exam 2 Flashcards
a committee for apply standardization should include which groups?
supply management, engineering, sales, operations, finance, reps from supplier and customer
founded 1901
non-regulatory federal agency within the department of commerce’s technology administration
promote innovation an industrial competitiveness by advancing measurement science, standards, and technology in ways that enhance economic security and improve quality of life
The National Institute of Standards and Technology (NIST)
defines voluntary European standards for fields including chemicals, consumer products, energy, healthcare, and air and space
European Committee for Standardization (CEN)
identifies voluntary standards for the electrotechnical filed to help facilitate trade, create new markets, and reduce compliance costs
European Committee for Electrotechnical Standardization
largest standards settings organizations for materials, products, systems, and services
not for profit
voluntary standards are used in contracts, laboratories, architectural plans, and offices
ASTM International
ISO 9000
fundamentals and vocabulary of quality management
ISO 9001
Quality management systems, requirements
ISO 9004
guidelines for performance improvements
ISO 19011
guidelines for auditing quality
ISO 20400
sustainable procurements
ISO 28000
set of standards that address potential security issues at all stages of procurement process, which targets threats such as terrorism, fraud, and piracy
ISO 14000
environmental standards
ISO 17799 and 27001
guidelines for implementing and information security management system
ISO 37001
help organizations fight bribery and promote ethical business practices
enables better spend analysis using the five-level hierarchy system for more than 20,000 categories of products and services
United Nations Standard Products and Services Code (UNSPSC)
umbrella organization that issues national standards based on consensus by all stakeholder organizations
American National Standards and Institute (ANSI)
foster technological innovation and excellence for the benefit of humanity
Institute for Electrical and Electronic Engineers (IEEE)
help procurement professionals make decisions and set a course of action that maintains a high level of integrity, adds value for employers and creates loyalty
Principles and Standards of Ethical Supply Management Conduct
an organizations expense for creating a new product or service
Development Cost
relationship between data sets and their relative clustering or dispersion within the sample or population. the smaller the ___, the more tightly the numbers will cluster around a central value
Variability
the process of agreeing on a common specification. improves quality and leads to efficiencies and cost savings
Standardization
basic system used to determine the quantity and timing requirements of dependent demand materials used in a manufacturing operation
master production schedule, BOM, and current inventory levels
Materials Requirements Planning
time based demand from the distribution center to balance customer fill rate against inventory investment
informs organization about what products are on hand to fulfill existing orders
Distribution Requirements Planning (DRP)
time-phased computerized inventory system to replenish inventory in multi-echelon warehousing system
plans for warehouse space, manpower requirements, transportation alternatives and financial flows
DRP II
computer software designed specifically for managing the movement and storage of materials throughout the warehouse
Warehouse Management System (WMS)
plan optimal transportation strategies based on projected expenditures, shipping routes, modes, and lead time
Transportation Management System (TMS)
reverse logistics process
Returns Management System (RMS)
process of establishing, measuring and adjusting the levels of capacity in an organization within the context of manufacturing resource planning (MRPII)
Capacity Requirements Planning (CRP)
a physical stock checking system in which the inventory is divided into groups which are physically counted at predetermined intervals, depending on their ABC classification. thus, the physical inventory counting goes on continuously without interrupting operations or storeroom activities
Cycle Counting
the function of identifying demands for products and services to support the marketplace. ___ encompasses the activities of forecasting, order planning and determining outside warehouse requirements, production balancing and spare parts
Demand Planning
derived from or contingent upon the demand for another component or a finished product (the demand for axles used in assembly is dependent on the demand for the finished automobiles
Dependent Demand
usually refers to a particular type of computer software package that integrates various functions within an organization. it may be used to enable processes such as forecasting, materials management, and purchasing
Enterprise Resource Planning (ERP)
a plan outlining the mix of end products to be produced during a given week
Master Production Schedule (MPS)
the ___ is a forward-looking plan for production or manufacturing. it includes a forecast over defined time periods (dates), plus customer orders, projected available balance, available-to-promise, and the master production schedule. a ___r uses the forecast, production plan and other considerations such as backlog, availability of materials, availability of capacity and management policies and goals to establish a ___
Master Schedule
an order is placed whenever a withdrawal brings inventory position to a predetermined reorder point level
Reorder Point System
items inventory position is reviewed on a schedule periodic basis rather than continuously
risk of stockouts
Fixed Order Point System
replenishment system where the size of the order remains fixed, while the time interval between them changes, depending on how quickly items are consumed
Fixed Order Quantity
model that can be used to determine the quantity of an item to be ordered or manufactured that minimizes total acquisition and inventory carrying costs. most common in independent demand items managed in an order-point management system
Economic Order Quantity (EOQ)
organizations inventory values are kept continuously in line with its actual inventory on hand
after each purchase records are updated and if they fall below a certain point more will be ordered
Perpetual Inventory
transactions are recorded as purchases are made. inventory only reviewed on a periodic basis
Periodic inventory
in the context of inventory, this assign an inventory value for an item at the average cost paid
Average Costing
demand based manufacturing strategy where items are pulled through coordinated manufacturing process based on the ongoing monitoring of customer demand
Flow Manufacturing
a philosophy of operation which focuses on minimization of resources (including time) used in an enterprise. it employs a set of principles and practices to reduce cost through the relentless removal of waste through the simplification of all processes
Lean Production
predetermined level that triggers an order. the level provides adequate inventory to be anticipated demand during the time it takes to receive the order
Reorder Point
a measure of dispersion of data. ___ is calculated by finding the difference between the average and each actual observation, squaring each difference, summing all squared differences, dividing that by n-1 (n is the number of observations) and taking the square root of the results
Standard Deviation
inventory management system that holds a supplier responsible for ensuring that stock is maintained at appropriate levels at the purchasers facility and for replenishing items when levels drop
Supplier-Managed Inventory (SMI)
the ___ asserts that every entity in a system is a constraint, but only one can be defined as the critically constrained resource (CCR). all other entities or constraints are noncritically constrained resources (NCCR). the CCR controls the system. if an action reduces time at the CCR to less than the time at a NCCR, then the NCCR becomes the new CCR. this is true for any process until absolute line balance is achieved, one can think of the workstation/cell/process as a CCR or NCCR to the bigger system and repeat analytical ____ thought process for the larger system
Theory of Constraints
a change in data caused by one of four: special cause, common cause, tampering or structural ___
Variation
inventory management system that holds a supplier responsible for ensuring that stock is maintained at appropriate levels in the purchasers facility and for replenishing items when levels drop
Vendor Managed Inventory (VMI)
the body of regulations used by all US federal executive agencies in the acquisition of supplies and services with appropriate funds. the ___ are compilation of all laws and policies governing the federal procurement process
Federal Acquisition Regulations (FAR)
extends the principles of S&OP throughout the supply chain, product and customer portfolios, customer demand, and strategic planning to deliver one seamless management process and improve business performance
Integrated Business Process
proactive compilation of requirements information regarding demand (from customers, sales, marketing, and finance), and the organizations capabilities from supply side such as supply, operations, and logistics management
Demand Management
cross-functional, horizontal process led by senior management that works with internal business units to forecast anticipated demand, inventory, supply, and customer lead times based on the sales forecast, actual demand, capacity forecast, and the organizations business objectives
Sales and Operations Planning (S&OP)
a collaborative process between buyer and seller involving the exchange of jointly developed sales forecast, inventory replenishment schedules, and promotion plans
Collaborative planning, forecasting, and replenishment (CPFR)
formula for forecast error
forecast error=actual demand-forecast demand
the average of the absolute values over a given number of time periods
Mean Absolute Deviation (MAD)
standard deviation of the sampling distribution of the mean
measure of the uncertainty of a given forecast and can be used to create confidence intervals
Standard Deviation
checked each time period to determine whether it falls outside some preset control limit
if equal to 0, forecast is equal to actual demand
greater than 0 indicates the actual demand exceeds the forecast
less than 0 indicates the actual demand is less than the forecast
Tracking Signal
an average of the squared errors
taking the square of each error prevents positive and negative errors from canceling out each other, and amplifies the effect of large errors
Mean Squared Error (MSE)
the process of anticipating future capacity requirements
Capacity Forecast
setting the long-term direction of an organization. to be successful, an organization must approach ___ on three levels: (1) corporate: decisions and plans that answer the questions of “what business are we in?” and “how will we allocate our resources among these businesses”; (2) unit: these decisions mold the plans of a particular business unit, as necessary to contribute to the corporate strategy; (3) function: these plans concern the “how” of each functional area’s contribution to the business strategy and involve the allocation of internal resources
Strategic Planning
the network of entities providing materials or services and transforming them into a product or service used by a consumer. there is no unique ___ that fits across all organizations and industries. rather ___s will be designed to meet the needs of the organization
Supply Chain
businesses that sell to other businesses and not to the general public. typically they sell products in large commercial quantities
Wholesaler
all labor, goods, services, and capital are free from any government restrictions or trade barriers so they can move freely across national borders
Pure market economy
country severely limits trade with the outside world, and relies on its own resources to support production and trade
Closed Economy
mix of state-owned and private enterprises. most industrialized nations
Mixed Economy
government interface with the free flow of goods and services that is considered harmful to the domestic economy
Protectionism
exists when one of the trading companies can produce a unit of the good involved with less resources than the other, or when only one country has a particular resource
Absolute Advantage
selling a product in other countries at price below those in the home market. illegal in most importing countries, US
Dumping
what are the 5 phases of the business cycle?
the highest point of output before a down turn
recession or shrinkage of the economy
recession trough or lowest point in economic activity
recovery or resuming growth path
expansion (prosperity), beyond a previous high point
measure of economic activity that changes before the business cycle does and thus indicates its future direction
Leading
confirms a change has occurred in the economy and tends to follow changes in the economy
Lagging
measure of economic activity that changes concurrently with changes in the business cycle
Coincident
replaced GATT in 1995
164 member nations
be more open to trade by lowering trade barrier such as customs duties (or tariffs) and discourage measures such as import bans or quotas that restrict quantities
discourages unfair practices such as export subsidies, product dumping
World Trade Organization (WTO)
What are Porter’s 5 forces?
the extent and intensity of direct competition threat of entrants threat of substitute product or service power of buyers power of suppliers
the process and result of gathering an analyzing information about aggregate forces (including economics) at work in trade and commerce in a specific service or commodity
Market Intelligence
taking out an investment that will specifically reduce or cancel out the risk in another investment
Hedging
a contract to exchange one form of currency for another at a specified exchange rate on some future date
Forward Exchange Contracts
gives an organization the right to buy a given amount of currency at a specified exchange rate on or before a specified date, but do not require the organization to buy at the end of the period. gives some flexibility but are more expensive then forward exchange contracts
Currency Options
family of indexes published by many nation agencies (US bureau of labor statistics)
measure the average change over time in the prices received by domestic producers of goods and services
based on selling price rather than on actual cost to produce an item
Producer Price Index (PPI)
popular measure of price inflation for retail goods and services
published monthly by US department of labor and other national agencies
measure average change in retail prices over time for a basket of eight major groups with more than 200 categories of various goods and services
Consumer Price Index (CPI)
a repetitive pattern of demand from year to year that indicates quantitative differences based on regular marketing and production cycles, model changeovers, seasonal discounts, and holidays
Seasonality
value that allows data to be measured overtime in terms of some base period
Deflator
measure of inflation, a factor used to eliminate prices changes in computing a nation’s real changes in output
Implicit price deflator
professional tool that organizations use to measure, investigate, and control price and cost changes within their own organizations
Custom Indexing
the difference between the value of a nations exports to all other countries and the value of all imports from all other countries over a given time period
Balance of Merchandise Trade
measure for the difference in the flow of funds across a nations boundaries
Balance of Payments
a written instrument executed by a bidder or contractor (the principal) and a second party (the surety) to assure fulfillment of the principals obligation to a third party. Types of ___s include performance ___s, payment ___s, and bid ___s
Bond
the value of goods or services received from suppliers and other creditors for which invoices have been received but not yet paid by the buying organization. also that branch of an organization which receives invoices and processes payments to suppliers and creditors
Accounts Payable
(1) a situation in which the capacity to accommodate products is less than what is needed to ensure smooth flow through the system; (2) in a kraljic matrix or quadrant analysis, the ___ quadrant represents items that are low-value high-risk. items in this category are generally purchased in large quantities and inventory levels are monitored closely to avoid interruptions in supply
Bottleneck
(1) any tangible good that can be bough, sold, or bartered, such as gold, silver, natural gas and oil or a bulk food product like grain, oats, corn, beef, pork bellies and coffee. currently, the term includes investment vehicles such as ___ futures. a ___ is traded on a commodities exchange that facilitates the trade and establishes and enforces rules and regulations about the trading process. Depending on its use and trading purpose a ___ may come in two types- cash and spot. a cash ___ is an actual ___ that is under a futures contract. a ___ is one that is traded on a spot market, pending delivery; (2) in supply management, the term ___ often refers to any good or services that is bought and sold in any trading arena
Commodity
the reduction in average unit costs experienced as organization’s volume increase
Economies of Scale
the price of a currency as it is being exchanged for another
Exchange Rate
a measure of a nations total output, which is the total value of all finished goods and services produced anywhere in the world by its agencies and firms during a certain time period (typically one calendar year)
Gross National Product (GNP)
a comprehensive study of feasibility or viability of a new concept or idea, usually undertaken before entry into the marketplace
Market Analysis
a tax imposed on imports and exports
Tariff
in finance, the total number of shares, units or contracts traded in a security or market during a specified period of time
Volume
system developed jointly by the US, Canada, and Mexico to classify business activity across North America. ___ is expected to replace the US Standard Industrial Classification (SIC) System
North American Industry Classification System (NAICS)
comparison of prices in one year to a base year
Price Indices
professional tool that organizations use to measure, investigate, and control price and cost changes within their own organization
Custom Indexing
calculates the proportion of plant and equipment used in the manufacturing, mining, and electric and gas utility industries. represents the ratio of the industrial production index to plan and equipment capacity
Federal Reserve Board
measure of a nations domestic output, which is the total value of all finished goods and services produced within a country within a given time period
general measure of economic activity
Gross Domestic Product (GDP)
exchange rates imposed by a country’s government that differ, depending on the nature of the goods or services imported
Differential Exchange Rates
currency exchange rate set and maintained by a government
Fixed Exchange Rate
currency exchange rate determined by market forces rather than government decisions
Floating Exchange Rate
measure statistical, but not causal, relationship between two variables
Regression Analysis
used to describe the degree of relationship between two data series
Correlation
method for examining the factors that influence changes in data series over time
Time Series
weights the observations being averaged to give more weights to the most recent data
Exponential Smoothing
interdependent decisions under uncertain conditions
maps alternative courses of action and their consequences
Decision Tree Analysis
linear regression but more complex
used when data in a time series are stationary or can be transformed into a stationary series
Box-Jenkins Method
a numerical modeling procedure using random or sample data to discover solutions to problems
helps in decision making when there is a high level of uncertainty in the environment
simulations developed using computer software and incorporated factors are considered innately unpredictable
software provides a range of possible outcomes and the probability they will occur
Monte Carlo Methods
calculates the average of the most current ‘n’ periods. in each recalculation the most current period’s data is added and the oldest data is removed
Data summed and then divided by the number of time periods used in the calculation
Simple Moving Average
standardized protocols and data structures defined for each software or computer application that can be used to facilitate communication between software or computer applications
Application Program Interface (API)
a monthly index issued by the US Federal Reserve Board that calculates capacity utilization in the manufacturing, mining, and electric and gas utilities industries. this index represent the ratio of industrial production index and equipment capacity
Capacity Utilization Index
a statistical concept which defines the average of a distribution. normally measure by mean, median, and mode
Central Tendency
a trend is general movement upward or downward. studying data to reveal such movement may lead to better decision-making. Factors that can create trends include changes in population, productivity, technology, supply/demand, price or costs
Trend Analysis
buying on “spot” or open market for immediate delivery
Spot Buying
buying more product than is required due to potential supply constraints or inflationary markets
Forward Buying
purchases in excess of current and future known requirements with the intention of profiting from price movement and resale
Speculative Buying
contracts established by buying organization to meet requirements for significant quantities of specific products or commodities with the primary objectives of ensuring supply, consolidating requirements to maximize purchasing leverage, and eliminating the carrying costs associated with bringing the entire required quantity into inventory at one time
price negotiated based on the total number of items to be purchased or the total dollar amount to be spent with the supplier over a defined time period
Volume Purchase Agreements (VPA)
award contracts to suppliers of raw materials or components for the life of the product
Life-of-Product Supply
an agreement with a supplier to stock goods at a customer’s location with the goods remaining the property of the supplier until used or sold
Consignment
when a commodity or component is purchased over a long period, the value of the items inventory is considered average, based on the mix of quantities and prices of the items bought at different times
averaging decreases the difference between short-term price fluctuations and long-term averages
Dollar Averaging
a term commitment (usually one year or more) to a supplier for certain goods or services over a predetermined period of time at predetermined prices, or at prices to be determined based on market or other conditions. this practice is aimed at reducing the number of small orders, utilizing short term releases to satisfy demand requirements
Blanket Order
strategies that determine the frequency and timing of purchases. these strategies are influenced by the current and projected requirements and supply market conditions, the speed of technological change and availability of funds
Buying strategies
advance purchases for use in the next three weeks to three months
Buying to Requirements
the computer-to-computer exchange of business information in a standard format. transaction documents, such as purchase orders, invoices, and shipping notices, are transmitted electronically and entered directly into a supplier’s (or purchaser’s) computer or into a third-party network for processing
Electronic Data Interchange (EDI)
contract for the purchase or sale and delivery of commodities or currencies at a specified future date for a specified price. primarily used as hedging device against market price fluctuations or unforeseen supply shortages
Futures Contract
regulated exchange using standardized futures contracts to buy or sell something (typically commodities or financial products at a particular time for a particular price)
Futures Market
a measure of the velocity of total inventory movement through the organization, found by dividing annual sales (at costs) by the average aggregate inventory value maintained during the year. the higher turnover, generally, the more favorable the measure
Inventory Turnover
a method for the effective planning of all resources used in a manufacturing organization. ideally, it addresses operational planning units and financial planning in dollars, and has a simulation capacity to answer “what if” questions. it is comprised of a variety of functions, each linked together: business planning, sales and operations planning, production planning, master production scheduling, material requirements planning, capacity requirements planning, and the execution support systems for capacity and materials. ___ is a direct outgrowth and extension of closed-loop material requirements planning (MRP)
Manufacturing Resource Planning (MRP II)
the stage in the product life cycle characterized by slower increases in sales, decline in profits, more competition and some marketplace exits
Maturity Stage
a replace-on-consumption process in which material moves only when specifically “pulled” by a user. pull processes can be created throughout a supply chain. in procurement, shipments occur (under an umbrella contract) when a user signals a supplier that goods have been consumed. in distribution, field inventory is replenished by decisions made at the field warehouse, not at a central point. in production, items are produced only to replace those withdrawal for use. in inventory control, materials are issued only on a signal from a user. typically the process of pulling and replacing material is accompanied by minimum paperwork
Pull System
reduction in inventory that occurs when items are lost, stolen or misplaced. can also occur naturally through evaporation or age and so on
Shrinkage
the volume of output generated by a resource in a specific period of time
Throughput
the movement of money through an organization. it is the measure of inbound revenues and outbound expenses by time period
Cash Flow
the process of overseeing and maximizing the financial and operational value of a group of related commodities, products or services by identifying and monitoring total spend and consumption, keeping abreast of market shifts, new alternatives or inventions, forecasting market supply and demand, and continuously evaluating supplier performance in order to drive down costs, improve supplier performance, and respond to changing business requirements and/or enhance stakeholder satisfaction
Category Management
refers to both internal partnering to define demand as well as working with suppliers. while often associated with vendor managed inventory or utilization of software, the process changes required within a business to reap benefits can be significant, as are the potential rewards for making such changes
Collaborative Inventory Management
a collaborative process between buyer and selling involving the exchange of jointly developed sales forecasts, inventory replenishment schedules and promotion plans. both parties benefit from these co-managed process and shared information
Collaborative Planning, Forecasting and Replenishment (CPFR)
the stages a product goes through from beginning to end. five distinct stages are: design, introduction, growth, maturity and decline
Product Life Cycle
(1) exposure to a chance or probability of loss or damage. (2) in supply management, exposure to business loss or interruption, of access to raw materials, manufactured goods, capacity, or other key materials, products or services required by the buying organization to execute its business plane. (3) from a legal perspective, consequences from some action or inaction. (4) in insurance law, the peril or casualty covered by the contract of insurance
Risk
the strategy and management of continuous, value-added processes across organizational boundaries to meet the needs of the end customer, while incorporating a structured approach, combined with the use of best-practice tools, to enable the development of comprehensive sourcing strategies that deliver maximum long-term value
Supply Chain Planning
a voluntary, nonprofit organization that establishes cross-industry standards to simplify the flow of product and information in the general merchandise retail industry. GS1 US and Voluntary Interindustry organization merged in 2012
Voluntary Interindustry Commerce Standards (VICS)
calculated by dividing the absolute forecast error by the actual demand for each time period
Mean Absolute Percentage Error (MAPE)
in statistics, a measure of accuracy used in time series analysis
Mean Squared Error (MSE)
when a population is normally distributed, ___ is the population standard deviation divided by the square root of the sample size
Standard Error of the Mean
the degree to which relevant data or information is accessible to all involved in the supply chain
Supply Chain Visibility
formula for target cost
target cost=expected price-desired profit
redefine a family of products or services
if successful, result in significant strikes in pass its competition and improving profitability
Breakthrough Ideas
process changes that improve the delivery or quality of an existing product or services while reducing costs
Incremental Ideas
results in add-on features that extend, improve, or modify existing product, service or processes
Derivative Ideas
result in product and services that are uniquely created to meet the specific demands of one customer
Customized Ideas
an approach to product or service development in which key stakeholders are involved early and continuously in the design stage to shorten cycle time and to ensure that manufacturability, procurement, reliability, maintenance, scheduling, delivery and marketing are considered simultaneously rather than sequentially
Concurrent Engineering
often used interchangeably with “term”, a provision in a contract. in traditional common law a distinction is drawn between ___ precedent and ___ subsequent
Condition
legal requirement for creation of a valid contract involving an exchange of value for value
Consideration
an evaluation of actual or anticipated cost data (material, labor, overhead, general and administrative, and profit). the application of experience, knowledge and judgement to data to project reasonable estimated contract costs. estimated costs serve as the basis for buyer-seller negotiations to arrive at mutually agreeable contract prices
Cost Analysis
an accounting classification that accumulates the monetary value of direct materials, direct labor and allocated overhead in products sold during a given time period. it is used to calculate earnings for the period, typically a year
Cost of Goods Sold (COGS)
an effort to lower the costs associated with acquiring a particular product or service
Cost Reduction
groups of individuals from various organizational functions who are brought together to achieve clear, worthwhile and compelling goals that could not be reached without a team. teaming leverages organizational resources while utilizing the expertise of team members. purchasers typically participate on teams dealing with sourcing, commodities, quality, and new product/service development
Cross-Functional Team
a practice that involves purchasing professionals in the new product or service development process from its inception
Early Purchasing Involvement (EPI)
a practice that brings together one or more selected suppliers with a buyer’s product or service design team early in the product development process. the objective is to utilize the supplier’s expertise and experience in developing a product specification that is designed for effective and efficient product roll-out
Early Supplier Involvement (ESI)
a cost analysis tool that incorporates the purchase price of a piece of equipment and all operating and related costs over the life of the item; including maintenance, downtime, energy costs and salvage value. cost of ownership is often divided by expected lifetime production to determine cost-per-piece. ___ is the concept of total cost of ownership applied to capital acquisitions
Life-Cycle Costing
the capacity or likelihood that a product can actually be produced profitably following product conceptualization and design
Manufacturability
the identification and analysis of the components necessary to satisfy a particular business requirement
Needs Analysis
a series of integrated processes in new ___ chronicling steps from idea conception to commercialization
Product Development
a new product model built so that testing and performance evaluation can be done prior to release to manufacturing
Prototype
the process of agreeing on a common specification. this process can take place at different levels: (1) across an organization; (2) throughout an industry; (3) across nations; (4) around the world
Standardization
the analysis of existing or new suppliers on the basis of key performance indicators such as technical quality, production, capacity, delivery, service, cost and managerial capabilities which are included in the spec of the statement of work
Supplier Analysis
(1) a structured approach to determine the life-cycle costs at which a proposed product with a specified functionality and quality must be produced to generate the desired level of profitability over its life cycle when sold at its anticipated selling price; (2) used in supply management to identify the allowable price for a supplier’s product or service which starts with the selling price of the buyer’s end product or service in the marketplace and subtracting out required profit. the amount remaining is the total that it can costs the organization to make the product or to perform that service, including materials. this cost is allocated among purchases and internals costs, with the result being the target cost for each item. purchasing then works with suppliers to ensure that their prices come in at or below the target costs. further analysis and negotiation then seeks to remove costs from both the buyer’s and seller’s operations to reduce the price to the acceptable target level
Target Costing
value analysis conducted at the design engineering stage of the product development process
Value Engineering
a financial statement that shows the flow and timing of cash into and out of the organization
Cash Flow Statement
any grouping of businesses, regardless of type of ownership, that share a common method of generating profits
Industry
proposals to make a contract; a binding expression of interest and willingness to create a contractual relationship usually including certain terms
Offer
a consumer’s preference for a particular brand in a product category because the consumer perceives that the brand offers the right product features, images or level of quality at the right price. often, such consumer is willing to pay a higher price for that brand over other brands
Brand Loyal
suppliers that meet the organizations selection criteria and have been added to the approved list
Approved Suppliers
a group of suppliers that an organization has determined meet its expectations for quality, delivery, and/or price, and are able to respond to unexpected changes
Preferred Suppiers
close relationship between buyer and seller to attain some advantages from each other in a positive way
Partnered Suppliers
one whose quality control system has proven to be highly reliable, thus eliminating the need for incoming inspection
certified supplier
global organization of more than 128,000 engineers and other technical experts
SAE International
global organization dedicated to quality and sustainability in the information and communication technology industry
based on 9001, but industry specific
QuEST Forum
steps in the ISO certification
inquiry into registration process Contract registrar certification audit processes audit final certification audit rolling certification audits
measuring quality performance and comparing it with specifications requirements as a basis for controlling output quality levels
Quality Control
a group of workers doing similar work, who voluntarily meet regularly during normal working hours to identify, analyze and implement improvement opportunities
Quality Circle
a structured method for translating user requirements into detailed design specifications using a continual stream of what/how metrics. QFD links the need of the customer (end user) with design, development, engineering, manufacturing, and service functions. it helps organizations seek out both spoken and unspoken needs, translate these into actions and designs, and focus various business function toward achieving this common goal
Quality Function Deployment (QFD)
a system of strategically placed quality inspection steps to ensure discrepant parts are not passed to the next operation and that processing error feedback is quickly provided to the station which produced the defect
Quality Gate
management function that includes establishing specifications that can be met by suppliers; using suppliers that have the capacity to provide adequate quality within those specifications; applying control processes that ensure high-quality product, service, cost performance of suppliers, and comparing it with requirements
Quality Assurance
What are the seven basic tools of quality?
Histograms pareto charts cause and effect diagrams check sheets scatter diagrams flowcharts or process maps control charts
diagram of values being measured versus the frequency with which each occurs
Histogram
graph showing the frequency with which events occur, arranged in order of descending frequency used to rank issues so that resources can be applied first to those with the largest potential return
Pareto Chart
data gathering tools that can be used in forming histograms
Check Sheets
graph used to analyze the relationship between two variables
Scatter Diagrams
used in statistical process control (SPC) to record, measure, and analyze variations in a process to determine whether outside influences are causing a process to go out of control
Control Chart
what are the seven managerial tools for improvement?
affinity diagram interrelation digraph tree diagrams matrix diagram prioritization matrices process decision program chart activity network diagram
total quality management tool in which the member of a team each sort data in silence, looking for associations
after sorting the team identifies the associations found, the critical links, and the issues that emerged
Affinity Diagram
after affinity diagram, used to understand the causal relationship between the different issues surfaced
Interrelationship Digraph
affinity diagram, key issues identified relating to the problem, this diagram identifies steps needed to address the given problem
Tree Diagram
show the relationship between two, three, or four groups of information
Matrix Diagram
different priorities are obtained from the tree and matrix diagrams, weighted matrices are used to prioritize which variables or topic should be emphasized
Prioritization Matrices`
tool used to help brainstorm possible contingencies or problems associated with the implementation of some program or improvement
Process decision program chart
technique using the application of statistical control charts in measuring and analyzing the variation in processing operations
Statistical Process Control (SPC)
two purposes of process capability (Cpk)
to determine if a process consistently results in products that meet specifications
to determine if a process is in need of monitoring through the use of permanent process charts
a quality level that represents the process limit of a measured attribute averaged from a series of satisfactory lots. typically used for sample inspection
Acceptable Quality Level (AQL)
a statistical procedure for measuring a random sample of a lot of material to determine acceptability of the whole lot. the entire lot may be accepted or rejected based on the results of the sample as the sample is assumed to be representative of the population. involves determine the maximum number of defects discovered in a sample before the entire batch is rejected
Acceptance Sampling
a process improvement method that offers a practical approach to improvements, whether at the office, logistics function or the warehouse. by assigning everything a location, time is not wasted looking for items
Five S
W Edward Deming’s four step process for improvement: plan (analyze problem), do (develop and test possible solution), check (measure effectiveness), act (implement fully)
Plan-Do-Check-Act
a measurement of supplier quality that compares existing processes, constraints in these processes and competitive technologies that may be available to meet customer needs. Two indices commonly used to measure ___ are Cp and Cpk
Process Capability
a reduction in the number of sizes and designs of an item that an organization uses
Simplification
application of a set of statistical techniques to control quality. ___ includes both statistical process control and acceptance sampling
Statistical Quality Control (SQC)
Activity network diagram is also known as what?
PERT
method of drawing a pictorial representation of a process that breaks the process into key activities, transfers, decisions and approvals
Process Mapping
formula for value-added ratio
total value-add activity cost divided by the total process cost
road map developed by an organization to help it assess, measure, and improve its contract management processes and relationships, including roles and responsibilities, time lines, performance management and cost
measures effectiveness of an organizations contract management process and helps it identify the level of maturity: ad hoc, basic, structured, integrated, or optimized
Contract Management Maturity Model (CMMM)
a performance measurement system developed by Kaplan and Norton which links performance measure to each other and to the organizations vision and strategy. the key performance categories are financial performance, customer knowledge, internal business processes, and learning and growth
Balanced Scorecards
a method for evaluating and measuring the maturity of the software development process of organizations on a scale of 1 to 5. the CMM was developed by Software Engineering Institute (SEI) at Carneige Mellon Univeristy in Pittsburgh
Collection of best practices that aid organization in improving their processes
Capability Maturity Model-Integrated (CMMI)
processes that are used to maximize value by ensuring that a contract is initiated, utilized, fulfilled, modified and completed in a system fashion that ensures stakeholder value is maximized and risk is minimized.
Contract Management
the time required to complete a process, such as replenishing inventory
Cycle Time
one of the seven tools of quality management, a ___ is a diagram of the steps of a process. each step is identified in sequence along with its key characteristics, such as time involved
Flow Chart
a systematic, centralized organizational effort to manage the surplus/obsolete equipment/material and scrap recovery/marketing/disposition activities in a manner that recovers as much of the original capital investment as possible
Investment Recovery
a methodology used to examine the different stages and requirements of projects, software or products to enable moving to the next step or level
Maturity Models
a type of supplier audit that checks the suppliers costs, quality, delivery and other critical processes for capability and improvement
Process Audit
the supply chain operations reference model is a process reference model that has been developed and endorsed by the Supply Chain Council as the cross-industry standard diagnostic tool for supply management. a business process model that integrates processes, metrices, best practice and technology to enhance supply performance
SCOR Model
software application that enables firms to track and capture transportation spending and costs, manage transportation contracts, rank transportation options, clear customs, track product movements in real time, track carrier performance, and determine the best use of containers and truck trailers
Transportation Management System (TMS)
joint US government-business initiative to build cooperative relationships that strengthen overall supply chain and border security
Customs Trade Partnership Against Terrorism (C-TPAT)
a general term applying to those things sought from a partner company when one’s own does not have the technology, capability, talent, time or capacity to provide on their own. unlike outsourcing, which is generally about costs, asset and head-count reduction, ___ is a top-line concept, where revenue growth and market growth are the pursuits
Access
name port destination. an incoterm rule under which goods are considered to be “delivered” (and buyer assumes risk of loss) when they pass the ships rail in the port of shipment. the seller is responsible for clearing the goods for export and for ___ to bring the goods to the destination port. this term can only be used for waterway transportation
Cost and Freight
the branch of government charged with the administration of policies and procedures for the import and export of goods
Customs
business activities of an enterprise that utilize the technology of the computer, including such tools as EDI, the internet, intranets and/or extranets to streamline and enhance commercial transactions of both private and public sector entities
Electronic Commerce
the carrier’s invoice for transportation charges applicable to a shipment
Freight Bill
the specific designation or image of a person, product, service, or organization relative to competitors in the same market space
Positioning
action of one party pursuant to specific contract language to end a contract for some reason other than breach by the other party
Termination
a materials management activity that controls buying, scheduling, auditing and billing of common and contract carriers
Traffic
the management of activities associated with buying and controlling transportation services for a shipper or consignee or both. in many companies the ___ department has been integrated into the logistics department
Traffic Management
a third-party service provider that makes transportation arrangements, and fills out forms under power of attorney. combine small shipments from multiple shippers into full loads. they make a profit on the difference between what they charge the shipper and the discounted price
Freight Forwarder
sales representatives that work for charter vessel owners, acting as middlemen between the shippers and ship owners
Ship Broker
represent a ship operator while the ship is docked in port, and manage its arrival, berthing, loading, unloading, and customs clearance. arrange for the payment of fees that are due while the ship is in port
Ship Agents
licensed to enter and clear goods through customs. all documentation and given power of attorney to pay any import duties
Customs house broker
hasten the movement of goods through customs based on their country-specific knowledge on rules and regulations on packaging. ensure right level of protection against climate changes and rough handling
Export Packer
management of both inbound and outbound materials, parts, supplies and finished goods for other organizations. often separate entity established as a joint venture or a long term contract between a primary client and one or more partners that act as a single interface between the client and multiple logistics service providers
Fourth-Party Logistics
performs the highest and most complex level of outsourced services. focused on global operations using an e-logistics network. they use the clients existing technology and infrastructure to optimize the supply chain by transforming it into a virtual organization
Fifth Party Logistics
cargo receipt and transportation contract between shipper and carrier. equivalent documents are the air waybill and mulimodal bill of lading
Bill of Lading
record of all documents that will accompany the shipment and their final disposition, along with any special instructions
Transmittal Letter
Document that assures the seller that payment will be made by the bank issuing the letter of credit upon fulfillment of the terms of the sales agreement
Letter of Credit
a statement of precisely where (in what country) the goods were produced
Certificate of Origin
transfers the responsibility for the cargo between the international and domestic carrier
Dock Receipt
required government form to track exports for statistical purposes
Export Declaration
a control document to track and identify goods shipped to other countries
Consular invoice
declares a shipment’s expected arrival time and relevant shipment details
Arrival Notice
authority from the consignee to th ocean carrier to release the cargo to a specified inland carrier
Delivery Order
multiple documents that describe the shipped merchandise, origin of shipment and applicable duties
Customs Entries
statement that all freight charges have been paid
Freight release
certification of ownership of the cargo provided to customs
Carrier’s certificate and release order
official government form used to declare the value of the shipment
special customs invoice
a person or an organization authorized to act for another person or organization (the principal) in prescribed dealings with a third party. all purchasers are, most sales personnel are agents buy may have differing levels of actual authority
Agent
term commonly used to describe pre-printed terms and conditions included on a purchase order or other form
Boilerplate
a certificate of ownership or consignee of cargo provided to customers
Carrier’s certificate and release order
a document required by customs officials, identifying the country of origin of imported goods, and certified by US consular officials overseas
Certificate of Origin
(1) an agreement with a supplier to stock goods at a customer’s location with the goods remaining the property of the supplier until used or sold (2) a shipment that is handed over to a common carrier for transport and delivery
Consignment
directives to an inland carrier for delivery
Delivery Instructions
a receipt (which often serves as the basis for a bill of lading) that is given at the point of shipping and transfers accountability from the domestic carrier to the shipper
Dock Receipt
statement that all freight charges have been paid
Freight Release
an agreement between a company, or person, in which the insured makes payments to the insuring company, usually based on the terms of an ___ policy, covering a specified period of time. the insuring company promises to pay money or other compensation to the insured for a loss covered by the ___ policy. often used to reduce business risk, many types of ___ are available (life, automobile, construction, health, contingent liability, business interruption)
Insurance
a document that provides an overview of goods being transported, often including a description of goods in detail and may include the shipment date as well as tracking information
Transmittal Letter
a transportation document showing point of origin, destination, route, consignor, consignee, description of the shipment and the amount charged for transportation
Waybill
US government agency established in 1970 to develop and enforce standards and methods to protect the environment
Environmental Protection Agency (EPA)
provides the legislative framework for chemical disclosure within the EU member states and several other non-EU countries
European Protection, Evaluation, Authorization and Restriction of Chemicals Act (REACH)
the US federal agency that used to regulate domestic surface transportation. the ___ came into existence in 1887 and ceased to exist in early 1996. many of the regulatory matters over which it still had review were transferred to the US department of transportation
Interstate Commerce Commission (ICC)
a point at which rates to another destination are computed
Basing point
local hauling between locations in the same town or city
Cartage
costs assumed by the carrier for independent contractors with the understanding that these costs will be charged back later
Charge-back
a publication containing a list of articles and the classes to which they are assigned for the purpose of apply rates
Classification
the person named in a freight contract that the goods have been shipped or turned over to for care
Consignee
the extra charges paid for detaining a freight car or ship beyond the permitted time for loading and unloading
Demurrage
the amount added to or deducted from a through rate to establish a rate
Differential rate
a charge made on the basis of miles traveled
Distance rate
the material used to protect or support truck freight and its weight, listed separately on the bill of lading
Dunnage
“freight all kinds”, usually refers to full container loads of shipments containing mixed types of freight
FAK
shipment that is miscarried or unloaded at the wrong location and then forwarded to the correct location at no charge
Free astray
lower-than-usual tariff rates assessed because a rail shipper offers a greater volume than specified in the tariff
Incentive rates
a rate for hauling a single shipment over two or more transportation lines (the lines involved cooperate to offer the service)
Joint Rate
rates established for shippers transporting large quantities of goods that fill up several rail freight cars
Multiple car rates
the formula that includes specific factors or elements that control the making of a rate
Rate basis
rates established for direct routes from one point to another; rates by other routes between the same points are set in relation to the standard rate
Standard Rate
should any cargo be thrown overboard or any expense incurred because of an emergency situation en route between ports, all losses will be split proportionally between the parties that hold a financial interest in the voyage
General Average
systematic, centralized organizational effort to manage the surplus/obsolete equipment/material and scrap recovery/marketing/disposition activities in a manner that recovers as much or the original capital investment as possible
Investment Recovery
a failure to perform any obligation included in the contract terms. failure of materials or product to meet quality or other specification warranted by the supplier
Breach
the cost of moving goods into and out of a business; also known as freight. ___ inward (from suppliers) is typically a direct cost. ___ outward ( to customers) is usually classified as indirect costs
Carriage
damage that was not observed when the goods were delivered usually due to exterior packaging and seals being intact
Concealed Damage
compensation for loss or injury suffered by one party as a result of another party’s actions of inactions. in breach of contract situations only compensatory, not punitive or exemplary, ___ are generally allowed
Damages
(1) an error in understanding, interpretation or calculation made without intention or malice; (2) common law defense that excuses performance of a contract if both parties were ____n about a fundamental assumption underlying their agreement
Mistake
a form of countertrade similar to counter purchase in which a supplier selling to a foreign organization agrees to purchase a certain quantity of materials from the country it suppliers. the primary difference is that the supplier can fulfill its obligation by purchasing from any business organization in the country it supplier. this term is primarily used in sale of military hardware
Offset
standard often applied in legal proceedings, e.g., “___ time, ___ person”, what is considered to be just a proper, ordinary or usual, under the circumstances presented. in contract disputes, what is ___ may be determine by past practices of the parties; practices in the particular industry and/or nature of the goods or services covered by the contract
Reasonable
a process documenting all tiers of suppliers primarily to support risk mitigation and time-to-recovery concerns
Supply Chain Mapping
a legally enforceable promise or representation as to quality or performance of goods or services made by the seller
Warranty
an EU directive, the purpose of which is to place restrictions on the use of certain hazardous substances in electrical or electronic equipment sold or used in the EU after July 1 2006
Restriction of Hazardous Substances (RoHS)
an EU directive, the purpose of which is to prevent the emergence of electrical and electronic equipment waste, and to promote the reuse, recycling and other forms of recovery of such waste
Waste Electrical and Electronic Equipment (WEEE)
a critical review of an organizations freight bills to determine if the assessed charges were correct. checks the classification, rating or extension, either by a third party or inside auditor
Freight bill audit
a freight rate pricing system that applies to a specific article or articles
Commodity Rate
named port of shipment. an incoterm rule used only for maritime trade under which responsibility for the shipment transfers from exporter to importer then shipment is loaded aboard the vessel at the name port of shipment. sell must load the goods onto the ship. this has changed since incoterms 2000 rules, where the seller was responsible to only deliver goods past the ship rails. centuries of maritime tradition say ___ point is the Ship’s Rail, also referred to as “Freight on Board”.
Free on Board
shipment weight specified by the carrier’s tariff as the ___ required to qualify for discounts of truckload or carload
Minimum Weight
(1) a homogeneous unit used in comparing freight earnings or expenses. the amount earned from the cost of hauling a tone of freight one mile or one half ton two miles; (2) the movement of a ton of freight one mile or any variation of this combination
Ton Miles
a distribution technique used to minimize or eliminate warehousing by unloading incoming materials and loading the materials outbound trailers or railcars, without storing them in a warehouse. used to change the type of conveyance, to sort material intended for different designations, or to combine material from different origins while minimizing or eliminating warehousing
Cross-Docking
an inventory storage system in which vehicles automatically load and unload material from the racks. they typically also allow for high-density storage
Automated Storage Retrieval System (AS/RS)
storage facility utilizing one or more automation technologies, such as automated storage/retrieval systems, automated guided vehicle systems and/or RFID
Automated Warehouse
a computer controlled materials handling system consisting of small vehicles (carts) that move along a guided way
Automated Guided Vehicle System (AGVS)
a method of picking inventory in which order requirements are aggregated to reduce the number of trips to and from product locations. the aggregate quantities are taken to a common area where individual orders are put together
Batch Picking
a company which purchases and resells standard products to a general customer base. it does not manufacture but may do limited modifications to products upon customer request. ___s usually maintain finished goods inventories and offer services to customers such as inventory management or consignment
Distributor
a third party, often licensed by a governmental agency, that makes transportation arrangements and fills out forms under power of attorney
Freight Forwarder
the point at which material is consumed. delivery to ___ means that arriving materials are taken directly to the ___ without being stored in a warehouse stockroom
Point of Use
computer software designed specifically for managing the movement and storage of materials throughout the warehouse
Warehouse Management System (WMS)
the process of housing or storing materialss and packages in larger quantities, generally using the original packaging, pallets, shipping containers or boxes
Bulk Storage
action of one party to end a contract due to breach by the other party. the right to cancel may be provided by law or in specific contract language
Cancellation
a term used when one shipper’s goods completely occupy an entire container
Container Load
what to do when stock isn’t moving
returning the stock to the seller if allowed under the contract
selling to the staff or external parties at a discount
donating to charity
disposal
measurements considered critical to the performance of a business or process, usually calculated and reviewed on a regular basis
Key Performance Indicators (KPI)
the amount of actual hours as compared to scheduled or available hours. the downtime that represents the different if often categorized by material shortage, equipment failure or other cause
Utilization
additional services above and beyond minimum requirements that the customer considers to be of value
Value-Added Services
formula for inventory turnover
inventory turnover= annual sales (at cost)/average aggregate inventory value
the ratio of usable output to input, when measure in the same terms. all output not perfect or all do not function at highest desirable level
Yield Loss
a statement of an organization’s assets, liabilities, and shareholder equities
Balance Sheet
reports generated when there is a difference, or discrepancy, between inventory records and actual physical inventory. these reports are used to identify where, when, and how the discrepancy occurred and to enable future correction and prevention
Discrepancy Reports
a management approach that aims to minimize inventory-related risks while ensuring smooth operations. this means balancing the costs of ordering and carrying inventory against the costs of stock outs
Inventory Management System
a statement of an organization’s revenues and expenses during a given year
Income statement
an itemization of the items included in a particular shipment, plus related details
Manifest
periodic manual check of actual inventory as compared to inventory records. this process, while necessary to confirm the accuracy of inventory records, is very time consuming and disruptive because operations typically have to be shut down while stocks are being counted
Physical Counting
the process of comparing records, identifying any differences between related records in which the content should match, and settling and resolving these variances
Reconciliation
the systematic control of records or documentation from creation or receipt through processing, distribution, maintenance and retrieval to ultimate disposition
Records Management
a code attached to a product which will be used to identify and track that product
Product Code
the commercial activity of transporting and selling goods or services from a producer to a consumer
Retail Distribution
oversight and management of physical assets such as inventories, buildings, land and infrastructure. some companies include intangible assets in this definition such as patents, copyrights and other intellectual property
Property Management
an individual unit or product that is stocked at a specific storage facility
Stock Keeping Unit (SKU)
picking material for production or sales order and moving to a separate area for purposes of consolidation or identifying shortages. staged material is normally handled as a location transfer and not as an issue to the destination production or sales order
Staging
the short term resources owned by a company, including cash, inventory, and accounts receivable. have a life of one year or less, or the normal operating cycle of the organization
Current Assets
an asset that lasts more than a year, with an impact on shareholder value, and considered by management to be worth controlling
usually property, plant, and equipment
depreciated over a certain monetary value
Fixed Assets
assets such as a brand name, goodwill or reputation that have value but cannot be physically seen or touched
usually have a life of excess of one year
Intangible Assets
incurring of an expenditure that has a future benefit in excess of one year that is capitalized to an asset account
Deferred Cost
allows organization to deduct a portion of the total cost of the asset over its useful life
qualifying assets must be tangible, purchased for business use, and on the IRS eligibility list
each year that the deduction for depreciation is taken reduces the asset’s adjusted cost basis
IRS section 179 deduction for depreciation
the process of maintaining an accurate accounting of assets, whether owned, leased or loaned, under an organization’s control and listed on the organization’s balance sheet
Asset Management
redeploying, reusing, recycling or regeneration of something of value (property, equipment, goods and so on) that is no longer necessary for the original intent; the return of environment conditions to the state they were prior to an action
Asset Recovery
inventory control system that involves the use of machine-readable codes on packages and products for easy identification and computerized recordkeeping. in addition to materials inventories, ___ can also be used to keeping records of tools, furniture and equipment
Bar Coding
equipment used by an organization for its production potential that costs more than a predetermined threshold value and whose costs will be depreciated over time
Capital Equipment
the process of removing something from a location, typically the removal of scrap, surplus, excess, obsolete and waste items from an organization’s premises
Disposal
the process of planning, implementing and controlling the efficient, cost-effective flow and storage of raw materials, in-process inventory, finished goods and related information from point of origin to point of consumption for the purpose of conforming to customer requirements
Logistics
process that converts an image of text into a machine-readable text format
Optical Character Recognition (OCR)
land and rights to land, ground improvements, utility distribution systems, buildings and other structures
Real Property
means of information storage. Their purposes are to provide: (1) actionable information to enable better decisions; (2) a knowledge base for sharing and transferring information; and (3) complete documentation for legal and audit purposes. purchasing is responsible for maintaining ___ for bills of sales, titles, warranties and other purchase-related documents
Records
the practice of returning useable materials cast off from a process into a production stream for another use. this is particularly true in primary manufacturing, where clean process scrap can become part of a new cast of material. segregated, clean material can have considerable value
Recycling
the value of an asset remaining at the end of a lease period
Residual Value
an independent, private-sector body that develops and approves international financial reporting standards
International Accounting Standards Board (IASB)
US federal law adopted in 2002 in an attempt to restore public confidence in corporate governance; regulates the accounting profession and imposes extensive reporting requirements on all publicly-traded corporations in the US. the law requires internal financial controls to provide assurance of the reliability of financial reporting and preparation of financial statements
Sarbanes-Oxley Act(SOX)
what is the calculation for safety stock?
(maximum daily usage * maximum lead time in days) - (average daily usage * average lead time in days)
a “pull” system of production and inventory management where product is manufactured in response to an actual order from a customer thereby reducing inventory
Build-to-order (BTO)
a “push” system of production and inventory management where product is manufactured or acquired in response to sales forecasts and kept in inventory until an order is received
Build-to-stock (BTS)
the cost of keeping inventory on hand, including: the opportunity costs of invest funds (finance costs); storage and handling costs (overhead costs); and taxes, insurance (ownership costs), shrinkage, damages, and obsolescence (risk costs). organization’s usually state an item’s holding cost per time period as a percentage of the item’s value
Carrying Cost
process that uses customer demand (not forecasting) to produce goods
Demand Flow
linkage between buyers and sellers that enables efficient sharing of demand data for the purpose of reducing costs in the chain
Demand Flow Technology (DFT)
the unproductive time when manufacturing processes are stopped and workers are idle, usually as the result of equipment failure, setup, maintenance work or material shortages. also applicable to services when service delivery is interrupted as a result of failure of equipment or people in the service delivery process
Downtime
a material replenishment system in which the size of the orders remain fixed, while the time interval between them changes, depending on how quickly the items are consumed
Fixed-Order Quantity (FOQ)
the costs incurred in changing tooling or in changing the production line to produce a different item
Setup Costs
a legally binding document prepared by a purchaser to describe the terms and conditions of a purchase. in the contracting process the ___ may function as an offer, an acceptance, a confirmation of an oral agreement or a trigger for periodic perforance (release) under an established contract
Purchase Order (PO)
a PC-based setup that integrates personal processing application with a network of PC’s or with a mainframe computer. a ___ allows a user access to a very large mainframe databases otherwise inaccessible
Workstation
developed testing standards to assess the various transport packaging materials available today
certification programs for packaged products and packaging professionals
International Safe Transit Association (ISTA)
offers global food safety (GFSI) certification for the food packaging industry
NSF International
contract management processes exist and are accepted and practiced. management understands the benefits of a contract management process. it includes some informal contract management process documentation. managers and personnel are not held accountable for not following standards
Ad hoc
some basic contract management processes and standards are in place but only required on complex, critical, and highly visible contracts. consistent policies and standards do not exists on other contracts. processes and standards exist but have not been institutionalized throughout the organization
Basic
contract management processes have been fully developed, institutionalized and mandated throughout the organization. formal documentation has been developed, and some processes may be automated. the processes and documentation can be tailored for the unique aspects of each contract. senior management provides guidance, direction, approval of contracting strategy, decision-making, documents, and terms and conditions
Structured
contract management processes have been fully integrated with the organization’s core processes and the end user or customer. performance metrics are used periodically to measure the contract management process and make related decisions
Integrated
contract management processes are fully integrated with the organization’s core processes and end user or customer. performance metrics are used systematically to improv process quality. contract management personnel apply lessons learned and develop best practices. continuous improvement efforts are used to improve and streamline contract management processes
Optimized
bringing together individuals for a facilitated exchange of ideas about a specific topic for the purpose of getting input and gaining perspective that may influence decision-making. technique used in qualitative research
Focus Group
creation of high-value products with a large variety of options. customers specify their exact versions from many possible configurations. manufacturing costs are low due to large volumes. examples include technology devices such as personal computers which are assembled on one line a low costs yet customers specify processor speed, storage device and many other options
Mass Customization
intermediary, for a fee, brings a buyer and seller together
Broker
like a broker but will take possession of the goods and sell them
dealers fee for services is usually a commission calculated on the total value of the sale
Dealer
what organization restricts the use of 6 hazardous materials and what are they?
RoHS--> restriction of hazardous substance directive lead mercury cadmium chronium VI PBB--> flame retardant PBDE--> flame retardant
a unit of weight equivalent to 1,000 kilograms or 2,204 pounds
Metric Ton
legal theory under which a definitive promise made by one party and justifiably relied on by another will be enforced, even though the requirements of contracting may not be met
Promissory Estoppel
capital budgeting technique used to equate the discounted cash flows against the initial investment for the project
Net Present Value (NPV)
capital budgeting technique that calculates the discount rate that equate the discounted cash flows of the project with the initial investment
Internal Rate of Return (IRR)
the period of time needed for a project to recover its initial investment, based on the cash inflows
Payback
team follows along with managers argument even though they might disagree because they are the manager
abilene paradox
tools used to assign project team members their specific roles and responsibilities with respect to the project effort. typically assigns project team members to a specific section of the project work breakdown structure
Responsibility Assignment Matrix (RAM)
horizontal bar chart that is used to plot the planned and actual progress of project tasks
Gnatt chart
mathematical-based algorithm for scheduling a set of project activities that shows the longest path of planned activities to the end of the project, and the earliest and latest that each activity can start and finish without making the project longer
includes a list of project activities known as the work breakdown structure, the expected time that each activity will take to complete and the dependencies among the activities
Critical Path Method (CPM)
network planning technique used for controlling the activities in a project. each activity is assigned a pessimist, probable, and optimistic estimate of duration
the critical path and project duration are calculated and progress is monitored using this data
greater reliability of the time estimates
Program Evaluation and Review Technology (PERT)
what are the 9 essential elements of a project plan?
objectives technical and managerial approaches contractual agreement project schedule project budget or resource requirements risk management risk assessment evaluation methods
if a project becomes larger as a result of change or there are changes occurring outside the control of the project team
Scope Creep
a structured proposal for business improvement that functions as a decision package for organizational decision-makers
Business Case
making changes in a planned or systematic fashion through the use of methods, models and practices common to the multi-disciplinary body of knowledge surrounding the task of managing planned or unplanned change
Change Management
the management of various facets of a contract to ensure that the contractor’s total performance is in accordance with the contractual commitments and that obligations to the purchaser are fulfilled
Contract Administration
the consecutive sequence of activities in a project whose cumulative time requirements determine the minimum total project time; the longest time path through a series of tasks; i.e., when the last task on the ___ is completed, the project is complete
Critical Path
a management system and related sub-systems implemented to establish a relationship between cost, schedule, and technical aspects of a project, measure progress, accumulate actual costs, analyze deviations from plans, forecast completion of events and incorporate changes in a timely manner
Earned Value Management System (EVMS)
the monetary value of an entity at the end of a time period minus the monetary value of that same entity at the beginning of that time period. for an enterprise, after-tax earnings minus the opportunity cost of capital. as with any other entity, ___ essentially measure how much more valuable an organization has become during a given time period
Economic Value Added (EVA)
a set of processes or rules designed to optimize desired results and limit (optimally eliminate) undesired results, typically embedded within management practices
Governance
systematic procedures developed by to apply critical thinking to information, data, and experience for the purpose of solving problems, making decisions, anticipating future problems and appraising situations
Kepner-Tregoe Rational Process Analysis
the process of coordinating the organization, planning, scheduling, controlling, monitoring and evaluating activities so that the objectives of a project are met
Project Management
project management term to describe document that shows the entire hierarchy of project operations required to accomplish project objectives
Work Breakdown Structure (WBS)
