CPIM Part 1

Zone

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

Decoupling Inventory

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

Generally Accepted Accounting Principles (GAAP)

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

Voice of the Customer (VOC)

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

Anticipation Inventories

Additional inventory above basic pipeline stock to cover projected trends of increasing sales, planned sales promotion programs, seasonal fluctuations, plant shutdowns, and vacations

1 - Practical Benefit to participating in the UNGC

Adopting an established and globally recognized policy framework for the development, implementation, and disclosure of environmental, social, and governance policies and practices

3 - Practical benefit to participating in the UNGC

Advancing sustainability solutions in partnership with a range of stakeholders

Genchi Genbutsu

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

Hansei

A Japanese word meaning reflection

Hoshin

A Japanese word meaning statement of objectives

Muri

A Japanese word meaning strain or overburden

Sensei

A Japanese word meaning teacher or one with experience

Mura

A Japanese word meaning unevenness or variability

Jishuken

A Japanese word meaning voluntary study groups

Third-Party Logistics (3PL)

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

Pallet Positions

A calculation that determines the space needed for the number of pallets for inventory storage or transportation based on a standard pallet size.

Manufacturing Calendar

A calendar used in inventory and production planning functions that consecutively numbers only the working days so that the component and work order scheduling may be done based on the actual number of workdays available

Contract Carrier

A carrier that does not serve the general public, but provides transportation for hire for one or a limited number of shippers under a specific contract

Bill of Lading (Uniform) (B/L)

A carrier's contract and receipt for goods the carrier agrees to transport from one place to another and to deliver to a designated person. In case of loss, damage, or delay, the bill of lading is the basis for filing freight claims

Inventory Adjustment

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

Single-Source Supplier

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

Reverse Logistics

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

Traffic

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

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.

Single-Level Bill of Material

A display of components that are directly used in a parent item. Shows only the relationship one level down

Transaction Channel

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

Waybill

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

Picking List

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

Shipping Manifest

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

Request for Quote (RFQ)

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

Manufacturing Order

A document, group of documents, or schedule conveying authority for the manufacture of specified parts or products in specified quantities

Functional Layout

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

Distribution Warehouse

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

Bottleneck

A facility, function, department, or resource whose capacity is less than the demand placed upon it

Key Performance Indicators (KPI)

A financial or non-financial measure that is used to define and assess progress toward specific organizational goals and typically is tied to an organization's strategy and business stakeholders. Should not be contradictory to other departmental or strategic business unit performance measures

Income Statement

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

Balance Sheet

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

Random Variation

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

Intrinsic Forecast Method

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

Extrinsic Forecasting method

A forecast method using a correlated leading indicator. Tend to be more useful for large aggregations than for individual product sales

Planned Bill of Material

An artificial grouping of items or events in bill-of-material format used to facilitate master scheduling and material planning.

Assembly line

An assembly process in which equipment and work centers are laid out to follow the sequence in which raw materials and parts are assembled

Purchase Requisition

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

Advance ship notice (ASN)

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

Finite Forward Scheduling

An equipment scheduling technique that builds a schedule by proceeding sequentially from the initial period to the final period while observing capacity limits

Forecast

An estimate of future demand. Can be constructed using quantitative methods, qualitative methods, or a combination of methods, and it can be based on extrinsic or intrinsic factors

Value Chain Analysis

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

Histogram

A graph of contiguous vertical bars representing a frequency distribution in which the groups or classes of items are marked on the x axis and the number of items in each class is indicated on the y axis.

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 is to detect assignable causes of variation in the process as opposed to random variations. One of the seven tools of quality

Process Flow Diagram

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

Scatter Chart/Scatterplot

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

Master Planning

A group of business processes that includes the following activities: demand management, production and resource planning, and master scheduling

Product Family

A group of products or services that pass through similar processing steps, have similar characteristics, and share common equipment prior to shipment or delivery to the customer

Private Carrier

A group that provides transportation exclusively within an organization

Theory of Constraints (TOC)

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

Two-Card Kanban System

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

One-Card Kanban System

A kanban system where only a move card is employed. An empty square signals the supplying work center to produce a standard container of the item

Value Stream Mapping

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

continuous replenishment

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

Production Planning

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

Sales and Operations Planning (S&OP)

A process to develop tactical plans that provide management the ability to strategically direct its businesses to achieve competitive advantage on a continuous basis by integrating customer-focused marketing plans for new and existing products with the management of the supply chain. The process brings together all the plans for the business into one integrated set of plans

Quality at the Source

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

Postponement

A product design or supply chain strategy that deliberately delays final differentiation until the latest possible time in the process. Shifts product differentiation closer to the consumer to reduce the anticipatory risk, eliminating excess inventory in the form of finished goods in the supply chain

Package to Order

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

Assemble-To-Order (ATO)

A production environment where a good or service can be assembled after receipt of a customer's order. The key components (bulk, semi-finished, intermediate, subassembly, fabricated, purchased, packing, and so on) used in the assembly or finishing process are planned and usually stocked in anticipation of a customer order. Receipt of an order initiates assembly of the customized product. This strategy is useful where a large number of end products (based on the selection of options and accessories) can be assembled from common components.

Make-to-Order

A production environment where a good or service can be made after receipt of a customer's order. The final product is usually a combination of standard items and items custom-designed to meet the special needs of the customer.

Make-to-Stock

A production environment where products can be and usually are finished before receipt of a customer order. Customer orders are typically filled from existing stocks, and production orders are used to replenish those stocks

Chase Production Method

A production planning method that maintains a stable inventory level while varying production to meet demand. Companies may combine chase and level production schedule methods

Continuous Production

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

Dock-to-Stock

A program through which specific quality and packaging requirements are met before the product is released. Prequalified product is shipped directly into the customer's inventory. Eliminates the costly handling of components, specifically in receiving and inspection, and enables product to move directly into production

Buffer

A quantity of materials awaiting further processing. It can refer to raw materials, semifinished stores or hold points, n or a work backlog that is purposely maintained behind a work center

Lot

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

Batch

A quantity scheduled to be produced or in production.

Sawtooth Diagram

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

Milk Run

A regular route for pickup of mixed loads from several suppliers.

Open Order

A released manufacturing order or purchase order; An unfilled customer order

Planned Order Release

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

Final Assembly Schedule (FAS)

A schedule of end items to finish the product for specific customers' orders in a make-to-order or assemble-to-order environment. Also referred to as the finishing schedule because it may involve operations other than the final assembly

Forward Scheduling

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

Bar Code

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

Production Line

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

Order Point

A set inventory level where, if the total stock on hand plus on order falls to or below that point, action is take to replenish the stock

Four Ps

A set of marketing tools to direct the business offering to the customer. Product, price, place, and promotion

Lot Control

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

Incoterms

A set of rules established by the International Chamber of Commerce that provides internationally recognized rules for the interpretation of the most commonly used trade terms in foreign trade and is routinely incorporated int he contracts for the sale of goods worldwide to provide guidance to all parties involved in the transaction

Material Requirements Planning (MRP)

A set of techniques that uses bill of material data, inventory data, and the master production schedule to calculate requirements for materials. Makes recommendations to release replenishment orders for material. Time-phased - makes recommendations to reschedule open orders when due dates and need dates are not in phase

Consignment

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

Unit Load

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

Andon

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

Visual Review System

A simple inventory control system where the inventory reordering is based on actually looking at the amount of inventory on hand. usually used for low-value items

Assignable Cause

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

Lead Time

A span of time required to perform a process; In a logistics context, the time between recognition of the need for an order and the receipt of goods.

Leading Indicator

A specific business activity index that indicates future trends

Work Center

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

Radio Frequency Identification (RFID)

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

Duty

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

Back Scheduling

A technique for calculating operation start dates and due dates. The schedule is computed starting with the due date for the order and working backward to determine the required start date and/or due date for each operation

Input/Output Control (I/O)

A technique for capacity control where planned and actual inputs and planned and actual outputs of a work center are monitored

Lead-Time Offset

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

Backlog

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

Operating Expense

All the money an organization spends in generating goal units

Terms and Conditions

All the provisions and agreements of a contract

Tolerance

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

Sustain

Always follow the first four Ss

Cost of Goods Sold (COGS)

An accounting classification useful for determining the amount of direct materials, direct labor, and allocated overhead associated with the products sold during a given period of time

Liabilities

An accounting/financial term representing debts or obligations owed by a company to a creditors

Owner's Equity

An accounting/financial term representing the residual claim by the company's owners or shareholders, or both, to the company's assets less its liabilities

Green Reverse Logistics

The responsibility of the supplier to dispose of packaging materials or environmentally sensitive materials

Dispatching

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

Manufacturing Process

The series of operations performed upon material to convert it from the raw material or a semi-finished state to a state of further completion. Can be arranged in a process layout, product layout, cellular layout, or fixed-position layout

Tactical Plan(s)

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

Manufacturing Philosophy

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

Product Life Cycle

The stages a new product goes through from beginning to end; The time from initial research and development to the time at which sales and support of the product to customers are withdrawn; The period of time during which a product can be produced and marketed profitably

Value Analysis

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

Standard Costs

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

Drum-Buffer-Rope (DBR)

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

Wait Time

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

Internal Setup Time

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

External Setup Time

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

Delivery Lead Time

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

Setup Time

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

Procurement Lead Time

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

Run Time

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

Move Time

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

Purchasing Lead Time

The total lead time required to obtain a purchased item

Gross Requirement

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

Replenishment Lead Time

The total period of time that elapses from the moment it is determined that a product should be reordered until the product is back on the shelf available for use

Manufacturing Lead Time

The total time required to manufacture an item, exclusive of lower-level purchasing lead time

Order qualifiers

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

Order Winners

Those competitive characteristics that cause a firm's customers to choose that firm's goods and services over those of its competitors.

Finished Goods Inventory

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

Service Parts

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

Explode

To perform a bill of materials explosion

Drop Ship

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

Unit Cost

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

Fixed Overhead

Traditionally, all manufacturing costs - other than direct labor and direct materials - that continue even if products are not produced. Although fixed overhead is necessary to produce the product, it cannot be directly traced to the final product

Operator Flexibility

Training machine workers to perform tasks outside their immediate jobs and in problem-solving techniques to improve process flexibility. Necessary process in developing a fully cross-trained workforce

Common Carrier

Transportation available to the public that does not provide special treatment to any one party and is regulated as to the rates charges, the liability assumed, and the service provided. Must obtain a certificate of public convenience and necessity from the FTC for interstate traffic

Distribution Center

Typically a finished goods warehouse designed for demand-driven rapid distribution to retailers.

Inventory Accuracy

When the on-hand quantity is within an allowed tolerance of the recorded balance. Usually measured as the percent of items with inventory levels that fall within tolerance.

10/10 UNGC Principles - Anti-Corruption

Work against corruption in all its forms, including extortion and bribery

Protective Packaging

Wrapping or covering of material that provides containment, protection, and identification of inventory in a warehouse.

Bill of Material (BOM)

a listing of all the subassemblies, intermediates, parts, and raw materials that go into a parent assembly showing the quantity of each required to make an assembly

Simplify

neatly arrange items for use

The UN Global Compact relies on

public accountability, transparency, and disclosure

Bullwhip Effect

An extreme change in the supply position upstream in a supply chain generated by a small change in demand downstream in the supply chain. Inventory can quickly move from being back-ordered to being excess. This is caused by the serial nature of communicating orders up the chain with the inherent transportation delays of moving product down the chain. Can be eliminated by synchronizing the supply chain

Transcendent Quality

An ideal; an condition of excellence.

Remanufacturing

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

Reverse Auction

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

Cycle Couting

An inventory accuracy audit technique where inventory is counted on a cyclic schedule rather than once a year.

Projected Available Balance

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

Stock Keeping Unit (SKU)

An inventory item; In a distribution system, an item at a particular geographic location

Wall-to-Wall Inventory

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

Tariff

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

Scheduled Receipt

An open order that has an assigned due date

Variable Cost

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

Work order

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

Job Shop

An organization in which similar equipment is organized by function. Each job follows a distinct routing through the shop; A type of manufacturing process used to produce items to each customer's specification. Production operations are designed to handle a wide range of product designs and are performed at fixed plant locations using general-purpose equipment

Sustainability

An organizational focus on activities that provide present benefit without compromising the needs of future generations

Productivity

An overall measure of the ability to produce a good or a service. It is the actual output of production compared to the actual input of resource

Backorder

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

Root Cause Analysis

Analytical methods to determine the core problem(s) of an organization, process, product, market, and so forth

Inventory Turnover Equation

Annual Costs of sales/average inventory levels

Product Layout

Another name for flow process layout. A system that is set upp for a limited range of similar products.

Waste

Any activity that does not add value to the good or service in the eyes of the consumer; A by-product of a process or task with unique characteristics requiring special management control. Waste production can usually be planned and somewhat controlled. Scrap is typically not planned and may result from the same production run as waste

Constraint

Any element or factor that prevents a system from achieving a higher level of performance with respect to its goals. Can be physical or managerial

Finite Loading

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

Appraisal Costs

Associated with the formal evaluation and audit of quality in the firm. Typically include inspection, quality audits, testing calibration, and checking time

Takt Time Formula

Available production time/rate of customer demand

Product-Based Quality

Based on a product attribute

Total Line-Haul Cost

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

Line Haul Costs

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

Approaches to Performing RCCP

Bill of labor (resources, capacity) approach, the capacity planning using overall factors approach, and the resource profile approach

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 int he next five years

Bonded Warehouse

Buildings or parts of buildings designated by the US Secretary of the Treasury for storing imported merchandise, operated under US Customs supervision

Primary driver of globalization

Business

Quality

Conformance to requirements or fitness for use. Can be defined through five principal approaches: 1. Transcendent quality 2. Product-based quality 3. User-based quality 4. Manufacturing-based quality 5. Value-based quality; Has two major components: 1. Quality of conformance 2. Quality of Design

Total Costs

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

Product Cost

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

Dependent Demand

Demand that is directly related to or derived from the BOM structure for other items 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

Performance Standard

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

Logistics

In a supply chain management context, it is the subset of supply chain management that controls the forward and reverse movement, handling, and storage of goods between origin and distribution points; In an industrial context, the art and science of obtaining, producing, and distributing material and product in the proper place and in proper quantities; In a military sense, its meaning can also include the movement of personnel

Value Added

In accounting, the addition of direct labor, direct material, and allocated overhead assigned at an operation. It is the cost roll-up as a part goes through a manufacturing process to finish inventory; In current manufacturing terms, the actual increase of utility from the viewpoint of the customer as a part is transformed from raw material to finished inventory; the contribution made by an operation or a plant to the final usefulness and value of a product, as seen by the customer. The objective is to eliminate all non-value-added activities in producing and providing a good or service

Total Cost Curve

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

Enterprise Resources Planning (ERP)

Framework for organizing, defining, and standardizing the business processes necessary to effectively plan and control an organization so the organization can use its internal knowledge to seek external advantage.

Trend

General upward or downward movement of a variable over time

Rated Capacity Equation

Hours available*efficiency*utilization

Pegging

In MRP and MPS, the ability to identify for a givenitem the sources of its gross requirements and/or allocations.

Net Requirements

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

VATI Analysis

In TOC, procedure for determining the general flow of parts and products from raw materials to finished products (logical product structure). (1) V logical structure - starts with one or few raw materials, and the product expands into a number of different products as it flows thru divergent points in its routings; (2) A logical structure - dominated by converging points. Many raw materials are fabricated and assembled into a few finished goods; (3) T logical structure - consists of numerous similar finished products assembled from common assemblies, subassemblies, and parts; (4) I logical structure - simplest of production flows, where resources are shared between different products and the flow is in a straight line sequence, such as an assembly line. Once general parts flow is determined, the system control points (gating operations, convergent points, divergent points, constraints, and shipping points) can be identified and managed

Reorder Quantity

In a fixed reorder quantity system of inventory control, the fixed quantity that should be ordered each time the available stock falls to or below the reorder point; In a variable reorder quantity system, the amount ordered from time period to time period varies

Safety Stock

In general, a quantity of stock planned to be in inventory to protect against fluctuations in demand or supply; In the context of master production scheduling, the additional inventory and capacity planned as protection against forecast errors and short-term changes in thee backlog

Cycle Time

In industrial engineering, the time between the completion of two discrete units of production. In materials management, the length of time from when material enters a production facility until it exits

Service Industry

In its narrowest sense, an organization that provides an intangible product; In its broadest sense, all organizations except farming, mining, and manufacturing

Heijunka

In just-in-time philosophy, an approach to level production throughout the supply chain to match the planned rate of end product sales

Critical Chain Method

In the theory of constraints, a network planning technique for the analysis of a project's completion time, used for planning and controlling project activities

Days of Supply

Inventory-on-hand metric converted from units to ow long the units will last; A financial measure of the value of all inventory in the supply chain divided by the average daily cost of goods sold rate

Maintenance, Repair, and Operating (MRO) Supplies

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

When was the UN Global Compact launched?

July 2000

Direct Labor

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

4 - Practical benefit to participating in the UNGC

Linking business units and subsidiaries across the value chain with the UNGC's local networks around the world

Time-Phased Order Point (TPOP)

MRP like time planning logic technique for independent demand items, where gross requirements come from a forecast, not via explosion. Can be used to plan distribution center inventories as well as to plan for service (repair) parts, because MRP logic can readily handle items with dependent demand, independent demand, or a combination of both.

Objectives of the UN Global Compact

Mainstream the 10 principles in business activities around the world; Catalyze actions in support of broader UN goals

2/10 UNGC Principles - Human Rights

Make sure they are not complicit in human rights abuses

In-Transit Inventory

Material moving between two or more locations, usually separated geographically

Scrap

Material outside of specifications and possessing characteristics that make rework impractical

Direct Material

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

Materials Handling

Movement and storage of goods inside the distribution center. Represents a capital cost and is balanced against the operating costs of the facility

Cycle Stock

One of the two main conceptual components of any item inventory, the cycle stock is the most active component. Depletes gradually as customer orders are received and is replenished cyclically when supplier orders are received.

Interplant demand

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

Average Inventory

One-half the average lot size plus the safety stock, when demand and lot sizes are expected to be relatively uniform over time. The average can be calculated as an average of several inventory observations taken over several historical times periods

Ways

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

Time Buffer

Protection against uncertainty that takes the form of time

Demonstrated Capacity

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

Supplier

Provider of goods or services; Seller with whom the buyer does business, as opposed to vendor, which is a generic term referring to all sellers in the marketplace

Raw Material

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

Quality of Conformance

Quality is defined by the absence of defects

Quality of Design

Quality is measured by the degree of customer satisfaction with a product's characteristics and features

Shingo's Seven Wastes

Shigeo Shingo, a pioneer in the Japanese just-in-time philosophy, identified seven barriers to improving manufacturing. 1. Waste of overproduction 2. Waste of waiting 3. Waste of transportation 4. Waste of stocks 5. Waste of motion 6. Waste of making defects 7. Waste of the processing iteself

Intermodal Transport

Shipments moved by different types of equipment combining the best features of each mode; The use of two or more different carrier modes in the through movement of a shipment

Fixed-Position Manufacturing

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

Service

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

Standardize

Sort, simplify, and scrub daily

Load Leveling

Spreading orders out of in time or rescheduling operations so that the amount of work to be done in sequential time periods tends to be distributed evenly and is achievable

7/10 UNGC Principles - Environment

Support a precautionary approach to environmental challenges

1/10 UNGC Principles - Human Rights

Support and respect the protection of internationally proclaimed human rights

Advanced Planning and Scheduling (APS)

Techniques that deal with analysis and planning of logistics and manufacturing during short, intermediate, and long-term time periods

Freight Forwarder

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

Kaizen

The Japanese term for improvement; refers to continuing improvement involving everyone. Relates to finding and eliminating waste in machinery, labor, or production methods

Jidoka

The Japanese term for the practice of stopping the production line when a defect occurs

Customer Service

The ability of a company to address the needs, inquiries, and requests of customers; A measure of the delivery of a product to the customer at the time the customerspecified

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

Traceability

The attribute allowing the ongoing location of a shipment to be determined; The registering and tracking of parts, processes, and materials used in production, by lot or serial number

Idle Capacity

The available capacity that exists on non constraint resources beyond the capacity required to support the constraint. Has two components: Protective capacity and excess capacity

Mean Absolute Deviation (MAD)

The average of the absolute values of the deviations of observed values from some expected value.

Marketing Strategy

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

Inventory Management

The branch of business management concerned with planning and controlling inventories

Procurement

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

Capacity Available

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

Demurrage

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

General and Administrative Expenses (G&A)

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

Supply Chain Management

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

Drum Schedule

The detailed production schedule for a resource that sets the pace for the entire system. Must reconcile the customers requirements with the system's constraints

Forecast Error

The difference between actual demand and forecast demand, stated as an absolute value or as a percentage

Variance

The difference between the expected (budgeted or planned) value and the actual; In statistics, a measurement of dispersion of data

Profit Margin

The difference between the sales and cost of goods sold for an organization, sometimes expressed as a percentage of sales

Gross Margin

The difference between total revenue and the cost of goods sold

Distribution Channel

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

Gantt Chart

The earliest and best-known type of planning and control chart, especially designed to show graphically the relationship between planned performance and actual performance over time

Supplier Partnership

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

Rated Capacity

The expected output capability of a resource or system.

Receiving

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

Distribution Requirements Planning (DRP)

The function of determining the need to replenish inventory at branch warehouses. A time-phased order point approach is used where the planned orders at the branch warehouse level are "exploded" via MRP logic to become gross requirements of the supplying source

Priority Planning

The function of determining what material is needed and when.

Capacity Management

The function of establishing measuring, monitoring, and adjusting limits or levels of capacity in order to execute all manufacturing schedules. Executed at 4 levels: Resource requirements planning, rough-cut capacity planning, capacity requirements planning and input/output control

Capacity Requirements Planning

The function of establishing, measuring, and adjusting limits or levels of capacity.

Transportation

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

Demand Management

The function of recognizing all demands for goods and services to support the marketplace. Involves prioritizing demand when supply is lacking. Proper demand management facilitates the planning and use of resources for profitable business results.

Production Activity Control (PAC)

The function of routing and dispatching the work to be accomplished through the production facility and of performing supplier control. Encompasses the principles, approaches, and techniques needed to schedule, control, measure, and evaluate the effectiveness of production operations

Field Service

The functions of installing and maintaining a product for a customer after the sale or during the lease. May also include training and implementation assistance

Supply Chain

The global network used to deliver products and services from raw materials to end customers through an engineered flow of information, physical distribution, and cash

Freight Consolidation

The grouping of shipments to obtain reduced costs or improved utilization of the transportation function. Consolidation can occur by market area grouping, grouping according to scheduled deliveries, or using third-party pooling services

Materials Management

The groupings of management functions supporting the complete cycle of material flow, from the purchase and internal controls of production materials to the planning and control of work in process to the warehousing, shipping, and distribution of the finished product

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

Parent item

The item produced from one or more components

Strategic Plan

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

Operations Management

The planning, scheduling, and control of the activities that transform inputs into finished goods and services

Employee Empowerment

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

Backhauling

The process of a transportation vehicle returning from the original destination point to the point of origin

Order Entry

The process of accepting and translating what a customer wants into terms used by the manufacturer or distributor. The commitment should be based on the available-to-promise line in the master schedule.

Requirements Explosion

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

Demand Planning

The process of combining statistical forecasting techniques and judgment to construct demand estimates for products and services across the supply chain from the supplier's raw materials to the consumer's needs.

Capable-To-Promise (CTP)

The process of committing orders against available capacity as well as inventory.

Product Mix

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

Purchase Order

The purchaser's authorization used to formalize a purchase transaction with a supplier

Process Batch

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

Planned Order Receipt

The quantity planned to be received at a future date as a result of a planned order release.

On-hand Balance

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

Throughput

The rate at which the system generates "goal units". Because throughput is a rate, it is always expressed for a given time period

Velocity

The rate of change of fan item with respect to time; 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 more desirable because it indicates higher asset turnover for stockholders and faster order-to-delivery response for customers

Tracking Signal

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

Component

The raw material, part, or subassembly that goes into a higher-level assembly, compound, or other item. Also include packaging materials for finished items

Point of Sales (POS)

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

Repetitive Manufacturing

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

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

Manufacturing-Based Quality

Conformance to requirements

Scrub

Clean up the work area

Stockout Percentage Formula

(1-customer service ratio)*100%

Utilization Formula

100% - % of time lost due to the unavailability of machines, tools, workers, and so forth

Supplier Relationship Management (SRM)

A comprehensive approach to managing an enterprise's interactions with the organizations that supply the goods and services the enterprise uses. The goal is to streamline and make more effective the processes between an enterprise and its suppliers. Often associated with automating procure-to-pay business processes, evaluating supplier performance, and exchanging information with suppliers.

Perpetual inventory record

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

Pareto's Law

A concept developed by Vilfredo Pareto that states that a small percentage of a group accounts for the largest fraction of its impact or value

Participative Design/Engineering

A concept that refers to the simultaneous participation of all the functional areas of the firm in the product design activity. Suppliers and customers are often also included. Intent is to enhance the design with the inputs of all the key stakeholders

Bias

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

Job Costing

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

Theory of Constraints (TOC) Accounting

A cost and managerial accounting system that accumulates costs and revenues into three areas - throughput, inventory, and operating expenses.

Hedge Inventory

A form of inventory buildup to buffer against some event that may not happen. Involves speculation related to potential labor strikes, price increases, unsettled governments, and events that could severely impair a company's strategic initiatives.

Intermittent Production

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

Flow Shop

A form of manufacturing organization in which machines and operators handle a standard, usually uninterrupted, material flow. The operators generally perform the same operations for each production run. A flow shop is often referred to as a mass production shop or is said to have a continuous manufacturing layout. The plant layout (arrangement of machines, benches, assembly lines, etc.) is designed to facilitate a product "flow." Some process industries (chemicals, oil, paint, etc.) are extreme examples of flow shops. Each product, though variable in material specifications, uses the same flow pattern through the shop. Production is set at a given rate, and the products are generally manufactured in bulk.

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

Indented Bill of Materials

A form of multilevel bill of material. Exhibits the highest-level parents closest to the left margin, and all the components going into these parents are shown indented toward the right. All subsequent levels of components are indented farther to the right. If a component is used in more than one parent within a given product structure, it will appear more than once, under every sub-assembly in which it is used

Master Schedule

A format that includes time periods, the forecast, customer orders, projected available balance, available-to-promise, and the master production schedule. Takes into account the forecast, production plan, and other important considerations such as backlog, availability of material, availability of capacity, and management policies and goals

Plan-Do-Check-Action (PDCA)

A four-step process for quality improvement.

UN Global Compact Management Model

A framework for guiding companies through the process of formally committing to, assessing, defining, implementing, measuring, and communicating the United Nations Global Compact and its principles

Work In Process (WIP)

A good or goods in various stages of completion throughout the plant, including all material from raw material that has been released for initial processing up to completely processed material awaiting final inspection and acceptance as finished goods inventory. Many accounting systems also include the value of semi-finished stock and components in this category

Value Stream Map

A graph displaying the sequence of operations needed to produce and deliver a product or service

Master Production Schedule (MPS)

A line on the master schedule grid that reflects the anticipated build schedule for those items assigned to the master scheduler.

Where-Used List

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

Fixed order Quantity

A lot-sizing technique in MRP or inventory management that will always cause planned or actual orders to be generated for a predetermined fixed quantity, or multiples thereof, if net requirements for the period exceed the fixed order quantity

Lot-for-lot (L4L)

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

Period Order Quantity

A lot-sizing technique under which the lot size is equal to the net requirements for a given number of periods.

Split Lot

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

Cellular Manufacturing

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

Overlapped Schedule

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

Customer Relationship Management (CRM)

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

Vendor-Managed Inventory (VMI)

A means of optimizing supply chain performance in which the supplier has access to the customer's inventory data and is responsible for maintaining the inventory level required by the customer. 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

Utilization

A measure of how intensively a resource is being used to produce a good or service. Compares actual time used to available time. Traditionally, calculated as the ratio of direct time charged(run time+setup time) to the clock time available; In theory or constraints, activation of a resource that productively contributes to reaching the goal. Over-activation of a resource does not productively utilize a resource

On-Time Schedule Performance

A measure of meeting the customer's originally negotiated delivery request date

Total Factor Productivity

A measure of productivity 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

Level of Service

A measure of satisfying demand through inventory or by the current production schedule in time to satisfy the customers' requested delivery dates and quantities

Record Accuracy

A measure of the conformity of recorded values in a bookkeeping system to the actual values

Stockout Percentage

A measure of the effectiveness with which a company responds to actual demand or requirements. Can be a comparison of total orders containing a stockout to total orders, or of line items incurring stockouts to total line items ordered during a period

Efficiency

A measurement of the actual output relative to the standard output expected. Measures how well something is performing relative to existing standards

Manufacturing Resource Planning (MRP II)

A method for the effective planning of all resources of a manufacturing company. Addresses operational planning in units and financial planning in dollars, and has a simulation capability to answer what-if questions

Periodic Replenishment

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

Backflush

A method of inventory bookkeeping where the book inventory of components is automatically reduced by the computer after completion of activity on the component's upper-level parent item based on what should have been used as specified on the bill of material and allocation records. This approach has the disadvantage of a built-in differential between the book record and what is physically in stock

Kanban

A method of just-in-time production that uses standard containers or lot sizes with a single card attached to each. It is a pull system in which work centers signal with a card that they wish to withdraw parts from feeding operations or suppliers

Batch Picking

A method of picking orders in which order requirements are aggregated by product across orders to reduce movement to and from product locations. The aggregated quantities of each product are then transported to a common area where the individual orders are constructed

Discrete order Picking

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

Wave Picking

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

Fixed-Location Storage

A method of storage in which a relatively permanent location is assigned for the storage of each item in a storeroom or warehouse. Although more space is needed to store parts than in a random-location storage system, fixed locations become familiar, and therefore a locator file may not be needed

Zone Picking

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

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. Can be viewed as a set of communication and translation tools. Tries to eliminate the gap between what the customer wants in a new product and what product is capable of delivering. Often leads to a clear identification of the major requirements of the customers. These expectations are referred to as the voice of the customer

Lean Six Sigma

A methodology that combines the improvement concepts of lean and six sigma. Uses the seven wastes of lean and the DMAIC process from six sigma, and awards recognition of competence through judo-style belts

Six Sigma

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

Critical Path Method (CPM)

A network planning technique for the analysis of a project's completion time used for planning and controlling the activities in a project.

Continuous Process Improvement (CPI)

A never-ending effort to expose and eliminate root causes of problems; small-step improvement as opposed to big-step improvement

Time Bucket

A number of day sof data summarized into a columnar or row-wise display

Customs Broker

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

Lean Production

A philosophy of production that emphasizes the minimization of the amount of all the resources used int he various activities of the enterprise. It involves identifying and eliminating non-value-adding activities in design, production, supply chain management, and dealing with customers

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. Can aid planners working with MRP systems to respond to material and capacity problems by firming up selected planned orders. Also, are the normal method of stating the MPS

Time Fence

A policy or guideline established to note where various restrictions or changes in operating procedures take place

Seasonality

A predictable repetitive pattern of demand measured within a year where demand grows and declines. These are calendar-related patterns that can appear annually, quarterly, monthly, weekly, daily and/or hourly

Quantity Discount

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

Transit Time

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

Business Plan

A statement of long-range strategy and revenue, cost, and profit objectives usually accompanied by budgets, a projected balance sheet, and a cash flow statement.

Control Limit

A statistically determined line on a control chart.

Certified Supplier

A status awarded to a supplier that consistently meets predetermined quality, cost, delivery, financial, and count objectives. Incoming inspection may not be required

Store

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

Random-Location Storage

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

Product Differentiation

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

Planned Order

A suggested order quantity, release date, and due date created by the planning system's logic when it encounters net requirements in processing MRP

Closed-Loop MRP

A system built around material requirements planning that includes the additional planning processes of production 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 executing processes come into play.

Total Quality Management (TQM)

A term coined to described Japanese-style management approaches to quality improvement. A management approach to long-term success through customer satisfaction. Based on the participation of all members of an organization in improving processes, goods, services, and the culture in which they work.

Sales Plan

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

Cause-And-Effect Diagram

A tool for analyzing process dispersion.

Economic Order Quantity (EOQ)

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

Two-Bin Inventory System

A type of fixed-order system in which inventory is carried in two bins. A replenishment quantity is ordered when the first bin (working) is empty. During the replenishment lead time, material is used from the second bin. When the material is received, the second bin (which contains a quantity to cover demand during lead time plus some safety stock) is refilled and the excess is put into the working bin. At this time, stock is drawn from the first bin until it is again exhausted

Min-Max System

A type of order point replenishment system where the minimum is the order point, and the maximum is the "order up to" inventory level.

United Nations Global Compact

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

Queue

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

SMART

Abbreviation for organizational goals that are Specific, Measurable, Achievable/Attainable, Relevant/Realistic, and Timely

5 - Practical benefit of participating in the UNGC

Accessing UN's knowledge of and experience with sustainability and development issues

Infinite Loading

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

Resource Planning

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

Detention

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

Terminal-Handling Charges

Carrier charges dependent on the number of times a shipment must be loaded, handled, and unloaded. Cost can be reduced by consolidating shipments into few parcels or by shipping in truckload quantities; For shipping lines, the costs of paying container terminals for unloading and loading during shipments. These costs are borne by the shipping lines at the port of shipment or destination

Pickup and Delivery Costs

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

Truckload (TL) Carriers

Carriers that deliver/charge only for full truckload shipments

Supplier Certification

Certification procedures verifying that a supplier operates, maintains, improves, and documents effective procedures that relate to the customer's requirements.

Work Cell

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

Break-Bulk

Dividing truckloads, railcars, or containers of homogeneous items into smaller, more appropriate quantities for use

5/10 UNGC Principles - Labour

Effective abolition of child labour

4/10 UNGC Principles - Labour

Elimination of all forms of forced and compulsory labour

6/10 UNGC Principles - Labour

Elimination of discrimination in respect of employment and occupation

9/10 UNGC Principles - Environment

Encourage the development and diffusion of environmentally friendly technologies

Yield Formula

Final amount/initial amount -> converted to a decimal or percentage

User-Based Quality

Fitness for use

Five Ss

Five terms beginning with "S" used to create a workplace suitable for lean production: Sort, simplify, scrub, standardize, and sustain.

Distribution Inventory

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

Muda (Waste)

In lean manufacturing, costs are reduced by reducing waste within a system. There are seven categories of waste: Overproduction (excess or too early), waiting (queuing delays), Transportation (Unneeded movement), Processing (Poor process design), Motion (activities that do not add value), Inventory (stock that is sitting and is accumulating cost without necessarily providing value), Defective units (Scrap or rework)

Uniform Plant Loading

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

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.

Available-To-Promise (ATP)

In operations, the uncommitted portion of a company's inventory and planned production maintained in the master schedule to support customer-order promising.

Flow Processing

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

Modularization

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

Push System

In production, the production of items at times required by a given schedule planned in advance; In material control, the issuing of material according to a given schedule or issuing material to a job order at its start time; In distribution, a system for replenishing field warehouse inventories where replenishment decision making is centralized, usually at the manufacturing site or central supply facility

Pull System

In production, the production of items only as demanded for use or to replace those taken for use; In material control, the withdrawal of inventory as demanded by the using operations. Material is not issued until a signal comes from the user; In distribution, a system for replenishing field warehouse inventories where replenishment decisions are made at the field warehouse itself, not at the central warehouse or plant

Start Date

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

Total Cost of Ownership (TCO)

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

Buffer Management

In the theory of constraints, a process in which all expediting in a shop is driven by what is scheduled to be in the buffers

Protective Inventory

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

Productive Capacity

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

Level Schedule

In traditional management, a production schedule or master production schedule that generates material and labor requirements that are as evenly spread over time as possible

Terminals

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

Unitization

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

Routing

Information detailing the method of manufacture of a particular item. Includes the operations to be performed, their sequence, the various work centers involved, and the standards for setup and run.; In information systems, the process of defining the path a message will take from one computer to another computer

Four Categories of Cost

Internal failure costs, external failure costs, appraisal costs, prevention costs

Seasonal Inventory

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

Decentralized Inventory Control

Inventory decision making exercised at each stocking location for SKUs at that location

Centralized Inventory Control

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

Pipeline Stock

Inventory in the transportation network and the distribution system, including the flow through intermediate stocking points.

Transit inventory

Inventory in transit between manufacturing and stocking lcoations

Inventory Ordering System

Inventory models for the replenishment of inventory

Fluctuation Inventory

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

Transportation Inventory

Inventory that is in transit between locations

Lot-size inventory

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

Inventory Buffer

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

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

Multisourcing

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

U-Lines

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

Engineer-to-Order

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

Market-Driven

Responding to customers' needs

Throughput Formula

Revenues received - totally variable costs/unites of the chosen time period

Order Picking

Selecting or "picking" the required quantity of specific products for movement to a packaging area and documenting that the material was moved from one location to shipping

Subcontracting

Sending production work outside to another manufacturer

Sort

Separate needed items from unneeded ones and remove the latter

Takt Time

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

2 - Practical benefit to participating in the UNGC

Sharing best and emerging practices to advance practical solutions and strategies to common challenges

Quick Changeover

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

Nesting

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

Scheduling

The act of creating a schedule, such as a shipping schedule, master production schedule, maintenance schedule or supplier schedule

Make-or-Buy Decision

The act of deciding whether to produce an item internally or buy it from an outside supplier. Factors to consider in the decision include costs, capacity availability, proprietary and/or specialized knowledge, quality considerations, skill requirements, volume, and timing

Inventory Control

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

Distribution

The activities associated with the movement of material from the manufacturer to the customer. Encompass the functions of transportation, warehousing, inventory control, material handling, order administration, site and location analysis, industrial packaging, data processing, and the communications network necessary for effective management. Includes all activities related to physical distribution, as well as the return of goods to the manufacturer

Warehousing

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

Preventive Maintenance

The activities, including adjustments, replacements, and basic cleanliness, that forestall machine breakdowns. Purpose is to ensure that production quality is maintained and that delivery schedules are met

Physical Inventory

The actual inventory itself; the determination of inventory quantity by actual count. Can be taken on a continuous, periodic, or annual basis

Production Plan

The agreed-upon plan that comes from the production planning process - specifically, the overall level of manufacturing output planned to be produced, usually stated as a monthly rate for each product family

Lot Size

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

Yield

The amount of good or acceptable material available after the completion of a process. In manufacturing planning and control systems, it is usually related to specific routing steps or to the parent item to determine how many units should be scheduled to produce a specific number of finished goods

Load

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

Planning Horizon

The amount of time a plan extends into the future

Demand lead Time

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

Supplier Lead Time

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

ABC CLassification

The classification of a group of items in decreasing order of annual dollar volume or other criteria

Five Whys

The common practice in total quality management is to ask "why" five times when confronted with a problem. By the time the answer to the fifth "why" is found, the ultimate cause of the problem is identified

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

Employee Involvement (EI)

The concept of using the experience, creative energy, and intelligence of all employees by treating them with respect, keeping them informed, and including them and their ideas in decision-making process appropriate to their areas of expertise. Focuses on quality and productivity improvements

Cost of Poor Quality

The cost associated with providing poor-quality products or services

Carrying Cost

The cost of holding inventory, usually defined as a percentage of the dollar value of inventory per unit of time. Depend mainly on the cost of capital invested as well as costs of maintaining the inventory such as taxes and insurance, obsolescence, spoilage, and space occupied.

Stockout Costs

The costs associated with a stock-out. Those costs may include lost sales, back-order costs, expediting, and additional manufacturing and purchasing costs

Prevention Costs

The costs caused by improvement activities that focus on the reduction of failure and appraisal costs.

Overhead

The costs incurred in the operation of a business that cannot be directly related to the individual goods or services produced

Internal Failure Costs

The costs of things that go wrong before the product reaches the customer.

External Failure Costs

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

Ordering Cost

The costs that increase as the number of orders placed increases. Used in calculating order quantities.

Mass Communication

The creation of a high-volume product with large variety whose manufacturing cost is low due to the large volumes, allowing customers to specify an exact model out of a large volume of possible end items

Value-Based Quality

The degree of excellence at an acceptable price

Independent Demand

The demand for an item that is unrelated to the demand for other items

Process Flexibility

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

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

Break-Even Point

The level of production of the volume of sales at which operations are neither profitable nor unprofitable. The break-even point is the intersection of the total revenue and total cost curves

Cumulative Lead Time

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

Physical Supply

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

Cash Flow

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

Inventory Turnover

The number of times that an inventory cycles, or "turns over", during the year.

Available Inventory

The on-hand inventory balance minus allocations, reservations, backorders, and (usually) quantities held for quality problems

Flowchart

The output of a flow-charting process; a chart that shows the operations, transportation, storage's, delays, inspections, and so on related to a process. Drawn to better understand processes. One of the seven tools of quality

Quality Costs

The overall costs associated with prevention activities and the improvement of quality throughout the firm before, during, and after production of a product. These costs fall into four recognized categories: internal failure costs, external failure costs, appraisal costs, and prevention costs.

Data Governance

The overall management of data's accessibility, usability, reliability, and security. used to ensure data record accuracy

Electronic Data Interchange (EDI)

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

Gemba

The place where humans create value; the real workplace

Priority Control

The process of communicating start and completion dates to manufacturing departments in order to execute a plan

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.

Total Quality Control (TQC)

The process of creating and producing the total composite good and service characteristics through which the good and service will meet the expectations of customers

Capacity Planning

The process of determining the amount of capacity required to produce in the future.

Mixed-Model Scheduling

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

What-If Analysis

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

Outsourcing

The process of having suppliers provide goods and services that were previously provided internally. Involves substitution

Order Promising

The process of making a delivery commitment

Quality Control

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

Value Stream

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

Discrete Manufacturing

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

Job Shop Scheduling

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

Unit of Measure

The uni in which the quantity of an item is managed

Unit of Measuring (purchasing)

The unit used to purchase an item. This may or may not be the same unit of measure used in the internal systems.

Project Management

The use of skills and knowledge in coordinating the organizing, planning, scheduling, directing, controlling, monitoring, and evaluating of prescribed activities to ensure that the stated objectives of a project, manufactured good, or service are achieved

Setup

The work required to change a specific machine, resource, work center, or line from making the last good piece of item A to making the first good piece of item B; The refitting of equipment to neutralize the effects of the last lot produced

Landed Cost

This cost includes the product cost plus the costs of logistics

8/10 UNGC Principles - Environment

Undertake initiatives to promote greater environmental responsibility

3/10 UNGC Principles - Labour

Uphold the freedom of association and the effective recognition of the right to collective bargaining

Upstream

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

6 - Practical benefit of participating in the UNGC

Utilizing UNGC management tools and resources, and the opportunity to engage in specialized work streams in the environmental, social, and governance realms

Spread

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