CPIM Part 2

Kaizen blitz

-A rapid improvement of a limited process area; for example, a production cell. Part of the improvement team consists of workers in that area. The objectives are to use innovative thinking to eliminate non-value-added work and to immediately implement the changes within a week or less. Ownership of the improvement by the area work team and the development of the team's problem-solving skills are additional benefits. See: kaizen event.

process train

-A representation of the flow of materials through a process industry manufacturing system that shows equipment and inventories. Equipment that performs a basic manufacturing step, such as mixing or packaging, is called a process unit. Process units are combined into stages, and stages are combined into process trains. Inventories decouple the scheduling of sequential stages within a process train.

Triple Bottom Line (TBL)

-An approach that measures the economic, social, and environmental impact of an organization's activities with the intent of creating value for both its shareholders and society.

safety lead time

-An element of time added to normal lead time to protect against fluctuations in lead time so that an order can be completed before its real need date. When used, the MRP system, in offsetting for lead time, will plan both order release and order completion for earlier dates than it would otherwise. Syn: protection time, safety time.

Global Trade Identification Number (GTIN)

-An identification number that uniquely identifies all products and services that are sold, delivered, and invoiced at any point in the supply chain. GTINs are typically found at points of sale and on cases and pallets of products in a distribution or warehouse environment.

Standardized work

A work process that is always carried out exactly the same way, preferably using the current best known way under which the output can be achieved

flexible workforce

A workforce whose members are cross-trained and whose work rules permit assignment of individual workers to different tasks. Ex: Picking for receiving in the morning and shipping in the afternoon

ISO 26000

-An international standard adopted by the International Organization for Standardization to assist organizations in contributing to sustainable development beyond legal compliance through a common understanding of social responsibility. ISO 26000 is not a management system standard and is not intended or appropriate for certification purposes or regulatory or contractual use.

divergent point

-An operation in a production process in which a single material/component enters and, after processing, can then be routed to a number of different downstream operations.

broker

-An organization that helps match carriers to freight, adding value by helping the shipper and carrier obtain better rates and more fully utilize their capacity and equipment.

Horizontally Integrated Firm

-An organization that seeks to produce or sell a type of product in numerous markets. Horizontal integration exists when an organization produces or sells similar products in various geographical locations. Horizontal integration in marketing occurs more frequently than horizontal integration in production. See: vertically integrated firm.

Risk Tolerance

-An organization's or stakeholder's readiness to accept a threat or potential negative outcome in order to achieve its objectives.

Redundancy

1) A backup capability, coming either from extra machines or from extra components within a machine, to reduce the effects of breakdowns. 2) The use of one or more extra or duplicating components in a system or equipment (often to increase reliability).

Product Profiling

1) A graphical device used to ascertain the level of fit between a manufacturing process and the order-winning criteria of its products. Can be used at the process or company level to compare the manufacturing capabilities with the market requirements to determine areas of mismatch and identify steps needed for realignment. 2) Removing material around a predetermined boundary by means of numerically controlled machining. The numerically controlled tool path is automatically generated on the system.

batch processing

1) A manufacturing technique in which parts are accumulated and processed together in a lot. 2) A computer technique in which transactions are accumulated and processed together or in a lot. Syn: batch production.

Design of Experiments (DOE)

1) A process for structuring statistically valid studies in any science. 2) A quality management technique used to evaluate the effect of carefully planned and controlled changes to input process variables on the output variable. The objective is to improve production processes.

Generally Accepted Accounting Principles (GAAP)

Accounting practices that conform to conventions, rules, and procedures that are generally accepted by the accounting profession.

SIPOC

Acronym for "supplier, input, process, output, customer" (pronounced "sye-pahk").

Capital budgeting

Actions relating to the planning and financing of capital outlays for such purposes as the purchase of new equipment, the introduction of new product lines, and the modernization of plant facilities.

Tracking Capacity Strategy

Adding capacity in small amounts to attempt to respond to changing demand in real time in the marketplace. This approach may satisfy total demand and help minimize unit costs, but it can be difficult in some situations to add incremental amounts of capacity, especially if the facility has no more space available.

lead capacity strategy

Adding capacity to a resource in anticipation of increased future demand. This is done to ensure the ability to satisfy market demand when increase occurs.

Cradle-to-grave analysis (Life-cycle analysis)

An analysis of the impact of a product from the beginning of its source-gathering processes, through the end of its useful life, to disposal of all waste products a systems tool that looks at the materials used and released throughout the manufacturing, use, and disposal of a product

Direct ownership/subsidiary

A "direct" ownership is obvious where a parent company directly owns shares of the subsidiary. So, for example, 2 companies, A and Z , Company A owns shares of Company Z. But "indirect" ownership would be where a company owns shares of another (1 or more) company and that company owns shares of the subsidiary.

Genchi genbutsu

A Japanese phrase meaning to visit the shop floor to observe what is occurring

obeya

A Japanese word meaning big room; a command center. A war-room

mura

A Japanese word meaning unevenness or variability.

Management accounting

A branch of accounting that uses techniques such as break-even analysis, costvolume-profit analysis, make-buy analysis, and others to provide information used in day-to-day decision making

Operating Budget

A budget that states how managers intend to use organizational resources to achieve organizational goals.

Manufacturing Planning and Control (MPC)

A closed-loop information system that includes the planning functions of: production planning (sales and operations planning), master production scheduling, material requirements planning, and capacity requirements planning Once the plan has been accepted as realistic, execution begins. The execution functions include input-output control, detailed scheduling, dispatching, anticipated delay reports (department and supplier), and supplier scheduling. A closed-loop MRP system is one example of a manufacturing planning and control system

Private Warehouse

A company owned warehouse

Third party logistics company

A company that manages all or part of another company's product delivery operations.

upside supply chain flexibility

A discrete measurement of the amount of time it takes a supply chain to respond to an unplanned 20 percent increase in demand without service or cost penalty.

Upside Supply Chain Adaptability

A discrete measurement of the quantity of increased production a supply chain can achieve and sustain for 30 days.

Downside Supply Chain Adaptability

A discrete measurement of the reduction in quantities ordered sustainable at 30 days prior to delivery with no inventory or cost penalties.

Shortest Processing Time (SPT)

A dispatching rule that directs the sequencing of jobs in ascending order by processing time. If this rule is followed, the most jobs at a work center per time period will be processed. As a result, the average lateness of jobs at that work center is minimized, but some jobs will be very late. Syn: smallest processing time rule.

first-come, first-served

A dispatching rule under which the jobs are sequenced by their arrival times. See: first-in, first-out

Load profile

A display of future capacity requirements based on released and/or planned orders over a given span of time. Syn: load projection. See: capacity requirements plan.

risk response plan

A document defining known risks including description, cause, likelihood, costs, and proposed responses. It also identifies current status on each risk.

Move ticket

A document used in dispatching to authorize or record movement of a job from one work center to another. It may also be used to report other information, such as the actual quantity or the material storage location.

Activity ratio

A financial ratio to determine how an organization's resources perform relative to the revenue the resources produce. Activity ratios include inventory turnover, receivables conversion period, fixed-asset turnover, and return on assets.

Funds Flow Statement

A financial statement showing the flow of cash and its timing into and out of an organization or project. Syn: cash flow statement, statement of cash flows.

intrinsic forecasting method

A forecast based on internal factors, such as an average of past sales. Ant: extrinsic forecast.

Net Change MRP

An approach in which the material requirements plan is continually retained in the computer. Whenever a change is needed in requirements, open order inventory status, or bill of material, a partial explosion and netting is made for only those parts affected by the change. Ant: regeneration MRP.

absorption costing

An approach to inventory valuation in which variable costs and a portion of fixed costs are assigned to each unit of production. The fixed costs are usually allocated to units of output on the basis of direct labor hours, machine hours, or material costs. Syn: allocation costing. See: activity based costing.

Planning Bill of Material

An artificial grouping of items or events in bill-of-material format used to facilitate master scheduling and material planning. It may include the historical average of demand expressed as a percentage of total demand for all options within a feature or for a specific end item within a product family. Used as the quantity per in the planning bill of material. Syn: planning bill. See: hedge, option overplanning, production forecast, pseudo bill of material.

weighted moving average

An averaging technique in which the data to be averaged is not uniformly weighted but is given values according to its importance. See: moving average, simple moving average.

Group Technology (GT)

An engineering and manufacturing philosophy that identifies the physical similarity of parts (common routing) and establishes their effective production. It provides for rapid retrieval of existing designs and facilitates a cellular layout.

aggregate forecast

An estimate of sales, often time-phased, for a grouping of products or product families produced by a facility or firm. Stated in terms of units, dollars, or both, the aggregate forecast is used for sales and production planning (or for sales and operations planning) purposes. See: product group forecast.

Control Chart

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

supplier-input-process-output-customer (SIPOC) diagram

A high-level process map that shows substantial subprocesses in an organization's process together with the structure of the process represented by the suppliers, inputs, outputs, and customers. A SIPOC diagram defines the critical aspects of a process without losing the overall perspective.

Panel Consensus

A judgmental forecasting technique by which a committee, sales force, or group of experts arrives at a sales estimate. See: Delphi method, management estimation.

Two card kanban

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

extrinsic forecasting

-A forecast method using a correlated leading indicator; for example, estimating furniture sales based on housing starts. Extrinsic forecasts tend to be more useful for large aggregations, such as total company sales, than for individual product sales. Ant: intrinsic forecast method. See: quantitative forecasting technique.

adaptive smoothing

-A form of exponential smoothing in which the smoothing constant is automatically adjusted as a function of forecast error measurement.

Summarized bill of material

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

Green manufacturing

-A method of producing a good or service that minimizes external cost and pollution. It includes design for reuse, design for disassembly, and design for remanufacture. See: environmentally responsible business.

Risk pooling

-A method often associated with the management of inventory risk. Manufacturers and retailers that experience high variability in demand for their products can pool together common inventory components associated with a broad family of products to buffer the overall burden of having to deploy inventory for each discrete product.

One-card Kanban

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

stockout

A lack of materials, components, or finished goods that are needed. Occurs when an order is placed, and the needed items are not available

Earliest due date (EDD)

A priority rule that sequences the jobs in a queue according to their (operation or job) due dates. See: earliest operation due date.

forward flow scheduling

A procedure for building process train schedules that starts with the first stage and proceeds sequentially through the process structure until the last stage is scheduled.

Failure Mode and Effects Analysis (FMEA)

A procedure in which each potential failure mode in every sub-item of an item is analyzed to determine its effect on other sub-items and on the required function of the item.

Business Process Re-engineering (BPR)

A procedure that involves the fundamental rethinking and radical redesign of business processes to achieve dramatic organizational improvements in such critical measures of performance as cost, quality, service, and speed. Any BPR activity is distinguished by its emphasis on process, rather than functions and products, and the customers for the process.

Failure Mode Analysis (FMA)

A procedure to determine which malfunction symptoms appear immediately before or after the failure of a critical parameter in a system. After all the possible causes are listed for each symptom, the product is designed to eliminate the problems.

Process Capability Analysis

A procedure to estimate the parameters defining a process. The mean and standard deviation of the process are estimated and compared to the specifications, if known. This comparison is the basis for calculating capability indexes. In addition, the form of the relative frequency distribution of the characteristic of interest may be estimated. Syn: capability study. See: process capability

Process flow analysis

A procedure to evaluate the effectiveness of a sequence of business activities. The analysis determines which elements of the flow are value-added and eliminates those that are not, determines which parts of the process can be automated, evaluates activities as to whether they contribute to the core competencies of the business or are candidates for outsourcing, and designs a structure for the remaining activities of the process to improve productivity.

one less at a time

A process of gradually reducing the lot size of the number of items in the manufacturing pipeline to expose, prioritize, and eliminate waste.

Critical Path Method (CPM)

-A network planning technique for the analysis of a project's completion time used for planning and controlling the activities in a project. By showing each of these activities and their associated times, the critical path, which identifies those elements that actually constrain the total time for the project, can be determined. See: critical chain method, network analysis, critical activity, critical path.

Firm Planned Order (FPO)

-A planned order that can be frozen in quantity and time. The computer is not allowed to change it automatically; this is the responsibility of the planner in charge of the item that is being planned. This technique can aid planners working with MRP systems to respond to material and capacity problems by firming up selected planned orders. In addition, firm planned orders are the normal method of stating the master production schedule. See: planning time fence.

focused factory

-A plant established to focus the entire manufacturing system on a limited, concise, manageable set of products, technologies, volumes, and markets precisely defined by the company's competitive strategy, technology, and economics. See: cellular manufacturing.

Planning Time Fence

-A point in time denoted in the planning horizon of the master scheduling process that marks a boundary inside of which changes to the schedule may adversely affect component schedules, capacity plans, customer deliveries, and cost. Outside the planning time fence, customer orders can be booked and changes to the master schedule can be made within the constraints of the production plan. Changes inside the planning time fence must be made manually by the master scheduler. Syn: planning fence. See: cumulative lead time, demand time fence, firm planned order, planned order, planning horizon, time fence

failure mode effects and criticality analysis (FMECA)

-A procedure that is performed after a failure mode effects analysis to classify each potential failure effect according to its severity and probability of occurrence

Mixed-flow scheduling

-A procedure used in some process industries for building process train schedules that start at an initial stage and work toward the terminal process stages. This procedure is effective for scheduling where several bottleneck stages may exist. Detailed scheduling is done at each bottleneck stage.

contingency planning

-A process for creating a document that specifies alternative plans to facilitate project success if certain risk events occur.

Design for Manufacture and Assembly (DFMA)

-A product development approach that involves the manufacturing function in the initial stages of product design to ensure ease of manufacturing and assembly. See: early manufacturing involvement.

first-article inspection

-A quality check on the first component run after a new setup has been completed. Syn: first-piece inspection.

Standardized product

A product that can be made in large quantities, or continuously, because it has very few product designs.

fast tracking

A project schedule compression technique that overlaps (or performs in parallel) activities that would ordinarily be performed sequentially.

Contingent project

A project that can be accepted only if one or more other projects are accepted first. See: independent project, mutually exclusive project.

Delphi Method for Forecasting

A qualitative forecasting technique where the opinions of experts are combined in a series of iterations. The results of each iteration are used to develop the next, so that convergence of the experts' opinions is obtained. See: management estimation, panel consensus.

Life Cycle Analysis

A quantitative forecasting technique based on applying past patterns of demand data covering introduction, growth, maturity, saturation, and decline of similar products to a new product family.

P:D ratio

A ratio where P is the manufacturing lead time and D is the customer required delivery time. If the P:D ratio exceeds 1.00, either a customer's order will be delayed, or production will start as the result of a forecast (make-to-stock) or an anticipated customer order (make-to-order).

risk register

A report that has summary information on qualitative risk analysis, quantitative risk analysis, and risk response planning. This register contains all identified risks and associated details.

Engineering Change

A revision to a drawing or design released by engineering to modify or correct a part. The request for the change can be from a customer or from production, quality control, another department, or a supplier. Syn: engineering change notice, engineering change order.

reverse flow scheduling

A scheduling procedure used in some process industries for building process train schedules. Starts with the last stage and proceeds backward (countercurrent to the process flow) through the process structure.

Mixed Model Scheduling

A scheduling technique that varies product and lot sizes so each model is made every day The process of developing one or more schedules to enable mixed-model production. The goal is to achieve a day's production each day. See: mixed-model production.

order point

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

First-Order Smoothing (Single Exponential Smoothing)

A single exponential smoothing; a weighted moving average approach that is applied to forecasting problems where the data does not exhibit significant trend or seasonal patterns. Syn: single exponential smoothing, single smoothing.

quality circle

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. Syn: quality control circle. See: small group improvement activity.

Leading Indicator Forecasting Method

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

Flow control

A specific production control system that is based primarily on setting production rates and feeding work into production to meet these planned rates, then monitoring and controlling production. See: shop floor control.

Problem-solving storyboard

A technique based on the plan/do/check/action problem-solving process. The steps being taken and the progress toward the resolution of a problem are continuously planned and updated.

Processor-dominated scheduling (PDS)

A technique that schedules equipment (processor) before materials. Facilitates scheduling equipment in economic run lengths and the use of low-cost production sequences. A scheduling method used in some process industries. See: material-dominated scheduling.

Project Management Body of Knowledge (PMBOK)

All the knowledge within the project management profession. Includes all published and unpublished material, knowledge that rests with practitioners and academics, and practices that range from traditional to innovative.

Keiretsu

Alliances of corporations and banks that dominate the Japanese economy. (in Japan) a conglomeration of businesses linked together by cross-shareholdings to form a robust corporate structure.

risk appetite

Amount and type of risk that an organization is willing to pursue or retain.

Regeneration MRP

An MRP processing approach where, to maintain valid priorities, the master production schedule is totally re-exploded down through all bills of material. New requirements and planned orders are completely recalculated or "regenerated" at that time. Ant: net change MRP.

RACI (responsible, accountable, consulted, Informed) analysis

An acronym used to describe a document that identifies who is Responsible; who is Accountable; who should be Consulted; and who should be kept Informed for various aspects of a project or process.

Protective Capacity

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

Duty Paid Warehouse

The same as a public warehouse

X-Bar Chart

The same as an average chart

Order priority

The scheduled due date to complete all the operations required for a specific order.

process flow

The sequence of activities that, when followed, results in a product or service deliverable. See: flow process chart, process chart.

corporate culture

The set of important assumptions that members of the company share. It is a system of shared values about what is important and beliefs about how the company works. These common assumptions influence the ways the company operates.

steady state

The state occurring when the variables that define the behavior of a system or process are behaving naturally as if operating for some time. In simulations, data is not collected until after this state is reached. See: transient state.

go/no-go

The state of a unit or product. Two parameters are possible: go (conforms to specification) and no-go (does not conform to specification).

Cost-Volume-Profit Analysis (CVP)

The study of how profits change with various levels of output and selling price.

wait time

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

Interoperation Time

The time between the completion of one operation and the start of the next. Includes time waiting to be moved to the next work station and waiting for the next operation to start

setup time

The time required for a specific machine, resource, work center, process, or line to convert from the production of the last good piece of item A to the first good piece of item B

appraisal costs

Those costs associated with the formal evaluation and audit of quality in the firm. Typical costs include inspection, quality audits, testing, calibration, and checking time.

Debt to capital ratio

Today Debt / (Total Debt + Total Equity)

Debt-to-assets ratio

Total Debt / Total Assets (A leverage ratio)

Selective distribution

Type of product distribution that lies between intensive distribution and exclusive distribution, and in which only a few retail outlets cover a specific geographical area. Considered more suitable for high-end items such as 'designer' or prestige goods.

Liquidity Activity Leverage Profitability Value

What are the 5 groups of ratios used to measure an organiztion's financial health?

Competitive Strategy Corporate Strategy Business Strategy Functional Strategy Operating Strategy

What are the 5 types of strategies in Strategic Management?

Initiating Planning Executing Monitoring Controlling Closing

What are the 6 PMBOK phases?

Cause-and-effect diagram (fishbone or Ishikawa diagram) Check Sheet Flowchart Histogram Pareto Chart Control Chart Scatter Diagram

What are the 7 tools of quality?

Increased market access (Not market share) Increased performance Increased product value

What are the benefits of a strategic alliance?

Theft, scrap, shelf-life, expiration, deterioration, evaporation

What are the causes of stockroom inventory shrinkage?

The cost of capital invested (opportunity cost) Cost of maintaining the inventory such as: taxes and insurance, obsolescence, spoilage, and space occupied

What are the costs associated with maintaining inventory?

Current Ratio includes inventory as a current asset Quick ratio excludes inventory from assets Both are Current Assets (minus inventory in quick) / Liabilities

What are the differences between the current and quick ratios?

forecast demand customer orders inventory levels lot size lead time

What are the inputs of MPS?

Human rights Labor environment Anti-corruption practices

What are the key areas of sustainability using GRI reporting?

Strategic Compliance Managerial Defensive

What are the stages of corporate responsibility?

Operating, Excess, Inactive, Obsolete Scrap

What are the stages of inventory as it progresses through time?

Primary and support

What are the two activity types of value chains?

PERT and CPM

What are two common networking planning tools?

operating and capital budgets

What are two key outputs of the business planning process?

MRP logic applied to independent demand items

What can time phased order point be defined as?

Capacity Requirements Planning

What capacity management procedure is not needed in Lean manufacturing?

Backflushing

What deducts components from month inventory using the amount of finished assemblies?

Design for disassembly Design for remanufacture Design for reuse

What designs does green manufacturing include?

Lower inventories due to advanced planning and more visible forecasts

What does VMI result in?

How efficiently a company is managing assets to improve cash flow

What does the cash-to-cash cycle measure?

Economies of scale

What does using a focused location in a global supply chain strategy result in?

No effect on capacity

What effect on capacity does the number of orders released on the floor at a time?

Measures of capability based on: Usage, performance quality The 3 fundamental components are availability loss, performance loss, and quality loss

What is Overall Equipment Effectiveness based on and what are the 3 fundamental components to measure OEE?

Both MPS and MRP

What is PAC responsible for executing?

Currency value fluctuations

What is a disadvantage of exporting as a way of entering a new global market?

3rd party access to proprietary information

What is a risk of outsourcing?

Raw materials

What is a time phased order point not suitable for?

Average inventory

What is an inventory metric used to identify a potential obsolescence risk?

Sales plan, production plan, inventory plan

What is included in the make-to-stock S&OP grid?

Manufacturing order release to shipment to customer

What is meant by the manufacturing cycle?

Customer service level and deviation between actual and forecast

What is needed to calculate safety stock?

employee empowerment

What is the best way to increase productivity?

sell at a discount

What is the best way to manage inactive inventory?

Capable to Promise (CTP) extends Available to Promise by taking into account capacity information. Whereas ATP only considers material availability and assumes infinite capacity resources, CTP considers availability of both materials and capacity, giving a more realistic picture of whether demand can be satisfied within a given time fence

What is the difference between Available to Promise and Capable to Promise?

Partnerships are less formal and generally more narrow than alliances

What is the difference between a strategic alliance and partnership?

Consigned inventory means the supplier owns the inventory at the buyers location Vendor managed inventory means the supplier manages the inventory levels at the buyer. They can occur together or separately.

What is the difference between consigned inventory and VMI?

Rated capacity uses standard hours, efficiency, and utilization Demonstrated capacity uses historical data, so rather than using standard hours, efficiency, and utilization it uses actual time

What is the difference between demonstrated vs rated capacity

Financial accounting = for outside use Managerial accounting = for internal use

What is the difference between financial accounting and managerial accounting?

Order priority relates to the due date of an item Dispatching rules relate the sequence to process orders

What is the difference between order priority rules and dispatching rules?

Resource smoothing relates to making sure load can meet time requirements Resource leveling relates to equally (or close to equal) capacity on all resources

What is the difference between resource smoothing and resource leveling?

Measuring and reporting on corporations' sustainability performance

What is the focus of the global reporting initiative?

assets + liabilities = owner's equity

What is the formula expressing the relationship between assets, liabilities, and owner's equity

Inventory Days + Accounts Receivable Days - Accounts Payable Days

What is the formula for Cash-to-Cash Cycle

Current SS x SQRT(Number of Future DC's / Current Number of DC's)

What is the formula for future safety stock of a company changing the number of distribution centers?

MRP output feeds final assembly, but does not control it

What is the relationship between MRP and final assembly?

MRP-Planned Orders, Planned load, Open Orders (Released Orders), Scheduled Load

What is the sequence of building order input for capacity requirements planning?

Speed

What is the supply chain performance objective associated with the growth stage?

Item cost, ordering cost, carrying cost, stockout costs

What is the total cost of inventory made up of?

BOM, pick tick, routing, work instruction, production reporting tickets, move tickets

What manufacturing order information is usually found in a job shop packet?

Market Value Ratios

What ratio type measures the attractiveness of a company's stock to investors?

Identification of orders to expedite

What should MRP generating future planned or released orders not be used for?

Sustainability

What term is associated with this supply chain management definition of waste: By product of a process or task with unique characteristics requiring special management control?

Forecast consumption

What tool helps prevent demand inflation?

Protective Capacity & Excess Capacity

What two types of capacity make up idle capacity?

Forward pick (can be replenished from average inventory) and Reverse pick bins

What two types of pick bins can be used to separate working stock from reserve stock?

customer order backlog, service parts requirements, inter plant demand

What types of demand are included in demand management?

Two level master schedule

What uses a planning bill of material to schedule end items and key features?

Accepted Quality Level (AQL)

When a continuing series of lots is considered, a quality level that, for the purposes of sampling inspection, is the limit of a satisfactory process average.

Little's Law

When a system has fixed capacity and is relatively stable, the lead time and work-in-process (WIP) inventory level are proportional and an increase or decrease in either WIP or lead time will produce a proportional change in the other. The formula for the law is WIP equals throughput rate multiplied by lead time, or, more generally, total entities equals entities divided by unit time multiplied by total time.

Operation Costing = Best for ATO Process Costing = Continuous and mass production environments Job Costing = Used when costs can be tracked by specific lots, batches, or customer specific requirements

When are operation, process, and job costing best suited?

Franchising

When expanding operations to other countries, which method poses the risk of brand dilution?

Shipping and delivery

When is an advanced ship notice sent in the customer management cycle?

transient state

When the variables in a system or process have changed, but not reached steady state yet. Data is usually not collected from the model until less erratic behavior emerges. See: steady state.

Theoretical capacity

Which capacity measurement measures maximum capacity, assuming no stoppages?

Both tangible and intangible

Which type of costs and benefits (tangible or intangible) are included in ROI?

Top management

Who is responsible for the production plan?

Work is generated by Kan Ban

Why are work orders not used in lean?

All benefits may not be realized initially

Why is it important to factor in the learning curve into project payback?

Allows for accurate planning around component lead times to support due dates

Why is the MRP planning horizon important?

Gateway work center

Work center with the first operation

Lot

_________________ sizing is still used in a time phased order point system

Universal Process Code

code consisting of a series of vertical bars of variable width that are scanned by a laser; printed on consumer product packages to identify the item for a computer that provides the price and registers inventory information

Profit sanctuary

country markets in which a company derives considerable profits because of its protected or powerful market position.

Channel Master

dominant party whose policies determine nature of entire SC; other firms must align with this strategy

Operating Profit

earnings or income after all expenses (selling, administrative, depreciation) have been deducted from gross profit.

Function area strategy

fleshes out the details of a company's business strategy; a functional strategy adds power and support to the overall business strategy by specifying what actions, approaches, and practices will be employed in managing a particular function within a business

multilevel master schedule

master scheduling technique that allows any level in an end item's BOM to be master scheduled To accomplish this, MPS items must receive requirements from independent and dependent demand sources. See two-level master schedule

Customer Lifetime Value (CLV)

measures the value of a customer over its lifespan, which represents the total profitability earned off an average customer based on the standard length of time you expect to maintain the relationship. Businesses calculate CLV to evaluate the return on marketing campaigns and to identify the most valuable customer segments.

Job Shop Process

production process designed to produce goods or services in relatively small batches using general purpose machinery and equipment

Risk threshold

project management tool to measure the degree of uncertainty and the level of impact which a stakeholder or organization may have interest.

Capacity Reservation Contract

provides a risk-sharing mechanism that encourages a manufacturer to expand its capacity more

risk transfer

refers to the underlying principle of insurance policies, which involves passing a specific risk detailed in the insurance contract from one party, the insured, to another party, the insurer, who takes on the risk for a fee known as a premium

Vertical analysis

reporting an amount on a financial statement as a percentage of another item on the same financial statement

Risk impact matrix

s also known as the Probability Matrix or Impact Matrix. It is an effective tool that assists in risk evaluation by considering the probability or likelihood against severity linked with the potential risks of a project.

virtual organization

short-term alliances between independent organizations in a potentially long-term relationship to design, produce, and distribute a product. Organizations cooperate based on mutual values and act as a single entity to third parties.

kentouzu

study drawing used in design development

Sand Cone Analogy

suggests that although in the short term it is possible to trade off capabilities one against the other, there is actually a hierarchy amongst the four capabilities. To build cumulative and lasting manufacturing capability, management attention and resources should go first towards enhancing quality, then - while the efforts to enhance quality are further expanded - attention should be paid to improve also the dependability of the production system, then - and again while efforts on the previous two are further enhanced - production flexibility (or reaction speed) should also be improved, and finally, while all these efforts are further enlarged, direct attention can be paid to cost efficiency.

ratio analysis

the assessment of a firm's financial condition using calculations and interpretations of financial ratios developed from the firm's financial statements

supply chain management

the design, planning, execution, control, and monitoring of supply chain activities with the objective of creating net value, building a competitive infrastructure, leveraging worldwide logistics, synchronizing supply with demand, and measuring performance globally.

Operating strategy

the way in which a company organizes its production and selling of goods or services Key objective = define performance objectives

Channel Design

those decisions involving the development of new marketing channels where none had existed before or to the modification of existing channels.

economic, environmental, social

three pillars of sustainability and the 3 pillars of GRI (promotes corporate sustainability)

Kaizen Event

time-boxed set of activities carried out by the cell team during the week of cell implementation. The kaizen event is an implementation arm of a lean manufacturing program. See: kaizen blitz

Drop ship

to take the title of the product but not actually handle, stock, or deliver it (i.e., to have one supplier ship directly to another or to have a supplier ship directly to the buyer's customer).

Shingo's 7 Wastes

waste of overproduction waste of waiting waste of transportation waste of stocks waste of motion waste of making defects waste of the processing itself.

Cpk

An index method of the variability of a process. A widely used process capability index. It is expressed as: (m - nearer specification limit) / 3 where m is the mean and s is the standard deviation

Profitability Ratios

An indicator of whether or not a company is generating profits at an acceptable rate. It includes such measurements as return on total assets, return on equity, and profit margin.

ISO 50001

An international standard that defines the requirements for designing, implementing, and maintaining an energy management system. It includes documentation, reporting, and procurement guidance.

ISO 28000

An international standard that specifies the requirements for a security management system, including those aspects critical to security assurance of the supply chain.

convergent points

An operation in a production process where multiple materials/parts/components are combined into a single component. An assembly operation is an example of a convergent point.

Horizontally integrated firm

An organization that seeks to produce or sell a type of product in numerous markets. Horizontal integration exists when an organization produces or sells similar products in various geographical locations. Horizontal integration in marketing occurs more frequently than horizontal integration in production. See: vertically integrated firm.

Vertically Integrated Firm

An organization with functions that were previously performed by suppliers but are now done internally. See: horizontally integrated firm.

material review board (MRB)

An organization within a company, often a standing committee, that determines the resolution or disposition of items that have questionable quality or other attributes.

risk tolerance

An organization's or stakeholder's readiness to accept a threat or potential negative outcome in order to achieve its objectives

Small group improvement activity

An organizational technique for involving employees in continuous improvement activities. See: quality circle

Trading Partner

Any organization external to the firm that plays an integral role within the supply chain community and whose business fortune depends on the success of the supply chain community.

No, they are different

Are back scheduling and infinite loading the same?

finite loading

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

mean time for failures (MTFF)

Average time for failure of a nonrepairable product (expected life) or average time to first failure of a repairable product. See: reliability.

Hoshin Planning

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

Joint Replenishment

Coordinating the lot sizing and order release decision for related items and treating them as a family of items. The objective is to achieve lower costs because of ordering, setup, shipping, and quantity discount economies. This term applies equally to joint ordering (family contracts) and to composite part (group technology) fabrication scheduling. Syn: joint replenishment system.

Corporate strategy

Corporate strategy is a companywide plan to choose and develop particular markets in which to compete while improving the various divisions or units of the business. Two major components include: vertical integration and diversification

Indirect costs

Costs that are not directly incurred by a particular job or operation. Certain utility costs, such as plant heating, are often indirect. An indirect cost is typically distributed to the product through the overhead rates.

move card

In a just-in-time context, a card or other signal indicating that a specific number of units of a particular item are to be taken from a source (usually an outbound stockpoint) and taken to a point of use (usually an inbound stockpoint). It authorizes the movement of one part number between a single pair of work centers. The card circulates between the outbound stockpoint of the supplying work center and the inbound stockpoint of the using work center. Syn: move signal, conveyance card. See: kanban.

mutually exclusive project

In capital budgeting, a project that will not be accepted if a competing project is accepted. See: contingent project, independent project.

Distribution integrative intensity

Determines the level of integration, horizontal or forward, a company chooses to pursue in the delivery channel

Usage variance

Deviation of the actual consumption of materials as compared to the standard

Usage variance (efficiency, utilization, labor, and volume)

Deviation of the actual consumption of materials as compared to the standard.

Market penetration strategy

Focuses on capturing a larger market share within an existing market

Machine and Labor Hours: ATO Design Hours: ETO Order backlog: MTO Material Supply: MTS

For capacity planning purposes, which manufacturing environment would use the following as the unit of measure? Machine and Labor Hours Design Hours Order Backlog Material Supply

long-haul freight

Freight that travels more than 800 miles

Reuse Recycle Recover energy during disposal disposal in responsible landfill

From (top to bottom of list) most environmentally friendly to least, what is the waste hierarchy pyramid?

Cost Speed Dependability Quality

From the top of the pyramid to the base, what are the elements the sand cone analogy as it relates to aspects of continuous improvement?

Operating Strategy

Gives form to the operating units of an organization. A company may develop an operating strategy. As an instance, for its sales zones. An operating strategy put across at the field level, usually to achieve on hand objectives. In some companies, managers develop an operating strategy for each set of annual goals in the divisions.

Capacity utilization

Goods produced, or customers served, divided by total output capacity.

Functional

High equipment flexibility is a benefit of which production process?

Leverage Items

High profit impact, low supply risk Items with many competing suppliers that are purchased in high quantities Description: High spend, many qualified suppliers. Action: Maximize your position by volume discounts and promoting competitive bidding. (Focus on low cost and reduction) Example: Heinz ketchup purchase of tomatoes using reverse auction.

For guidance of the explosion process

How is the BOM used in MRP planning?

The demand plan is first used to replenish inventory in distribution centers

How is the distribution process impacted by S&OP?

Mean Square Error (MSE)

If someone wants a forecast accuracy measurement that is the most sensitive, what metric will he/she use?

Transfer batches

In TOC: an original order may be broken down into small quantities so that the next process can begin before the entire order is completed, what is this called?

Sales, marketing, and distribution/delivery to the end user

In a direct delivery distribution channel, the manufacturer performs which of the following functions?

brand switching

In a highly competitive market, what is easy and inexpensive for customers?

Life Cycle Costing

In evaluating alternatives, the consideration of all costs—including acquisition, operation, and disposition costs—that will be incurred over the entire time of product ownership.

Net Operating Cash Flow

In finance management, the difference between cash inflow and cash outflow for a given period. It is found by taking the change in net operating profit after taxes and adding the change in depreciation then subtracting the increase in net working capital requirements.

frozen zone

In forecasting, the periods where no changes can be made to work orders based on changes in demand. This provides stability to the master production schedule

resiliency

In the supply chain, the ability to return to a position of equilibrium after experiencing an event that causes operational results to deviate from expectations. Resiliency is increased by strategically increasing the number of response options and/ or decreasing the time to execute those options. Resiliency is improved by risk monitoring and control.

In a push system

Is the cost of Total Inventory higher in a push or pull system?

resource smoothing

It is defined as a technique that adjusts the activities of a schedule model so that all requirements for the resources do not go beyond the resource limits already pre-defined during the planning. Resource smoothing is one of the tools used to reconcile the limited resources and time but a different approach than resource leveling.

maintenance, repair, and operating (MRO) products

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.

Small order quantities with non-repetitive flows

Job shop scheduling works best for what type of order quantities and flow?

Bulk storage

Large-scale storage for raw materials, intermediates, or finished products. Each vessel normally contains a mixture of lots and materials that may be replenished and withdrawn for use or pack-out simultaneouslys

Strategic Performance Objectives

Measurements that relate to the long-term goals of a business. Examples include profitability, market share, growth, and productivity. See: global performance measurements, operational performance measurements.

Overall Equipment Effectiveness (OEE)

Measuring the effectiveness of all of the equipment of a company based on usage, performance, and production quality

lag capacity strategy

Not adding capacity until the firm is operating at or beyond full capacity. This keeps unit costs minimized by working at full capacity, but does not satisfy total demand.

Diseconomies of scale

Occurs when more outputs are required than the efficient quantity the facility is designed to produce. Causes an increase in unit cost.

Net Operating Profit After Taxes (NOPAT)

Operating profit less applicable taxes.

Licensing

Paying a fee for permission to manufacture and sell a product created by another.

Demonstrated capacity

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

very late

Shortest Processing Time will result in fewer late orders, but the orders that are late will be...

Exclusive Distribution

Situation where suppliers and distributors enter into an exclusive agreement that only allows the named distributor to sell a specific product. For example, if Apple had an exclusive distribution deal with AT&T to provide the iPhone to consumers.

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 plans. Companies are provided with realistic estimates of when material will arrive.

Cash flow statement

Syn: Funds Flow Statement

allocation costing

Syn: absorption costing.

Fill Rate

Syn: customer service ratio.

Bill of Distribution

Syn: distribution network structure. Shows the dependencies between stocking locations at multiple levels within the network

Load projection

Syn: load profile

Detailed Scheduling

Synonym: Operations scheduling

Buffer stock

Synonym: safety stock.

Focused low cost strategy

Targeting a market with a low-cost product line in order to lower the cost of sales and increase gross margin.

Lead Time Offset

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

core process

That unique capability that is central to a company's competitive strategy

capacity simulation

The ability to do rough-cut capacity planning using a simulated master production schedule or material plan rather than live data.

critical characteristics

The attributes of a product that must function properly to avoid the failure of the product. Syn: functional requirements.

Idle capacity

The available capacity that exists on nonconstraint resources beyond the capacity required to support the constraint. Idle capacity has two components: protective capacity and excess capacity

Mean Time Between Failures (MTBF)

The average time interval between failures for repairable product for a defined unit of measure (e.g., operating hours, cycles, miles). See: reliability.

Mean Time to Repair (MTR)

The average time that it takes to repair a product.

capacity available

The capability of a system or resource to produce a quantity of output in a particular time period. Syn: available capacity. See: capacity, available time.

capacity required

The capacity of a system or resource needed to produce a desired output in a particular time period. Syn: required capacity. See: capacity.

Outbound stockpoint

The designated locations near the point of use on a plant floor to which material produced is taken until it is pulled to the next operation.

Distribution Channel

The distribution route, from raw materials through consumption, along which products travel. See: channels of distribution, marketing channel.

gating operation

The first operation in a process

Priority Planning

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

Capacity Requirements Planning (CRP)

The function of establishing, measuring, and adjusting limits or levels of capacity. In this context, the term refers to the process of determining in detail the amount of labor and machine resources required to accomplish the tasks of production. Open shop orders and planned orders in the MRP system are input to CRP, which through the use of parts routings and time standards translates these orders into hours of work by work center by time period. Even though rough-cut capacity planning may indicate that sufficient capacity exists to execute the MPS, CRP may show that capacity is insufficient during specific time periods. See: capacity planning.

risk management

The identification, assessment, and prioritization of risks followed by coordinated and economical application of resources to minimize, monitor, and control the probability and/or impact of unfortunate events or to maximize the realization of opportunities.

corrective action

The implementation of solutions resulting in the reduction or elimination of an identified problem.

ISO Certification/Registration

The independent audit of an organization against a recognized management system standard such as ISO 9001 (Quality) or ISO 14001 (Environmental) by a third party. Third-party audits are known as certification or registration audits. Once compliance to the relevant standard and certification is achieved by the organization, the third party (referred to as the certification body or registrar) issues a certificate valid for three years and visits annually to ensure maintenance of the management system. Such visits are known as surveillance audits.

Customer segmentation

The practice of dividing a customer base into groups of individuals who are similar in specific ways relevant to marketing. Traditional segmentation focuses on identifying customer groups based on demographics and attributes such as attitude and psychological profiles.

Backward Integration

The process of buying or owning elements of the production cycle and channel of distribution back toward raw material suppliers. See: vertical integration.

tactical buying

The purchasing process focused on transactions and nonstrategic material buying. Closely aligned with the "ordering" portion of executing the purchasing transaction process. Its characteristics include stable, limited fluctuations; defined stan

Transfer batch

The quantity of an item moved between sequential work centers during production. See: batch, overlap quantity.

Joint venture

-An agreement between two or more firms to risk equity capital to attempt a specific business objective.

plan, source, make, deliver, return

What are the 5 basic supply chain activities and the process models of SCOR-P?

risk acceptance

A decision to take no action to deal with a risk or an inability to format a plan to deal with the risk.

Statement of Work

-1) A description of products to be supplied under a contract. 2) In project management, the first project planning document that should be prepared. Describes the purpose, history, deliverables, and measurable success indicators for a project. 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 validated for management, staff, and review groups, the statement of work should be a persuasive document.

Customer Service Ratio

-1) A measure of delivery performance of finished goods or other cargo, usually expressed as a percentage. In a make-tostock company, this percentage usually represents the number of items or dollars (on one or more customer orders) that were shipped on schedule for a specific time period, compared to the total that were supposed to be shipped in that time period. Syn: customer service level, fill rate, order-fill ratio, percent of fill. Ant: stockout percentage. 2) In a make-to-order company, usually some comparison of the number of jobs or dollars shipped in a given time period (e.g., a week) compared with the number of jobs or dollars that were supposed to be shipped in that time period. Syn: fill rate.

muri

-A Japanese word meaning strain or overburden

Differentiation Strategy

-A business strategy that focuses on setting a product or service apart from the competition—focusing on making the product or service unique.

glocalization

-A combination of "globalization" and "localization." In a supply chain context, glocalization is a form of postponement where a product or service is developed for distribution globally but is modified to meet the needs of a local market. The modifications are made to conform with local laws, customs, cultures, and preferences.

Decision Support System (DSS)

-A computer system designed to assist managers in selecting and evaluating courses of action by providing a logical (usually quantitative) analysis of the relevant factors

learning curve

-A curve reflecting the rate of improvement in time per piece as more units of an item are made. A planning technique, the learning curve is particularly useful in project-oriented industries in which new products are frequently phased in. The basis for the learning curve calculation is that workers will be able to produce the product more quickly after they get used to making it. Syn: experience curve, manufacturing progress curve.

Inbound Stockpoint

-A defined location next to the place of use on a production floor. Materials are brought to the stockpoint as needed and taken from it for immediate use. Inbound stockpoints are used with a pull system of material control.

Slack Time Rule

-A dispatching rule that directs the sequencing of jobs based on slack time. Slack time is calculated as (days left until due date multiplied by hours per day) minus standard hours of work left on a specific job. For example, (5 × 8) - 12 = 28 hours of slack. The smaller the amount of slack time for a specific job, the higher the priority that job becomes in the sequence.

Earliest Operation Due Date (ODD)

-A dispatching rule that selects the job having the earliest due date for the impending operation. See: earliest due date.

multilevel bill of material

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

Safety Data Sheet (SDS)

-A document that is part of the materials information system and accompanies the product. Formerly referred to as the manufacturing safety data sheet (MSDS). The document is prepared by the manufacturer and provides information regarding the safety and chemical properties to downstream users and (if necessary) the long-term storage, handling, and disposal of the product. Among other factors, the SDS describes: the hazardous components of a product; how to treat leaks, spills, and fires; and how to treat improper human contact with the product.

Activity Ratio

-A financial ratio to determine how an organization's resources perform relative to the revenue the resources produce. Activity ratios include inventory turnover, receivables conversion period, fixed-asset turnover, and return on assets.

Plan-Do-Check-Act (PDCA) (Demming Cycle)

-A four-step process for quality improvement. In the first step (plan), a plan to effect improvement is developed. In the second step (do), the plan is carried out, preferably on a small scale. In the 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-action cycle is sometimes referred to as the Shewhart cycle (because Walter A. Shewhart discussed the concept in his book, Statistical Method from the Viewpoint of Quality Control) or as the Deming circle (because W. Edwards Deming introduced the concept in Japan and the Japanese subsequently called it the Deming circle). Syn: plan-do-check-act cycle, Shewhart circle of quality, Shewhart cycle. See: Deming circle.

Generally Accepted Manufacturing Practices (GAMP)

-A group of practices and principles, independent of any one set of techniques, that define how a manufacturing company should be managed. Included are such elements as the need for data accuracy, frequent communication between marketing and manufacturing, top management control of the production planning process (sales and operations planning process), systems capable of validly translating high-level plans into detailed schedules, and so on. Today, GAMP includes such paradigms as just-in-time, theory of constraints, total quality management, business process reengineering, and supply chain management.

Management Estimation

-A judgmental forecasting technique whereby responsible individuals predict the demand for new products or alter a quantitative forecast for existing products largely on the basis of experience and intuition. Other judgmental forecasting techniques may be used in combination with management estimation to improve the accuracy of the estimate. See: Delphi method, historical analogy, panel consensus, pyramid forecasting.

Bill of Resources (BOR)

-A listing of the required capacity and key resources needed to manufacture one unit of a selected item or family. Rough-cut capacity planning uses these bills to calculate the approximate capacity requirements of the master production schedule. Resource planning may use a form of this bill. In Resource planning: a bill of resources is based on one unit of a typical product Syn: bill of capacity. See: bill of labor, capacity planning using overall factors, product load profile, resource profile, rough-cut capacity planning, routing.

Blanket Purchase Order

-A long-term commitment to a supplier for material against which short-term releases will be generated to satisfy requirements. Often blanket orders cover only one item with predetermined delivery dates. Syn: blanket order, standing order.

Decision Matrix

-A matrix used by teams to evaluate problems or possible solutions. For example, after drawing the matrix, the team lists the solutions in the far left vertical column. Next, the team selects criteria to rate the possible solutions, writing them across the top row. Third, each possible solution is rated on a scale of 1 to 5 for each criterion and the rating recorded in the corresponding grid. Finally, the ratings of all the criteria for each possible solution are added to determine its total score. The total score is then used to help decide which solution deserves the most attention.

MRP II - Manufacturing Resource Planning

-A method for the effective planning of all resources of a manufacturing company. Ideally, it addresses operational planning in units and financial planning in dollars, and has a simulation capability to answer what-if questions. It is made up of a variety of processes, each linked together: business planning, production planning (sales and operations planning), master production scheduling, material requirements planning, capacity requirements planning, and the execution support systems for capacity and material. Output from these systems is integrated with financial reports such as the business plan, purchase commitment report, shipping budget, and inventory projections in dollars. Manufacturing resource planning is a direct outgrowth and extension of closed-loop MRP.

Operation costing

-A method of costing used in batch manufacturing environments when the products produced have both common and distinguishing characteristics; for example, suits. The products are identified and costed by batches or by production runs, based on the variations.

Second-order smoothing (double smoothing)

-A method of exponential smoothing for trend situations that employs two previously computed averages, the singly and doubly smoothed values, to extrapolate into the future. Syn: double smoothing.

Capacity Planning Using Overall Factors (CPOF)

-A rough-cut capacity planning technique. The master schedule items and quantities are multiplied by the total time required to build each item to provide the total number of hours to produce the schedule. Historical work center percentages are then applied to the total number of hours to provide an estimate of the hours per work center to support the master schedule. This technique eliminates the need for engineered time standards. Syn: overall factors. See: bill of resources, capacity planning, resource profile, rough-cut capacity planning.

Final Assembly Schedule (FAS)

-A schedule of end items to finish the product for specific customers' orders in a make-to-order or assemble-to-order environment. It is also referred to as the finishing schedule because it may involve operations other than the final assembly; also, it may not involve assembly (e.g., final mixing, cutting, packaging). The FAS is prepared after receipt of a customer order as constrained by the availability of material and capacity, and it schedules the operations required to complete the product from the level where it is stocked (or master scheduled) to the end-item level.

ISO 14000 Series Standards

-A series of generic environmental management standards, developed by the International Organization for Standardization, that provide structure and systems for managing environmental compliance with legislative and regulatory requirements and affect every aspect of a company's environmental operations.

Econometric

-A set of equations intended to be used simultaneously to capture the way in which dependent and independent variables are interrelated.

ISO 9000

-A set of international standards on quality management and quality assurance developed to help companies effectively document the quality system elements to be implemented to maintain an efficient quality system. The standards, initially published in 1987, are not specific to any particular industry, product, or service. The standards were developed by the International Organization for Standardization, known as ISO, a specialized international agency for standardization composed of the national standards bodies of 91 countries. The standards underwent major revision in 2008 and now include ISO 9000:2008 (definitions), ISO 9001:2008 (requirements), and ISO 9004:2008 (continuous improvement). See: ISO/TS 16949, QS 9000.

andon

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

define, measure, analyze, improve, control (DMAIC) process

-A six sigma improvement process composed of five stages: (1) Determine the nature of the problem. (2) Measure existing performance and commence recording data and facts that offer information about the underlying causes of the problem. (3) Study the information to determine the root causes of the problem. (4) Improve the process by effecting solutions to the problem. (5) Monitor the process until the solutions become ingrained.

demand filter

-A standard set to monitor sales data for individual items in forecasting models. Usually set to be tripped when the demand for a period differs from the forecast by more than some number of mean absolute deviations.

Multicountry strategy

-A strategy in which each country market is self-contained. Customers have unique product expectations that are addressed by local production capabilities. Syn: multidomestic strategy.

global strategy

-A strategy that focuses on improving worldwide performance through the sales and marketing of common goods and services with minimum product variation by country. Its competitive advantage grows through selecting the best locations for operations in other countries. See: multinational strategy.

Material-Dominated Scheduling (MDS)

-A technique that schedules materials before processors (equipment or capacity). This technique facilitates the efficient use of materials. MDS can be used to schedule each stage in a process flow scheduling system. MRP systems use material-dominated scheduling logic. See: processor-dominated scheduling.

form-fit function

-A term used to describe the process of designing a part or product to meet or exceed the performance requirements expected by customers.

Common Parts Bill of Material

-A type of planning bill that groups common components for a product or family of products into one bill of material, structured to a pseudo parent item number. Syn: common parts bill.

Modular bill of material

-A type of planning bill that is arranged in product modules or options. It is often used in companies where the product has many optional features (e.g., assemble-to-order companies such as automobile manufacturers). See: pseudo bill of material.

modular bill of material

-A type of planning bill that is arranged in product modules or options. It is often used in companies where the product has many optional features (e.g., assemble-to-order companies such as automobile manufacturers). See: pseudo bill of material.

Cp

-A widely used process capability index. It is calculated by dividing the difference between the upper specification limit (USL) and the lower specification limit (LSL) by 6 times the standard deviation (s) [Upper Specification Limits(USL) - Lower Specification Limits(LSL) / 6s] Where s is the standard deviation

Period Costs

-All costs related to a period of time rather than a unit of product (e.g., marketing costs, property taxes).

strategic partnerships

-Alliances with top supplier and buyer performers to enhance a firm's performance.

Net Profit

-An absolute measure of financial performance that is calculated as the difference between revenues and expenses. (Revenues - Expenses) In throughput accounting, net profit is calculated as throughput minus operating expense. (Throughput - Operating Expenses) Net profit is earnings or income after adjusting operating profit for miscellaneous income, expenses (patent royalties, interest, capital gains, etc.), and tax.

Resource Planning

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

social responsibility

-Commitment by top management to behave ethically and to contribute to community development. This may also entail improving the workforce's quality of life.

Automated Information System (AIS)

-Computer hardware and software configured to automate calculating, computing, sequencing, storing, retrieving, displaying, or communicating, or to otherwise manipulate data and textual material to provide information.

Product Cost

-Cost allocated by some method to the products being produced. Initially recorded in asset (inventory) accounts, product costs become an expense (cost of sales) when the product is sold.

Dependent demand

-Demand that is directly related to or derived from the bill-of-material structure for other items or end products. Such demands are therefore calculated and need not and should not be forecast. A given inventory item may have both dependent and independent demand at any given time. For example, a part may simultaneously be the component of an assembly and sold as a service part. See: independent demand.

Fair Labor Standards Act (FLSA)

-Federal law that governs the definitions of management and labor and establishes wage payment, hours worked, and other employment practices.

Production card

-In a just-in-time context, a card or other signal for indicating that items should be made for use or that some items removed from pipeline stock should be replaced. See: kanban

profitability index

-In financial management, the net present value of a projected stream of income from a project (potential investment) divided by the investment in the project. It is used to select among competing potential investments

crashing

-In project management, adding resources to critical path or near-critical path activities on a project to shorten project duration after analyzing the project to identify the most cost-effective course of action.

Control Points

-In the theory of constraints, strategic locations in the logical product structure for a product or family that simplify the planning, scheduling, and control functions. Control points include gating operations, convergent points, divergent points, constraints, and shipping points. Detailed scheduling instructions are planned, implemented, and monitored at these locations. Other work centers are instructed to "work if they have work; otherwise, be prepared for work." In this manner, materials flow rapidly through the facility without detailed work center scheduling and control. BENEFIT: Materials flow rapidly through the facility without detailed work-center scheduling and control

productive capacity

-In the theory of constraints, the maximum of the output capabilities of a resource (or series of resources) or the market demand for that output for a given time period. See: excess capacity, idle capacity, protective capacity.

capital expenditure

-Money invested in a long-term asset; i.e., one that is expected to last longer than one year. The investment is expected to generate a stream of future benefits.

ISO 73

-Provides the definitions of generic terms related to risk management. It aims to encourage a mutual and consistent understanding of, and a coherent approach to, the description of activities relating to the management of risk, and the use of uniform risk management terminology in processes and frameworks dealing with the management of risk

risk mitigation

-Reducing exposure to risk in terms of either its likelihood or its impact

gross profit

-Sales minus cost of goods sold.

Production Plan

-The agreed-upon plan that comes from the production planning (sales and operations planning) process—specifically, the overall level of manufacturing output planned to be produced, usually stated as a monthly rate for each product family (group of products, items, options, features, and so on). Various units of measurement (e.g., units, tonnage, standard hours, number of workers) can be used to express the plan. Represents management's authorization for the master scheduler to convert it into a more detailed plan—that is, the master production schedule. See: sales and operations planning, sales plan.

Design for Logistics

-The design of products that considers all aspects of a product's movement and storage pertaining to manufacturing, packaging, shipping, warehousing, merchandising, and repackaging for returns. The chosen design is intended to control logistics costs, increase customer service levels, facilitate ease of transport, and facilitate ease of shelving within distribution centers and stores. Other considerations include environmental impacts and security.

capacity management

-The function of establishing, measuring, monitoring, and adjusting limits or levels of capacity in order to execute all manufacturing

aggregate inventory

-The inventory for any grouping of items or products involving multiple stockkeeping units. See: base inventory level.

limiting operation

-The operation with the least capacity in a series of operations with no alternative routings. The capacity of the total system can be no greater than the limiting operation, and as long as this limiting condition exists, the total system can be effectively scheduled by scheduling the limiting operation and providing this operation with proper buffers. See: protective capacity, protective inventory.

Distribution network structure

-The planned channels of inventory disbursement from one or more sources to field warehouses and ultimately to the customer. There may be one or more levels in the disbursement system. Syn: bill of distribution.

Rough-Cut Capacity Planning (RCCP)

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

outsourcing

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

Capacity Control

-The process of measuring production output and comparing it with the capacity plan, determining if the variance exceeds pre-established limits, and taking corrective action to get back on plan if the limits are exceeded. See: input/output control.

Key success factors

-The product attributes, organizational strengths, and accomplishments with the greatest impact on future success in the marketplace.

first pass yield

-The ratio of products that conform to specifications without rework or modification to total input.

Vertical Dependency

-The relationship between a parent item and a component in its bill of material that defines the need for the component based on producing the parent, without regard to the availability of other components at the same level in the bill of material. See: horizontal dependency.

Inventory velocity

-The speed with which inventory passes through an organization or supply chain at a given point in time as measured by inventory turnover. See: inventory turnover.

Capability Index

-The value of the tolerance specified for the characteristic divided by the process capability. There are several types of process capability indices, including the widely used Cpk and Cp. Less than 1 = process unacceptable 1.0 - 1.33 Process is marginal (barely within specifications) Greater than 1.33 = process is acceptable (well within specifications)

Life Cycle Assessment (LCA)

-Understanding the human and environmental impacts during the life of a product, process, or service, including energy, material, and environmental inputs and outputs. Sometimes called cradle-to-grave analysis, LCA includes raw material extraction through materials processing, manufacture, distribution, use, repair and maintenance, and disposal or recycling.

Hedge

1) An action taken in an attempt to shield the company from an uncertain event such as a strike, price increase, or currency reevaluation. 2) In master scheduling, a scheduled quantity to protect against uncertainty in demand or supply. The hedge is similar to safety stock, except that a hedge has the dimension of timing as well as amount. A volume hedge or market hedge is carried at the master schedule or production plan level. The master scheduler plans excess quantities over and above the demand quantities in given periods beyond some time fence such that, if the hedge is not needed, it can be rolled forward before major resources must be committed to produce the hedge and put it in inventory. A product mix hedge is an approach where several interrelated optional items are overplanned. Sometimes, using a planning bill, the sum of the percent mix can exceed 100 percent by a defined amount, thus triggering additional hedge planning. 3) In purchasing, any purchase or sale transaction having as its purpose the elimination of the negative aspects of price fluctuations. See: market hedge, option overplanning, planning bill of material, safety stock, time fence, two-level master.

Break-bulk

1) Dividing truckloads, railcars, or containers of homogeneous items into smaller, more appropriate quantities for use. 2) A distribution center that specializes in break-bulk activities. 3) Unitized cargo in bales, boxes, or crates that is placed directly in a ship's holds rather than in containers.

Available-to-Promise (ATP)

1) In operations, the uncommitted portion of a company's inventory and planned production maintained in the master schedule to support customer-order promising. The ATP quantity is the uncommitted inventory balance in the first period and is normally calculated for each period in which an MPS receipt is scheduled. In the first period, ATP includes on-hand inventory less customer orders that are due and overdue. Three methods of calculation are used: discrete ATP, cumulative ATP with look-ahead, and cumulative ATP without look-ahead. (2) In logistics, the quantity of a finished good that is or will be available to commit to a customer order based on the customer's required ship date. To accommodate deliveries on future dates, ATP is usually time-phased to include anticipated purchases or production receipts. See: discrete available-to-promise, cumulative available-to-promise.

Direct Costs

1) In traditional cost accounting, variable costs that can be directly attributed to a particular job or operation. Direct material and direct labor are traditionally considered direct costs. 2) In activity-based cost (ABC) accounting, a cost that can specifically be traced and is economically feasible to track to a particular cost object (e.g., the units produced, a production line, a department, a manufacturing plant). In contrast, if the cost must be allocated across various cost objects, it is an indirect cost. Based on the cost object under consideration, the classification of direct and indirect can change. ABC accounting assumes that more costs traditionally viewed as fixed costs are variable and can be traced to cost objects.

accessibility

1) In transportation, the ease with which a carrier provides service from one point to another. 2) In warehousing, the ability to get to and within the point of storage easily.

Demand Time Fence (DTF)

1) That point in time inside of which the forecast is no longer included in total demand and projected available inventory calculations; inside this point, only customer orders are considered. Beyond this point, total demand is a combination of actual orders and forecasts, depending on the forecast consumption technique chosen. 2) In some contexts, the demand time fence may correspond to that point in the future inside which changes to the master schedule must be approved by an authority higher than the master scheduler. Note, however, that customer orders may still be promised inside the demand time fence without higher authority approval if there are quantities available-to-promise (ATP). Beyond the demand time fence, the master scheduler may change the MPS within the limits of established rescheduling rules without the approval of higher authority. See: option overplanning, planning time fence, time fence.

capacity

1) The capability of a system to perform its expected function. 2) The capability of a worker, machine, work center, plant, or organization to produce output per time period. Capacity required represents the system capability needed to make a given product mix (assuming technology, product specification, etc.). As a planning function, both capacity available and capacity required can be measured in the short term (capacity requirements plan), intermediate term (rough-cut capacity plan), and long term (resource requirements plan). Capacity control is the execution through the I/O control report of the short-term plan. Capacity can be classified as budgeted, dedicated, demonstrated, productive, protective, rated, safety, standing, or theoretical. See: capacity available, capacity required. 3) Required mental ability to enter into a contract.

velocity

1) The rate of change of an item with respect to time. See: inventory turnover, lead time. 2) In supply chain management, a term used to indicate the relative speed of all transactions, collectively, within a supply chain community. A maximum velocity is most desirable because it indicates higher asset turnover for stockholders and faster order-to-delivery response for customers.

Forward flow, reverse flow, mixed model flow

3 basic scheduling techniques for process train

strategic sourcing

A comprehensive approach for locating and sourcing key material suppliers, which often includes the business process of analyzing total-spend-for-material spend categories. Includes a focus on the development of long-term relationships with trading partners who can help the purchaser meet profitability and customer satisfaction goals. From an information technology applications perspective, includes automation of requests for quote (RFQ), requests for proposal (RFP), electronic auctioning (e-auction or reverse auction), and contract management processes.

Taguchi methodology

A concept of off-line quality control methods conducted at the product and process design stages in the product development cycle. This concept, expressed by Genichi Taguchi, encompasses three phases of product design: system design, parameter design, and tolerance design. The goal is to reduce quality loss by reducing the variability of the product's characteristics during the parameter phase of product development. Syn: Taguchi methods.

Performance Control

A corporate management tool that helps managers monitor and evaluate employees' work. Performance management's goal is to create an environment where people can perform to the best of their abilities to produce the highest-quality work most efficiently and effectively. A formal performance-management program helps managers and employees see eye-to-eye about expectations, goals, and career progress, including how individuals' work aligns with the company's overall vision. Generally speaking, performance management views individuals in the context of the broader workplace system. In theory, you seek the absolute performance standard, though that is considered unattainable.

Job costing

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

Process Costing

A cost accounting system in which the costs are collected by time period and averaged over all the units produced during the period. This system can be used with either actual or standard costs in the manufacture of a large number of identical units.

Activity based cos accounting

A cost accounting system that accumulates costs based on activities performed and then uses cost drivers to allocate these costs to products or other bases such as customers, markets, or projects. It attempts to allocate overhead costs on a more realistic basis than by using direct labor or machine hours. Syn: activity-based costing. See: absorption costing

Pyramid forecasting

A forecasting technique that enables management to review and adjust forecasts made at an aggregate level and to keep lower-level forecasts in balance. The approach combines the stability of aggregate forecasts and the application of management judgment with the need to forecast many end items within the constraints of an aggregate forecast or sales plan. The procedure begins with the roll up (aggregation) of item forecasts into forecasts by product group. The management team establishes a (new) forecast for the product group. The value is then forced down (disaggregation) to individual item forecasts so they are consistent with the aggregate plan. See: management estimation, planning bill of material, product group forecast.

Break-bulk warehousing

A form of cross-docking in which the incoming shipments are from a single source or manufacturer.

Trend adjusted exponential smoothing

A form of exponential smoothing forecasting that includes a factor for increasing or decreasing trends in the data resulting from variables such as population growth or income changes.

Racking

A function performed by a rack-jobber—a full-function intermediary who performs all regular warehousing functions and some retail functions, typically stocking a display rack.

Functional Strategy

A functional strategy refers to an approach that points up a particular functional area of an organization. It sets down to achieve some objectives of a business unit by maximizing resource productivity. Once in a blue moon, functional strategy names departmental strategy since each business function frequently devolves with a section. Examples of functional strategy comprise production strategy, marketing strategy, human resource strategy, and financial strategy. The functional strategy is concerned with developing distinctive the right stuff to provide a business unit with a competitive advantage. Each business unit has its own set of departments, and every department has a functional strategy. Functional strategies adapt to support a competitive strategy. For example, a company following a low-cost competitive strategy needs a production strategy. It insists on reduction cost operation and also a human resource strategy.

echelon

A level of supply chain nodes. For example, a supply chain with two independent factory warehouses and nine wholesale warehouses delivering product to 350 retail stores is a supply chain with three echelons between the factory and the end customer. One echelon consists of the two independent factory warehouses, one echelon consists of the nine wholesale warehouses, and one echelon consists of the 350 retail stores. Each echelon adds operating expense, holds inventory, adds to the cycle time, and expects to make a profit. See: disintermediation.

product diversification strategy

A marketing strategy that seeks to develop new products to satisfy current markets

Product diversification

A marketing strategy that seeks to develop new products to supply current markets.

intensive distribution

A marketing strategy under which a company sells through as many outlets as possible, so that the consumers encounter the product virtually everywhere they go: supermarkets, drug stores, gas stations, and the like. Soft drinks are generally made available through intensive distribution.

two-level master schedule

A master-scheduling approach in which a planning bill of material is used to master schedule an end product or family, along with selected key features (options and accessories). See: hedge, multilevel master schedule, production forecast.

Lifetime customer value (LCV)

A metric used for defining customer profitability A prediction of the net profit attributed to the entire future relationship with a customer.

risk rating

A numerical assessment of the risk associated with a supplier, customer, or product, normalized and used for comparison purposes.

labor productivity

A partial productivity measure in which the rate of output of a worker or group of workers per unit of time is compared to an established standard or rate of output. Labor productivity can be expressed as output per unit of time or output per labor hour. See: machine productivity, productivity

capital asset

A physical object that is held by an organization for its production potential and that costs more than some threshold value

Count Point

A point in a flow of material or sequence of operations at which parts, subassemblies, or assemblies are counted as being complete. Count points may be designated at the ends of lines or upon removal from a work center, but most often they are designated as the points at which material transfers from one department to another. Syn: pay point.

The state of the returned product and unplanned repairs

A primary challenge with remanufacturing is the uncertainty of:

ISO 31000

A standard adopted by the International Organization for Standardization that outlines principles and a set of guidelines to manage risk in any endeavor. The standard includes guidelines for understanding risk, developing a risk management policy, integrating risk management into organizational processes (including accountability and responsibility), and establishing internal and external risk communication processes. ISO 31000 is not a management system standard and is not intended or appropriate for certification purposes or regulatory or contractual use.

Analysis of Variance (Anova)

A statistical analysis system that estimates what portion of variation in a dependent variable is caused by variation in one or more independent variables. It also produces a number used to infer whether any or all of the independent-dependent variable relationships have statistical significance (i.e., have not been caused by randomness in the data).

Regression Analysis

A statistical technique for determining the best mathematical expression describing the functional relationship between one response and one or more independent variables. See: least-squares method.

Rack

A storage device for handling material in pallets. A rack usually provides storage for pallets arranged in vertical sections with one or more pallets to a tier. Some racks accommodate more than one-pallet-deep storage

product differentiation

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

Multinational strategy

A strategy to out-compete rivals that focuses on opportunities to achieve cross-business and cross-country coordination, thereby enabling economies of scope and an improved competitive position with regard to reducing costs, cross-country subsidization, and so on. See: global strategy.

Bill of labor

A structured listing of all labor requirements for the fabrication, assembly, and testing of a parent item. See: bill of resources, capacity bill procedure, routing.

A3 Problem Solving

A structured problem‐solving approach that uses a lean tool called the A3 Problem‐Solving Report. The term "A3" represents the paper size historically used for the report (a size roughly equivalent to 11" x 17").

Closed-Loop MRP

A system built around material requirements planning that includes the additional planning processes of production planning (sales and operations planning), master production scheduling, and capacity requirements planning. Once this planning phase is complete and the plans have been accepted as realistic and attainable, the execution processes come into play. These processes include the manufacturing control processes of input-output (capacity) measurement and detailed scheduling and dispatching, as well as anticipated delay reports from both the plant and suppliers, supplier scheduling, and so on. T he term closed loop implies not only that each of these processes is included in the overall system, but also that feedback is provided by the execution processes so the planning can be kept valid at all times.

focus forecasting

A system that allows the user to simulate the effectiveness of numerous forecasting techniques, enabling selection of the most effective one.

automatic identification system (AIS)

A system that can use various means, including bar code scanning and radio frequencies, to sense and load data in a computer.

80-20

A term referring to the Pareto principle. The principle suggests that most effects come from relatively few causes; that is, 80 percent of the effects (or sales or costs) come from 20 percent of the possible causes (or items). See: ABC classification.

Fitness for use

A term used to indicate that a good or service fits the customer's defined purpose for that good or service.

Quality Trilogy

A three-pronged approach to managing quality proposed by Joseph Juran. The three legs are: quality planning (developing the products and processes required to meet customer needs), quality control (meeting product and process goals), and quality improvement (achieving unprecedented levels of performance). Syn: Juran Trilogy.

waste hierarchy

A tool that ranks waste management options according to what is most environmentally sound. Gives top priority to preventing waste in the first place and can be applied to various applications.

Super Bill of Material

A type of planning bill, located at the top level in the structure, that ties together various modular bills (and possibly a common parts bill) to define an entire product or product family. The quantity per relationship of the super bill to its modules represents the forecasted percentage of demand of each module. The master-scheduled quantities of the super bill explode to create requirements for the modules that also are master scheduled. See: pseudo bill of material.

QS 9000

A variation of the popular ISO 9000 certification for the automotive industry

UN Global Compact

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

infinite loading

Calculation of the capacity required at work centers in the time periods required regardless of the capacity available to perform this work. Syn: infinite scheduling.

Excess Capacity

Capacity that is not used to either produce or protect the creation of throughput.

Execution and Control of Operations

Carrying out the strategic, MPS, and MRP

theft, obsolescence, evaporation

Causes of inventory shrinkage:

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.

risk avoidance

Changing a plan to eliminate a risk or to protect plan objectives from its impact

Resource smoothing is used when the time constraint takes priority. The objective is to complete the work by the required date while avoiding peaks and troughs of resource demand. Resource levelling is used when limits on the availability of resources are paramount. It simply answers the question 'With the resources available, when will the work be finished?'. Resource smoothing and resource leveling are two resource optimization techniques which, if used in any project, increase the chance of completing the project within the approved cost and schedule baselines. Resource leveling is used to balance the demand and supply of resources and resource smoothing helps ensure uniform resource utilization.

Difference between resource leveling and smoothing?

Point of use delivery

Direct delivery of material to a specified location on a plant floor near the operation in which it is to be used

New Data

Does the alpha in exponential smoothing relate to the weight on new or old data?

actual output/effective capacity

Efficiency is defined as the ratio of?

Strategic Management of Resources

Encompasses the following categories: aligning resources with the strategic plan, configuring and integrating operating processes to support the strategic plan, and implementing change. Topics include: competitive market issues choices affecting facilities, supply chain, information technology, and organizational design configuring and integrating internal processes evaluating and managing projects

aggregate inventory management

Establishing the overall level (dollar value) of inventory desired and implementing controls to achieve this goal.

naïve forecasting

Estimating technique in which the last period's actuals are used as this period's forecast, without adjusting them or attempting to establish causal factors. It is used only for comparison with the forecasts generated by the better (sophisticated) techniques.Read more: http://www.businessdictionary.com/definition/na-ve-forecasting.html

Direct salaries are a direct cost, but incentive commissions are indirect costs

Explain the difference between direct salaries and incentive commissions, as they relate to direct/indirect costs?

Non-compliance

Failing to fulfill a specified requirement

non-conformity

Failing to fulfill a specified requirement

Liquidity Ratio

Financial ratios that are indicators of a firm's ability to retire short-term financial obligations.

Muda

In lean manufacturing, costs are reduced by reducing waste within a system. There are seven categories of waste: (1) overproduction—excess or too early; (2) waiting—queuing delays; (3) transportation— unneeded movements; (4) processing—poor process design; (5) motion—activities that do not add value; (6) inventory—stock that is sitting and is accumulating cost without necessarily providing value; (7) defective units—scrap or rework.

pacemaker

In lean, the resource that is scheduled based on the customer demand rate for that specific value stream; this resource performs an operation or process that governs the flow of materials along the value stream. Its purpose is to maintain a smooth flow through the manufacturing plant. A larger buffer is provided for the pacemaker than other resources so that it can maintain continuous operation. See: constraint.

Johnson's Rule

In manufacturing environment this procedure is termed as sequencing of N number of jobs on two resources or machines. It aims to minimize the total production time and idle time of the system under consideration. Step-wise implementation of Johnson's rule includes the following . Step 1 List all of the jobs and times for each work-center or machine Step 2 Choose the job having the shortest activity time Step 3 If the activity chosen lies under first work centre, schedule the job first Step 4 If the activity chosen lies under the second work centre, schedule the job last Step 5 The selected job should be eliminated from the list Step 6 Repeat steps 2-5, till all selected job get scheduled

modularization

In product development, the use of standardized parts for flexibility and variety. Permits product development cost reductions by using the same item(s) to build a variety of finished goods. This is the first step in developing a planning bill of material process.

program evaluation and review technique (PERT)

In project management, a network analysis technique in which each activity is assigned a pessimistic, most likely, and optimistic estimate of its duration. The critical path method is then applied using a weighted average of these times for each node. PERT computes a standard deviation of the estimate of project duration. See: critical path method, graphical evaluation and review technique, network analysis.

slack time

In project management, the amount of time that an activity may be delayed from its early start without delaying the project finish date (A dispatching rule)

To provide one integrated set of plans for operations management

In simplest terms, what is the role of S&OP planning?

Total cost of ownership (TCO)

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

VATI Analysis

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

control points

In the theory of constraints, strategic locations in the logical product structure for a product or family that simplify the planning, scheduling, and control functions. Control points include gating operations, convergent points, divergent points, constraints, and shipping points. Detailed scheduling instructions are planned, implemented, and monitored at these locations. Other work centers are instructed to "work if they have work; otherwise, be prepared for work." In this manner, materials flow rapidly through the facility without detailed work center scheduling and control

Business Intelligence

Information collected by an organization on customers, competitors, products or services, and processes. Business intelligence provides organizational data in such a way that the organizational knowledge filters can easily associate with this data and turn it into information for the organization. Persons involved in business intelligence processes may use application software and other technologies to gather, store, analyze, and provide access to data, and to present that data in a simple, useful manner. The software aids in business performance management and aims to help consumers make better business decisions by offering them accurate, current, and relevant information. Some businesses use data warehouses because they are a logical collection of information gathered from various operational databa

Payback method

Initial cash investment / annual net cash income A method of evaluating an investment opportunity that provides a measure of the time required to recover the initial amount invested in a project.

Product Development Strategy

Introduction of new products into identifiable or established markets

multiple sourcing

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

Operation buying

Procurement related to dealing with meeting the daily purchasing needs of organization

co-products

Products that can be manufactured under the same processes

Manufacturing and 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 what occurred during a very short history into the past. Quality control information is also gathered and a laboratory information management system may be part of this configuration to tie process conditions to the quality data that is generated. Cause-and-effect relationships can thereby be determined. The quality data at times affects the control parameters that are used to meet product specifications either dynamically or off line.

Competitive Strategy

Refers to a plan that combines the clout of the external situation. Along with the integrative concerns of the personal status of an organization. The competitive strategy aims at gaining a competitive advantage in the marketplace against competitors. Competitive advantage comes from strategies that lead to some uniqueness in the market. Winning a competitive strategy is grounded in sustainable competitive advantage. Examples of the competitive strategy include contrast strategy, low-cost strategy, and focus or market-niche strategy.

Responsiveness

Refers to the speed or promptness with which an organization or supply chain provides products and services to the customer. A SCOR performance attribute.

Simple Regression analysis

Regression analysis involving only one independent variable.

Detailed Scheduling and Planning

Relates to the operations scheduling

Indirect Delivery

Relies on intermediaries to perform most or all distribution functions, otherwise known as wholesale distribution

S&OP process owner

Resolves conflict in S&OP meetings, executes the meeting, and has another role in the organization

Sustainability

Responsible economic growth for the company while providing minimal impact to the environment An organizational focus on activities that provide present benefit without compromising the needs of future generations.

Low cost provider

Seeks to sell its products at the lowest price it can, while still making a profit so that it can draw customers to the market. This is the broad version of the low-cost strategy because such companies try to appeal to a broad market.

dumping

Selling goods below costs in selected markets.

supply chain visibility

Sharing information throughout the supply chain to create transparency among supply chain partners; for example, the ability of supply chain partners to access demand and production information from trading partners.

agility

The ability to quickly plan, source, make, and deliver to adapt and respond to changes in the competitive environment. It is a SCOR performance attribute that includes product or service flexibility (speedy introduction of new products and services), mix flexibility (ability to quickly change products or services offered), volume flexibility (ability to service large order quantities), and delivery flexibility (ability to quickly change delivery dates to meet new requirements).

visibility

The ability to view important information throughout a facility or supply chain no matter where in the facility or supply chain the information is located.

Breakthrough Improvement

The achievement of previously unattainable savings in the cost of doing business through reduction of defects on an unprecedented scale.

continuous improvement

The act of making incremental, regular improvements and upgrades to a process or product in the search for excellence.

Operations scheduling

The actual assignment of starting or completion dates to operations or groups of operations to show when these operations must be done if the manufacturing order is to be completed on time. These dates are used in the dispatching function. Syn: detailed scheduling, order scheduling, shop scheduling.

Planning horizon

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

Shelf life

The amount of time an item may be held in inventory before it becomes unusable.

ABC classification

The classification of a group of items in decreasing order of annual dollar volume (price multiplied by projected volume) or other criteria. This array is then split into three classes, called A, B, and C. The A group usually represents 10 percent to 20 percent by number of items and 50 percent to 70 percent by projected dollar volume. The next grouping, B, usually represents about 20 percent of the items and about 20 percent of the dollar volume. The C class contains 60 percent to 70 percent of the items and represents about 10 percent to 30 percent of the dollar volume. The ABC principle states that effort and money can be saved through applying looser controls to the lowdollar-volume class items than to the high-dollarvolume class items. The ABC principle is applicable to inventories, purchasing, and sales. Syn: ABC analysis, distribution by value. See: 80-20, Pareto analysis, Pareto's law.

Shewhart/Deming Circle

The concept of continuously rotating wheel of plan-do-check-action (PDCA) used to show the need for interaction among market research, design, production, and sales to improve quality

Single Minute Exchange of Die (SMED)

The concept of setup times of less than 10 minutes, developed by Shigeo Shingo in 1970 at Toyota. See: single-digit setup. Uses external setups to reduce changeover time

Direct Delivery

The consignment of goods directly from the supplier to the buyer, frequently used where a third party acts as intermediary between supplier and buyer.

independent demand

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

shipping point

The location from which material is sent. Ant: receiving point.

decoupling points

The locations in the product structure or distribution network where inventory is placed to create independence between processes or entities. Selection of decoupling points is a strategic decision that determines customer lead times and inventory investment. See: control points.

Management by Walking Around (MBWA)

The management technique of managers touring a facility on a regular basis to talk with workers and staff about problems, trends, and potential solutions.

law of variability

The more variability that exists in a process, the less productive that process will be.

Service Parts Demand

The need or requirement for a component to be sold by itself, as opposed to being used in production to make a higher-level product. Syn: repair parts demand, spare parts demand.

Facing Fill Rate

The number of orders / lines that are processed complete from any warehouse location without regard to assigned customer location divided by the total orders / lines processed within the measurement period.

Pay back period

The period of time required for the stream of cash flows resulting from a project to equal the project's initial investment.

Kentou

The phase of new product development where the focus is on generating hundreds of study drawings.

Gemba

The place where humans create value; the real workplace. Also a philosophy: "Go to the actual place, see the actual work."

Capable-to-Promise (CTP)

The process of committing orders against available capacity as well as inventory. This process may involve multiple manufacturing or distribution sites. Used to determine when a new or unscheduled customer order can be delivered. Employs a finite-scheduling model of the manufacturing system to determine when an item can be delivered. Includes any constraints that might restrict the production, such as availability of resources, lead times for raw materials or purchased parts, and requirements for lower-level components or subassemblies. The resulting delivery date takes into consideration production capacity, the current manufacturing environment, and future order commitments. The objective is to reduce the time spent by production planners in expediting orders and adjusting plans because of inaccurate delivery-date promises.

Capacity Planning

The process of determining the amount of capacity required to produce in the future. This process may be performed at an aggregate or product-line level (resource requirements planning), at the master-scheduling level (rough-cut capacity planning), and at the material requirements planning level (capacity requirements planning). See: capacity requirements planning, resource planning, rough-cut capacity planning.

disintermediation

The process of eliminating an intermediate stage or echelon in a supply chain. Total supply chain operating expense is reduced, total supply chain inventory is reduced, total cycle time is reduced, and profits increase among the remaining echelons. See: echelon.

transportation management

The process of executing requirements for the planning, scheduling, and budgeting of transportation assets, services, and related systems of the shipping process through delivery

Early Supplier Involvement (ESI)

The process of involving suppliers early in the product design activity and drawing on their expertise, insights, and knowledge to generate better designs in less time and designs that are easier to manufacture with high quality. See: participative design/engineering.

Consuming the forecast

The process of reducing the forecast by customer orders or other types of actual demands as they are received. The adjustments yield the value of the remaining forecast for each period. Syn: forecast consumption.

resource leveling

The process of scheduling (and rescheduling) the start and finish dates of operations (or activities) to achieve a consistent rate of resource usage so that resource requirements do not exceed resource availability for a given time period. Syn: leveling.

job shop scheduling

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

manufacturing lead time

The total time required to manufacture an item, exclusive of lower-level purchasing lead time. For make-to-order products, it is the length of time between the release of an order to the production process and shipment to the final customer. For make-to-stock products, it is the length of time between the release of an order to the production process and receipt into inventory. Included are order preparation time, queue time, setup time, run time, move time, inspection time, and put-away time. Syn: manufacturing cycle, production cycle, production lead time. See: lead time.

computer-aided manufacturing (CAM)

The use of computers to program, direct, and control production equipment in the fabrication of manufactured items.

financial accounting

The use of generally accepted accounting principles to prepare reports to external agencies such as investors and governmental agencies.

alternate work center

The work center where an operation is not normally performed but can be performed. Ant: primary work center.

primary work center

The work center where an operation on a manufactured part is normally scheduled to be performed. Ant: alternate work center.

Warehouse Space Report Transportation Planning Report Labor and Equipment Report Inventory Investment Report

There are 4 reports used to plan logistics resource requirements. What are they?

Continuous Breakthrough

There are two types of performance improvement, what are they?

landed cost

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

specific identification

This method keeps track of the units of the beginning inventory and the units purchased—that is, specific identification of the purchase cost of each item. This may be done through a coding method or serial number identification.

Option overplanning

Typically, scheduling extra quantities of a master schedule option greater than the expected sales for that option to protect against unanticipated demand. This schedule quantity may be planned only in the period where new customer orders are currently being accepted, typically just after the demand time fence. This technique is usually used on the second level of a two-level master scheduling approach to create a situation where more of the individual options than of the overall family are available. The historical average of demand for an item is quantified in a planning bill of material, and option overplanning is accomplished by increasing this percentage to allow for demands greater than forecast. See: demand time fence, hedge, planning bill of material.

labor standard

Under normal conditions, the quantity of worker minutes necessary to finish a product or process.

Product velocity

Units sold per period

Protective capacity

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

Actual output / design capacity

Utilization is defined as the ratio of?

Insufficient due diligence and culture clashes

What are 2 major impediments to a successful merger or acquisition?

Earliest Due Date (EDD) Shortest Processing Time (SPT) Johnson's Rule Critical Ratio

What are 4 common dispatching rules? (For prioritizing the sequence orders should be processed)

Market Penetration Market Development Product Development Diversification

What are 4 growth strategies?

Racking Bulk Shelving Specialized

What are 4 types of storage methods?

Profitability, market share, growth, productivity

What are some strategic performance metrics

Supply & Demand

What are the 2 groups used in channel design?

Throughput, inventory, and operating expense

What are the 3 TOC accounting measures?

Visibility Variability Velocity

What are the 3 V's of supply chain management?

Bill of Labor Resource Profile CPOF

What are the 3 approaches to RCCP?

capacity utilization Protecting stock Accessibility

What are the 3 challenges of inventory storage?

Social, environment, economic People, planet, profit

What are the 3 components of the Triple Bottom Line? What are 3 alternative components?

Quality Planning, Quality Control, Quality Improvement

What are the 3 legs of the Juran Trilogy / Quality Trilogy

Regulations and Compliance Life Cycle Costing Integrate Sustainability into the Corporate Strategy

What are the 3 stages of Adapting Sustainability Strategies?

Leading Lagging Tracking

What are the 3 types of capacity strategies?

Organizational functions Communication requirements Data modeling Management and Control

What are the 4 components of information architecture?

Cost Leadership Strategy Differentiation Strategy Cost Focus Strategy Differentiation Focus Strategy

What are the 4 main competitive strategies?

Sort Simplify Scrub Standardize Sustain

What are the 5 Ss?

Corporate Strategy

a type of strategy in strategic management. It draws up at the top level by the senior management of a diversified company. In our country, a diversified company is known as 'group of companies', such as Bashundhara, Partex, Beximco, and Square Group. Such a strategy describes the company's overall corporate strategy. As well, corporate strategy defines the long-term objectives and generally affects all the business-nits under its umbrella. A corporate strategy (Bashundhara), maybe acquiring the major tissue paper companies in Bangladesh to become the unquestionable market leader.

Payback Contract

also known as a back month or far month contract. This type of contract can be used with repayment clauses, termination payments, training costs, and futures contracts. Has clauses detailing how and when an amount will be paid back

horizontal analysis (trend analysis)

analysis of financial statements that compares account values reported on these statements over two or more years to identify changes and trends

Business Strategy

formulates at the business-unit level. It is popularly known as 'business-unit strategy'. This strategy emphasizes the building up of the company's competitive position of products or services. Business strategies compos of a competitive and cooperative approach. The business strategy covers all the activities and tactics for competing in denial of the competitors. And the behavior management addresses various strategic matters. As Hill and Jones have remarked, the business strategy consists of plans of action. It's strategic managers adapt to use a company's resources. Additionally, managers change distinctive attitudes to gain a competitive advantage over its rivals in a market. The business strategy usually formulates in line with the corporate strategy. The main focus of the business strategy is on product development, innovation, integration, market development, diversification, and the like.

market development

introducing existing products to new markets

Collaborative Planning, Forecasting, and Replenishment

-1) A collaboration process whereby supply chain trading partners can jointly plan key supply chain activities from production and delivery of raw materials to production and delivery of final products to end customers. Collaboration encompasses business planning, sales forecasting, and all operations required to replenish raw materials and finished goods. 2) A process philosophy for facilitating collaborative communications. CPFR is considered a standard, and is endorsed by the Voluntary Interindustry Commerce Standards.

Cycle Time

-1) In industrial engineering, the time between the completion of two discrete units of production. For example, the cycle time of motors assembled at a rate of 120 per hour is 30 seconds. 2) In materials management, the length of time from when material enters a production facility until it exits. Syn: throughput time.

Operational Performance Measurements (Local)

-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 constraints, performance measurements that link causally to organizational performance measurements. Throughput, inventory, and operating expense are examples. See: global performance measurements, local performance measurements, strategic performance measurements.

risk category

-A cluster of risk causes with a label such as external, environmental, technical, or organizational.

Fixed-Position Layout

-A factory layout that plans for the product to be in a set place; the people, machines, and tools are brought to and from the product.

Net Profit Margin

-A financial ratio used to calculate the percentage of profit a company produces from its total revenue. It measures the amount of net profit a company obtains per dollar of revenue gained. Net Profit (or net Income) / Revenue

Consigned stocks

-A means of optimizing supply chain performance in which the supplier has access to the customer's inventory data and is responsible for maintaining the inventory level required by the customer. Accomplished by a process in which resupply is performed by the vendor through regularly scheduled reviews of the on-site inventory. The on-site inventory is counted, damaged or outdated goods are removed, and the inventory is restocked to predefined levels. The vendor obtains a receipt for the restocked inventory and accordingly invoices the customer. See: continuous replenishment.

Vendor Managed Inventory (VMI)

-A means of optimizing supply chain performance in which the supplier has access to the customer's inventory data and is responsible for maintaining the inventory level required by the customer. Accomplished by a process in which resupply is performed by the vendor through regularly scheduled reviews of the on-site inventory. The on-site inventory is counted, damaged or outdated goods are removed, and the inventory is restocked to predefined levels. The vendor obtains a receipt for the restocked inventory and accordingly invoices the customer. See: continuous replenishment.

Quick Asset Ratio

-A measure of a firm's financial stability. It is defined as: (current assets minus inventory) divided by current liabilities. A value greater than 1 is desirable. Syn: quick ratio, acid test, acid test ratio

Total Factor Productivity (TFP)

-A measure of productivity (of a department, plant, strategic business unit, firm, etc.) that combines the individual productivities of all its resources, including labor, capital, energy, material, and equipment. These individual factor productivities are often combined by weighting each according to its monetary value and then adding them. For example, if material accounts for 40 percent of the total cost of sales, labor 10 percent of the total cost of sales, and other resources 60 percent, total factor productivity = .4 (material productivity) + .1 (labor productivity) + .6 (other resource productivity).

Last In, First-Out (LIFO)

-A method of inventory valuation for accounting purposes. The accounting assumption is that the most recently received (last in) is the first to be used or sold (first out) for costing purposes, but there is not necessarily any relationship with the actual physical movement of specific items. See: average cost systems. Used during inflation periods results in value lower and COGS higher

Quality Function Deployment (QFD)

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

Continuous Replenishment

-A process by which a supplier is notified daily of actual sales or warehouse shipments and commits to replenishing these sales (for example, by size or color) without stockouts and without receiving replenishment orders. The result is a lowering of associated costs and an improvement in inventory turnover. See: rapid replenishment, vendor managed inventory.

Risk Register

-A report that has summary information on qualitative risk analysis, quantitative risk analysis, and risk response planning. This register contains all identified risks and associated details

Product-based layout

-A type of layout where resources are arranged sequentially according to the steps required to make a particular complex product

CPFR

-Abbreviation for collaborative planning, forecasting, and replenishment

Cash-to-cash cycle

-An indicator of how efficiently a company manages its assets to improve cash flow. Calculated as inventory days plus accounts receivable days minus accounts payable days. See: cash conversion cycle.

Current Ratio

-Current assets divided by current liabilities.

Inventory accuracy

-The branch of accounting dealing with valuing inventory. Inventory may be recorded or valued using either a perpetual or a periodic system. A perpetual inventory record is updated frequently or in real time, while a periodic inventory record is counted or measured at fixed time intervals (e.g., every two weeks or monthly). Both recording systems use the LIFO, FIFO, or average costs inventory valuation method.

Rated capacity

-The expected output capability of a resource or system. Capacity is traditionally calculated from such data as planned hours, efficiency, and utilization. The rated capacity is equal to: hours available × efficiency × utilization. Syn: calculated capacity, effective capacity, nominal capacity, standing capacity.

Manufacturing Process

-The series of operations performed upon material to convert it from the raw material or a semifinished state to a state of further completion. Manufacturing processes can be arranged in a process layout, product layout, cellular layout, or fixed-position layout. Manufacturing processes can be planned to support make-to-stock, make-to-order, assemble-to-order, and so forth, based on the strategic use and placement of inventories. See: production process, transformation process.

Physical Inventory

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

U Chart

A control chart for evaluating the stability of a process in terms of the average count of events of a given classification per unit occurring in a sample. Syn: count-per-unit chart.

C Chart

A control chart for evaluating the stability of a process in terms of the count of events of a given classification occurring in a sample. Syn: count chart, number defective chart.

Average Chart

A control chart in which the subgroup average, X-bar, is used to evaluate the stability of the process level.

R Chart

A control chart in which the subgroup range, R, is used to evaluate the stability of the variability within a process. Syn: range chart.

Courier

A courier is a company, an employee of that company or a person who delivers a message, package or letter from one place or person to another place or person.

Critical Ratio

A dispatching rule that calculates a priority index number by dividing the time to due date remaining by the expected elapsed time to finish the job. Time Remaining / Work Remaining A ratio less than 1.0 indicates the job is behind schedule, a ratio greater than 1.0 indicates the job is ahead of schedule, and a ratio of 1.0 indicates the job is on schedule.

Functional (process) layout

A facility configuration in which operations of a similar nature or function are grouped together; an organizational structure based on departmental specialty (e.g., saw, lathe, mill, heat treat, press). Syn: job shop layout, process layout.

PESTEL Analysis

A framework or tool used by marketers to analyse and monitor the macro-environmental (external marketing environment) factors that have an impact on an organisation. The result of which is used to identify threats and weaknesses which are used in a SWOT analysis. P - Political E - Economic S - Social T - Technological E - Environmental L - Legal E - Ethical (NEW)

run chart

A graphical technique that illustrates how a process I performing over time. By statistically analyzing a run chart, a process can be determined to be under or out of control The most common types of data used to construct the charts are ranges, averages, percentages/counts, and individual process attributes

Leverage Ratios

A leverage ratio is any kind of financial ratio that indicates the level of debt incurred by a business entity against several other accounts in its balance sheet, income statement, or cash flow statement. These ratios provide an indication of how the company's assets and business operations are financed (using debt or equity).

Cellular Layout

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

First In, First-Out (FIFO)

A method of inventory valuation for accounting purposes. The accounting assumption is that the oldest inventory (first in) is the first to be used (first out), but there is no necessary relationship with the actual physical movement of specific items. See: first-come-first-served rule, average cost system.

Five-Forces Model of Competition

A methodology for analyzing competitive pressures in a market and assessing the strength and importance of each of those pressures. 1. Risk of entry by potential competitors 2. Rivalry among current competitors 3. Bargaining Power of Buyers 4. Bargaining Power of Suppliers 5. Threat of Substitute products

Global Reporting Initiative (GRI)

A network-based organization that pioneered the world's most widely used sustainability reporting framework.

Periodic Inventory

A physical inventory taken at some recurring interval (e.g., monthly, quarterly, or annual physical inventory). See: physical inventory.

business strategy

A plan for choosing how to compete. Business strategies can be classified into three general categories: (1) least cost, (2) differentiation, and (3) focus.

strategic alliance

A relationship formed by two or more organizations that share information (proprietary), participate in joint investments, and develop linked and common processes to increase the performance of both companies. Many organizations form strategic alliances to increase the

Direct Loading

A synonym of cross docking

Total Quality Management (TQM)

A term coined to describe Japanese-style management approaches to quality improvement. Since then, total quality management (TQM) has taken on many meanings. Simply put, TQM is a management approach to longterm success through customer satisfaction. TQM is based on the participation of all members of an organization in improving processes, goods, services, and the culture in which they work. The methods for implementing this approach are found in teachings of such quality leaders as Philip B. Crosby, W. Edwards Deming, Armand V. Feigenbaum, Kaoru Ishikawa, J.M. Juran, and Genichi Taguchi.

Supermarket approach

A way of managing inventory and improving picking by making all parts easy to take off of a shelf, much like the shelves of a supermarket. Inventory is then restocked in such a way that employees always have easy access.

Current Assets

An accounting/financial term (balance sheet classification of accounts) representing the short-term resources owned by a company, including cash, accounts receivable, and inventories. See: assets, balance sheet.

job enrichment

An increase in the number of tasks that an employee performs and an increase in the control over those tasks. It is associated with the design of jobs and especially the production worker's job. Job enrichment is an extension of job enlargement.

Job enlargement

An increase in the number of tasks that an employee performs. Job enlargement is associated with the design of jobs, particularly production jobs, and its purpose is to reduce employee dissatisfaction

Leverage Capital Structure Ratio

An indicator of whether or not a company has the ability to retire its long-term debts

5 S's

Five terms beginning with "S" used to create a workplace suitable for lean production: sort - to separate needed items from unneeded ones and remove the latter simplify - to neatly arrange items for use. scrub - to clean up the work area. standardize - to sort, simplify, and scrub daily sustain - to always follow the first four Ss

TOC Performance Measures

In the theory of constraints, throughput, inventory, and operating expense are considered performance measures that link operational decisions to organizational profit.

Less than Truckload (LTL)

Less than truckload shipping (LTL) is the transportation of relatively small freight. The alternatives to LTL carriers are parcel carriers or full truckload carriers. Parcel carriers usually handle small packages and freight that can be broken down into units less than 150 pounds (68 kg). Full truckload carriers move freight that is loaded into a semi-traile

Total Productive Maintenance (TPM)

Preventive maintenance plus continuing efforts to adapt, modify, and refine equipment to increase flexibility, reduce material handling, and promote continuous flows. It is operator-oriented maintenance with the involvement of all qualified employees in all maintenance activities. Syn: total preventive maintenance.

Forward Integration

Process of buying or owning elements of the production cycle; the channel of distribution forward toward the final customer. See: vertical integration.

takt time

Sets the pace of production to match the rate of customer demand and becomes the heartbeat of any lean production system. 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. Syn: tact time.

Virtual organization

Short-term alliances between independent organizations in a potentially long-term relationship to design, produce, and distribute a product. Organizations cooperate based on mutual values and act as a single entity to third parties.

Statistical Quality Control (SQC)

The application of statistical techniques to control quality. Includes acceptance sampling as well as statistical process control, but is often used interchangeably with statistical process control

Statistical Process Control (SPC)

The application of statistical techniques to monitor and adjust an operation. Often used interchangeably with statistical quality control, although statistical quality control includes acceptance sampling as well as statistical process control.

Cross-docking

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

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. See: backward integration, forward integration.

Market Penetration

The degree to which a product has been accepted by the marketplace

Global Reporting Initiative (GRI) Framework

The framework that sets out the principles and performance indicators organizations can use to measure and report their human rights, labor, environment, and anticorruption practices and outcomes.

Standard time

The length of time that should be required to (1) set up a given machine or operation and (2) run one batch or one or more parts, assemblies, or end products through that operation. Used in determining machine requirements and labor requirements. Assumes an average worker who follows prescribed methods, and allows time for personal rest to overcome fatigue and unavoidable delays. Also frequently used as a basis for incentive pay systems and as a basis of allocating overhead in cost accounting systems. Syn: standard hours. See: standard

theoretical capacity

The maximum output capability, allowing no adjustments for preventative maintenance, unplanned downtime, shutdown, and so forth.

Hurdle Rate

The minimum acceptable rate of return on a project.

Inventory Turnover

The number of times that an inventory cycles, or "turns over," during the year. A frequently used method to compute inventory turnover is to divide the annual cost of sales by the average inventory level. For example, an annual cost of sales of $21 million divided by an average inventory of $3 million means that inventory turned over seven times. Syn: inventory turns, turnover. See: inventory velocity.

equity

The part of a company's total assets not provided by creditors; owner-invested funds.

tactical planning

The process of developing a set of tactical plans (e.g., production plan, sales plan, marketing plan). Two approaches to tactical planning exist for linking tactical plans to strategic plans— production planning and sales and operations planning. See: operational planning, strategic planning, tactical plan.

Theory of constraints scheduling

The scheduling method that solves the problem of jobs running into each other is known as theory of constraints scheduling. Maximizes total throughput Theory of constraints scheduling material load provides optimum input timing that takes material load into consideration and greatly reduces lead-time.

tactical plan

The set of functional plans (e.g., production plan, sales plan, marketing plan) synchronizing activities across functions that specify production levels, capacity levels, staffing levels, funding levels, and so on, for achieving the intermediate goals and objectives to support the organization's strategic plan. See: aggregate planning, operational plan, production planning, sales and operations planning, strategic plan, tactical planning.

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. These services can include product inspection, product rating, and repackaging. These facilities are typically located near primary roads, railways, or inland waterways to facilitate rapid receiving and shipping of products. Syn: duty paid warehouse.

Basic Seven (B7) Tools of Quality

Tools that help organizations understand their processes in order to improve them. The tools are: the cause-and-effect diagram (also known as the fishbone diagram or the Ishikawa diagram) check sheet flowchart histogram Pareto chart control chart scatter diagram. Syn: seven tools of quality. See: seven newer tools of quality

Asset to Equity Ratio

Total Assets / Total Equity

Debt to EBITDA Ratio

Total Debt / Earnings Before Interest Taxes Depreciation & Amortization a metric used to evaluate a company's operating performance. It can be seen as a proxy for cash flow from the entire company's operations.

Total Debt Ratio

Total Debt/Total Assets A measure of how much a company funds itself with debt

Debt-to-equity ratio

Total Debt/Total Equity The amount of bonds and preferred stocks relative to the owners' equity position. A measurement of borrowed funds to leverage owners' equity The key difference between debt ratio and debt to equity ratio is that while debt ratio measures the amount of debt as a proportion of assets, debt to equity ratio calculates how much debt a company has compared to the capital provided by shareholders. (A leverage ratio)

MRP scheduling

Type of scheduling method that minimizes backlog and lead time as its focus

Lean scheduling

Type of scheduling that minimizes WIP and reduces Lead time as its focus

Distribution Center

Typically a finished goods warehouse designed for demand-driven rapid distribution to retailers (retail distribution centers), wholesalers, or direct shipments to customers (order fulfillment centers). Cross-docking warehouses are another type of distribution center. See: cross-docking.

Inter-modal transportation

involves the transportation of freight in an intermodal container or vehicle, using multiple modes of transportation (rail, ship, and truck), without any handling of the freight itself when changing modes.

Freight Forwarding

is an intermediary that provides a wide range of logistics services to move certain cargo from its point of origin to its final destination. It is a company that handles the shipping process through a large network of third parties.

Capacity Planning, Forecasting and Replenishment (CPFR)

strategies allow aligning of multiple S&OP processes and jointly plan supply chain activities to ensure that the joint business plans between organizations are respected, while minimizing costs and maximizing efficiency from end-to-end of your supply chain. Using these strategies can help you get ahead by focusing on collaboration a process that enables companies to work together with their trading partners in an effort to improve forecasts, reduce inventory and production costs, and increase sales and profit.

Parcel Carriers

the delivery of shipping containers, parcels, or high value mail as single shipments. The service is provided by most postal systems, express mail, private courier companies, and less than truckload shipping carriers.