APICS Deck 5 OO Flashcards
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order backlog
Syn: backlog, past due order.O
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work package
In project management, a deliverable at the bottom of a work breakdown structure. This may be treated as a subproject to be assigned to a project manager to plan and execute, in which case this manager will define new activities.W
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technology transfer
The transmission of technology (e.g., knowledge, skills, software, hardware) from one country, organization, business, or entity to another country, organization, business, or entity.T
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end-user computing
Use of computer resources by non-information-system personnel to enter, retrieve, manipulate, or print data.E
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SEC
Abbreviation for the Securities and Exchange Commission (U.S.).S
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predictable maintenance
Syn: predictive maintenance.P
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description by market grade/industry standard
A method to identify a product or service required when there is a high level of understanding between user and supplier.D
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days outstanding
A term used to imply the amount of an asset or liability measured in days of sales. For example, accounts payable days are the typical number of days that a firm delays payments of invoices to its suppliers.D
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risk category
A cluster of risk causes with a label such as external, environmental, technical, or organizational.R
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body of knowledge
The knowledge in a given area that a person is expected to understand to be certified as a practitioner.B
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indicator
An index of business activities.I
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control limit
A statistically determined line on a control chart (upper control limit or lower control limit). If a value occurs outside of this limit, the process is deemed to be out of control.C
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seller’s market
A market condition in which goods cannot easily be secured (purchased) and when the economic forces of business tend to cause goods to be priced at the supplier’s estimate of value.S
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logistics system
The planning and coordination of the physical movement aspects of a firm’s operations such that a flow of raw materials, parts, and finished goods is achieved in a manner that minimizes total costs for the levels of service desired.L L
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off-grade
A product whose physical or chemical properties fall outside the acceptable ranges.O
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perceived quality
One of the eight dimensions of quality that refers to a subjective assessment of a product’s quality based on criteria defined by the observer.P
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contactless
Using radio frequency identification or similar technologies to record data about an item electronically without physical contact with the item.C
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process capability
Refers to the ability of the process to produce parts that conform to (engineering) specifications. Process capability relates to the inherent variability of a process that is in a state of statistical control. See: Cp, Cpk, process capability analysis.P
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run-out list
1) A list of items to be scheduled into production in sequence by the dates at which the present available stock is expected to be exhausted. 2) A statement of ingredients required to use up an available S resource (e.g., how much “a” resource is required to consume 300 pounds of “x”).R
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functional manager
A manager responsible for a specialized department, such as accounting or engineering.F
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P:D ratio
A ratio where P is the manufacturing lead time and D is the customer required delivery time. If the P:D ratio exceeds 1.00, either a customer’s order will be delayed or production will start as the result of a forecast (make-to-stock) or an anticipated customer order (make-to-order).P
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B2B
Abbreviation for business-to-business commerce.B
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specification
A clear, complete, and accurate statement of the technical requirements of a material, an item, or a service, and of the procedure to determine if the requirements are met.S
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RAM
Abbreviation for responsibility assignment matrix.R
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accreditation
Certification by a recognized body of the facilities, capability, objectivity, competence, and integrity of an agency, service, operational group, or individual to provide the specific service or operation needed. For example, the Registrar Accreditation Board accredits those organizations that register companies to the ISO 9000 Series Standards.A
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just in time (JIT)
A philosophy of manufacturing based on planned elimination of all waste and on continuous improvement of productivity. It encompasses the successful execution of all manufacturing activities required to produce a final product, from design engineering to delivery, and includes all stages of conversion from raw material onward. The primary elements of just in time are to have only the required inventory when needed; to improve quality to zero defects; to reduce lead times by reducing setup times, queue lengths, and lot sizes; to incrementally revise the operations themselves; and to accomplish these activities at minimum cost. In the broad sense, it applies to
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vendor-managed inventory (VMI)
A means of optimizing supply chain performance in which the supplier has access to the customer’s inventory data and is responsible for maintaining the inventory level required by the customer. This activity is accomplished by a process in which resupply is done by the vendor through regularly scheduled reviews of the on-site inventory. The on-site inventory is counted, damaged or outdated goods are removed, and the inventory is restocked to predefined V levels. The vendor obtains a receipt for the restocked inventory and accordingly invoices the customer. See: continuous replenishment.V
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centralized computer network
A network in which there is one computer (or possibly more) linked to all others in a given enterprise.C
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bin
1) A storage device designed to hold small discrete parts. 2) A shelving unit with physical dividers separating the storage locations.B
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contribution margin pricing
A method of setting prices based on the contribution margin. It provides a ceiling and a floor between which the price setter operates.
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cost, insurance, freight (CIF)
A freight term indicating that the seller is responsible for cost, the marine insurance, and the freight charges on an ocean shipment of goods.C
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serial number
A unique number assigned for identification to a single piece that will never be repeated for similar pieces. Serial numbers are usually applied by the manufacturer but can be applied at other points, including by the distributor or wholesaler.S
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economic infrastructure
A nation’s networks for supporting commerce, including transportation, communications, and finance.E
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backflush costing
The application of costs based on the output of a process. Backflush costing is usually associated with repetitive manufacturing environments.B
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KPI
Abbreviation for key performance indicator.K L
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units-of-production depreciation
A method of depreciation whereby the amount to be recovered (written off as a period expense) is calculated based on estimated life of the equipment in units to be produced over the life and the number of units produced in a given time period. See: depreciation.U
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reverse engineering
The process of disassembling, evaluating, and redesigning a competitor’s product for the purpose of manufacturing a product with similar characteristics without violating any of the competitor’s proprietary manufacturing technologies.R
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XML
Abbreviation for extensible markup language.X Y
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common material
Readily available items used in industry that require no special handling.C
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business unit
A division or segment of an organization generally treated as a separate profit-and-loss center.B
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purchase consolidation
The pooling of purchasing requirements by multiple areas in a company, or even across companies.P
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data transfer
The movement by electronic means of data from one location to another. The data can take the form of voice, text, image, or others. The movement is accomplished by communication links between computers and a variety of input/output devices.D
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automatic rescheduling
Rescheduling done by the computer to automatically change due dates on scheduled receipts when it detects that due dates and need dates are out of phase. Ant: manual rescheduling.A
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shop traveler
Syn: traveler.S
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obligated material
Syn: reserved material.O
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block stacking
A storage method in which pallets, cases, or cartons are stacked upwards from the floor to whatever practical height is available without the use of shelves.B
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schedule control
Control of a plant floor by schedules rather than by job orders (called order control). Schedules are derived by taking requirements over a period of time and dividing by the number of workdays allowed to run the parts or assemblies. Production completed is compared with the schedule to provide control. This type of control is most frequently used in repetitive and process manufacturing.S
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slack time rule
A dispatching rule that directs the sequencing of jobs based on slack time. Slack time is equal to (days left until due date × hrs/day) minus standard hours of work left on this specific job; for example, (5 × 8) – 12 = 28 hours of slack. The lower the amount of slack time, the higher the priority in sequencing of jobs.S
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purchase requisition
An authorization to the purchasing department to purchase specified materials in specified quantities within a specified time. See: parts requisition.P
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technical components
Parts that are difficult to make, have long lead times, and require expert knowledge to produce. They are parts that are produced by only a few suppliers because of these characteristics. Tooling to produce these products usually is owned by the customer to avoid proprietary or patent issues.T
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probable scheduling
A variant of scheduling that considers slack time to increase or decrease the calculated lead time of an order. Interoperation and administrative lead time components are expanded or compressed by a uniform “stretching factor” until no difference exists between the schedule of operations obtained by forward and backward scheduling. See: lead time scheduling.P
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integrated resource management (IRM)
Syn: resource management.I
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EAC
Abbreviation for estimate at completion.E
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scrap rate
Syn: scrap factor.S
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lading
The cargo being transported by a vehicle.L
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clicks and mortar
Refers to a brick and mortar company that also has succeeded in making online sales. Ant: bricks and mortar.C
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foreign freight forwarder
An entity that picks up goods at the production site and coordinates transport to the foreign customer’s location.F
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uniform product code
A retail product numbering and bar coding system that identifies the item and the manufacturer. U
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requirements definitions
Specifying the inputs, files, processing, and outputs for a new system, but without expressing computer alternatives and technical details.R
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point-of-use storage
Keeping inventory in specified locations on a plant floor near the operation where it is to be used.P
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customer service representative (CSR)
Personnel assigned to customer relations who answer customer questions and who provide technical support.C
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point-of-use inventory
Inventory placed in the production process near where it is used. See: dock-to-stock inventory.P P
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cycle time
1) In industrial engineering, the time between completion of two discrete units of production. For example, the cycle time of motors assembled at a rate of 120 per hour would be 30 seconds. 2) In materials management, it refers to the length of time from when material enters a production facility until it exits. Syn: throughput time.C
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deficiency
Failure to meet quality standards.D
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military standards
Product standards and specifications for military or defense contractors, units, suppliers, and so forth. These standards sometimes become de facto standards within the civilian community.M
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work measurement
Estimating how long it takes for an employee to produce one unit of output.W
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cost-benefit ratio
A ratio of total measurable benefits to the initial capital cost. This might be used in deciding which projects to pursue in a continuous improvement effort.C
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cybermarketing
Any type of internet-based promotion. Many marketing managers use the term to refer to any type of computer-based marketing.C D
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green manufacturing
A method of producing a good or service that minimizes external cost and pollution. It includes design for reuse, design for disassembly, and design for remanufacture. See: environmentally responsible business.G
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automated information system (AIS)
Computer hardware and software configured to automate calculating, computing, sequencing, storing, retrieving, displaying, communicating, or otherwise manipulating data and textual material to provide information.A
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T&M
Abbreviation for time and materials.T
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warrant of merchantability
An implied warranty that goods are fit for the use to which they are generally applied.W
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acid test
Syn: quick asset ratio.A
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service rate
In queuing theory, the rate at which arrivals are processed through the production or service system, in arrivals per unit of time. See: queuing theory.S
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inventory pooling
The act of holding inventory in a single location instead of multiple locations.I
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multiple sourcing
Syn: multisourcing. See: dual sourcing.M
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CSCMP
Abbreviation for Council of Supply Chain Management Professionals.C
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multiskilled
Individuals who are capable of carrying out a variety of tasks.M N
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supplier base
The group of suppliers from which a firm acquires goods and services. Syn: supply base.S
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inventory adjustment
A change made to an inventory record to correct the balance, to bring it in line with actual physical inventory balances. The adjustment either increases or decreases the item record on-hand balance.I
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ceteris paribus
Latin for all other things being the same.C
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acceptable outgoing quality level (AOQL)
A demarcation between the level of defects in a lot at which the lot will be accepted or rejected.A
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operation description
The details or description of an activity or operation to be performed. The operation description is normally contained in the routing document and could include setup instructions, operating instructions (feeds, speeds, heats, pressure, etc.), and required product specifications or tolerances.O
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optical scanning
A technique for machine recognition of characters by their images.O
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maximum allowable cost
In service organizations, the limit of reimbursement allowed by an agency for the cost of a supply item.M
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repair factor
The percentage of time on average that an item must be repaired for return to a serviceable condition. The repair factor is also expressed as a percentage applied to the quantity per assembly on the bill of material. It is useful for forecasting materials and capacity requirements for planning purposes. Syn: frequency of repair. See: occurrence factor, replacement factor.R
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retrofit
An item that replaces components originally installed on equipment; a modification to in-service equipment.R
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replenishment interval
Syn: replenishment period.R
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analytic workplace design
A design based on established biomechanical and behavioral concepts, including the known operating characteristics of people. Produces a workplace situation well within the range of human capacity and does not generally require modification, improvement, or preliminary experimental “mock-up.”A
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R&D
Abbreviation for research and development.R
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plant rate
The total value added by a plant divided by the total direct labor hours in particular time period. This percentage allows the scheduling at the rough cut and capacity requirements level of the plan.P
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materials requisition
1) An authorization that identifies the items and quantities to be withdrawn from inventory. 2) An authorization that identifies the items and quantities to be included in a purchase order. Syn: production materials requisition.M
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base stock system
A method of inventory control that includes, as special cases, most of the systems in practice. In this system, when an order is received for any item, it is used as a picking ticket, and duplicate copies, called replenishment orders, are sent back to all stages of production to initiate replenishment of stocks. Positive or negative orders, called base stock orders, are also used from time to time to adjust the level of the base stock of each item. In actual practice, replenishment orders are usually accumulated when they are issued and are released at regular intervals.B
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methods analysis
That part of methods engineering normally involving an examination and analysis of an operation or a work cycle broken down into its constituent parts to improve the operation, eliminate unnecessary steps, and/or establish and record in detail a proposed method of performance.M
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direct truck shipment
Shipment made without any additional stops, such as for loading or changing trucks.D
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alternate work center
The work center where an operation is not normally performed but can be performed. Ant: primary work center.A
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channel partners
Suppliers, manufacturers, distributors, and retailers who form a supply chain to make and distribute a set of products.C
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seven categories of waste: (1) overproduction
excess
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manufacturing instruction
A set of detailed instructions for carrying out a manufacturing process. It is usually referenced by the routing and thus can simplify the content of the routing.M
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licensing
Paying a fee for permission to manufacture and sell a product created by another.L
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turnover
1) Syn: inventory turnover. 2) In the United Kingdom and certain other countries, annual sales volume.T
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inventory turnover
The number of times that an inventory cycles, or “turns over,” during the year. A frequently used method to compute inventory turnover is to divide the average inventory level into the annual cost of sales. For example, an average inventory of $3 million divided into an annual cost of sales of $21 million means that inventory turned over seven times. Syn: inventory turns, turnover. See: inventory velocity.I
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Taguchi methodology
A concept of off-line quality control methods conducted at the product and process design stages in the product development cycle. This concept, expressed by Genichi Taguchi, encompasses three phases of product design: system design, parameter design, and tolerance design. The goal is to reduce quality loss by reducing the variability of the product’s characteristics during the parameter phase of product development. Syn: Taguchi methods.T
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certification audits
Audits occurring within registration processes (e.g., for ISO 9000:2000).C Certified Fellow in Production and Inventory
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scheduled load
The standard hours of work required by scheduled receipts (i.e., open production orders).S
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warehouse
A place to receive, store, and ship materials.W
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center-of-gravity approach
A methodology for locating distribution centers at approximately the location representing the minimum transportation costs between the plants, the distribution centers, and the markets.C
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decoupling points
The locations in the product structure or distribution network where inventory is placed to create independence between processes or entities. Selection of decoupling points is a strategic decision that determines customer lead times and inventory investment. See: control points.D
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industrial buyers
Buyers who purchase materials mainly for conversion.I
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logistics data interchange (LDI)
The electronic transmission of logistics information via computer systems.L
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current start date
In project management, the present estimate of an activity’s start date.C
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planned order
A suggested order quantity, release date, and due date created by the planning system’s logic when it encounters net requirements in processing MRP. In some cases, it can also be created by a master scheduling module. Planned orders are created by the computer, exist only within the computer, and may be changed or deleted by the computer during subsequent processing if conditions change. Planned orders at one level will be exploded into gross requirements for components at the next level. Planned orders, along with released orders, serve as input to capacity requirements planning to show the total capacity requirements by work center in future time periods. See: planning time fence.P
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forecast management
The process of making, checking, correcting, and using forecasts. It also includes determination of the forecast horizon.F forecast mean absolute percentage of error (FMAPE) The absolute error divided by actual demand for “n” periods. Where absolute error is the variation between the actual demand and the forecast for the period expressed as a positive value (without regard for sign).F
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backsourcing
Company processes that, previously handled externally, have been reassigned internally.B
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move card
In a just-in-time context, a card or other signal indicating that a specific number of units of a particular item are to be taken from a source (usually an outbound stockpoint) and taken to a point of use (usually an inbound stockpoint). It authorizes the movement of one part number between a single pair of work centers. The card circulates between the outbound stockpoint of the supplying work center and the inbound stockpoint of the using work center. Syn: move signal. See: kanban.M
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ethical standards
A set of guidelines for proper conduct by business professionals. For example, the ISM (formerly NAPM) provides a set of principles and standards for the proper conduct of purchasing activities.E
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first-mover advantage
The phenomenon of market leadership being gained through market innovation.F
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control
Comparing actual to planned performance and taking corrective action, as needed, to align performance with plan.C
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inventory costs
Costs associated with ordering and holding inventory. See: carrying costs, ordering cost.I
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interplant transfer
The shipment of a part or product by one plant to another plant or division within the corporation. See: interplant demand, transfer pricing.I
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lot splitting
Dividing a lot into two or more sublots and simultaneously processing each sublot on identical (or very similar) facilities as separate lots, usually to compress lead time or to expedite a small quantity. Syn: operation splitting.L M
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retainage
A percentage of a contract value that is withheld pending project completion and approval.R
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attractor
In information systems, a website that, over time, continues to attract a large number of visitors.A
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price
One of the four Ps (product, price, place, and promotion) that constitute the set of tools used to direct the business offering to the customer. Price is the amount charged for the product offering. The price set must take into account competition, substitute products, and internal business costs to return a desirable product margin. See: four Ps.P
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business-to-consumer sales (B2C)
Business being conducted between businesses and final consumers largely over the internet. It includes traditional brick and mortar businesses that also offer products online and businesses that trade exclusively electronically.B
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direct sales
Sales from the manufacturer to the ultimate consumer without going through a distributor or retailer.D
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intermodal transport
1) Shipments moved by different types of equipment combining the best features of each mode. 2) The use of two or more different carrier modes in the through movement of a shipment.I
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mixed-model production
Making several different parts or products in varying lot sizes so that a factory produces close to the same mix of products that will be sold that day. The mixed-model schedule governs the making and the delivery of component parts, including those provided by outside suppliers. The goal is to build every model every day, according to daily demand.M
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scientific management
Managing a production system using scientific principles. Usually refers to the principles established by Frederick Taylor.S
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marginal pricing
Pricing products at a markup over the marginal cost of producing the next item. Marginal costs generally include the variable cost of producing and selling an additional item.M
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green belt
A manager or team member who has been trained in six sigma improvement methods and will have full-time responsibilities for process and quality improvement.G
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project duration
The elapsed duration from project start date through project finish date.P
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relationship map
A graphic map of the relationship between the business functions. It shows the inputs and outputs flow across functions. It is useful to show how processes are currently performed, disconnections in processes, and proposed processes. Relationship maps show the products and services of a given unit, how work flows through organizational boundaries, and the relationships between functions represented by boxes in the map.R
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days of supply
Inventory-on-hand metric converted from units to how long the units will last. For example, if there are 2,000 units on hand and the company is using 200 per day, than there are 10 days of supply.D
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for loss
either money, property, or human life.C
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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. The critical chain, which determines project duration, is based on technological and resource constraints. Strategic buffering of paths and resources is used to increase project completion success. See: critical chain, critical path method.C
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national stock number (NSN)
The individual identification number assigned to an item to permit inventory management in the U.S. supply system.N
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strategic mission
A statement of the future business scope of an enterprise. The statement incorporates what is being satisfied (customer needs), who is being satisfied (customer groups), and how the company creates value for the customer (processes, technologies, and core competencies).S
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early start date (ES)
In the critical path method of project management, the earliest time at which a given activity is estimated to begin. This date can change as the project is executed.E
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matrix diagram
A graphical technique used to analyze the relationship between two related groups of ideas.M
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store
A storage point located upstream of a work station intended to make it easier to see customer requirements.S
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wave picking
A method of selecting and sequencing picking lists to minimize the waiting time of the delivered material. Shipping orders may be picked in waves combined by common carrier or destination, and manufacturing orders in waves related to work centers.W
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fluctuation inventory
Inventory that is carried as a cushion to protect against forecast error. Syn: fluctuation stock. See: inventory buffer.F
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smoothing models
Another name for forecasting models that utilize moving averages. The forecast is “smoothed” in the sense that averages have less variability than individual periods.S
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MAP
Acronym for manufacturing automation protocol.M
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reorder cycle
Syn: replenishment lead time.R
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available capacity
Syn: capacity available.A
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co-destiny
The evolution of a supply chain from intraorganizational management to interorganizational management.C
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composite lead time
Syn: cumulative lead time.C
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cargo
A product shipped in an aircraft, railroad car, ship, barge, or truck.C
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actual duration
The difference between the actual start date of a project activity and the current date (if the activity is still in progress) or the difference between the actual start date of a project activity and the actual completion date (if the activity is completed).A
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hard copy
A printed report, message, or special listing.H
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goodwill
An intangible item that is only recorded on a company’s books as the result of a purchase. Generally, it is inseparable from the enterprise but makes the company more valuable, for example, a good reputation.G
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first-come-first-served rule
A dispatching rule under which the jobs are sequenced by their arrival times. See: first-in, first-out.F
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operation chart
Syn: routing.O
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human factors engineering
A merging of those branches of engineering and the behavioral sciences that concern themselves principally with the human component in the design and operation of humanmachine systems. Human factors engineering is based on a fundamental knowledge and study of human physical and mental abilities and emotional characteristics.H
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lot number
A unique identification assigned to a homogeneous quantity of material. Syn: batch number, mix number.L
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predictive maintenance
A type of preventive maintenance based on nondestructive testing and statistical analysis, used to predict when required maintenance should be scheduled. Syn: predictable maintenance.P
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delivery reliability
A performance criterion that measures how consistently goods and services are delivered on, or before, the promised time.D
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two-level master schedule
A master scheduling approach in which a planning bill of material is used to master schedule an end product or family, along with selected key features (options and accessories). See: hedge, multilevel master schedule, production forecast.T
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PPAP
Abbreviation for production part approval process.P
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demographic segmentation
In marketing, dividing potential markets by characteristics of potential customers, such as age, sex, income, and education.D
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touch labor
Syn: direct labor.T T
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hierarchical database
A method of constructing a database that requires that related record types be linked in tree-like structures, where no child record can have more than one physical parent record.H
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batch card
A document used in the process industries to authorize and control the production of a quantity of material. Batch cards usually contain quantities and lot B numbers of ingredients to be used, processing variables, pack-out instructions, and product disposition. See: assembly parts list, batch sheet, blend formula, fabrication order, manufacturing order, mix ticket.B
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yield factor
A measurement of the yield of a process. For a specific process or operation, yield factor + scrap factor = 1. See: scrap factor, yield.Y
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operating characteristic curve (OC curve)
A graph used to determine the probability of accepting lots as a function of the quality level of the lots or processes when using various sampling plans. There are three types: Type A curves, which give the probability of acceptance for an individual lot coming from finite production (will not continue in the future); Type B curves, which give the probability of acceptance for lots coming from a continuous process; and Type C curves, which, for a continuous sampling plan, give the long-run percentage of product accepted during the sampling phase.O
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collaborative forecasting
The process for collecting and reconciling information from within and outside the organization to come up with a single projection of demand.C
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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. Syn: continuous improvement. See: kaizen.C
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target costing
The process of designing a product to meet a specific cost objective. Target costing involves setting the planned selling price, subtracting the desired profit as well as marketing and distribution costs, thus leaving the required manufacturing or target cost.T
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on-demand
Work is completed only when demand occurs. More specifically, it is a process in which a product or service is made only after an order is placed for that product or service.O
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VBM
Abbreviation for value-based management.V
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metered issues
Issues of parts or materials from stores in quantities that correspond to the rate at which materials are used.M
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secure electronic transaction (SET)
In e-commerce, a system for guaranteeing the security of financial transactions conducted over the internet.S
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(NAPM)
A nonprofit society for purchasing managers and others, now known as the Institute for Supply Management (ISM).N
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systems analysis
1) The analyzing in detail of the information needed for an organization, the characteristics and components of the current information system, and the requirements of any proposed changes to the information system. 2) A method of problem solving that encompasses the identification, study, and evaluation of interdependent parts and their attributes that function in an ongoing process and that constitute an organic whole.S
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automated assembly system
A system that produces completed products or assemblies without the contribution of direct labor.A
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machine-limited capacity
A production environment where a specific machine limits throughput of the process. See: constraint, throughput.M
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price break
A discount given for paying early, buying in quantity, and so forth. See: discount.P P
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stockless production
Syn: just in time.S
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analog
As applied to an electrical or computer system, the capability of representing data in continuously varying physical phenomena (as in a voltmeter) and converting them into numbers.A A
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turnover ratio
An indicator of whether or not a company is using its assets efficiently. It is measured by dividing sales by average assets during a particular period.T
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chain reaction
A chain of events proposed by W. Edwards Deming: improve quality, and costs will go down because of less scrap and rework, while revenues will go up because the company will be able to sell more product at higher prices. Thus, better quality means more profitability.C
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activity-on-arrow network (AOA)
A project management network in which the passage of time, via activities, takes place on the arrows. The start of an activity is represented by the tail of the arrow, while the completion of the activity is represented by the tip of the arrow. The sequence of the arrows represents the sequence of activities. Arrows are connected by nodes, which are usually circles. Syn: activity-on-arc network, arrow diagram method, event-on-arrow network.A
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cellular manufacturing
A manufacturing process that produces families of parts within a single line or cell of machines controlled by operators who work only within the line or cell.C
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QRP
Abbreviation for quick-response program.Q
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SET
Acronym for secure electronic transaction.S
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capacity available
The capability of a system or resource to produce a quantity of output in a particular time period. Syn: available capacity. See: capacity, available time.C
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operation number
A sequential number, usually two, three, or four digits long, such as 010, 020, 030, that indicates the sequence in which operations are to be performed within an item’s routing.O
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infinite scheduling
Syn: infinite loading.I
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job
1) The combination of tasks, duties, and responsibilities assigned to an individual employee and usually considered his or her work assignment. 2) The contents of a work order.J
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layoff
The process by which employees that are not needed for some extended amount of time are given notice that their services are not needed. Benefits may or may not continue in a layoff.L
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deposition
The sworn questioning, outside of court, of a potential witness by the other side’s attorney.D
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exit interview
An interview given to an employee who is leaving the company. The purpose is to find out why a person is leaving, what was liked and disliked about the job and the company, and what changes would make the department and the company a better place to work.E
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moving average forecast
A forecasting technique that uses a simple moving average or a weighted moving average projected forward as a forecast.M
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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. See: order release.P
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random component
A component of demand usually describing the impact of uncontrollable variation on demand. See: decomposition, time series analysis.R
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(CPIM)
The APICS designation that is a recognition of a high level of professional knowledge in production and inventory management.C
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total quality control (TQC)
The process of creating and producing the total composite good and service characteristics (by marketing, engineering, manufacturing, purchasing, etc.) through which the good and service will meet the expectations of customers.T
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American customer satisfaction index
A metric cosponsored by the University of Michigan and the American Society for Quality that measures the satisfaction of U.S. customers with the goods and services available to them from both domestic and foreign origins.A
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absentee rate
A ratio comparing the number of employee-days lost with the total number of available employee-days of employment during some base period, usually one month.A
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baud
The number of bits transmitted per second.B
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terminal delivery allowance
A discount provided if freight is delivered to or picked up from the carrier’s terminal.T
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mura
A Japanese word meaning unevenness or variability.M
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harmonized system classification codes
An internationally standardized description of goods that uses a system of numbers to provide increasingly detailed classification and descriptions.H
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affinity diagram
A total quality management tool whereby employees working in silence generate ideas and later categorize these ideas.A
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fixed-asset turnover
Sales divided by net fixed assets. Fixed assets reflect asset acquisition price less depreciation.F
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just-in-time purchasing
This type of purchasing uses few suppliers who have long-term commitments with the organization. Long-term contracts are used, which enable the purchaser to develop and certify the quality process at the supplier.J K
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local area network (LAN)
A high-speed data communication system for linking computer terminals, programs, storage, and graphic devices at multiple workstations distributed over a relatively small geographic area such as a building or campus.L
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undesirable effects (UDE)
In theory of constraints: Those negative aspects of an environment that are noted so that a current reality tree may be constructed.U
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Acronym for electronic mail.E
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profitability
A measure of the excess income over expenditure during a given period of time.P
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product group
Syn: product line.P
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change agent
A person who facilitates change within an organization. This person may or may not be within the organization and may or may not be the initiator of the change.C
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bottleneck operation
Syn: bottleneck.B
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capacity
traditionally in only factory products and processes (little q).B
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demand management
1) The function of recognizing all demands for goods and services to support the marketplace. It involves prioritizing demand when supply is lacking. Proper demand management facilitates the planning and use of resources for profitable business results. 2) In marketing, the process of planning, executing, controlling, and monitoring the design, pricing, promotion, and distribution of products and services to bring about transactions that meet organizational and individual needs. Syn: marketing management. See: demand planning.D
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virtual organization
Short-term alliances between independent organizations in a potentially long-term relationship to design, produce, and distribute a product. Organizations cooperate based on mutual values and act as a single entity to third parties.V W
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M-day calendar
Syn: manufacturing calendar.M
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queue
A waiting line. In manufacturing, the jobs at a given work center waiting to be processed. As queues increase, so do average queue time and work-inprocess inventory.Q
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replanning frequency
In an MRP system, the amount of time between successive runs of the MRP model. If the planner does not run MRP frequently enough, the material plan becomes inaccurate as material requirements and inventory status change with the passage of time.R
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layout
Physical arrangement of resources or centers of economic activity (machines, groups of people, workstations, storage areas, aisles, etc.) within a facility. Layouts include product (linear or line), functional (job shop or process), cellular, and fixed position.L
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limited partnership
A partnership having two types of partners: (1) limited partners contribute assets to the company without participating in management and (2) general partners manage the company and are responsible for all debts.L
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total costs
Considering all cost impacts, rather than just one cost impact, on customer service improvement.T
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project
An endeavor with a specific objective to be met within predetermined time and dollar limitations and that has been assigned for definition or execution. See: project manufacturing, project management.P
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front room
The place where the customer comes into contact with the service operation. Many service operations contain front room and back room operations. See: back room.F
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count-per-unit chart
Syn: U chart.C
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product diversification
A marketing strategy that seeks to develop new products to supply current markets.P
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outbound consolidation
The gathering of a number of small shipments to a variety of customers into a larger load, which is then shipped to a point near the customers where it is broken down for delivery.O
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optical character
A printed character frequently used in utilities billing and credit applications that can be read by a machine without the aid of magnetic ink.O
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quotation
A statement of price, terms of sale, and description of goods or services offered by a supplier to a prospective purchaser; a bid. When given in response to an inquiry, it is usually considered an offer to sell. See: bid.Q
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statistical order point system
Syn: order point system.S
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order point system
The inventory method that places an order for a lot whenever the quantity on hand is reduced to a predetermined level known as the order point. Syn: statistical order point system. See: fixed reorder quantity inventory model, hybrid system.O
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histogram
A graph of contiguous vertical bars representing a frequency distribution in which the groups or classes of items are marked on the x axis and the number of items in each class is indicated on the y axis. The pictorial nature of the histogram lets people see patterns that are difficult to see in a simple table of numbers. The histogram is one of the seven tools of quality.H
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current assets
An accounting/financial term (balance sheet classification of accounts) representing the shortterm resources owned by a company, including cash, accounts receivable, and inventories. See: assets, balance sheet.C
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operation sheet
Syn: routing.O
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FMEA
Abbreviation for failure mode effects analysis.F F
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sales promotion
1) Sales activities that supplement both personal selling and marketing, coordinate the two, and help to make them effective (e.g., displays). 2) More loosely, the combination of personal selling, advertising, and all supplementary selling activities. 3)
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pick on receipt
Similar to cross-docking, a product is unloaded from an inbound vehicle and loaded directly on an outbound vehicle. Product is received and picked simultaneously, never becoming set in the warehouse.P
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percent chart
Syn: P chart.P
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jobbing
Syn: job shop.J
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business-to-business commerce (B2B)
Business conducted over the internet between businesses. The implication is that this connectivity will cause businesses to transform themselves via supply chain management
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under-capacity scheduling
Allowing more time than should be necessary to complete a day’s work. As a result, a daily quota is met more often and workers have time to cross-train or perform maintenance on their tools and machines.U
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order point/order quantity system
Syn: fixed reorder quantity inventory model.O
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customer-as-product
A service system designed to actually perform the service on the customer, such as in health care or hair salons.C
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baseline measures
A set of measurements (or metrics) that seeks to establish the current or starting level of performance of a process, function, product, firm, and so on. Baseline measures are usually established before implementing improvement activities and programs.B
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risk response plan
A document defining known risks including description, cause, likelihood, costs, and proposed responses. It also identifies current status on each risk.R
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nonconforming material
Any raw material, part, component, or product with one or more characteristics that depart from the specifications, drawing, or other approved product description.N
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business process outsourcing
Contracting with third parties to perform non-core activities within a business. Functions often outsourced include human resources, accounts receivable, accounts payable, and payroll.B
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OCR
Abbreviation for optical character recognition.O
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modular architecture
A type of product architecture where the functional pieces correspond to physical pieces. The different physical pieces have their own function, and there is little interaction between them.M
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manufacturer’s agent
Syn: manufacturer’s representative.M
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activity level
A description of how reactive one activity is to changes in the level of another activity or cost object.A
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multifactor productivity
A productivity score that measures output levels relative to more than one input, such as labor or capital.M
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drum-buffer-rope (DBR)
The theory of constraints method for scheduling and managing operations that have an internal constraint or capacity-constrained resource.D
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operations research
1) The development and application of quantitative techniques to the solution of problems. More specifically, theory and methodology in mathematics, statistics, and computing are adapted and applied to the identification, formulation, solution, validation, implementation, and control of decisionmaking problems. 2) An academic field of study concerned with the development and application of quantitative analysis to the solution of problems faced by management in public and private organizations. Syn: management science.O
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passive data gathering
Data gathered when a customer initiates the process by filling out a card or sending an email. The firm develops the feedback form but the customer initiates the use of it.P
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balking
When customers will not join a queue when they learn how long it is. See: reneging.B
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production card
In a just-in-time context, a card or other signal for indicating that items should be made for use or to replace some items removed from pipeline stock. See: kanban.P
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hi-low
A forklift truck with a standing operator.H
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times interest earned
Ratio of profits before payment of interest and income taxes (EBIT) to interest on debt.T
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actual start date
In project management, the date on which an activity in a project was actually started.A
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nonexempt employee
A person filling a nonexempt position. See: nonexempt positions.N
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customer relationship management (CRM)
A marketing philosophy based on putting the customer first. The collection and analysis of information designed for sales and marketing decision support (as contrasted to enterprise resources planning information) to understand and support existing and potential customer needs. It includes account management, catalog and order entry, payment processing, credits and adjustments, and other functions. Syn: customer relations management.C
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enforced problem solving
The methodology of intentionally restricting a resource (e.g., inventory, storage space, number of workers) to expose a problem that must then be resolved.E
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upside flexibility
The ability of a facility to increase their output and ability to deliver, for the foreseeable future, because of a non-forecasted increase in demand. The main drivers of this flexibility are the availability of direct labor and/ or direct materials and the actual production capacity of the facility.U
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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.V
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ABM
Abbreviation for activity-based management.A
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units
scrap or rework.M
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burden rate
A cost, usually in dollars per hour, that is normally added to the cost of every standard production hour to cover overhead expenses.B
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consumer price index
A measure of the overall level of prices. It attempts to relate the cost of buying a specific set of goods and services with the cost of buying the same set of goods and services during an earlier time period.C
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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.S
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arrow diagram method
Syn: activity-on-arrow network.A
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data warehouse
A repository of data that has been specially prepared to support decision-making applications. Syn: decision-support data. See: information data warehouse.D
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second-order smoothing
A method of exponential smoothing for trend situations that employs two previously computed averages, the singly and doubly smoothed values, to extrapolate into the future. Syn: double smoothing.S
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WTO
Abbreviation for World Trade Organization.W
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ABB
Abbreviation for activity-based budgeting.A
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direct materials purchasing
Purchasing from suppliers on a contractual basis for a fixed period of time or amount of product. For job shops, the purchasing contract can be only for one job. For repetitive manufacturing, the materials are usually purchased on contracts that last for a model run or at least a year.D
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type I error
An incorrect decision to reject something (such as a statistical hypothesis or a lot of products) when it is acceptable. See: producer’s risk.T
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heuristics
A form of problem solving in which the results or rules have been determined by experience or intuition instead of by optimization. Heuristics can be used in such areas as forecasting; lot sizing; or determining production, staff, or inventory levels.H
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level strategy
Syn: level production method.L
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network chain
A route through a chain involving multiple network paths, with switching of paths due to resource conflicts.N
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ASCII
Acronym for American Standard Code for Information Interchange.A
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CAIT
Abbreviation for computer-aided inspection and test.C
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service level agreement (SLA)
A document that represents the terms of performance for organic support.S
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variation
A change in data, a characteristic, or a function that is caused by one of four factors: special causes, common causes, tampering, or structural variation.V
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control points
In the theory of constraints, strategic locations in the logical product structure for a product or family that simplify the planning, scheduling, and control functions. Control points include gating operations, convergent points, divergent points, constraints, and shipping points. Detailed scheduling instructions are planned, implemented, and monitored at these locations. Other work centers are instructed to “work if they have work; otherwise, be prepared for work.” In this manner, materials flow rapidly through the facility without detailed work center scheduling and control.C
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blocked operations
A group of operations identified separately for instructions and documentation but reported as one.B
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quality costs
The overall costs associated with prevention activities and the improvement of quality throughout the firm before, during, and after production of a product. These costs fall into four recognized categories: internal failure costs, external failure costs, appraisal costs, and prevention costs. Internal failure costs relate to problems before the product reaches the customer. These usually include rework, scrap, downgrades, reinspection, retest, and process losses. External failure costs relate to problems found after the product reaches the customer. These usually include such costs as warranty and returns. Appraisal costs are associated with the formal evaluation and audit of quality in the firm. Typical costs include inspection, quality audits, testing, calibration, and checking time. Prevention costs are those caused by improvement activities that focus on reducing failure and appraisal costs. Typical costs include education, quality training, and supplier certification.Q
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out-of-control process
A process in which the statistical measure being evaluated is not in a state of statistical control (i.e., the variations among the observed sampling results can be attributed to a constant system of chance causes). Ant: in-control process.O
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Poisson distribution
A type of statistical distribution frequently used to model the arrival of customers or entities into a queuing system.P
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ISP
An abbreviation for internet service provider.I
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data element
A group of characters that defines an item at a basic level. Syn: data field.D
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batch formula
Syn: batch bill of materials.B
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historical labor standard
Determined by studying actual past labor data for the operation of interest.H
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modem
A device that converts digital signals to analog signals (and vice versa) so they can be sent over phone lines.M
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path float
Syn: float.P
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acceptance criteria
Those performance requirements and conditions that must be reached before projects or products are accepted.A
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critical-to-quality characteristics (CTQs)
Critical-toquality characteristics (CTQs) are the important and measurable traits of a product or process whose performance targets must be met to satisfy the customer. They adjust improvement efforts to meet consumer requirements. CTQs represent customer expectations for a product.C
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operations plan
Syn: production plan.O
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PDM
Abbreviation for product data management.P
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blanket purchase order
A long-term commitment to a supplier for material against which short-term releases will be generated to satisfy requirements. Often blanket orders cover only one item with predetermined delivery dates. Syn: blanket order, standing order.B
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financial leverage management ratios
A set of measurements of the degree to which a firm is financing assets with fixed-charge instruments such as debt or preferred stock.F
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convergent point
An operation in a production process where multiple materials/parts/components are combined into a single component. An assembly operation is an example of a convergent point.C
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periodic inventory
A physical inventory taken at some recurring interval (e.g., monthly, quarterly, or annual physical inventory). See: physical inventory.P
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basic stock
Syn: base inventory level.B
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planning
The process of setting goals for the organization and choosing various ways to use the organization’s resources to achieve the goals.P
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capacity-related costs
Costs generally related to increasing (or decreasing) capacity in the medium-to longrange time horizon. Personnel costs include hiring and training of direct laborers, supervisors, and support personnel in the areas related to the capacity increase. Equipment purchases to increase capacity are also considered. In contrast, costs related to decreasing capacity include layoffs, the fixed overhead spread over fewer units, the impact of low morale, and the inefficiencies of lower production levels.C
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accelerated depreciation
A depreciation method involving high write-offs in the early years of an asset’s life and lower write-offs later. This method lowers the value of an asset faster than straight-line depreciation.A
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critical activity
Any activity on the critical path of a project; an activity with no slack time (i.e., any delay in the activity will delay project completion). See: critical path, critical path method.C
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bill-back
A penalty given to the supplier because a late delivery or poor quality resulted in extra costs.B
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operations process chart
Syn: process chart.O
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bulk storage
Large-scale storage for raw materials, intermediates, or finished products. Each vessel normally contains a mixture of lots and materials that may be replenished and withdrawn for use or pack-out simultaneously.B
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communication management plan
A document that describes the communications needs and expectations within a project, including format, dates, locations, and responsibilities.C C
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process control chart
Syn: control chart.P
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world-class company
An organization that has reached a level of excellence due to superior products or services and customer satisfaction; best of the best.W
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flexible benefits/cafeteria plans
Plans designed to give employees a core of minimum basic coverage with the option to choose additional coverage or, sometimes, cash. Employees can customize their benefits packages to suit their personal needs.F
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reserve stock
Syn: safety stock.R
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serial shipping container code
An 18-character designation identifying boxes or pallets that are part of a shipment covered by an automated shipment notice.S
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unplanned receipt
A receipt transaction that updates the quantity on hand but for which no order exists.U
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price discrimination
Selling the same products to different buyers at different prices.P
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dock-to-stock time
Syn: put-away time.D
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market penetration
The degree to which a product has been accepted by the marketplace. Syn: market reach.M
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complete and on-time delivery (COTD)
A metric defining customer service. To be considered as complete and on
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capacity buying
A purchasing practice whereby a company commits to a supplier for a given amount of its capacity per unit of time. Subsequently, schedules for individual items are given to the supplier in quantities to match the committed level of capacity. Syn: buying capacity.C C
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place utility
Usefulness to the customer created by having the product delivered to a desired location.P
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learning management system
A software system for delivering and managing education and training within an organization.L
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transparency
A company allows outsiders, typically customers, to see some internal information, typically regarding an order, without giving any more than the outsider requires.T
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gain sharing
A method of incentive compensation where employees share collectively in savings from productivity improvements. Syn: gain sharing plans.G
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legal environment
The governmental restrictions placed on an organization regarding the goods and services provided by the business, for example, environmental regulations, export/import restrictions, safety regulations, and mandated deregulations.L
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demand during lead time
The quantity of a product expected to be withdrawn from stock or to be consumed during its replenishment lead time when usage is at the forecasted rate. See: expected demand.D
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free trade zone (FTZ)
The international term for what is known in the United States as a foreign trade zone. See: foreign trade zone.F
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allowance
1) In work measurement, a time value or percentage of time by which the normal time is increased, or the amount of nonproductive time applied, to compensate for justifiable causes or policy requirements that necessitate performance time not directly measured for each element or task. Usually includes irregular elements, incentive opportunity on machinecontrolled time, minor unavoidable delays, rest time to overcome fatigue, and time for personal needs. 2) In assembly, the minimum clearance or maximum interference distance between two adjacent objects.A
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department overhead rate
The overhead rate applied to jobs passing through a department.D
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statistical safety stock calculations
The mathematical determination of safety stock quantities considering forecast errors, lot sizes, desired customer service levels, and the ratio of lead time to the length of the forecast period. Safety stock is frequently the product of the appropriate safety factor and the standard deviation or mean absolute deviation of the distribution of demand forecast errors.S
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shelf life
The amount of time an item may be held in inventory before it becomes unusable.S
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total waste management (TWM)
A methodology that enables finding solutions to waste issues while keeping in mind financial elements and the business case.T
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rate-based scheduling
A method for scheduling and producing based on a periodic rate (e.g., daily, weekly, monthly). This method has traditionally been applied to high-volume and process industries. The concept has also been applied within job shops using cellular layouts and mixed-model level schedules where the production rate is matched to the selling rate.R
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productivity
1) An overall measure of the ability to produce a good or a service. It is the actual output of production compared to the actual input of resources. Productivity is a relative measure across time or against common entities (labor, capital, etc.). In the production literature, attempts have been made to define total productivity where the effects of labor and capital are combined and divided into the output. One example is a ratio that is calculated by adding the dollar value of labor, capital equipment, energy, and material, and so forth and dividing it into the dollar value of output in a given time period. This is one measure of total factor productivity. See: efficiency, labor productivity, machine productivity, utilization. 2) In economics, the ratio of output in terms of dollars of sales to an input such as direct labor in terms of the total wages. This is called single factor productivity or partial factor productivity.P
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tracing
In activity-based cost accounting, connecting resources to activities to cost objects using underlying causal drivers to understand how costs occur during normal business activities.T
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lessee
An entity to which a lease is given.L
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materials efficiency
A concept that addresses the efficiency with which materials are obtained, converted, and shipped in the overall purchasing, production, and distribution process. It can be considered as a companion concept to labor efficiency, and it is potentially more significant as the materials portion of cost of goods sold continues to grow.M
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consumer surplus
The difference between the highest price a consumer is willing to pay for a good or service and the price actually paid.C
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keiretsu
A form of cooperative relationship among companies in Japan where the companies largely remain legally and economically independent, even though they work closely in various ways such as financial backing. A member of a keiretsu generally owns a limited amount of stock in other member companies. A keiretsu generally forms around a bank and a trading company, but “distribution” (supply chain) keiretsu alliances have been formed of companies ranging from raw material suppliers to retailers.K
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matrix bill of material
A chart made up from the bills of material for a number of products in the same or similar families. It is arranged in a matrix with components in M columns and parents in rows (or vice versa) so that requirements for common components can be summarized conveniently.M
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obsolete inventory
Inventory items that have met the obsolescence criteria established by the organization. For example, inventory that has been superseded by a new model or otherwise made obsolescent. Obsolete inventory will never be used or sold at full value. Disposing of the inventory may reduce a company’s profit.O
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incentive arrangements
The incentive contract allows for the sharing of the cost responsibility between the buyer and seller. Incentives are incorporated into the contracts to motivate the supplier to improve its performance in areas such as quality, on-time delivery, and customer satisfaction. There are three elements of an incentive agreement: target cost, target profit, and the sharing agreement.I
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TPS
Abbreviation for Toyota Production System.T
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city driver
A delivery person who drives a local route, as opposed to long-haul route.C
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third-party warehousing
The outsourcing of the warehousing function by the seller of the goods.T
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direct costs
1) In traditional cost accounting, variable costs that can be directly attributed to a particular job or operation. Direct material and direct labor are traditionally considered direct costs. 2) In activity-based cost (ABC) accounting, a cost that can specifically be traced and is economically feasible to track to a particular cost object (e.g., the units produced, a production line, a department, a manufacturing plant). In contrast, if the cost must be allocated across various cost objects, it is an indirect cost. Based on the cost object under consideration, the classification of direct and indirect can change. ABC accounting assumes that more costs traditionally viewed as fixed costs are variable and can be traced to cost objects.D
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web services
A common internet or intranet framework that enables the movement of data from one application to another, without the requirement for a direct connection between two supply chain applications and without regard to the underlying operating system for those applications.W
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commonality
A condition where given raw materials or ingredients are used in multiple parents.C
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AIDC
Abbreviation for automatic identification and data capture.A
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operating assets
An accounting/financial term representing the resources owned by a company for productive purposes (to generate a profit) including cash, accounts receivable, inventories, equipment, and facilities.O O
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land bridge
Moving goods over water, then land, and then water again to the final point.L
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sole-source supplier
The only supplier capable of meeting (usually technical) requirements for an item. See: single-source supplier.S
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indirect labor cost
The compensation paid to workers whose activities are not related to a specific product.I
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threshold costs
A company’s variable costs, which must be covered for a company to continue to stay in business.T
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application system
A set of programs of specific instructions for processing activities needed to compute specific tasks for computer users, as opposed to operating systems that control the computer’s internal operations. Examples are payroll, spreadsheets, and word processing programs. See: application software.A
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after-sale service
Syn: field service.A
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service
Sometimes used to describe those activities that support the production or distribution functions in any organization, such as customer service and field service.S
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performing organization
The enterprise directly involved in the execution of work.P
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competitive bid
A price offering by one company that a buyer will consider along with price offerings from other companies.C
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manufacturing cycle
Syn: manufacturing lead time.M
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decoupling
Creating independence between supply and use of material. Commonly denotes providing inventory between operations so that fluctuations in the production rate of the supplying operation do not constrain production or use rates of the next operation.D
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waybill
A document containing a list of goods with shipping instructions related to a shipment.W
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five Ms
The branches of a cause and effect (fishbone) diagram: manpower, methods, materials, machines, and measurements.F
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focus group
A set of people who are interviewed together for the purpose of collecting marketing data.F
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work cell
Dissimilar machines grouped together into a production unit to produce a family of parts having similar routings.W
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computer-integrated manufacturing (CIM)
The integration of the total manufacturing organization through the use of computer systems and managerial philosophies that improve the organization’s effectiveness; the application of a computer to bridge various computerized systems and connect them into a coherent, integrated whole. For example, budgets, CAD/CAM, process controls, group technology systems, MRP II, and financial reporting systems are linked and interfaced.C
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cost management
Control of activities to eliminate waste, improve cost drivers, and plan operations. This process should affect the organization’s setting of strategy. Factors such as product pricing, introduction of new products, and distribution of existing products are examples of strategic decisions that are affected by cost management.C
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flexible specialization
A strategy based on multi-use equipment, skilled workers, and innovative senior managers to accommodate the continuous change that occurs in the marketplace.F
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inventory receipt
An inventory record transaction that records the receipt or arrival of inventory into physical stores by increasing the inventory on-hand balance by the received quantity. Often associated with receipt of a purchase or production order quantity.I
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customer-as-participant
A service system that contains a high level of customer involvement in part of the service delivery.C
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Certified Purchasing Manager
1) Certification from The Institute for Supply Management (ISM), formerly NAPM. This is no longer being tested (C.P.M.). 2) Certification from the American Purchasing Society (CPM).C
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pick and place
Equipment that picks up parts from one station on an assembly line and places them on the next.P
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(CSCMP)
A not-for-profit worldwide organization of logistics and supply chain managers. It provides educational opportunities through a variety of activities.C
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resource driver
The objects that are linked to an activity that consumes resources at a specified rate. For example, a resource driver is a purchase order (the object) that when placed (the activity) consumes hours (the rate) of purchasing (the resource).R
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cumulative available-to-promise
A calculation based on the available-to-promise (ATP) figure in the master schedule. Two methods of computing the cumulative available-to-promise are used, with and without lookahead calculation. The cumulative with look-ahead ATP equals the ATP from the previous period plus the MPS of the period minus the backlog of the period minus the sum of the differences between the backlogs and MPSs of all future periods until, but not to include, the period where point production exceeds the backlogs. The cumulative without look-ahead procedure equals the ATP in the previous period plus the MPS, minus the backlog in the period being considered. See: available-topromise. C
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object-oriented programming (OOP)
Within computer programming, the use of coding techniques and tools that reflect the concept of viewing the business environment as a set of elements (or objects) with associated properties (e.g., data, data manipulation/actions, inheritance). The objects encapsulate, through data and functions, the properties of the business that are of interest.O
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cost pool
In activity-based cost accounting, an aggregation of resources assigned to activities or activities assigned to cost objects. Items may be aggregated or disaggregated depending on how the data are to be used.C
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relationship marketing
A form of target marketing in which the type and time of communications are determined by the customer. Syn: permission marketing.R
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maintainability
The characteristic of equipment design and installation that provides the ability for the equipment to be repaired easily and efficiently. See: serviceability.M M 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.M
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available work
Work that is actually in a department ready to be worked on as opposed to scheduled work that may not yet be physically on hand. Syn: live load.A
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information
Data that have been interpreted and that meet the need of one or more managers.I
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lead-time scheduling
Development of a schedule of start and completion times of planned operations for a manufacturing order by calculation of the lead time. The calculation includes the duration of all operations, interoperation times, and order administration times. See: back scheduling, central point scheduling, forward scheduling, probable scheduling.L
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list server
Software running on a web-accessed computer that facilitates electronic discussions by emailing submissions from one member to all other members of the discussion group. Syn: listserv.L
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mixed-flow scheduling
A procedure used in some process industries for building process train schedules that start at an initial stage and work toward the terminal process stages. This procedure is effective for scheduling where several bottleneck stages may exist. Detailed scheduling is done at each bottleneck stage.M
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standard allowance
The established or accepted amount by which the normal time for an operation is increased within an area, plant, or industry to compensate for the usual amount of personal, fatigue, and unavoidable delay times.S
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staging and consolidation
Physically moving material from the packing area to a staging area, based on a prescribed set of instructions related to a particular outbound vehicle or delivery route, often for shipment consolidation purposes.S
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batch production
Syn: batch processing.B
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part
Generally, a material item that is used as a component and is not an assembly, subassembly, blend, intermediate, etc.P
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application-to-application
The exchange of data between computers without reentry of data.A A
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Q chart
A control chart for evaluating the stability of a process in terms of a quality score. The quality score is the weighted sum of the count of events of various classifications, where each classification is assigned a weight. Syn: quality chart, quality score chart.Q
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income statement
A financial statement showing the net income for a business over a given period of time. See: balance sheet, funds flow statement.I
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perfect order
An order in which the “seven Rs” are satisfied: the right product, the right quantity, the right condition, the right place, the right time, the right customer, the right cost.P
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waterspider
An expert worker who makes the rounds of workstations and provides assistance, as needed. The waterspider knows all processes well enough to take over if needed. At Toyota, this position is a prerequisite to supervision and management positions.W
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hypermedia
An addition to hypertext to include sound, pictures, or music.H
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aggregate production plan (APP)
A long-range plan that is used to determine timing and quantity of total future production for a family of products. Syn: long-term production plan.A
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muda (waste)
In lean manufacturing, costs are reduced by reducing waste within a system. There are
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performance
1) The degree to which an employee or group applies skill and effort to an operation or task as measured against an established standard. 2) One of the eight dimensions of quality that refers to product attributes pertaining to the functioning of a product (e.g., horsepower, signal-to-noise ratio, decibel output).P
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internal customer
The recipient (person or department) of another person’s or department’s output (good, service, or information) within an organization. See: customer, external customer.I
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consumer durable goods
A division of durable goods for items intended for consumer use, such as refrigerators, as opposed to industrial goods, such as fork lifts. See: durable goods.C
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service bureau model
A business strategy in which a company outsources certain products and services from another company. The company prefers to concentrate on its core business rather than expending resources on the outsourced item.S
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capacity simulation
The ability to do rough-cut capacity planning using a simulated master production schedule or material plan rather than live data.C
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government market
A market in which most or all buyers consist of agencies of federal, state, or local governments. See: consumer market, industrial market, institutional market.G
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projected available inventory
Syn: projected available balance.P
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constraint
1) Any element or factor that prevents a system from achieving a higher level of performance with respect to its goal. Constraints can be physical, such as a machine center or lack of material, but they can also be managerial, such as a policy or procedure. 2) One of a set of equations that cannot be violated in an optimization procedure.C
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cell
A manufacturing or service unit consisting of a number of workstations and the materials transport mechanisms and storage buffers that interconnect them.C
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process engineering
The discipline of designing and improving the manufacturing equipment and production process to support the manufacture of a product line. See: manufacturing engineering.P
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blending
The process of physically mixing two or more lots or types of material to produce a homogeneous lot. Blends normally receive new identification and require testing.B
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executive sales and operations planning
The portion of sales and operations planning that defines executive decision-making processes to balance supply and demand at the volume level in families, fully integrates financial planning and operational planning, and that provides a forum for establishing and linking high-level strategic plans with day-to-day operations. See: sales and operations planning.E
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linear decision rules
A modeling technique using simultaneous equations (e.g., the establishment of aggregate workforce levels) based upon minimizing the total cost of hiring, firing, holding inventory, backorders, payroll, overtime, and undertime.L
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target inventory level
In a min-max inventory system, the equivalent of the maximum. The target inventory is equal to the order point plus a variable order quantity. It is often called an order-up-to inventory level and is used in a periodic review system. Syn: order-up-to level.T
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option
A choice that must be made by the customer or company when customizing the end product. In many companies, the term option means a mandatory choice from a limited selection. See: feature.O
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hazmat
Hazardous material defined by environmental laws and legal precedents. A product has been defined as hazardous by regulations that impose stiff fines if the regulations are ignored.H
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loading port
The port where cargo is loaded onto an exporting vessel.L
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planner intervention
Syn: manual rescheduling.P P
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blemish
An imperfection that is severe enough to be noticed but should not cause any real impairment with respect to intended normal or reasonably foreseeable use. See: defect, imperfection, nonconformity.B
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IPO
1) Abbreviation for initial public offering. 2) Abbreviation for international procurement office.I
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judgment items
Those inventory items that cannot be effectively controlled by algorithms because of age (new or obsolete product) or management decision (promotional product).J
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value-based management (VBM)
The concept of satisfying customers to create shareholder wealth.V
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gemba
A Japanese word meaning shop floor.G
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basic seven tools of quality (B7)
Tools that help organizations understand their processes to improve them. The tools are the cause-and-effect diagram (also known as the fishbone diagram or the Ishikawa diagram), check sheet, flowchart, histogram, Pareto chart, control chart, and scatter diagram. Syn: seven tools of quality. See: seven new tools of quality.B
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ABC frequency of access
A warehouse location that is determined by both a product’s ABC classification and by the frequency with which it is removed or replaced.A
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actual cost of work performed
The direct costs actually incurred in, and the indirect costs applied to, accomplishing work performed within a given time period. These costs should reconcile with the contractor’s incurred-cost ledgers, which are regularly audited by the client.A
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minimum cost order quantity
Syn: economic order quantity.M
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total cost consideration
Considering all cost impacts, rather than just one cost impact, on customer service improvement.T
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vertical marketplace
An online marketplace connecting buyers and sellers within the same industry. It enables lower prices by lowering transaction costs.V
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third-party transportation services
Outside firms providing transportation of goods.T
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LDI
Abbreviation for logistics data interchange.L
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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 such as public warehouses and freight forwarders.F
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rapid replenishment
A replenishment strategy in which the supplier prepares shipments at predetermined intervals and varies the quantity based on recent sales data. Sales data may be supplied via a point-of-sale system. See: continuous replenishment.R
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econometric modeling
The process of developing econometric models. See: econometric model.E
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inventory issue
1) Items released from an inventory location for use or sale. 2) The inventory record transaction reducing the inventory balance by the amount released.I
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input control
Management of the release of work to a work center or production facility.I
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prima facie
Latin for at first sight or on the face of it. Something is presumed to be true.P
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lag capacity strategy
Not adding capacity until the firm is operating at or beyond full capacity. This keeps unit costs minimized by working at full capacity, but does not satisfy total demand.L
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value stream map
A graph displaying the sequence of operations needed to produce and deliver a product or service.V
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centralized inventory control
Inventory decision making for all stockkeeping units exercised from one office or department for an entire company.C
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byte
A string of 8 bits used to represent a single character in a computer code.B C
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lean metric
A metric that permits a balanced evaluation
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clickstream
The way a customer moves through a website.C
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supply base
Syn: supplier base.S
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capital rationing
In financial management, the process of apportioning capital expenditures among prospective projects to conserve limited investment funds.C
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demand-side analysis
Techniques such as market research, surveys, focus groups, and performance/cost modeling used to identify emerging technologies.D
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on-hand balance
The quantity shown in the inventory records as being physically in stock.O
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hoshin
A Japanese word meaning statement of objectives.H
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company culture
A system of values, beliefs, and behaviors inherent in a company. To optimize business performance, top management must define and create the necessary culture.C
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union free
A designation that indicates that a company or operation does not have a union contract.U
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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. See: limiting operation.P
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controller
The person responsible for financial and managerial accounting within a company. Syn: comptroller.C
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centralized purchasing
A system in which all purchasing decisions are made from a corporate purchasing office.C
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pure competition
A market in which many competitors offer undifferentiated products or services within a given geographical area. Competitors are forced to accept the market price for their product. See: industry structure types.P
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budgeted capacity
The volume/mix of throughput on which financial budgets were set and overhead/burden absorption rates established.B
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vertical display
A method of displaying or printing output from an MRP system where requirements, scheduled receipts, projected balance, and so forth are displayed vertically. Vertical displays are often used in conjunction with bucketless systems. Ant: horizontal display.V
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traveling purchase requisition
A purchase requisition designed for repetitive use. After a purchase order has been prepared for the goods requisitioned, the form is returned to the originator, who holds it until a repurchase of the goods is required. The name is derived from the repetitive travel between the originating and purchasing departments. Syn: traveling requisition.T
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confidence level
The probability that a particular value
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job lot
A specific quantity of a part or product that is produced at one time.J
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self-directed work team
Generally, a small, independent, self-organized, and self-controlling group in which members flexibly plan, organize, determine, and manage their duties and actions, as well as perform many other supportive functions. It may work without immediate supervision and can often have authority to select, hire, promote, or discharge its members.S
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lessor
An entity which gives a lease.L
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compensation
The pay and benefits given for services rendered to an organization.C
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bucket
A time period, usually a week.B
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cross-functional organization
Organization where groups of directors, executives, and managers with a C diversity of skills and backgrounds work on problems outside the bounds of their functional responsibilities. See: integrated enterprise.C
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forecast bias
Tendency of a forecast to systematically miss the actual demand (consistently either high or low).F
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materials handling time
The time necessary to move materials from one work center to the next work center. This time includes waiting for the materials handling equipment and actual movement time.M
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demand forecasting
Forecasting the demand for a particular good, component, or service.D
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X-bar chart
Syn: average chart.X
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utilization
1) A measure (usually expressed as a percentage) of how intensively a resource is being used to produce a good or service. Utilization compares actual time used to available time. Traditionally, utilization is the ratio of direct time charged (run time plus setup time) to the clock time available. Utilization is a percentage between 0 percent and 100 percent that is equal to 100 percent minus the percentage of time lost due to the unavailability of machines, tools, workers, and so forth. See: efficiency, lost time factor, productivity. 2) In V the theory of constraints, activation of a resource that productively contributes to reaching the goal. Overactivation of a resource does not productively utilize a resource. See: available time.U V
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master planning
A group of business processes that includes the following activities: demand management (which includes forecasting and order servicing); production and resource planning; and master scheduling (which includes the master schedule and the rough-cut capacity plan).M
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value engineering and/or analysis
A disciplined approach to the elimination of waste from products or processes through an investigative process that focuses on the functions to be performed and whether such functions add value to the good or service.V
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vestibule training
A variant of job rotation in which a separate work area is set up for a trainee so that the actual work situation does not pressure the trainee. Examples are cockpit simulators and other machine simulators. V
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overlap quantity
The number of items that need to be run and sent ahead to the following operation before the following “overlap” operation can begin. Syn: offset quantity. See: process batch, transfer batch.O
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pure monopoly
A market in which only one firm provides a particular product or service within a given area. The monopoly may be regulated or unregulated. See: industry structure types.P
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tapering rate
A rate structure in which a shipping rate increases as the distance shipped increases, but the increases are not directly correlated to the increase in the distance shipped.T
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decision support system (DSS)
A computer system designed to assist managers in selecting and evaluating courses of action by providing a logical, usually quantitative, analysis of the relevant factors.D
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measurement ton
A measurement equivalent to 40 cubic feet. It is a factor in water transportation ratesetting. M
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quality assurance/control
Two terms that have many interpretations because of the multiple definitions for the words “assurance” and “control.” For example, “assurance” can mean the act of giving confidence, the state of being certain, or the act of making certain; “control” can mean an evaluation to indicate needed corrective responses, the act of guiding, or the state of a process in which the variability is attributable to a constant system of chance causes. One definition of quality assurance is all the planned and systematic activities implemented within the quality system that can be demonstrated to provide confidence that a good or service will fulfill requirements for quality. One definition for quality control is the operational techniques and activities used to fulfill requirements for quality. Often, however, quality assurance and quality control are used interchangeably, referring to the actions performed to ensure the quality of a good, service, or process. See: quality control.Q
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preferred stock
A type of stock entitling the owner to dividends before common stockholders are entitled to them.P
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variable cost
An operating cost that varies directly with a change of one unit in the production volume (e.g., direct materials consumed, sales commissions).V
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joint replenishment
Coordinating the lot sizing and order release decision for related items and treating them K as a family of items. The objective is to achieve lower costs because of ordering, setup, shipping, and quantity discount economies. This term applies equally to joint ordering (family contracts) and to composite part (group technology) fabrication scheduling. Syn: joint replenishment system.J
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residual inventory
Inventory created by the canceling or rescheduling of an order or left over because of lot sizing.R
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unattainable capability
The portion of the production capability that cannot be attained. This is typically caused by factors such as equipment unavailability, suboptimal scheduling, or resource limitations.U
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flow order
An order filled, not by moving material through production as an integral lot, but by production made over time and checked by a cumulative count until the flow order quantity is complete.F
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lies between an upper and a lower bound
the confidence limits.C
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production planning methods
The approach taken in setting the overall manufacturing output to meet customer demand by setting production levels, inventory levels, and backlog. Companies can use a chase, level, or hybrid production planning method. See: chase production method, hybrid production method, level production method.P
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transition tree (TRT)
In the theory of constraints, a logic-based tool for identifying and sequencing actions in accomplishing an objective. The transitions represent the states or stages in moving from the present situation to the desired objective.T
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ending inventory
A statement of on-hand quantities or the dollar value of a SKU at the end of a period, often determined by a physical inventory.E
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salvage
Property that, because of its worn, damaged, deteriorated, or incomplete condition or specialized nature has no reasonable prospect of sale or use as serviceable property without major repairs or alterations, but that has some value in excess of its scrap value.S
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open-to-receive
Authorization to receive goods, such as a blanket release, firm purchase order item, or supplier schedule. Open-to-receive represents near-term impact on inventory, and is often monitored as a control technique in aggregate inventory management. The total of open-to-receive, other longer term purchase commitments, and open-to-buy represents the material and services cash exposure of the company.O
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perpetual inventory record
A computer record or manual document on which each inventory transaction is posted so that a current record of the inventory is maintained.P P
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JIT
Acronym for just in time.J
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shipper-carriers
Companies that ship goods in their own vehicles. Many large retailers are shipper-carriers as they own their own fleets.S
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islands of automation
Stand-alone pockets of automation (e.g., robots, CAD/CAM systems, numerical control machines) that are not connected into a cohesive system.I
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N7
Abbreviation for seven new tools of quality.N
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decomposition
A method of forecasting where time series data are separated into up to three components: trend, seasonal, and cyclical; where trend includes the general horizontal upward or downward movement over time; seasonal includes a recurring demand pattern such as day of the week, weekly, monthly, or quarterly; and cyclical includes any repeating, nonseasonal pattern. A fourth component is random, that is, data with no pattern. The new forecast is made by projecting the patterns individually determined and then combining them. See: cyclical component, random component, seasonal component, trend component.D
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customer order promising
Syn: order promising.C
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operating profit margin ratio
Earnings before interest and taxes divided by sales.O
