Vocabulary Flashcards
360-DEGREE PERFORMANCE APPRAISAL
In human resource management, an appraisal tool
to measure employee performance and gather
employee development feedback from a group of
people who actually deal with the employee on a
regular basis. This group of individuals is made up
of both internal and external customers. It may
include the employee plus subordinates, peers and
managers in the organizational hierarchy, as well
as external sources such as customers and/or
suppliers or other interested stakeholders.
See Also: Human Resource Management;
Performance Evaluation; Performance
Measurement
80/20 RULE
Also known as the Pareto rule, it is the finding that
a minority of a population account for the majority
of a given effect. For example, in inventory
management, 20% of the inventoried items account
for 80% of the total dollars.
See Also: ABC Analysis; ABC Classification; Pareto
Analysis
ABATEMENT
Alleviation, suppression, mitigation or termination.
ABC ANALYSIS
Application of Pareto’s Law or the 80/20 rule to
define three categories: A, B and C. ABC analysis is
used to determine the relative ratios between the
number of items and the dollar value of the items
purchased repetitively for stock; the number of
purchase orders and the dollar value; and the
number of suppliers and percent of spend. In most
organizations, 10-20% of the items (“A” items)
account for 70-80% of the investment; the next 15-
25% of the items (“B” items) account for 10-20% of
the investment; and the remaining 65-75% of the
items (“C” items) account for 5-10% of the
investment. Inventories, purchases, and suppliers
should be managed accordingly, with more
emphasis placed on the strategic management of
the “A” items and looser controls and less attention
on “C” items.
See Also: 80/20 Rule; Pareto Chart
ABC CLASSIFICATION
A system of categorizing items in decreasing order
based primarily on their total annual dollar value.
See Also: 80/20 Rule; ABC Analysis; Pareto Analysis
ABNORMAL VARIATION
Variation that is outside the normal “noise” of a
system. It is typically caused by an outside
influence rather than the system itself and may
indicate a change in or to the system.
ABROGATION
Annulment of a contract after it has been partially
performed, usually due to circumstances outside
the control of the parties, e.g., force majeure. There
is no obligation on either party for the remainder of
the contract.
ABSOLUTE ADVANTAGE
A competitive strength enjoyed by an entity (firm or
country) that can produce a good or service at lower
cost (fewer labor resources or hours of work) or with
higher productivity (generates more output per
hour of work) relative to another entity. It is able to
produce more efficiently meaning that with equal
inputs the entity with the absolute advantage will
ACCELERATED DEPRECIATION
There are two accelerated depreciation methods:
sum of the year’s digits method and the declining
balance method. Both allow faster write-offs and
provide a greater tax shield than the straight line
method of depreciation. In both, it is assumed that
an asset loses a majority of its value in the first
several years of use.
See Also: Depreciation
ACCELERATION CLAUSE
Contract provision that allows one who is owed
money over time to declare the entire outstanding
amount due under certain circumstances.
ACCEPTABLE QUALITY LEVEL (AQL)
A quality level that represents the process limit of a
measured attribute averaged from a series of
satisfactory lots. Typically used for sample
inspection.
ACCEPTANCE
The indication of an offeree to be bound by the terms
of an offer; may be by communication or behavior.
See Also: Mutuality of Contract
ACCEPTANCE SAMPLING
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
determining the maximum number of defects
discovered in a sample before the entire batch is
rejected.
See Also: Sampling; Statistical Quality Control
(SQC)
ACCEPTANCE TESTING
Test procedures that lead to formal acceptance of a
new or changed product, process or system. For
example, the overall condition of a given lot may be
determined by inspecting only a portion or sample
of the lot. For a software system, a user acceptance
test plan is agreed to by the buyer and seller, carried
out and then results are compared to preestablished severity thresholds to determine
corrective action.
ACCESS
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 cost, asset and head-count
reduction, access is a top-line concept, where
revenue growth and market growth are the
pursuits.
ACCESSORIAL CHARGES
Costs that carriers may charge in addition to the
transportation cost. They include single shipment,
inside delivery, notification, and storage and
redelivery charges.
ACCORD AND SATISFACTION
Agreement between two parties who have an
underlying contract to enter into a new contract (the
accord) which alters the obligations of one or both
parties, performance of which (the satisfaction) will
render the first contract unenforceable.
ACCOUNTABILITY
The personal or organizational responsibility and
authority to provide direction, answers and insight
to all interested parties on a topic or within a given
area.
ACCOUNTING SYSTEM
The combination of records and procedures that
discover, record, classify and report information
about the financial position and operations of an
organization.
ACCOUNTS PAYABLE (A/P)
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 RECEIVABLE (A/R)
The value of goods delivered or services provided to
customers which have been invoiced but not yet
paid. Also that branch of an organization which
receives and processes payments from customers.
ACCREDITED PURCHASING PRACTITIONER (A.P.P.)
A certification of the Institute for Supply
Management® (ISM®) which is no longer available.
Individuals holding the A.P.P. designation may apply
for reaccreditation every 5 years.
ACCRUAL ACCOUNTING
A method of bookkeeping in which income and
expenses are allocated to periods to which they
apply, regardless of when actually received or paid.
For example, when an invoice is rendered, its value
is added to income immediately even though it has
not been paid.
ACCULTURATION
The culture changes that result from contact among
various societies over time. Typically, individuals of
a foreign or minority culture learn the language,
habits and values of a standard or dominant
culture.
ACCUMULATION BIN
A physical location used to accumulate all
components that go into an assembly before it is
sent to the production floor.
ACKNOWLEDGMENT
A communication (written or electronic) used to
inform the buyer that the supplier has accepted a
purchase order. An acknowledgment creates a
bilateral contract, so long as the terms of the
acknowledgment are not substantively different
from those of the purchase order.
ACQUISITION
The process of obtaining goods or services to meet
the needs of the organization.
See Also: Purchasing Process
ACQUISITION COST
The total cost of generating and processing an order
and its related documentation. Ordering or
purchase costs include the managerial, clerical,
material, telephone, mailing, fax, e-mail,
accounting, transportation, inspection and receiving
costs associated with a purchase or production
order.
See Also: Economic Order Quantity; Order Costs
ACQUISITION PRICE
The sum of the price, transportation and delivery
charges paid to purchase something.
See Also: Landed Price
ACT OF STATE DOCTRINE
Legal principle that one country’s judicial
authorities cannot challenge the action of a
recognized sovereign power in another country.
ACTIONABLE
Providing the basis for a legal claim.
ACTIVITY-BASED BUDGETING (ABB)
A method of budgeting whereby an organization
identifies, analyzes and monitors the activities that
incur costs in each of the organization’s functional
areas, relates these activities to the organization’s
strategic goals and uses the activity costs to
estimate resource requirements and develop a
budget. Because the budget is developed based on
activities (versus cost elements), this process
streamlines costs and can be used to evaluate the
achievement of the strategic goals.
See Also: Activity-Based Planning (ABP); Closed
Loop Activity-Based Planning
ACTIVITY-BASED COSTING (ABC)
A cost management method for attributing indirect
costs to the activities that drive cost. This approach
is in contrast to more traditional accounting
methods which pool and allocate indirect costs on a
formulaic basis that does not necessarily reflect the
true cost structure.
See Also: Overhead; Indirect Costs
ACTIVITY-BASED PLANNING (ABP)
A method of planning whereby the organization
continuously monitors the customer demand of its
products or services and uses this demand to
determine the organization’s activity and resource
requirements.
See Also: Activity-Based Budgeting (ABB); Closed
Loop Activity-Based Planning
ACTUAL AUTHORITY
The specific authority given to an agent by a
principal.
See Also: Agent; Authority; Principal
AD VALOREM RATE
Derived from the Latin words that translate into
“according to value”. Typically used to describe
personal property or real estate taxes or taxes on a
business output. Country specific names may
include sales tax, VAT, GST. Also used in
conjunction with duties on imported goods.
See Also: Compound Rate; Duty
ADAPTIVE SELLING
Adjusting, or adapting, selling techniques based on
interpretations of customer and/or market demand
and behavior.
ADDITIVE MANUFACTURING
A name given to 3-D printing which creates a solid
object.
ADEQUATE ASSURANCE OF PERFORMANCE
Remedy provided by UCC §2-609 allowing one
contracting party to demand in writing that the
other party prove its ability to perform its
contractual obligations when there is a reasonable
basis for questioning that ability. The other party
has no more than 30 days to respond, and failure to
provide adequate assurance constitutes repudiation
of the contract.
ADHESION CONTRACT
Contractual relationship wherein one party dictates
all the terms of the agreement, not subject to
negotiation. Sometimes referred to as a “take it or
leave it” contract or à prendre ou à laisser contract
(especially in international contracts).
AD-HOC BUYING
Based on the Latin term “for this,, it refers to the
real or perceived “for this time only” purchase that
typically uses no or minimal existing processes
designed to optimize value and control.
ADMINISTERED PRICE
A price determined by the policies of a seller rather
than by the competitive forces of the marketplace.
ADMINISTRATION
The performance of executive duties; the act or
process of managing or administering the conduct
of affairs such as the affairs of the supply
management process or function.
ADMINISTRATIVE AGENCY
Governmental body (federal, state or local) exercising authority delegated by the legislative branch to carry out specific functions.
ADMINISTRATIVE COSTS
The overhead costs of a business that must be
allocated across the activity streams related to the
products and services that are produced, bought
and sold, or resold.
ADMINISTRATIVE LAW
Decisions, orders, rules and regulations developed
by an administrative agency to carry out its
function(s).
ADMINISTRATIVE LAW JUDGE (ALJ)
Official who presides over a hearing within an
administrative agency
ADOPTION CURVE
A graphical depiction of the rate at which new
products, services or processes are adopted.
ADVANCE ARRANGEMENT
Prior notification required for the movement of
certain commodities by air carrier. Gold and other
precious metals, live animals, hazardous materials
and certain other classes of shipments may require
such arrangements.
ADVANCE MATERIALS REQUEST
An order for materials placed before the release of a
new product to production, usually to compensate
for long lead times
ADVANCE PAYMENTS
Payments in advance of delivery for stated amounts
or for specified percentages of the purchase price.
ADVANCE SHIPPING NOTICE (ASN)
A notification in EDI (electronic data interchange)
or XML (extensible markup language) format sent
ahead of a shipment listing its contents and
shipping information. Often includes purchase
order numbers, stockkeeping unit (SKU) numbers,
lot numbers, quantity, pallet or container number,
and carton number. Usually combined with
barcoded compliance labeling for easy scanning,
receipt into inventory and automated data
collection. ASNs may be paper-based.
ADVANCED CHARGES
The amount of freight or other charges on a
shipment advanced by one carrier to another, or to
the shipper, to be collected from the consignee.
ADVANCED PLANNING AND SCHEDULING (APS)
A manufacturing and logistics management process
that allocates raw materials and production
capacity to meet demand.
See Also: Advanced Planning and Scheduling
Software; Scheduling
ADVANCED PLANNING AND SCHEDULING
SOFTWARE
Software that supports activities associated with
advanced planning and scheduling (APS).
See Also: Advanced Planning and Scheduling (APS);
Scheduling
ADVANCED PRODUCT QUALITY PLANNING (APQP)
A process for developing a product quality plan based
on understanding customer needs. This plan guides
product and process development; documentation of
potential product and process failure modes and risk
factors; the development of a set of countermeasures
or control plans; and validation of product and
process. Used in the automotive industry.
ADVERTISING
(1) The process of promoting goods or services to a
general or targeted audience; (2) The branch of an
organization in charge of this process.
AFFIDAVIT
A written statement sworn to by one party and
acknowledged by a notary. Used to gather or
present facts.
AFFILIATED COMPANY
Business entity that is owned or otherwise
controlled by another company.
AFFINITY DIAGRAM
A Total Quality Management (TQM) tool in which
the members 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.
See Also: Total Quality Management (TQM)
AFTER-THE-FACT-CONTROLS
Reviews designed to compare actual performance
with planned results.
AGENCY
The legal relationship that exists between two
parties by which one (the agent) is authorized to
perform or transact specified business activities for
the other (the principal).
See Also: Agent; Fiduciary Duty; General Agency;
General Agent; Principal
AGENT
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 but
may have differing levels of actual authority.
See Also: Agency; Apparent Authority; Authority;
Expressed Authority; General Agent; Implied
Authority; Partially Disclosed Principal; Principal;
Ratification; Special Agent; Undisclosed Principal
AGGREGATE INDEX NUMBERS
Calculation of price changes for a group of related
items over time (e.g., an aggregate index for
fasteners combining nails and screws). An example
is the producer price index (PPI) that measures
changes in the average wholesale price of products
sold in the United States over a given period of time.
AGGREGATE PLANNING
Process by which an organization determines levels
of capacity, production, subcontracting, inventory,
stockouts and pricing over a specified time horizon,
usually three to 18 months. Decisions are made at a
product-family level, and the goals of aggregate
planning are to maximize profit and minimize the
total cost of operations.
AGGREGATOR
A Web site that contains product catalogs from
many suppliers in one place as a convenience to
purchasing organizations.
AGILE PRODUCTION
Through planning and equipping, production moves
with speed and ease to meet current business
demands.
AGILE SUPPLY CHAIN
Flexible supply chain that is capable of rapid
change and great responsiveness to customer
demand, technology advances, disasters, changes in
the product mix, etc.
AGILITY
The ability to respond rapidly to changes in the
physical or business environment.
AGING
A process used to focus attention on past-due and
most-urgent items by separating invoices, orders,
inventory and production lots into time buckets
based on due dates, receipt dates, expiration dates
or other factors.
AGREEMENT
Term often used interchangeably with “contract” but
which has a different definition in the U.S. law.
Defined in UCC §1-201(3) as “the bargain of the
parties in fact as found in their language or by
implication from other circumstances including
course of dealing or usage of trade or course of
performance … Whether an agreement has legal
consequences is determined by the provisions of the
Act, if applicable; otherwise by the law of contracts.”
See Also: Licensing Agreement; Supplier
Collaboration; Trading Partner Agreement
Compare: Contract; Memorandum of Understanding
(MOU)
AIR CARGO
Freight shipped by air
AIR WAYBILL
A document used for the shipment of air freight by
national and international air carriers that states
the commodities shipped, shipping instructions and
shipping costs.
ALIGNMENT
The relationship within the supply management
organization as well as groups within the larger
organization and community. Often used in
conjunction with shared goals or objectives.
ALL-IN COSTS
A measure of the total costs of a product or service
up to a certain point in its supply chain. The concept
is used in many ways: landed cost to a point of rest
in receiving, total costs of manufacture, or total
costs of buying, receiving, setting up and making a
capital item ready for use.
Also See: Total Cost of Ownership
ALONGSIDE
Shipping term referring to placement of goods near
enough to a ship that they can be loaded with the
ship’s equipment.
ALTERNATIVE DISPUTE RESOLUTION (ADR)
Methods for resolving contractual disputes outside
the judicial system such as facilitated negotiation,
conciliation, mediation, fact-finding, non-binding
arbitration and binding arbitration.
See Also: American Arbitration Association (AAA);
Arbitration; Conciliation; Dispute Resolution;
Mediation; Mini-Trial
AMENDMENT
Modification (addition, deletion or other alteration)
made to a contract by mutual agreement of the
parties.
AMORTIZATION
Recovery of a capital investment over time by
expensing a portion of it in each financial period.
Amortization is a non-cash expense that reduces an
organization’s reported income.
ANALYSIS OF VARIANCE (ANOVA)
A statistical technique for analyzing data that
subdivides total variation into meaningful
components associated with specific sources of the
variation to estimate the components of variance or
to test a hypothesis.
ANALYTICS
The use of business data to discover statistics,
metrics, patterns and measures that might
otherwise not be found or understood.
Also see: Big Data, Metadata, Meta Database,
Metatrends
ANDON
A visual indicator that notifies all relevant parties
when an abnormal condition occurs. Andon includes
a method to stop production, if necessary, and is one
of the main tools of Jidoka.
See Also: Jidoka; Toyota Production System (TPS)
ANNIVERSARY BILLING
A billing method whereby customers will have their
monthly payment due on the anniversary day of
their contract.
ANNUAL PERCENTAGE RATE (APR)
The yearly cost of a loan, including interest,
insurance and the origination fee (points),
expressed as a percentage.
ANNUAL WORK PLAN (AWP)
A document used in contract administration that
provides the initial definition of tasks to be
performed in the budget year and a schedule for
their accomplishment.
ANTICIPATION INVENTORIES
Those stocks that are accumulated for a well-defined
future need. They differ from buffer (safety) stocks
in that they are committed to specific future plans.
See Also: Inventory
ANTICIPATORY BREACH
Breach of contract occurring prior to actual time for
contract performance, usually by means of
repudiation.
See Also: Anticipatory Repudiation
ANTICIPATORY REPUDIATION
Notice given by one contracting party to another of the
first party’s intention not to perform the contract.
See Also: Anticipatory Breach
ANTI-CORRUPTION
A philosophy, often supported by both legal and
business practice, that prohibits dishonest or illegal
behavior
ANTITRUST LAWS
Antitrust laws, or competition laws, are laws which
prohibit anticompetitive behavior and unfair
business practices. The laws make illegal certain
practices deemed to hurt businesses or consumers
or both, or generally to violate standards of ethical
behavior. Such laws exist in developed countries
throughout the world as well as in many developing
countries. Competition law has been substantially
internationalized along the lines of the U.S. model
by nation states themselves; however, the
involvement of international organizations has
been growing. The International Competition
Network (ICN) is an informal, virtual network that
seeks to facilitate cooperation among competition
law authorities globally and is a way for national
authorities to coordinate their own enforcement
activities. The ICN provides antitrust agencies from
developed and developing countries with a focused
network for addressing practical antitrust
enforcement and policy issues of common concern.
See Also: Clayton Act; Robinson-Patman Act;
Sherman Antitrust Act; Unfair Trade Practices
APPARENT AUTHORITY
Type of authority created in an agency relationship
when a principal permits an individual to operate
in a fashion that allows third parties to believe that
the individual is an authorized agent of the
principal. It represents unauthorized purchasing or
bypassing of the purchasing function by other
functions within an organization. Also known as
rogue or maverick buying.
See Also: Agent; Authority; Backdoor Selling;
Principal; Rogue Purchasing
Compare: Actual Authority; Express(ed) Authority;
Implied Authority
APPLICATION PROGRAM INTERFACE (API)
Standardized protocols and data structures defined
for each software or computer application that can
be used to facilitate communication between
software or computer applications.
See Also: Application Software; Software
APPLICATION SERVICE PROVIDER (ASP)
An organization that provides software applications
over the Internet.
See Also: Service Level Agreement; Software as a
Service (SaaS)
APPLICATION SOFTWARE
A software program that allows a user to perform a
task. The user directly interacts with the
application software to achieve the desired result.
Examples include word processing, graphics and
spreadsheets.
See Also: Application Program Interface (API)
APPLICATIONS PACKAGE
A system of programs designed to assist in specific
applications.
APPRECIATIVE INQUIRY (AI)
A methodology that looks at what is working or
what “might be” to identify new opportunities and
build on present successes. Often contrasted with
problem-solving methodologies that focus on what
is not working and why.
APPROVED LIST
An organization’s list of suppliers that have been
evaluated and approved for purchases.
APPROVED SUPPLIERS
Suppliers who meet an organization’s selection
criteria and have been added to the approved list.
APRON
The sorting or staging platform where shipments
are loaded or unloaded.
ARBITRAGE
A trading technique of the buying of a security,
commodity or currency in one market while
simultaneously selling it in another market with
the intent of financial gain. The key to arbitrage is
taking advantage of temporary aberrations in the
market.
ARBITRATION
Private means of settling disputes between parties
in which an objective outside party acts as a fact
finder and a primary decision-maker. By prior
agreement between the parties, the rulings of an
arbitrator or arbitration panel may be binding and
may not be subject to appeal.
See Also: Alternative Dispute Resolution (ADR);
American Arbitration Association (AAA)
Compare: Conciliation; Mediation; Mini-Trial
ARITHMETIC MEAN
A mathematical average of data points obtained by
adding the values of all data points and dividing
that total by the number of data points.
ARRIVAL NOTICE
Declares a shipment’s expected arrival time and
relevant shipment details.
ARTICLES OF INCORPORATION
A document, filed with a U.S. state by a
corporation’s founders, describing the purpose,
place of business and other details of a corporation;
also called a charter.
ARTIFICIAL INTELLIGENCE
The ability of a computer to perform actions that
would be perceived as intelligent if performed by
human beings.
See Also: Electronic Agent
AS-IS
Contract term under which the buyer takes goods
in their given condition and any implied warranties
provided by law do not apply.
AS-IS MAP
In process mapping, an as-is map shows the current
steps taken by various people or departments from
beginning to end of a process.
ASSEMBLE TO ORDER
An order fulfillment strategy typically used when
there is the expectation of customer-specific
requirements that require an array of
configurations. This methodology relies on having
components accessible to quickly turn a customer’s
order into finished goods.
ASSEMBLY AREA
An area where components/items are congregated
preparatory to further action.
ASSET
Something of economic value. A tangible asset, such
as real estate, a building, equipment or cash, can be
touched. An intangible asset, such as a brand,
trademark, copyright or patent, cannot be touched.
See Also: Asset Management; Fixed Asset
ASSET MANAGEMENT
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.
See Also: Asset; Fixed Asset
ASSET RECOVERY
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 environmental conditions to
the state they were prior to an action.
See Also: Investment Recovery
ASSET-TO-SALES RATIO
The ratio of sales dollars divided by the value of
assets. It measures the productivity of an asset.
ASSET TURNOVER
A measure of how well assets are being used to
produce revenue derived by dividing net sales by
total assets.
ASSIGNMENT
The transfer by one contracting party (assignor) of
his/her rights or obligations under a contract to
another person (assignee). Sometimes also referred
to as delegation of duties.
See Also: Assignment Consent
Compare: Delegation of Duties
ASSIGNMENT CONSENT
A contractual provision giving the parties the right
to approve or disapprove any requested assignment.
See Also: Assignment
ASSOCIATION
(1) The state of being connected together; (2) A
formal organization of people or groups of people.
ASSOCIATION OF SOUTHEAST ASIAN NATIONS
ASEAN
Organization established in 1967 to promote
economic growth, social progress, cultural
development and peace in Southeast Asia. Current
member countries in ASEAN are Brunei
Darussalam, Cambodia, Indonesia, Laos, Malaysia,
Myanmar, Philippines, Singapore, Thailand and
Vietnam.
ASSORTING
To separate into groups according to kind; classify.
ASSURANCE OF SUPPLY
Activities directed toward maintaining a planned
and expected flow of materials and services needed
by the organization. This originally was directed
toward evaluating and selecting suppliers that were
reliable and able to source and produce the needed
products on time, but in recent times this has
expanded to include issues from longer supply
chains, market supply and demand risks, and
geological events such as floods, earthquakes, tsunamis, volcanoes and so on
ATTACHMENT
A legal proceeding accompanying an action in court
by which a plaintiff may acquire a lien on a
defendant’s property as a security for the payment
of any judgment which the plaintiff may obtain.
ATTAINABLE CUBIC FEET (ACF)
In warehousing, the existing usable or available
cubic space for storage. It is derived by multiplying
net storage space (square feet) by the stacking
height permitted by safety regulations and floor
load limitations.
AUCTION
The process of buying and selling through the use of
competitive bidding.
See Also: Bid; Buyer-Driven Auction; Competitive
Bidding; Electronic Auction; Offer; Online Auction;
Reverse Auction; Seller-Driven Auction
AUTHORITY
Right granted to an agent to act (engage in legally
binding transactions) on behalf of a principal.
See Also: Actual Authority; Agent; Apparent
Authority; Managerial Authority; Principal; RACI
Analysis
AUTOMATED STORAGE RETRIEVAL SYSTEM
AS/RS
An inventory storage system in which vehicles
automatically load and unload material from the
racks. They typically also allow for high-density
storage.
AUTOMATED WAREHOUSE
Storage facility utilizing one or more automation technologies, such as automated storage/retrieval systems (AS/RS), automated guided vehicle systems (AGVS) and/or radio frequency identification systems (RFID).
AUTOMATIC GUIDED VEHICLE SYSTEM (AGVS)
A computer-controlled materials handling system
consisting of small vehicles (carts) that move along
a guided pathway.
AUTOREGRESSIVE
Using historical data to predict future data.
See Also: Autoregressive Moving Average (ARMA);
Autoregressive Integrated Moving Average
AIRMA
AUTOREGRESSIVE INTEGRATED MOVING AVERAGE
AIRMA
A forecasting tool composed of autoregressive and
moving-average concepts used for understanding
and predicting values in time series data.
See Also: Autoregressive; Autoregressive Integrated
Moving Average (AIRMA); Box-Jenkins; Moving
Average
AVERAGE COSTING
In the context of inventory, this assigns an
inventory value for an item at the average cost paid.
AVERAGE WAREHOUSE COST
An inventory costing method that recalculates an
item’s cost at each receipt by averaging the actual cost
of the receipt with the cost of the current inventory.
BACK ORDER
Items ordered but not shipped due to a stockout or
some other reason. This is widely used as a measure
of supplier performance and customer service (e.g.,
percent back orders, number of occurrences and
number of back order days).
See Also: Stock Out
BACKDOOR SELLING
A salesperson bypasses the purchasing function and
goes directly to an end user of the product or service
being purchased or to someone else outside of
purchasing who is perceived as the real decision
maker.
See Also: Apparent Authority; Maverick Buying;
Rogue Buying
BACK-END INTEGRATION
In software design, connectivity between the frontend and back-end systems enabling the user to
interact with the front end while the back end
processes the output from the front end, but
remains invisible to the user.
See Also: Back-End System; Front-End System
BACK-END SYSTEM
Software components that process the output from
the front-end system.
See Also: Back-End Integration
Compare: Front-End System
BACKHAUL
Term used to indicate a transport vehicle’s return
from delivery point to point of origin. A backhaul
may include a full or partial load. If the return trip
is made with no load, it is called deadheading.
Compare: Deadhead
BACK-OFFICE SYSTEM
A system in an organization that does not deal
directly with the customer/client, such as enterprise
resource planning (ERP), materials resource
planning (MRP), manufacturing resource planning
(MRP II), inventory management, billing and
accounts payable systems.
See Also: Enterprise Resource Planning (ERP);
Inventory Management System; Manufacturing
Resource Planning (MRP II); Materials Resource
Plan (MRP)
BACKWARDATION
In the futures markets, a situation where spot
prices are higher than futures prices. This is the
exact opposite of contango, where forward prices are
higher than spot prices.
See Also: Contango
BAILMENT
Delivery of property by one party (bailor) to another
(bailee) who then has possession and control of the
property for a period of time but does not take
ownership of it
BALANCE OF PAYMENTS
A measure for the difference in the flows of funds
across a nation’s boundaries.
See Also: International Monetary Fund (IMF)
BALANCE OF TRADE
The difference between the value of a country’s
exports and imports.
BALANCE SHEET
A statement of an organization’s assets, liabilities,
and shareholder equities.
BALANCED SCORECARD
A performance management system developed by
Kaplan and Norton which links performance
measures to each other and to the organization’s
vision and strategy. The key performance categories
are financial performance, customer knowledge,
internal business processes, and learning and
growth.
BANDWIDTH
Amount of data that can be transferred at one time.
Also referred to as a pipeline. The bigger the pipeline,
the bigger the data file that can be transferred.
BANK
An organization whose purpose is the receiving,
keeping, lending (and sometimes issuing) of money,
and facilitating the movement of funds via checks,
notes and so on.
BANK(ER’S) ACCEPTANCE
A negotiable instrument used in financing overseas
purchases, involving a bank’s commitment to pay
upon presentation of the document.
BANKRUPTCY
When a person or an organization becomes insolvent (ceases to pay debts in the ordinary course of business or cannot pay debts as they become due) or their creditors petition the bankruptcy court and they are judged to be insolvent by a court. Their property will be administered for and divided among their creditors under bankruptcy law.
See Also: Insolvent
Compare: Solvency
BAR CODE
Machine-readable code; a pattern of alternating parallel bars and spaces, representing numbers and other characters. The major advantages of using bar coding technology in receiving and stores operations are the reduction in error rate and improved entry speed and count accuracy
BAR CODE SCANNER
A device capable of reading a bar code and entering its information into a software system.
BAR CODE SYMBOLOGY
A set of rules or protocol used to standardize types of bar codes for certain applications or usage.
BAR CODING
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, bar coding can also be used for keeping records of tools, furniture and equipment.
BAREBOAT CHARTER
A bareboat, also called a Demise Charter, involves obtaining a ship for a period of time. The company chartering the ship must provide its own crew and ship management.
See Also: Time Charter; Voyage Charter
BARRIER QUESTION
The first question in an oral or written examination. Those who fail to perform adequately on the first question normally are not permitted to continue.
BARTER
The act of exchanging one good or service for another, as distinct from trading by use of currency. Barter is also a form of countertrade sometimes used in international business.
BASE STOCK
A form of inventory management whereby, whenever a demand occurs, an order is immediately made to replace the amount used/sold.
