
Private Trucking Fleets
Private fleets serve the needs of their owners, and do not ordinarily offer commercial trucking services to other customers. Private fleets typically perform distribution or service functions.
Return Goods Handling
Processes involved with returning goods from the customer to the manufacturer. Products may be returned because of performance problems or simply because the customer doesn't like the product.
Process Manufacturing
Production that adds value by mixing, separating, forming, and/or performing chemical reactions. It may be done in a batch, continuous, or mixed batch/continuous mode.
Production-Related Material
Production-related material is an item classified as a material purchase and included in cost-of-goods sold as a raw material purchase.
Private Label
Products that are designed, produced, controlled by, and which carry the name of the store or a name owned by the store; also known as a store brand or dealer brand. An example would be Wal-Mart's "Sam's Choice" products.
UCC
See
Standing Order
See Blanket Purchase Order.
Vendor-Owned Inventory (VOI)
See Consignment Inventory.
Wholesaler
See Distributor.
HR
See Human Resources (HR).
ITE
See Independent Trading Exchange (ITE).
IMB
See International Maritime Bureau (IMB).
IMO
See International Maritime Organization (IMO).
ISO
See International Standards Organization (ISO).
Inventory Turnover
See Inventory Turns.
JSA
See Joint Supplier Agreement (JSA).
KPI
See Key Performance Indicator.
LIFO
See Last In First Out (LIFO).
LLP
See Lead Logistics Partner (LLP).
LCL
See Less-Than-Carload and Less-Than-Containerload (LCL).
LTL
See Less-Than-Truckload Carriers (LTL).
LOC
See Letter of Credit (LOC).
LO/LO
See Lift on, Lift off (LO/LO).
LAN
See Local Area Network (LAN).
MRO
See Maintenance, Repair, and Operating Supplies (MRO).
Shop Calendar
See Manufacturing Calendar
MES
See Manufacturing Execution Systems (MES).
MRP-II
See Manufacturing Resource Planning.
Open Policy
See Marine Cargo Insurance
Particular Average
See Marine Cargo Insurance.
Mar Ad
See Maritime Administration.
MAWB
See Master Air Waybill.
MRP
See Material Requirements Planning (MRP).
MSDS
See Material Safety Data Sheet.
NPI
See New Product Introduction (NPI).
NVOCC
See Non-Vessel Operating Common Carrier.
NOS/NES
See Not Otherwise Specified / Not Elsewhere Specified (NOS/NES).
OEM
See Original Equipment Manufacturer (OEM).
OS&D
See Over, Short, and Damaged.
P2P
See Path to Profitability (P2P).
Metrics
See Performance Measures.
PDCA
See Plan-Do-Check-Action (PDCA).
Shewhart Cycle
See Plan-Do-Check-Action.
PBIT
See Profit Before Interest and Tax.
POD
See Proof of Delivery (POD).
PO
See Purchase Order (PO).
QFD
See Quality Function Deployment (QFD).
QR
See Quick Response (QR).
RF
See Radio Frequency (RF).
RM
See Raw Materials (RM).
RFP
See Request for Proposal (RFP).
RFQ
See Request for Quote (RFQ).
ROA
See Return on Assets.
RTV
See Return to Vendor (RTV).
SWOT
See SWOT Analysis (SWOT).
S&OP
See Sales and Operations Planning.
SET
See Secure Electronic Transaction.
SG&A
See Selling, General, and Administrative Expenses.
SMART
See Specific, Measurable, Achievable, Realistic, Time Based.
SPC
See Statistical Process Control (SPC).
SCM
See Supply Chain Management
Tact Time
See Takt Time
Offer
See Tender.
T's & C's
See Terms and Conditions.
TOC
See Theory of Constraints
TMS
See Transportation Management System
Mode
See Transportation Mode.
UPC
See Uniform Product Code.
URL
See Uniform Resource Locator (URL).
ULD
See Unit Load Device (ULD).
UOM
See Unit of Measure (UOM).
UN/SPSC
See United Nations Standard Product and Service Code (UN/SPSC).
VAN
See Value-Added Network.
VBR
See Value-Based Return (VBR).
WMS
See Warehouse Management System
WIP
See Work in Process.
WTO
See World Trade Organization
WWW
See World Wide Web (WWW).
Subcontracting
Sending production work outside to another manufacturer. This can involve specialized operations such as plating metals or complete functional operations.Also see
Transactional Acknowledgement
Specific transaction sets, such as the Purchase Order Acknowledgement (855), that both acknowledges receipt of an order and provides special status information, such as reschedules, price changes, back order situation, etc.
SOP
Standard Operating Procedure.
Warehouse
Storage place for products. Principal warehouse activities include receipt of product, storage, shipment, and order picking.
Straight Truck
Straight trucks do not have a separate tractor and trailer. The driving compartment, engine and trailer are one unit.
SCOR
Supply Chain Operations Reference Model. This is the model developed by the Supply-Chain Council (SCC), and is build around six major processes
Pull or Pull-Through Distribution
Supply chain action initiated by the customer. Traditionally, the supply chain was pushed; manufacturers produced goods and pushed them through the supply chain and the customer had no control. In a pull environment, a customer's purchase sends replenishment information back through the supply chain from retailer to distributor to manufacturer so goods are pulled through the supply chain.
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.
Promotion
The act of selling a product at a reduced price, or a buy one/get one free offer, for the purpose of increasing sales.
Uniform Warehouse Receipts Act
The act that sets forth the regulations governing public warehousing. The regulations define a warehouse manager's legal responsibility and define the types of receipts he or she issues.
One-Way Networks
The advantages generally lie with either the seller of buyer, but not with both. B2C web sites are one-way networks.
Rationing
The allocation of product among customers, or components among manufactured goods during periods of short supply. When price is used to allocate product, it's allocated to those willing to pay the most.
Shelf Life
The amount of time an item may be held in inventory before it becomes unusable. Shelf life is a consideration for food and drugs which deteriorate over time, and for high-tech products which become obsolete quickly.
Profitability Analysis
The analysis of profit derived from cost objects with the view to improve or optimize profitability. Multiple views may be analyzed, such as market segment, customer, distribution channel, product families, products, technologies, platforms, regions, manufacturing capacity, etc.
Poka Yoke (mistake proof)
The application of simple techniques that prevent process quality failure. A mechanism that either prevents a mistake from being made or makes the mistake obvious at a glance.
Mean
The arithmetic average of a group of values. Synonym
Virtual Corporation
The logical extension of outpartnering. With the virtual corporation, the capabilities and systems of the firm are managed with those of the suppliers, resulting in a new type of corporation where the boundaries between the suppliers' systems and those of the firm seem to disappear. The virtual corporation is dynamic in that the relationships and structures formed change according to the changing needs of the customer.
Traffic Management
The management and controlling of transportation modes, carriers, and services.
Profit Before Interest and Tax (PBIT)
The financial profit generated prior to the deduction of taxes and interest due on loans. Also called operating profit.
Human Resources (HR)
The function broadly responsible for personnel policies and practices within an organization.
Receiving
The function encompassing the physical receipt of material, the inspection of the shipment for conformance with the purchase order (quantity and damage), the identification and delivery to destination, and the preparation of receiving reports.
Pre-Expediting
The function of following up on open orders before the scheduled delivery date to ensure the timely delivery of materials in the specified quantity.
Shipping
The function that performs the tasks for the outgoing shipment of parts, components, and products. It includes packaging, marking, weighing, and loading for shipment.
Purchasing
The functions associated with buying the goods and services the firm requires.
Haulage
The inland transport service which is offered by the carrier under the terms and conditions of the tariff and of the relative transport document.
Safety Stock
The inventory a company holds above normal needs as a buffer against delays in receipt of supply or changes in customer demand.
Touch Labor
The labor that adds value to the product - assemblers, welders, packagers, etc. This does not include indirect resources like material handlers who move and stage product, and mechanical and electrical technicians who maintain equipment.
Importation Point
The location where goods will be cleared for importation into a country.
Quality Control
The management function that attempts to ensure that the goods or services in a firm manufacturers or purchases meet the product or service specifications.
Inbound logistics
The management of materials from suppliers and vendors into production processes or storage facilities.
Vendor
The manufacturer or distributor of an item or product line. Also see
Materials Planning
The materials management function that attempts to coordinate materials supply with materials demand.
Transportation Mode
The method of transportation
Median
The middle value in a set of measured values when the items are arranged in order of magnitude. If there is no single middle value, the median is the mean of the two middle values.
Physical Distribution
The movement and storage of finished goods from manufacturing plants to warehouses to customers; used synonymously with business logistics. See Distribution.
Physical Supply
The movement and storage of raw materials from supply sources to the manufacturing facility.
Mixed Loads
The movement of both regulated and exempt commodities in the same vehicle at the same time.
Land bridge
The movement of containers by ship-rail-ship on Japan-to-Europe moves; ships move containers to the U.S. Pacific Coast, rails move containers to an East Coast port, and ships deliver containers to Europe.
Notify Party
The name of an organization, or individual, that should be notified when a shipment reaches its destination.
Logistics Channel
The network of supply chain participants engaged in storage, handling, transfer, transportation, and communications functions that contribute to the efficient flow of goods.
Inventory, Days of
The number of days of inventory on-hand at any given time.
Upside Production Flexibility
The number of days required to complete manufacture and delivery of an unplanned sustainable 20% increase in end-product supply of the predominant product line. The one constraint that is estimated to be the principal obstacle to a 20% increase in end-product supply as represented in days is Upside Flexibility
Picking
The operations involved in pulling products from storage areas to complete a customer order.
1. Opportunity Cost
The opportunity cost of holding inventory. This should be based on your company's own cost of capital standards using the following formula.
Third Party Warehousing
The outsourcing of the warehousing function by the seller of the goods.
Trailer
The part of the truck that carries the goods.
Shipper
The party that tenders goods for transportation.
Profit Ratio
The percentage of profit to sales--that is, profit divided by sales.
Materials Handling
The physical handling of products and materials between procurement and shipping.
Origin
The place where a shipment begins its movement.
United States Railway Association
The planning and funding agency for Conrail; created by the 3-R Act of 1973.
Order Management
The planning, directing, monitoring, and controlling of the processes related to customer orders, manufacturing orders, and purchase orders. Regarding customer orders, order management includes order promising, order entry, order pick, pack and ship, billing, and reconciliation of the customer account. Regarding manufacturing orders, order management includes order release, routing, manufacture, monitoring, and receipt into stores or finished goods inventories. Regarding purchase orders, order management includes order placement, monitoring, receiving, acceptance, and payment of supplier.
Pallet
The platform which cartons are stacked on and then used for shipment or movement as a group. Pallets may be made of wood or composite materials.
Loading Port
The port where the cargo is loaded onto the exporting vessel. This port must be reported on the Shipper's Export Declaration, Schedule D. Schedule D is used by U.S. companies when exporting to determine which tariff is used to freight rate the cargo for carriers with more than one tariff.
Internal Labor and Overhead
The portion of COGS that is typically reported as labor and overhead, less any costs already classified as "outsourced."
Interleaving
The practice of assigning an employee multiple tasks which are performed concurrently.
Upsell
The practice of attempting to sell a higher-value product to the customer.
Weight Confirmation
The practice of confirming or validating receipts or shipments based on the weight.
Load Tendering
The practice of providing a carrier with detailed information and negotiated pricing (the tender) prior to scheduling pickup. This practice can help assure contract compliance and facilitate automated payments (self billing).
Tracing
The practice of relating resources, activities, and cost objects using the drivers underlying their cost causal relationships. The purpose of tracing is to observe and understand how costs are arising in the normal course of business operations. Synonym
Vendor-Managed Inventory (VMI)
The practice of retailers making suppliers responsible for determining order size and timing, usually based on receipt of retail POS and inventory data. Its goal is to increase retail inventory turns and reduce stock outs.
Merge In Transit
The process of "merging" shipments from suppliers and going directly to the buyer or to the store, bypassing the seller. A "drop shipment" from several vendors to one buyer.
Supply Chain Strategic Planning
The process of analyzing, evaluating, and defining supply chain strategies, including network design, manufacturing and transportation strategy, and inventory policy.
Push Distribution
The process of building product and pushing it into the distribution channel without receiving any information regarding requirements. Also see
Transportation Planning
The process of defining an integrated supply chain transportation plan and maintaining the information which characterizes total supply chain transportation requirements, and the management of transporters, both inter- and intra- company.
Sales Planning
The process of determining the overall sales plan to best support customer needs and operations capabilities, while meeting general business objectives of profitability, productivity, competitive customer lead times, and so on, as expressed in the overall business plan. Also see
Tactical Planning
The process of developing a set of tactical plants (e.g., production plan, sales plan, marketing plan, and so on). Two approaches to tactical planning exist for linking tactical plans to strategic plans - production planning and sales and operations planning. Also see
Inventory Management
The process of ensuring the availability of products through inventory administration.
Supply Planning
The process of identifying, prioritizing, and aggregating, as a whole with constituent parts, all sources of supply that are required and add value in the supply chain of a product or service at the appropriate level, horizon, and interval.
Path to Profitability (P2P)
The step-by-step model to generate earnings.
Warehousing
The storage (holding) of goods.
Public Warehousing
The storage of goods by a firm that offers storage service for a fee to the public.
Private Warehousing
The storage of goods in a warehouse owned by the company that has title to the goods.
Proactive
The strategy of understanding issues before they become apparent and presenting the solution as a benefit to the customer, etc.
Laid-Down cost
The sum of the product and transportation costs. The laid-down cost is useful in comparing the total cost of a product shipped from different supply sources to a customer's point of use.
Service Parts Revenue
The sum of the value of sales made to external customers and the transfer price valuation of sales within the company of repair or replacement parts and supplies, net of all discounts, coupons, allowances, and rebates.
Supply Chain Network Design Systems
The systems employed in optimizing the relationships among the various elements of the supply chain manufacturing plants, distribution centers, points of sale, as well as raw materials, relationships among product families, and other factors to synchronize supply chains at a strategic level.
Shop Floor Production Control Systems
The systems that assign priority to each shop order, maintaining work-in-process quantity information, providing actual output data for capacity control purposes, and providing quantity by location by shop order for work-in-process inventory and accounting purposes.
Production Planning and Scheduling
The systems that enable creation of detailed, optimized plans and schedules, taking into account the resource, material, and dependency constraints to meet the deadlines.
Inventory Planning Systems
The systems that help to strategically balance the inventory policy and customer service levels throughout the supply chain. These systems usually calculate time-phased order quantities and safety stock using selected inventory strategies. Some inventory planning systems conduct what-if analysis and compare the current inventory policy with simulated inventory scenarios to improve the inventory ROI.
Performance and Event Management Systems
The systems that report on the key measurements in the supply chain - inventory days of supply, delivery performance, order cycle times, capacity use, etc. Using this information to identify causal relationships to suggest actions in line with the business goals.
Tare Weight
The weight of a substance obtained by deducting the weight of the empty container from the gross weight of the full container.
Net Weight
The weight of the merchandise, unpacked, exclusive of any containers.
Trading Partner Agreement
The written contract that spells out agreed upon terms between EDI trading partners.
8. Transportation, Outbound Freight, and Duties
This includes costs associated with all company-paid freight duties from point of manufacturer to end customer or channel.
2. Create Customer Order
This includes costs associated with creating and pricing configurations to order and preparing customer order documents.
5. Installation Planning
This includes costs associated with installation engineering, scheduling and modification, handling cancellations, and planning the installation.
10. Customer Invoicing/Accounting
This includes costs associated with invoicing, processing customer payments, and verification of customer receipt.
3. Order Entry and Maintenance
This includes costs associated with maintaining the customer database, credit check, accepting new orders, and adding them to the order system, as well as later order modifications.
6. Order Fulfillment
This includes costs associated with order processing, inventory allocation, ordering from internal or external suppliers, shipment scheduling, order status reporting, and shipment initiation.
1. New Product Release Phase In and Maintenance
This includes costs associated with releasing new products to the field, maintaining released products, assigning product ID, defining configurations and packaging, publishing availability schedules, release letters and updates, and maintaining product databases.
9. Installation
This includes costs associated with verification of site preparation, installation, certification, and authorization of billing.
7. Distribution
This includes costs associated with warehouse space and management, finished goods receiving and stocking, processing shipments, picking and consolidating, selecting carriers, and staging products/systems.
4.Contract/Program and Channel Management
This includes costs related to contract negotiation, monitoring progress, and reporting against the customer's contract, including administration of performance or warranty-related issues.
Price Erosion
What causes old-line executives to break out in a cold sweat? No question about it; traditional business models are threatened by the market efficiencies of B2B. When prices begin to plummet, the margin structures of older industries are also threatened.
Value Proposition
What the hub offers to members. To be truly effective, the value proposition has to be two-sided - a benefit to both buyers and sellers.
Lumping
When a driver assists with loading and unloading the trailer contents.
Trailer Drops
When a driver drops off a full truck at a warehouse and picks up an empty one.
Routing Accuracy
When specified activities conform to administrative specifications, and specified resource consumptions (both man and machine) are detailed according to administrative specifications and are within 10% of actual requirements.
WAN
Wide Area Network.
WPA
With particular average. See Marine Cargo Insurance.
4. Receiving and Put Away
all costs associated with taking possession of material and storing it. Note - inventory-carrying costs are normally covered in a separate worksheet.5. Incoming Inspection
Personal Computer (PC)
An individual unit an operator uses for creating and maintaining programs and files; can often access the mainframe simultaneously.
National Motor Bus Operators Organization
An industry association representing common and charter bus firms; now known as the American Bus Association.
Roof Fairings
An integrated air deflector mounted on the top of the cab.
Mini-Land bridge
An intermodal movement in which the shipment is moved from a foreign country to the U.S. by water and then moved across the U.S. by railroad to a destination that is a port city, or vice versa for exports from a U.S. port city.
Micro-Land Bridge
An intermodal movement in which the shipment is moved from a foreign country to the U.S. by water and then moved across the U.S. by railroad to an interior, non-port city, or vice versa for exports from a non-port city.
Just In Time (JIT)
An inventory control system that controls material flow into assembly and manufacturing plants by coordinating demand and supply to the point where desired materials arrive just in time for use. An inventory reduction strategy that feeds production lines with products delivered just in time. Developed by the auto industry, it refers to shipping goods in smaller, more frequent lots.
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.
Perpetual Inventory
An inventory record keeping system where each transaction in and out is recorded and a new balance is computed.
Pro Forma Invoice
An invoice, forwarded by the seller of goods prior to shipment, that advises the buyer of the particulars and value of the goods. Usually required by the buyer in order to obtain an import permit or letter of credit.
Load Tender (Pick-Up Request)
An offer of cargo for transport by a shipper. Load tender terminology is primarily used in the motor industry.
Maximum Order Quantity
An order quantity modifier applied after the lot size has been calculated that limits the order quantity to a pre-established maximum.
World Trade Organization (WTO)
An organization established on January 1, 1995 replacing the previous General Agreement on Tariffs and Trade GATT that forms the cornerstone of the world trading system.
Matrix Organizational Structure
An organization structure in which two (or more) channels of command budget responsibility, and performance measurement exist simultaneously. For example, both product and functional forms of organization could be implemented simultaneously; in other words, the product and functional managers have equal authority and employees report to both managers.
Lead Logistics Provider (LLP)
An organization that organizes other third party logistics partners for outsourcing of logistics functions. Also see
Small Group Improvement Activity
An organizational technique for involving employees in continuous improvement activities. Also see
Root Cause Analysis
Analytical methods to determine the core problem(s) of an organization, process, products, market, etc.
Pro Number
Any progressive or serialized number applied for identification of freight bills, bills of lading, etc.
Item
Any unique manufactured or purchased part, material, intermediate, sub-assembly, or product.
Process Benchmarking
Benchmarking a process (such as the pick, pack, and ship process) against organizations know to be the best in class in this process. Process benchmarking is usually conducted on firms outside of the organization's industry. Also see
Value-Added Productivity Per Employee
Contribution made by employees to total product revenue minus the material purchases divided by total employment. Total employment is total employment for the entity being surveyed. This is the average full-time equivalent employee in all functions, including sales and marketing, distribution, manufacturing, engineering, customer service, finance, general and administrative, and other. Total employment should include contract and temporary employees on a full-time equivalent (FTE) basis.
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, quality, delivery, flexibility, maintenance, safety, and ISO quality and environmental standards.
Personal Discrimination
Charging different rates to shippers with similar transportation characteristics, or, charging similar rates to shippers with differing transportation characteristics.
Shareholder Value
Combination of profitability (revenue and costs) and invested capital (working capital and fixed capital).
Transaction Set
Commonly used business transactions (e.g., purchase order, invoice, etc.) organized in a formal, structured manner consisting of a transaction set header control segment, one or more data segments, and a transaction set trailer control data segment.
Protocol
Communication standards that determine message content and format, enabling uniformity of transmissions.
Trading Partner
Companies that do business with each other via EDI (e.g., send and receive business documents such as purchase orders).
Standard Components
Components (parts) of a product for which there is an abundance of suppliers. Not difficult to produce. An example would be a power cord for a computer.
Quality
Conformance to requirements or fitness for use. Quality can be defined through five principal approaches
Shared Services
Consolidation of a company's back-office processes to form a spinout (0r a separate "shared services" unit to be run like a separate business), providing services to the parent company and sometimes, to external customers. Shared services typically lower overall cost due to the consolidation, and may improve support as a result of focus.
Landed Cost
Cost of product plus relevant logistics costs, such as transportation, warehousing, handling, etc. Also called Total Landed Cost of Net Landed Costs.
United Nations Standard Product and Service Code (UN/SPSC)
Developed jointly between the United Nations and Dun & Bradstreet (D&B). It has a five-level coding structure (segment, family, class, commodity, business function) for nearly 9,000 products.
Receiving Dock
Distribution center location where the actual physical receipt of the purchased material from the carrier occurs.
Waybill
Document containing description of goods that are part of common carrier freight shipment. Shows origin, destination, consignee/consignor, and amount charged. Copies travel with goods and are retained by originating/delivering agents. Used by carrier for internal record and control, especially during transit. Not a transportation contract.
Rules
Documented definitions of how work is to be performed.
Resources
Economic elements applied or used in the performance of activities or to directly support cost objects. They include people, materials, supplies, equipment, technologies, and facilities. Also see
Return on Assets (ROA)
Financial measure calculated by dividing profit by assets.
Return on Sales
Financial measure calculated by dividing profit by sales.
Plant Finished Goods
Finished goods inventory held at the end manufacturing location.
5. Channel Obsolescence
Aging allowances paid to channel partners, provisions for buy-back agreements, etc. Includes all material that becomes obsolete while in a distribution channel. Usually, a distributor will demand a refund on material that goes bad (shelf life) or is no longer needed because of changing needs.
Integrated Carrier
An airfreight company that offers a blend of transportation services such as air carriage, freight forwarding, and ground handling.
Hub Airport
An airport that serves as the focal point for the origin and termination of long-distance flights; flights from outlying areas meet connecting flights at the hub airport.
Inland Carrier
An enterprise that offers overland service to or from a point of export.
Interstate Commerce Commission (ICC)
An independent regulatory agency that implements federal economic regulations controlling railroads, motor carriers, pipelines, domestic water carriers, domestic surface freight forwarders, and brokers.
Hostler
An individual employed to move trucks and trailers within a terminal or warehouse yard area.
Intermodal Marketing Company (IMC)
An intermediary that sells intermodal services to shippers.
Hawthorne Effect
From a study conducted at the Hawthorne Plant of Western Electric Company from 1927-1932 which found that the act of showing people that you are concerned usually results in better job performance. Studying and monitoring of activities are typically seen as being concerned and results in improved productivity.
In Bond
Goods are held or transported In-Bond under customs control either until import duties or other charges are paid, or to avoid paying the duties or charges until a later date.
Interchange
In EDI, the exchange of electronic information between companies. Also, the group of transaction sets transmitted from one sender to one receiver at one time. Delineated by interchange control segments.
4. Total Obsolescence for Raw Material, WIP, and Finished Goods Inventory
Inventory reserves taken due to obsolescence and scrap and includes products exceeding the shelf life, i.e., spoils and is no good for use in its original purpose (do not include reserves taken for Field Service Parts).
Heijunka
In the just-in-time philosophy, an approach to level production throughout the supply chain to match the planned rate of end product sales.
INCOTERMS
International terms of sale developed by the International Chamber of Commerce to define sellers' and buyers' responsibilities.
ICC
Interstate Commerce Commission (U.S.).
Inventory In Transit
Inventory in a carrier's possession, being transported to the buyer.
In-Transit Inventory
Material moving between two or more locations, usually separated geographically; for example, finished goods being shipped from a plant to a distribution center. In-transit inventory is an easily overlooked component of total supply chain availability.
Intermittent-Flow, Fixed-Path Equipment
Materials handling devices that include bridge cranes, monorails, and stacker cranes.
Import
Movement of products from one country into another. The import of automobiles from Germany into the US is an example.
Import/Export License
Official authorization issued by a government allowing the shipping or delivery of a product across national boundaries.
Inventory Carrying Cost
One of the elements comprising a company's total supply chain management costs. These costs consist of the following
Igloos
Pallets and containers used in air transportation; the igloo shape fits the internal wall contours of a narrow-body airplane.
Highway Use Taxes
Taxes that federal and state governments assess against highway users (the fuel tax is an example). The government uses the use tax money to pay for the construction, maintenance, and policing of highways.
Inventory Velocity
The speed at which inventory moves through a defined cycle (i.e., from receiving to shipping).
Interstate System
The National System of Interstate and Defense Highways, 42,000 miles of four-lane, limited-access roads connecting major population centers.
Inland Bill of Lading
The carriage contract used in transport from a shipping point overland to the exporter's international carrier location.
Internal Customer
The recipient (person or department) of another person's or department's output (good, service, or information) within an organization. Also see
Horizontal Play/Horizontal Hub
This is a term for a function that cuts across many industries and usually defines a facility or organization that is providing a common service.
Intermodal Transportation
Transporting freight by using two or more transportation modes, such as by truck and rail or truck and oceangoing vessel.
Internal Water Carriers
Water carriers that operate over internal, navigable rivers such as the Mississippi, Ohio, and Missouri.
Intercoastal carriers
Water carriers that transport freight between East and West Coast ports, usually by way of the Panama Canal.
Inventory Accuracy
When the on-hand quantity is equivalent to the perpetual balance (plus or minus the designated count tolerances).
Indirect/Distributor Channel
Your company sells and ships to the distributor. The distributor sells and ships to the end user. This may occur in multiple stages. Ultimately, your product may pass through the Indirect/Distributor Channel and arrive at a retail outlet. Order information in this channel may be transmitted by electronic means. These means may include EDI, brokered systems, or linked electronic systems.
Hundredweight (CWT)
a pricing unit used in transportation (equal to 100 pounds).
Hub
1) A large retailer or manufacturer having many trading partners. 2) A reference for a transportation network as a "hub and spoke" which is common in the airline and trucking industry. For example, a hub airport serves as the focal point for the origin and termination of long-distance flights where flights from outlying areas are fed into the hub airport for connecting flights. 3) A common connection point for devices in a network. 4) A web "hub" is one of the initial names for what is now known as a "portal." It came from the creative idea of producing a web site which would contain many different "portal spots" (small boxes that looked like ads with links to different, yet related content). This content, combined with Internet technology, made the idea a milestone in the development and appearance of web sites, primarily due to the ability to display a lot of useful content and store one's preferred information on a secured server. The web term "hub" was replaced with portal.
International Civil Aeronautics Organization
An international agency responsible for air safety and for standardizing air traffic control, airport design, and safety features worldwide.
International Air Transport Association
An international air carrier rate bureau for passenger and freight movements.
House to House
See Door to Door.
House to Pier
See Door to Port.
HAWB
See House Air Waybill (HAWB).
Hi-Low
Usually refers to a forklift truck on which the operator must stand rather than sit.
Reengineering
(1) A fundamental rethinking and radical redesign of business processes to achieve dramatic improvements in performance. (2) A term used to describe the process of making (usually) significant and major revisions or modifications to business processes. (3) Also called Business Process Reengineering.
Operational Performance Measurements
(1) In traditional management, performance measurements related to machine worker, or department efficiency or utilization. These performance measurements are usually poorly correlated with organizational performance. (2) In theory of contraints, performance measurements that link causally to organizational performance measurements. Throughput, inventory, and operating expense are examples. Also see
Routing or Routing Guide
(1) Process of determining how shipment will move between origin and destination. Routing information includes designation of carrier(s) involved, actual route of carrier, and estimate time en route. (2) Right of shipper to determine carriers, routes, and points for transfer shipments. (3) In manufacturing, this is the document which defines a process of steps used to manufacture and/or assemble a product.
* A process and culture that drives performance and accountability to deliver performance against key performance indicators.
...
Supply Chain
(1) Starting with unprocessed raw materials and ending with the final customer using the finished goods, the supply chain links many companies together. (2) The material and informational interchanges in the logistical process, stretching from acquisition of raw materials to delivery of finished products to the end user. All vendors, service providers, and customers are links in the supply chain.
* An incentive plan that is tied to performance goals, objectives, and metrics.
...
* Delivered complete, with all items on the order in the quantity requested
...
XML
*See Extensible Markup Language (XML)
JIT II
*See Just In Time II (JIT II)
JIT
*See Just in Time (JIT)
NITL
*See National Industrial Transportation League (NITL)
NMFC
*See National Motor Freight Classification (NMFC)
SOW
*See Statement of Work (SOW)
SKU
*See Stock-Keeping Unit (SKU)
SCEM
*See Supply Chain Event Management (SCEM)
SCE
*See Supply Chain Execution (SCE)
3PL
*See Third Party Logistics (3PL)
TOFC
*See Trailer on a Flat Car, Piggyback (TOFC)
TL
*See Truckload Carriers (TL)
VMI
*See Vendor-Managed Inventory (VMI)
VOI
*See Vendor-Owned Inventory (VOI)
(Please see individual component categories for component detail and calculations.)
...
Statement of Work (SOW)
1) A description of products to be supplied under a contract. A good practice is for companies to have SOWs in place with their trading partners - especially for all top suppliers. 2) In projection management, the first project planning document that should be prepared. It describes the purpose, history, deliverables, and measurable success indicators for a project. It captures the support required from the customer and identifies contingency plans for events that could throw the project off course. Because the project must be sold to management, staff, and review groups, the statement of work should be a persuasive document.
Long Ton
2,240 pounds.
3D Loading
3D loading is a method of space optimizing designed to help quickly and easily plan the best compact arrangement of any 3D rectangular object set (boxes) within one or more larger rectangular enclosures (containers). It's based on three-dimensional, most-dense packing algorithms.
Local Service Carriers
A classification of air carriers that operate between less-populated areas and major population centers. These carriers feed passengers into the major cities to connect with major carriers. Local service carriers are now classified as national carriers.
Virtual Factory
A changed transformation process most frequently found under the virtual corporation. It's a transformation process that involves merging the capabilities and capacities of the firm with those of its suppliers. Typically, the components provided by the suppliers are hose that are not related to a core competency of the firm, while the components managed by the firm are related to core competencies. One advantage found in the virtual factory is that it can be restructured quickly in response to changing customer demands and needs.
Wharfage
A charge assessed by a pier or dock owner against the cargo or a steamship company for use of the pier or dock for the handling of incoming or outgoing cargo.
Web Browser
A client application that fetches and displays web pages and other World Wide Web resources to the user.
Manufacturing Calendar
A calendar used in inventory and production planning functions that consecutively numbers only the working days so that the component and work order scheduling may be done based on the actual number of workdays available.Synonyms
Marine Cargo Insurance - Open Policy
A cargo insurance policy that is an open contract; i.e. it provides protection for all of an exporter's shipments afloat or in transit within a specified geographical trade area for an unlimited period of time, until the policy is cancelled by the insured or by the insurance company. It is "open" because the goods that are shipped are also detailed at that time. This is usually shown in a document called a marine insurance certificate.
Independent Action
A carrier that is a rate bureau member may publish a rate that differs from the rate the rate bureau publishes.
Private Carrier
A carrier that provides transportation service to the firm that owns or leases the vehicles and does not charge a fee. Private motor carriers may haul at a fee for wholly owned subsidiaries.
Stock-Keeping Unit (SKU)
A category of unit with a unique combination of form, fit, and function (i.e., unique components held in stock). To illustrate
World Wide Web (WWW)
A "multi-media hyper-linked database that spans the globe" providing information on desktop and handheld computers and other devices such as web compliant phones and televisions. Unlike earlier Internet services, the "web" provides more than just text combining text, pictures, sounds, and even animation in a graphical user interface for ease of navigation.
Sigma
A Greek letter commonly used to designate the standard deviation of a population.
Kaizen
A Japanese term for improvement - continuing improvement involving everyone - managers and workers. In manufacturing, kaizen relates to finding and eliminating waste in machinery, labor, or production methods. Also see
Urban Mass Transportation Administration
A U.S. Department of Transportation agency that develops comprehensive mass transport systems for urban areas and for providing financial aid to transit systems.
Maritime Administration (Mar Ad)
A U.S. government agency, not actively involved in vessel operation, that administers laws for maintenance of a merchant marine for the purposes of defense and commerce.
Uniform Code Council (UCC)
A US association that administrates UCS, WINS, and VICS and provides UCS identification codes and UPC codes. Also, a model set of legal rules governing commercial transmissions, such as sales, contracts, bank deposits and collections, commercial paper, and letters or credit. Individual states give legal power to the UCC by adopting its articles of law.
International Maritime Organization (IMO)
A United Nations-affiliated organization representing all maritime countries in matters affecting maritime transportation, including the movement of dangerous goods. The organization also is involved in deliberations on marine environmental pollution.
Lighter
A barge-type vessel used to carry cargo between shore and cargo ship. While the terms barge and lighter are used interchangeably, a barge usually refers to a vessel used for a long haul, while a lighter is used for a short haul.
House Air Waybill (HAWB)
A bill of lading issued by a forwarder to a shipper as a receipt for goods that the forwarder will consolidate with cargo from other shippers for transport.
Retailer
A business that takes title to products and resells them to final consumers. Examples include Wal-Mart, Best Buy, and Safeway, but also include the many smaller independent stores.
Third Party Logistics Provider (3PL)
A firm which provides multiple logistics services for use by customers. Preferably, these services are integrated or bundled together, by the provider. These firms facilitate the movement of parts and materials from suppliers to manufacturers, and finished products from manufacturers, and finished products from manufacturers to distributors and retailers. Among the services they provide are transportation, warehousing, cross docking, inventory management, packaging, and freight forwarding.
Node
A fixed point in a firm's logistics system where goods come to rest; includes plants, warehouses, supply sources, and markets.
Vessel
A floating structure designed for transport.
Non-Certificated carrier
A for-hire air carrier that is exempt from economic regulation.
Major Carrier
A for-hire certificated air carrier that has annual operating revenues of $1 billion or more; the carrier usually operates between major population centers.
National Carrier
A for-hire certificated air carrier that has annual operating revenues of $75 million to $1 billion; the carrier usually operates between major population centers and areas of lesser population.
Keiretsu
A form of cooperative relationship among companies in Japan where the companies largely remain legally and economically independent, even though they work closely in various ways, such as sole sourcing and financial backing. A member of a keiretsu generally owns a limited amount of stock in other member companies. A keiretsu generally forms around a bank and a trading company but distribution (supply chain) keiretsus exist, linking companies from raw material suppliers to retailers.
Scenario Planning
A form of planning in which likely sets of relevant circumstances are identified in advance, and used to assess the impact of alternative actions.
Radio Frequency (RF)
A form of wireless communications that lets users relay information via electromagnetic energy waves from a terminal to a base station which is linked, in turn, to a host computer. The terminal can be placed at a fixed station, mounted on a forklift truck, or carried in a worker's hand. The base station contains a transmitter and receiver for communication with the terminal. RF systems use either narrow-band or spread-spectrum transmissions. Narrow-band data transmissions move along a single limited radio frequency, while spread-spectrum transmissions move across several different frequencies. When combines with a bar code system of identifying inventory items, a radio frequency system can relay data instantly, thus updating inventory records in so-called real time.
North American Free Trade Agreement (NAFTA)
A free trade agreement, implemented January 1, 1994, between Canada, the United States and Mexico.
Prepaid
A freight term which indicates that charges are to be paid by the shipper. Prepaid shipping charges may be added to the customer invoice, or the cost may be bundled into the pricing for the product.
Permit
A grant of authority to operate as a contract carrier.
Market Segment
A group of potential customers sharing some measurable characteristics based on demographics, psychographics, lifestyle, geography, benefits, etc.
Product Family
A group of products with similar characteristics often used in production planning (or sales and operations planning).
Port
A harbor where ships will anchor.
Over-the-Road
A motor carrier operation that reflects long-distance moves; the opposite of local operations.
Irregular Route Carrier
A motor carrier that may provide service utilizing any route.
Return Material Authorization or Return Merchandise Authorization (RMA)
A number usually produced to recognize and give authority for a faulty (perhaps) good to be returned to a distribution center or manufacturer. A form generally required with a warranty/return which helps the company identify the original product and the reason for the return. The RMA number often acts as an order form for the work required in repair situations, or as a reference for credit approval.
Salable Goods
A part of assembly authorized for sale to final customers through the marketing function.
Per Diem
A payment rate one railroad makes to use another's cars.
Operating Differential Subsidy (ODS)
A payment to an American-flag carrier by the U.S. government to offset the difference in operating costs between U.S. and foreign vessels.
Waterway Use Tax
A per-gallon tax assessed barge carriers for waterway
Performance Measurement Program
A performance measurement program goes beyond just having performance metrics in place. Typical characteristics of a good performance measurement program include the following
Scorecard
A performance measurement tool used to capture a summary of the key performance indicators (KPIs)/metrics of a company. Metrics dashboards/scorecards should be easy to read and usually have red, yellow, green indicators to flag when the company is not meeting its metrics targets. Ideally, a dashboard/scorecard should be cross functional in nature and include both financial and non-financial measures. In addition, scorecards should be reviewed regularly - at least on a monthly basis and weekly in key functions, such as manufacturing and distribution where activities are critical to the success of a company. The dashboard/scorecards philosophy can also be applied to external supply chain partners like suppliers to ensure that their objectives and practices align. Synonym
Lessor
A person or firm that grants a lease.
Lessee
A person or firm to whom a lessor grants a lease.
Port of Entry
A port at which foreign goods are admitted into the receiving country.
Shipping Lane
A predetermined, mapped route on the ocean that commercial vessels tend to follow between ports. This helps ships avoid hazardous areas. In general transportation, the logical route between the point of shipment and the point of delivery used to analyze the volume of shipment between two points.
Purchase Price Discount
A pricing structure in which the seller offers a lower price if the buyer purchases a larger quantity.
Intercorporate hauling
A private carrier hauling a subsidiary's goods and charging the subsidiary a fee; this is legal if the subsidiary is wholly owned or if the private carrier has common carrier authority.
Password
A private code required to gain access to a computer, an application program, or service.
Reverse Engineering
A process whereby competitors' products are disassembled and analyzed for evidence of the use of better processes, components, and techniques.
Theory of Constraints (TOC)
A production management theory which dictates that volume is controlled by a series of constraints related to work center capacity, component availability, finance, etc. Total throughput cannot exceed the capacity of the smallest constraint, and any inventory buffers or excess capacity at non-related work center is waste.
Part Standardization
A program for planned elimination of superficial, accidental, and deliberate differences between similar parts in the interest of reducing part and supplier proliferation. A typical goal of part standardization is to reduce costs by reducing the number of parts that the company needs to manage.
Quick Response (QR)
A strategy widely adopted by general merchandise and soft lines retailers and manufacturers to reduce retail out of stocks, forced markdowns, and operating expenses. These goals are accomplished through shipping accuracy and reduced response time. QR is a partnership strategy in which suppliers and retailers work together to respond more rapidly to the consumer by sharing point-of-sale scan data, enabling both to forecast replenishment needs.
Uniform Resource Locator (URL)
A string that supplies the Internet address of a web site or resource on the World Wide Web, along with the protocol by which the site or resource is accessed. The most common URL type is http
Quality Function Deployment (QFD)
A structured method for translating user requirements into detailed design specifications using a continual stream of "what-how" matrices. QFD links the needs of the customer (end user) with design, development, engineering, manufacturing, and service functions. It helps organizations seek out both spoken and unspoken needs, translate these into actions and designs, and focus various business functions toward achieving this common goal.
Subhauler
A subhauler drives a tractor under contract for a company. Usually a subhauler is an owner/operator or a small company.
Hazardous Material
A substance or material which the Department of Transportation has determined to be capable of posing a risk to health, safety, and property when stored or transported in commerce.
Weight-Point Plan
A supplier selection and rating approach that uses the input gathered in the categorical plan approach and assigns weights to each evaluation category. A weighted sum for each supplier is obtained and a comparison made. The weights used should sum to 100% for all categories. Also see
On-Line receiving
A system in which computer terminals are available at each receiving bay and operators enter items into the system as they are unloaded.
Pull Ordering System
A system in which each warehouse controls its own shipping requirements by placing individual orders for inventory with the central distribution center. A replenishment system where inventory is "pulled" into the supply chain (or "demand chain" by POS systems, or ECR programs). Associated with "build to order" systems.
Scanlon Plan
A system of group incentives on a companywide or plantwide basis that sets up one measure that reflects the results of all efforts. The Scanlon plan originated in the 1930s by Joe Scanlon and MIT. The universal standard is the ratio of labor costs to sales value added by production. If there's an increase in production sales value with no change in labor costs, productivity has increased while unit cost has decreased.
Target Costing
A target cost is calculated by subtracting the desired profit margin from an estimated or market-based price to arrive at a desired production, engineering, or marketing cost. This may not be the initial production cost, but one expected to be achieved during the mature production stage. Target costing is a method used in the analysis of product design that involves estimated a target cost, then designing the product/service to meet that cost.
National Motor Freight Classification (NMFC)
A tariff, which contains descriptions and classifications of commodities and rules for domestic movement by motor carriers in the US.
Tariff
A tax assessed by a government on goods entering or leaving a country. The term is also used in transportation in reference to the fees and rules applied by a carrier for its services.
Pegging
A technique in which a DRP system traces demand for a product by date, quantity, and warehouse location.
Six-Sigma Quality
A term generally used to indicate that a process is well controlled, I.e., tolerance limits are +-6 sigma (3.4 defects per million events) from the centerline in a control chart. The term is usually associated with Motorola which named one of its key operations initiatives Six-Sigma Quality.
Marine Cargo Insurance - Average
A term in marine cargo insurance signifying loss or damage to merchandise.
Less-Than-Containerload (LCL)
A term used when goods do not completely occupy an entire container. When many shipper's goods occupy a single container, each shipper's shipment is considered to be LCL.
Primary-Business Test
A test the ICC uses to determine if a trucking operation is bona fide private transportation; the private trucking operation must be incidental to and in the futherance of the firm's primary business.
Transaction Set ID
A three digit numerical representation that identifies a transaction set.
Sales Plan
A time-phased statement of expected customer orders anticipated to be received (incoming sales, not outgoing shipment) for each major product family or item. 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 (or sales and operations planning process). It is expressed in units identical to those used for the production plan (as well as in sales dollars). Also see
Self Billing
A transportation industry strategy which prescribes that a carrier will accept payment based on the tender document provided by the shipper.
Owner/Operator
A truck driver who owns and operates his/her tractor/trailer.
Truckload Lot
A truck shipment that qualifies for a lower freight rate because it meets a minimum weight and/or volume.
Pro-forma
A type of quotation or offer that may be used when first negotiating the sales of goods or services. If the pro-forma is accepted, then the terms and conditions of the pro-forma may become the request.
Order
A type of request for goods or services.
Serial Number
A unique number assigned for identification to a single piece that will never be repeated for similar pieces. Serial numbers are usually applied by the manufacturer but can be applied at other points by the distributor or wholesaler. Serial numbers can be used to support traceability and warranty programs.
Place Utility
A value that logistics creates in a product by changing the product's location. Transportation creates place utility.
Supplier-Owned Inventory
A variant of Vendor-Managed Inventory and Consignment Inventory. In this case the supplier not only manages the inventory, but also owns the stock close to or at the customer location until the point of consumption or usage by the customer.
Skills Matrix
A visible means of displaying people's skill levels in various tasks. Used in a team environment to identify the skills required by the team and which team members possess those skills.
Statistical Process Control (SPC)
A visual means of measuring and plotting process and product variation. Results are used to adjust variables and maintain product quality.
Intermediately Positioned Warehouse
A warehouse located between customers and manufacturing plants to provide increased customer service and reduced distribution cost.
Household Goods Warehouse
A warehouse that stores household goods.
Supply Warehouse
A warehouse that stores raw materials. Goods from different suppliers are picked, sorted, staged, or sequenced at the warehouse to assemble plant orders.
Portal
A web site that serves as a starting point to other destinations or activities on the Internet. Initially thought of as a home base-type of web page, portals attempt to provide all Internet needs in one location. Portals commonly provide services such as e-mail, online chat forums, shopping, searching, content, and news feeds.
Zone of Reasonableness
A zone or limit within which air carriers may change rates without regulatory scrutiny; if the rate change is within the zone, the new rate is presumed to be reasonable.
Hazardous Goods
Articles or substances capable of posing a significant risk to health, safety, or property, and that ordinarily require special attention when transported. Also called Dangerous Goods.
Order Picking
Assembling a customer's order from items in storage.
Value Adding/Non-Value Adding
Assessing the relative value of activities according to how they contribute to customer value or to meeting an organization's needs. The degree of contribution reflects the influence of an activity's cost driver(s).
Total Average Inventory
Average normal use stock, plus average lead stock, plus safety stock.
Total Cumulative Manufacture Cycle Time
Average time between commencement of upstream processing and completion of final packaging for shipment operations as well as release of approval for shipment. Does not include WIP storage time.
Release-to-Start Manufacturing
Average time from order release to manufacturing to the start of the production process. This cycle time may typically be required to support activities like material movement and line changeovers.
Strategic Alliance
Business relationship in which two or more independent organizations cooperate and willingly modify their business objectives and practices to help achieve long-term goals and objectives.
2. Demand/Supply Planning Costs
Costs associated with forecasting developing finished goods, intermediate, subassembly or end-item inventory plans, and coordinating demand/supply.
1. Supply-Chain Finance Costs
Costs associated with paying invoices, auditing physical counts, performing inventory accounting, and collecting accounts receivable. Does NOT include customer invoicing/accounting costs (See Order Management Costs).
Support Costs
Costs of activities not directly associated with producing or delivering products or services. Examples are the costs of information systems, process engineering, and purchasing. Also see
Lash Barges
Covered barges that carriers load on board oceangoing ships for movement to foreign destinations.
Raw Materials (RM)
Crude or processed material that can be converted by manufacturing, processing, or a combination thereof into a new and useful product.
Sub-Optimization
Decisions or activities in part made at the expense of the whole. An example of sub-optimization is where a manufacturing unit schedules production to benefit its cost structure without regard to customer requirements or the effect on other business units.
Point of Use Delivery
Delivery right to the production floor of an item.
Spot Demand
Demand with a short lead time that's difficult to estimate. Usually supply for this demand is provided at a premium price. An example of spot demand would be when there's a spiked demand for building materials as a result of a hurricane.
Also see
Deming Circle.
Nonconformity
Failure to fulfill a specified requirement.
Trend
General upward or downward movement of a variable over time such as demand for a product. Trends are used in forecasting to help anticipate changes in consumption over time.
Measurement Ton
Forty cubic feet; used in water transportation ratemaking.
Prepaid Freight
Freight paid by the shipper to the carrier when merchandise is tendered for shipment that is not refundable if the merchandise does not arrive at the intended destination.
Surrogate [item] Driver
In ABC costing, a substitute for the ideal cost driver, but closely correlated to the ideal driver, where [item] is Resource, Activity, or Cost Object. A surrogate driver is used to significantly reduce the cost of measurement while not significantly reducing accuracy. For example, the number of production runs is not descriptive of the material-disbursing activity, but the number of production runs may be used as an activity driver if material disbursements correlate well with the number of production runs.
Planned Order
In DRP and MRP systems, a future order the system plans in response to forecasted demand.
Life Cycle Cost
In cost account, a product's life cycle is the period that starts with the initial product conceptualization and ends with the withdrawal of the product from the marketplace and final disposition. A product life cycle is characterized by certain defined stages, including research, development, introduction, maturity, decline, and abandonment. Life cycle cost is the accumulated costs incurred by a product during these stages.
Hierarchy of Cost Assignability
In cost accounting, an approach to group activity costs at the level of an organization where they are incurred, or can be directly related to. Examples are the level where individual units are identified (unit level), where batches of units are organized or processed (batch level), where a process is operated or supported (process level), or where costs cannot be objectively assigned to lower level activities or processes (facility level). This approach is used to better understand the nature of the costs, including the level in the organization at which they are incurred, the level to which they can be initially assigned (attached), and the degree to which they are assignable to other activity and/or cost object levels, i.e., activity or cost object cost, or sustaining costs.
Resource Driver
In cost accounting, the best single quantitative measure of the frequency and intensity of demands placed on a resource by other resources, activities, or cost objects. It's used to assign resource costs to activities and cost objects, or to other resources.
Secure Electronic Transaction (SET)
In e-commerce, a system of guaranteeing the security of financial transactions conducted over the Internet.
Last In First Out (LIFO)
In inventory control and financial accounting, this refers to the practice of using stock from inventory on the basis of what was received last is consumed first. This has limited use in stock keeping and is primarily a cost-accounting method.
Market Demand
In marketing, the total demand that would exist within a defined customer group in a given geographical area during a particular time period given a known marketing program.
Plan-Do-Check-Action (PDCA)
In quality management, a four-step process for quality improvement. In the first step (plan), a plan to affect improvement is developed. In the second step (do), the plan is carried out, preferably on a small scale. In the third 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-act cycle is sometimes referred to as the Shewhart cycle (Walter A. Shewhart discussed the concept in his book Statistical Method from the Viewpoint of Quality Control) and as the Deming circle (W. Edwards Deming introduced the concept in Japan; the Japanese subsequently called it the Deming circle). Synonym
Quality Circle
In quality management, a small group of people who normally work as a unit and meet frequently to uncover and solve problems concerning the quality of items produced, process capability, or process control. Also see
Unitization
In warehousing, the consolidation of several units into larger units into larger units for fewer handlings.
Materials Management
Inbound logistics from suppliers through the production process. The movement and management of materials and products from procurement through production.
Logistics Management as defined by the Council of Supply Chain Management Professionals (CSCMP)
Logistics management is that part of supply chain management that plans, implements, and controls the efficient, effective forward and reverse flow and storage of goods, services, and related information between the point of origin and the point of consumption in order to meet customers' requirements. Logistics management activities typically include inbound and outbound transportation management, fleet management, warehousing, materials handling, order fulfillment, logistics network design, inventory management, supply/demand planning and management of third party logistics services providers. To varying degrees, the logistics function also includes sourcing and procurement, production planning and scheduling, packaging and assembly, and customer service. It is involved in all levels of planning and execution - strategic, operational, and tactical. Logistics management is an integrating function which coordinates and optimizes all logistics activities with other functions, including marketing, sales, manufacturing, finance, and information technology.
MRO items
Maintenance, repair, and operating items--office supplies, for example.
Marks and Numbers
Marks and numbers placed on goods used to identify a shipment or parts of a shipment.
Return to Vendor (RTV)
Material that has been rejected by the customer or the buyer's inspection department and is awaiting shipment back to the supplier for repair or replacement.
Production Capacity
Measure of how much production volume may be experienced over a set period of time.
Trend Forecasting Models
Methods for forecasting sales data when a definite upward or downward pattern exists. Models include double exponential smoothing, regression, and triple smoothing.
m-Commerce
Mobile commerce applications involve using a mobile phone to carry out financial transactions. This usually means making a payment for goods or transferring funds electronically. Transferring money between accounts and paying for purchases are electronic commerce applications. An emerging application, electronic commerce has been facilitated by developments in other areas in the mobile world, such as dual slot phones and other smarter terminals, and more standardized protocols which allow greater interactivity and therefore, more sophisticated service.
Unit Load Device (ULD)
Refers to airfreight containers and pallets.
Outsourced Cost-of-Goods Sold
Operations performed on raw material outside of the responding entity's organization that would typically be considered internal to the entity's manufacturing cycle. Outsourced cost-of-goods sold captures the value of all outsourced activities that roll up as cost-of-goods sold. Some examples of commonly outsourced areas are assembly, test, metal finishing or painting, and specialized assembly process.
Unplanned Order
Orders which are received that do not fit into the volumes prescribed by the plans developed from forecasts.
Resellers
Organizations intermediate in manufacturing and distribution process such as wholesalers and retailers.
Third Party Logistics
Outsourcing all or much of a company's logistics operations to a specialized company.
NOX
Oxides of Nitrogen
Parcel Shipment
Parcels include small packages like those typically handled by providers such as UPS and FedEx.
PM
Particulate matter
Work in Process (WIP)
Parts and subassemblies in the process of becoming completed finished goods. Work in process generally includes all of the material, labor, and overhead charged against a production order which has not been absorbed back into inventory through receipt of completed products.
Pay on Use
Pay on use is a process where payment is initiated by product consumption, i.e., consignment stock based on withdrawal of product from inventory, This process is popular with many European companies.
Stakeholders
People with a vested interest in a company, including manager, employees, stockholders, customers, suppliers, and others.
Multi-Skilled
Pertaining to individuals who are certified to perform a variety of tasks.
Multi-Language
Pertaining to the ability to process orders in many different country-specific languages using voice and text.
On-Demand
Pertaining to work performed when demand is present. Typically used to describe products which are manufactured or assembled only when a customer order is placed.
Pick/Pack
Picking and packing immediately into shipment containers.
P & D
Pickup and delivery.
Short Shipment
Piece of freight missing from shipment as stipulated by documents on hand.
Stickering
Placing customer-specific stickers on boxes of product. An example would be where Wal-Mart has a request for their own product codes to be applied to retail boxes prior to shipment.
Manufacturing Execution Systems (MES)
Programs and systems that participate in shop-floor control, including programmed logic controllers and process control computers for direct and supervisory control of manufacturing equipment; process information systems that gather historical performance information, then generate reports; graphical displays; and alarms that inform operations personnel what is going on in the plant currently and a short history into the past. Quality control information is also gathered - a laboratory information management system may be part of this configuration to tie process conditions to the quality data that are generated. Thereby, cause-and-effect relationships can be determined. The quality data at times affect the control parameters that are used to meet product specifications, either dynamically or offline.
Non-Negotiable BOL
Provides for the delivery of goods to a named enterprise and to no one else. Also known as a straight bill of lading.
Negotiable BOL
Provides for the delivery of goods to a named enterprise or to their order (anyone they may designate), but only upon surrender of proper endorsement and the bill of lading to the carrier or the carrier's agents. Also known as an order bill of lading.
Truck Stop Electrification (TSE)
Provides power outlets at truck parking spaces in which truck drivers can simply plug in, and turn off their engines, rather than idle their truck engine.
Nationalization
Public ownership, financing, and operation of a business entity.
Staging
Pulling material for an order from inventory before the material is required. This action is often taken to identify shortages, but it can lead to increased problems in availability and inventory accuracy. Also see
RFID
Radio Frequency Identification. Also see
Hopper Cars
Railcars that permit top loading and bottom unloading of bulk commodities; some hopper cars have permanent tops with hatches to provide protection against the elements.
Zone of Rate Flexibility
Railroads may raise rates by a percentage increase in the railroad cost index that the ICC determines; the railroads could raise rates by 6 percent per year through 1984 and 4 percent thereafter.
Velocity
Rate of product movement through a warehouse.
Inventory
Raw materials, work in process, finished goods, and supplies required for creation of a company's goods and services. The number of units and/or value of the stock of goods held by a company.
Shrinkage
Reductions of actual quantities of items in stock, in process, or in transit. The loss may be caused by scrap, theft, deterioration, evaporation, etc.
24/7/365
Referring to operations that are conducted 24 hours a day, 7 days a week, 365 days per year, with no breaks for holidays, etc.
24/7
Referring to operations that are conducted 24 hours a day, 7 days a week.
Put Away
Removing the material from the dock (or other location of receipt), transporting the material to a storage area, placing that material in a staging area, and then moving it to a specific location and recording the movement and identification of the location where the material has been place.
6. Field Service Parts Obsolescence
Reserves taken due to obsolescence and scrap. field service parts are those inventories kept at locations outside the four walls of the manufacturing plant i.e., distribution center or warehouse.
RGA
Return Goods Authorization. Also see
RMA
Return Material Authorization. Also see
Supply Chain Event Management (SCEM)
SCEM is an application that supports control processes for managing events within and between companies. It consists of integrated software functionality that supports five business processes
Vertical Hub/Vertical Portal
Serving one specific industry. Vertical portal web sites are ones that cater to customers within a particular industry. Similar to the term "vertical industry," these web sites are industry specific, and, like a portal, they make use of Internet technology by using the same kind of personalization technology. In addition to industry-specific vertical portals that cater to consumers, another definition of a vertical portal is one that caters solely to other businesses.
Takt Time
Sets the pace of production to match the rate of customer demand and becomes the heartbeat of any lean production system. It's computed as the available production time divided by the rate of customer demand. For example, assume demand is 10,000 units per month, or 500 units per day, and planned available capacity is 420 minutes per day. The takt time = 420 minutes per day/500 units per day = 0.84 minutes per unit. This takt time means that a unit should be planned to exit the production system on average every 0.84 minutes.
Shingo's Seven Wastes
Shigeo Shingo, a pioneer in the Japanese just-in-time philosophy, identified seven 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 the processing itself.
Less-Than-Carload (LCL)
Shipment that is less than a complete rail car load (lot shipment).
Shipper-Carriers
Shipper-carriers (also called private carriers) are companies with goods to be shipped that own or manage their own vehicle fleets. Many large retailers, particularly groceries and "big box" stores, are shipper-carriers.
SAE
Society of Automotive Engineers
Supply Chain Inventory Visibility
Software applications that permit monitoring events across a supply chain. These systems track and trace inventory globally on a line-item level, and notify the user of significant deviations from the plans. Companies are provided with realistic estimates of when the material will arrive.
Product
Something that has been or is being produced.
Supply Chain Management (SCM)
Supply chain management encompasses the planning and management of all activities involved in sourcing and procurement, conversion, and all logistics management activites. Importantly, it also includes coordination and collaboration with channel partners, which can be suppliers, intermediaries, third party service providers, and customers. In essence, supply chain management integrates supply and demand management within and across companies. Supply chain management is an integrating function with primary responsibility for linking major business functions and business processes within and across companies into a cohesive, high-performing business model. It includes all of the logistics managment activities noted above, as well as manufacturing operations, and it drives coordination of processes and activities with and across marketing, sales, product design, finance, and information technology. — as defined by the Council of Supply Chain Management Professionals (CSCMP)
Voice Activated
Systems which guide users such as warehouse personnel via voice commands.
Leverage
Taking something small and exploding it. Leverage can be financial or technological.
Total Productive Maintenance (TPM)
Team-based maintenance process designed to maximize machine availability and performance and product quality.
Piggyback
Terminology used to describe a truck trailer being transported on a railroad flatcar.
X12
The ANSI standard for inter-industry electronic interchange of business transactions.
Message
The EDIFACT term for a transaction set. A message is the collection of data, organized in segments, exchanged by trading partners engaged in EDI. Typically, a message is an electronic version of a document associated with a common business transaction, such as a purchase order or shipping notice. A message begins with a message header segment, which identifies the start of the message (e.g., the series of characters representing one purchase order). The message header segment also carries the message type code, which identifies the business transaction type. EDIFACT's message header segment is called UNH; in ANSI X12 protocol, the message header is called ST. A message ends with a message trailer segment, which signals the end of the message (e.g., the end of one purchase order). EDIFACT's message trailer is labeled UNT; the ANSI X12 message trailer is referred to as SE.
Police Powers
The United States' constitutionally granted right for the states to establish regulations to protect their citizens' health and welfare; truck weight; speed, length, and height laws are examples.
Visibility
The ability to access or view pertinent data or information as it relates to logistics and the supply chain, regardless of the point in the chain where the data exists.
Transparency
The ability to gain access to information without regard to the system's landscape or architecture. An example would be where an online customer could access a vendor's web site to place an order and receive availability information supplied by a third party outsource manufacturer or shipment information from a third party logistics provider. Also see
Supply Chain Execution (SCE)
The ability to move the product out of the warehouse door. This is a critical capacity and one that only brick-and-mortar firms bring to the B2B table. Dot coms have the technology, but that's only part of the equation. The need for SCE is what is driving the dot coms to offer equity partnerships to the wholesale distributors.
Multi-Currency
The ability to process orders using a variety of currencies for pricing and billing.
Market Dominance
The absence of effective competition for railroads from other carriers and modes for the traffic to which the rail rate applies. The Staggers Act stated that market dominance does not exist if the rate is below the revenue-to-variable-cost ratio of 160 percent in 1981 and 170 percent in 1983.
Total Make Cycle Time
The average processing time between commencement of upstream processing and completion of all manufacturing process steps up to, but not including, packaging and labeling operations (i.e., from start of manufacturing to final formulated product ready for primary packaging.) Does not include hold or test and release times. Calculation
Manufacture Cycle Time
The average time between commencement and completion of a manufacturing process, as it applies to make-to-stock products.
Total Test Release Cycle Time
The average total test and release time for all tests, documentation reviews, and batch approval processes performed from start of manufacturing to release of final packaged product for shipment.
Public Warehouse receipt
The basic document a public warehouse manager issues as a receipt for the goods a company gives to the warehouse manager. The receipt can be either negotiable or nonnegotiable.
Master Air Waybill (MAWB)
The bill of lading issued by air carriers to their customers.
Ocean Bill of Lading
The bill of lading issued by the ocean carrier to its customer.
Tasks
The breakdown of the work in an activity into smaller elements.
Procurement
The business functions of procurement planning, purchasing, inventory control, traffic, receiving, incoming inspection, and salvage operations. Synonym
Lading
The cargo carried in a transportation vehicle.
Issuing Carrier
The carrier whose name is printed on the bill of lading and with whom the contract of carriage exists.
Merger
The combination of two or more carriers into one company that will own, manage, and operate the properties that previously operated separately.
Jidoka
The concept of adding an element of human judgment to automated equipment. In doing this, the equipment becomes capable of discriminating against unacceptable quality, and the automated process becomes more reliable.
Viral Marketing
The concept of embedding advertising into web portals and pop ups, and as e-mail attachments to spread the word about products or services that the target audience may not otherwise have been interested in.
Synchronization
The concept that all supply chain functions are integrated and interact in real time; when changes are made to one area, the effect is automatically reflected throughout the supply chain.
Zone Price
The constant price of a product at all geographic locations within a zone.
Inherent Advantage
The cost and service benefits of one mode compared with other modes.
Unit Cost
The cost associated with a single unit of product. The total cost of producing a product or service divided by the total number of units. The cost associated with a single unit of measure underlying a resource, activity, product, or service. It's calculated by dividing the total cost by the measured volume. Unit cost measurement must be used with caution as it may not always be practical or relevant in all aspects of cost management.
Out-of-Pocket Cost
The cost directly assignable to a particular unit of traffic and which a company would not have incurred if it had not performed the movement.
Inventory Turns
The cost of goods sold divided by the average level of inventory on hand. This ratio measures how many times a company's inventory has been sold during a period of time. Operationally, inventory turns are measured as total throughput divided by average level of inventory for a given period. How many times a year the average inventory for a firm changes over or is sold.
Inventory Cost
The cost of holding goods, usually expressed as a percentage of the inventory value; includes the cost of capital, warehousing, taxes, insurance, depreciation, and obsolescence.
3. Insurance and Taxes
The cost of insuring inventories and taxes associated with the holding of inventory.
Lighterage
The cost of loading or unloading a vessel by means of barges.
Ordering Cost
The cost of placing an inventory order with a supplier.
Marginal Cost
The cost to produce one additional unit of output. The change in total variable cost resulting from a one-unit change in output.
Returns Material Acquisition, Finance, Planning, and IT Costs
The costs associated with acquiring the defective products and materials for repair or refurbishing items, plus any finance, planning, and information technology costs to support return activity. Includes all applicable elements of the Level 2 components material acquisition cost (acquiring materials for repairs), supply chain-related finance and planning costs, and supply chain management cost.
2. Shrinkage
The costs associated with breakage, pilferage, and deterioration of inventories. Usually pertains to the loss of material through handling damage, theft, or neglect.
Return Disposal Costs
The costs associated with disposing or recycling products that have been returned due to customer rejects, end of life, or obsolescence.
Return Order Management Costs
The costs associated with managing Return Material Authorization (RMA). Includes all applicable elements of the Level 2 component order management cost of total supply chain management cost.
Returns Inventory Costs
The costs associated with managing inventory returned for any of the following reasons
2. Supplier Quality Engineering
The costs associated with the determination, development/certification, and monitoring of suppliers' capabilities to fully satisfy the applicable quality and regulatory requirements. 3. Inbound Freight and Duties
Mass Customization
The creation of a high-volume product with large variety so that a customer may specify his or her exact model out of a large volume of possible end items, while manufacturing cost is low because of the large volume. An example is a personal computer order in which the customer may specify processor speed, memory size, hard disk size and speed, removable storage device characteristics, and many other options when PCs are assembled on one line and at a low cost.
Information
The data, plus the interpretation necessary to understand it.
Planned Date
The date an operation such as a receipt, shipment, or delivery of an order is planned to occur.
Line Functions
The decision-making areas companies associate with daily operations. Logistics line functions include traffic management, inventory control, order processing, warehousing, and packaging.
Perfect Order
The definition of a perfect order is one which meets all of the following criteria
Vertical Integration
The degree to which a firm has decided to directly produce multiple value-adding stages, from raw material to the sale of the product to the ultimate consumer. The more steps in the sequence, the greater the vertical integration. A manufacturer that decides to begin producing parts, components, and materials that it normally purchases is said to be backward integrated. Likewise, a manufacturer that decides to take over distribution and perhaps sale to the ultimate consumer is said to be forward integrated.
Postponement
The delay of final activities (i.e., assembly, production, packaging, etc.) until the latest possible time. A strategy used to eliminate excess inventory in the form of finished goods which may be packaged in a variety of configurations.
Supply Chain Design
The determination of how to structure a supply chain. Design decisions include the selection of partners, the location and capacity of warehouse and production facilities, the products, the modes of transportation, and supporting information systems.
Tender
The document which describes a business transaction to be performed.
Management of All Logistics
The effective management of all costs associated with logistics functions and activities so as to minimize their sum across the product supply chain.
Macro Environment
The environment external to a business, including technological, economic, natural, and regulatory forces that marketing efforts cannot control.
Logistics Costs
The factors associated with the acquisition, storage, movement, and disposition of goods.
Locational Determinant
The factors that determine a facility's location. For industrial facilities, the determinants include logistics.
Outpartnering
The process of involving the supplier in a close partnership with the firm and its operations management system. Outpartnering is characterized by close working relationships between buyers and suppliers, high levels of trust, mutual respect, and emphasis on joint problem solving and cooperation. With outpartnering, the supplier is not viewed as an alternative source of goods and services (as observed under outsourcing), but rather as a source of knowledge, expertise, and complementary core competencies. Outpartnering is typically found during the early stages of product life cycle when dealing with products that are viewed as critical to the strategic survival of the firm. Also see
Optimization
The process of making something as good or as effective as possible with given resources and constraints.
Just-in-Time Logistics (or Quick Response)
The process of minimizing the times required to source, handle, produce, transport, and deliver products in order to meet customer requirements.
Replenishment
The process of moving or resupplying inventory from a reserve (or upstream) storage location or facility to a primary (or downstream) storage or picking location, or to another mode of storage in which picking is performed.
Logistics
The process of planning, implementing, and controlling procedures for the efficient and effective storage of goods, services, and related information from the point of origin to the point of consumption for the purpose of conforming to customer requirements. This definition includes inbound, outbound, internal, and external movements.
Order Entry and Scheduling
The process of receiving orders from the customer and entering them into a company's order processing system. Orders can be received through phone, fax, or electronic media. Activities may include "technically" examining orders to ensure an orderable configuration and provide accurate price, checking the customer's credit and accepting payment (optionally), identifying and reserving inventory (both on hand and scheduled), and committing and scheduling a delivery date.
Outbound Logistics
The process related to the movement and storage of products from the end of the production line to the end user.
New Product Introduction (NPI)
The process used to develop products that are new to the sales portfolio of a company.
Unbundled Payment/Remittance
The process where payment is delivered separately from its associated detail.
Real Time
The processing of data in a business application as it happens, as contrasted with storing data for input at a later time (batch processing).
Sales Mix
The proportion of individual product-type sales volumes that make up the total sales volume.
Purchase Order (PO)
The purchaser's authorization used to formalize a purchase transaction with a supplier. The physical form or electronic transaction a buyer uses when placing an order for merchandise.
Lot Size
The quantity of goods a company purchases or produces in anticipation of use or sale in the future.
Material Index
The ratio of the sum of the localized raw material weights to the weight of the finished product.
Yield
The ratio of usable output from a process to its input.
Modal Split
The relative use that companies make of transportation modes; the statistics include ton-miles, passenger-miles, and revenue.
Process Yield
The resulting output from a process. An example would be a quantity of finished product output from manufacturing processes.
Quarantine
The setting aside of items from availability for use or sale until all required quality tests have been performed and conformance certified.
Vision
The shared perception of the organization's future - what the organization will achieve and a supporting philosophy. This shared vision must be supported by strategic objectives, strategies, and action plans to move in in the desired direction. Synonym
Weight Break
The shipment volume at which the LTL charges equal the TL charges at the minimum weight.
Minimum Weight
The shipment weight the carrier's tariff specifies as the minimum weight required to use the TL or CL rate; the rate discount volume.
Warehouse Management System (WMS)
The systems used in effectively managing warehouse business processes and direct warehouse activities, including receiving, putaway, picking, shipping, and inventory cycle counts. Also includes support of radio frequency communications, allowing real-time data transfer between the system and warehouse personnel. they also maximize space and minimize material handling by automating putaway processes.
Transportation Planning Systems
The systems used in optimizing assignments from plants to distribution centers, and from distribution centers to stores. The systems combine moves to ensure the most economical means are employed.
Order Cycle
The time and process involved from the placement of an order to the receipt of the order.
Total Supply Chain Response Time
The time it takes to rebalance the entire supply chain after determining a change in market demand. Also, a measure of a supply chain's ability to change rapidly in response to marketplace changes.
Peak Demand
The time period during which customers demand the greatest quantity.
Order Cycle Time
The time that elapses from placement of order until receipt of order. This includes time for order transmittal, processing, preparation, and shipping.
Returns Processing Cost
The total cost to process repairs, refurbished, excess, obsolete, and end-of-life products, including diagnosing problems and replacing products. Includes the costs of logistics support, materials, centralized functions, troubleshooting service requests, on-site diagnosis and repair, external repair, and miscellaneous. These costs are broken into Returns Order Management, Returns Inventory Carrying, Returns Material Acquisition, Finance, Planning, IT, Disposal, and Warranty Costs.
Manufacturing Lead Time
The total time required to manufacture an item, exclusive of lower-level purchasing lead time. For make-to-order products, it's 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's the length of time between the release of an order to the production process and receipt into finished goods inventory. Included are order preparation time, queue time, set-up time, run time, move time, inspection time, and put-away time. Synonym
Transit Time
The total time that elapses between a shipment's pickup and delivery.
Lead Time
The total time that elapses between an order's placement and its receipt. It includes the time required for order transmittal, order processing, order preparation, and transit.
Total Product Revenue
The total value of sales made to external customers plus the transfer price valuation of intra-company shipments, net of all discounts, coupons, allowances, and rebates. Includes only the intra-company revenue for product transferring out of an entity, installation services if these services are sold bundled with end products, and recognized leases to customers initiated during the same period as revenue shipments, with revenue credited at the average selling price.
Tractor
The tractor is the driver compartment and engine of the truck. It has two or three axles.
Movement of Goods
The transfer of goods from one location to another.
Payment
The transfer of money, or other agreed upon medium, for provision of goods or services.
Link
The transportation method a company uses to connect nodes (plants, warehouses) in a logistics system.
Interstate Commerce
The transportation of persons or property between states; in the course of the movement, the shipment crosses a state boundary.
Voyage
The trip designation (trade route and origin/destination) identifier, usually numerically sequential.
Unit of Measure (UOM)
The unit in which the quantity of an item is managed, e.g., pounds, each, box of 12, package of 20, or case of 144. Various UOMs may exist for a single item. For example, a product may be purchased in cases, stocked in boxes, and issued in single units.
Weight Unit Qualifier
The unit of measure that the user wants to see for weight.
Radio Frequency Identification (RFID)
The use of radio frequency technology such as RFID tags and tag readers to identify objects. Objects may include virtually anything physical, such as equipment, pallets of stock, or even individual units of product.
Product Description
The user's description of the product.
Possession Utility
The value created by marketing's effort to increase the desire to possess a good or benefit from a service.
Public Warehouse
The warehouse space that is rented or leased by an independent business providing a variety of services for a fee or on a contract basis.
Profitable to Promise
This is effectively a promise to deliver a certain order on agreed upon terms, including price and delivery. Profitable to Promise (PTP) is the logical evolution of Available to Promise (AtP) and Capable to Promise (CTP). While the first two are necessary for profitability, they aren't sufficient. For enterprises to survive in a competitive environment, profit optimization is a vital technology.
Over, Short, and damaged (OS&D)
This is typically a report issued at the warehouse when goods are damaged. Used to file a claim with a carrier.
Not otherwise specified/Not elsewhere specified (NOS/NES)
This term often appears in ocean or airfreight tariffs respectively. If no rate for the specific commodity shipped appears in the tariff, then a general class rate (for example
Machine Downtimes
Time during which a machine cannot be utilized. Machine downtimes may occur during breakdowns, maintenance, changeovers, etc.
Unitize
To consolidate several packages into one unit; carriers strap, band, or otherwise attach the several packages together.
Outsource
To utilize a third party provider to perform services previously performed in house. Examples include manufacturing of products and call center/customer support.
Present Value
Today's value of future cash flows, discounted at an appropriate rate.
Total Annual Sales
Total Annual Sales are Total Product Revenue plus post-delivery revenues (e.g., maintenance and repair or equipment, system integration) royalties, sales of other services, spare parts revenue, and rental/lease revenues.
Note
Total Product Revenue excludes post-delivery revenues (maintenance and repair of equipment, system integrations), royalties, sales of other services, spare parts revenue, and rental/lease revenues.
Calculation
Total Product Revenue-External Direct Material/[FTEs]
Total Cost of Ownership (TCO)
Total cost of a computer asset throughout its life cycle, from acquisition to disposal. TCO is the combined hard and soft costs of owning networked information assets. "Hard" costs include items such as the purchase price of the asset, implementation fees, upgrades, maintenance, contracts, support contracts, disposal costs, and license fees that may or may not be up-front or charged annually. These costs are considered "hard costs" because they are tangible and easily accounted for.
Total Supply Chain Management Cost (five elements)
Total cost to manage order processing, acquire materials, manage inventory, and manage supply chain finance, planning, and IT costs as represented as a percent of revenue. Accurate assignment of IT-related cost is challenging. It can be done using activity-based costing methods, or more traditional-based approaches. Allocation based on user counts, transaction counts, or departmental headcounts are reasonable approaches. The emphasis should be on capturing all costs, whether incurred in the entity completing the survey or in a supporting organization on behalf of the entity. Reasonable estimates founded in data were accepted as means to assess overall performance. All estimates reflected fully-burdened actuals inclusive of salary, benefits, space and facilities, and general and administrative allocations.
Net Assets
Total net assets are calculated as Total Assets - Total Liabilities; where the total assets are made up of fixed assets (plant, machinery, and equipment) and current assets which is the total of stock, debtors, and cash (also includes A/R, inventory, prepaid assets, deferred assets, intangibles, and goodwill). The total liabilities are made up in much the same way as long-term liabilities and current liabilities (includes A/P, accrued expenses, deferred liabilities).
Payroll
Total of all fully-burdened labor costs, including wages, fringe, benefits, overtime, bonus, and profit sharing.
Valuation Charges
Transportation charges to shippers who declare a value of goods higher than the value of the carriers' limits of liability.
Less-Than-Truckload (LTL)
Trucking companies that consolidate and transport smaller (less than truckload) shipments of freight by utilizing a network of terminals and relay points.
Less-Than-Truckload (LTL) Carriers
Trucking companies that consolidate and transport smaller (less than truckload) shipments of freight utilizing a network of terminals and relay points.
Truckload Carriers (TL)
Trucking companies which move full truckloads of freight directly from the point of origin to destination.
Refrigerated Carriers
Truckload carriers designed to keep perishables good refrigerated. The food industry typically uses this type of carrier.
Route Trucks Delivery
Trucks that travel fixed routes.
Interline
Two or more motor carriers working together to haul a shipment to a destination. Carriers may interchange equipment but usually they rehandle the shipment without transferring the equipment.
UNECE
United Nations Economic Commission for Europe.
Offshore
Utilizing an outsourcing service provider located in a country other than where the client is located.
Just in Time II (JIT II)
Vendor-managed operations taking place within a customer's facility. JIT II was popularized by the Bose Corporation. The supplier reps, called "inplants," place orders to their own companies, relieving the customer's buyers from this task. Many also become involved at a deeper level such as participating in new product development projects and manufacturing planning (concurrent planning).
1) A provider of goods or services. Also see
Vendor.
VSA
Vessel Sharing Agreement.
Market-Positioned Warehouse
Warehouse positioned to replenish customer inventory assortments and afford maximum inbound transport consolidation economies from inventory origin points with relatively short-haul local delivery.
Slotting
Warehouse slotting is defined as the placement of products within a warehouse facility. Its objective is to increase picking efficiency and reduce warehouse handling costs through optimizing product location and balancing the workload.
Push Technology
Web casting (push technology) is the prearranged updating of news, weather, or other selected information on a computer user's desktop interface through periodic and generally unobtrusive transmission over the World Wide Web (including the use of the web protocol on intranet). Web casting uses so-called push technology in which the web server ostensibly pushes information to the user rather than waiting until the user specifically requests it.
Primary Manufacturing Strategy
Your company's dominant manufacturing strategy. The primary manufacturing strategy generally accounts for 80-plus % of a company's product volume. According to a study by Pittiglio Rabin Todd & McGrath (PRTM), approximately 73% of all companies use a make-to-stock strategy.
Calculation
[Average # of units in WIP]/[Average daily output in units]
Calculation
[Average # of units in WIP]/[Average daily output in units] - WIP days of supply
Calculation
[Average number of units in test and release]/[Average daily output in units]
Calculation
[Forecast Cycle Time] + [Re-Plan Cycle Time] + [Intra-Manufacturing Re-Plan Cycle Time] + [Cumulative Source/Make Cycle Time] + [Order Fulfillment Lead Time]
Calculation
[Order Management Costs + Material Acquisition Costs + Inventory Carrying Costs + Supply-Chain Related Finance and Planning Costs + Total Supply Chain-Related IT Costs]/[Total Product Revenue]
Example
a grocery store chain buys Oreo cookies from Nabisco. For accounting purposes, the grocery store chain identifies Nabisco as Vendor #76091. One company can have multiple vendor codes. Example
Vendor Code
a unique identifier, usually a number and sometimes the company's DUNS number, assigned by a customer for the vendor it buys from.
As a further illustration
consider a computer company that allows customers to configure a complete computer from a selection of standard components. For example, they can choose from three keyboards, three monitors, and three CPUs. Customers may also individually buy keyboards, monitors, and CPUs. If the stock were held at the configuration component level, the company would have nine SKUs. If the company stocks at the component level, the company would have 36 SKUs. (9 component SKUs + 3*3*3 configured product SKUs.) If, as part of a promotional campaign, the company also specially packaged the products, the company would have a total of 72 SKUs.
