Supply Chain Management - Jargon M to Z - PART - II

M

Machine Downtimes: Time during which a machine cannot be utilized. Machine downtimes

may occur during breakdowns, maintenance, changeovers, etc.

Macro environment: The environment external to a business including technological,

economic, natural, and regulatory forces that marketing efforts cannot control.

Maintenance, Repair, and Operating supplies (MRO): Items used in support of general

operations and maintenance such as maintenance supplies, spare parts, and consumables used in

the manufacturing process and supporting operations.

Make-or-buy decision: The act of deciding whether to produce an item internally or buy it from

an outside supplier. Factors to consider in the decision include costs, capacity availability,

proprietary and/or specialized knowledge, quality considerations, skill requirements, volume,

and timing.

Make-to-Order (Manufacture-to-order): A manufacturing process strategy where the trigger

to begin manufacture of a product is an actual customer order or release, rather than a market

forecast. For Make-to-Order products, more than 20% of the value-added takes place after the

receipt of the order or release, and all necessary design and process documentation is available at

time of order receipt.

  

Make-to-Stock (Manufacture-to-stock): A manufacturing process strategy where finished

product is continually held in plant or warehouse inventory to fulfill expected incoming orders or

releases based on a forecast.

Manufacturer’s Representative: One who sells goods for several firms but does not take title

to them.

Manufacturing Calendar: A calendar used in inventory and production planning functions that

consecutively numbers only the working days so that the component and work order scheduling

may be done based on the actual number of workdays available. Synonyms: M-Day Calendar,

Planning Calendar, Production Calendar, Shop Calendar.

Manufacturing Capital Asset Value: The asset value of the "Manufacturing fixed assets" after

allowance for depreciation. Examples of equipment are SMT placement machines, conveyors,

Auto guided vehicles, robot cells, testers, X-ray solder machines, Burn-in chambers, Logic

testers, Auto packing equipment, PLC station controllers, Scanning equipment, PWB magazines.

Manufacture Cycle Time: The average time between commencement and completion of a

manufacturing process, as it applies to make-to-stock products.

Calculation: [Average # of units in WIP] / [Average daily output in units]

Manufacturing Execution Systems (MES): Programs and systems that participate in shop floor

control, including programmed logic controllers and process control computers for direct and

supervisory control of manufacturing equipment; process information systems that gather

historical performance information, then generate reports; graphical displays; and alarms that

inform operations personnel what is going on in the plant currently and a very short history into

the past. Quality control information is also gathered and a laboratory information management

system may be part of this configuration to tie process conditions to the quality data that are

generated. Thereby, cause-and-effect relationships can be determined. The quality data at times

affect the control parameters that are used to meet product specifications either dynamically or

off line.

Manufacturing Lead Time: The total time required to manufacture an item, exclusive of lower

level purchasing lead time. For make-to-order products, it is the length of time between the

release of an order to the production process and shipment to the final customer. For make-tostock

products, it is the length of time between the release of an order to the production process

and receipt into finished goods inventory. Included here are order preparation time, queue time,

setup time, run time, move time, inspection time, and put-away time. Synonyms: Manufacturing

Cycle Time. Also see: Lead Time

  

Manufacturing Resource Planning (MRP II): A method for the effective planning of all

resources of a manufacturing company. Ideally, it addresses operational planning in units,

financial planning in dollars, and has a simulation capability to answer what- if questions. It is

made up of a variety of processes, each linked together: business planning, production planning

(sales and operations planning), master production scheduling, material requirements planning,

capacity requirements planning, and the execution support systems for capacity and material.

Output from these systems is integrated with financial reports such as the business plan,

purchase commitment report, shipping budget, and inventory projections in dollars.

Manufacturing resource planning is a direct outgrowth and extension of closed-loop MRP.

Mapping: A computer term referring to diagramming data that is to be exchanged electronically,

including how it is to be used and what business management systems need it. Preliminary step

for developing an applications link. Performed by the functional manager responsible for a

business management system.

Marginal Cost: The cost to produce one additional unit of output. The change in total variable

cost resulting from a one-unit change in output.

Market Demand: In marketing, the total demand that would exist within a defined customer

group in a given geographical area during a particular time period given a known marketing

program.

Market Segment: A group of potential customers sharing some measurable characteristics

based on demographics, psychographics, lifestyle, geography, benefits, etc.

Market-Positioned Warehouse: Warehouse positioned to replenish customer inventory

assortments and to afford maximum inbound transport consolidation economies from inventory

origin points with relatively short- haul local delivery.

Marquis Partners: Key strategic relationships. This has emerged as perhaps the key

competitive advantage and barrier to entry of e- marketplaces. Get the big players in the fold first,

offering equity if necessary.

Mass Customization: The creation of a high-volume product with large variety so that a

customer may specify his or her exact model out of a large volume of possible end items while

manufacturing cost is low because of the large volume. An example is a personal computer

order in which the customer may specify processor speed, memory size, hard disk size and

speed, removable storage device characteristics, and many other options when PCs are

assembled on one line and at low cost.

  

Master Production Schedule (MPS): The master level or top level schedule used to set the

production plan in a manufacturing facility.

Material Acquisition Costs: One of the elements comprising a company's total supply-chain

management costs. These costs consist of the following:

1. Materials (Commodity) Management and Planning: All costs associated with

supplier sourcing, contract negotiation and qualification, and the preparation,

placement, and tracking of a purchase order. We recognize that these functions

may be organizationally dispersed and/or decentralized, but ask you to group all

related costs for purposes of this study. Also, this category includes all costs

related to buyer/planners.

2. Supplier Quality Engineering: The costs associated with the determination,

development/certification, and monitoring of suppliers' capabilities to fully satisfy

the applicable quality and regulatory requirements.

3. Inbound Freight and Duties: Freight costs associated with the movement of

material from a vendor to the buyer and the associated administrative tasks.

Duties are those fees and taxes levied by government for moving purchased

material across international borders. Customs broker fees should also be

considered in this category.

4. Receiving and Material Storage: All costs associated with taking possession of

material. This does not include inspection. Note that inventory-carrying costs are

covered in a subsequent worksheet.

5. Incoming Inspection: All costs associated with the inspection and testing of

received materials to verify compliance with specifications.

6. Material Process and Component Engineering: Those tasks required to

document and communicate component specifications, as well as reviews to

improve the manufacturability of the purchased item.

7. Tooling: Those costs associated with the design, development, and depreciation

of the tooling required to produce a purchased item. A tooling cost would be

incurred by a company if they actually paid for equipment and/or maintenance for

a contract manufacturer that makes their product. Sometimes, there aren't enough

incentive for a contract manufacturer to upgrade plant equipment to a level of

quality that a company requires, so the company will pay for the upgrades and

maintenance to ensure high quality. May not be common in some industries such

as the Chemicals

  

Material Safety Data Sheet (MSDS): A document that is part of the materials information

system and accompanies the product. Prepared by the manufacturer, the MSDS provides

information regarding the safety and chemical properties and (if necessary) the long-term

storage, handling, and disposal of the product. Among other factors, the MSDS describes the

hazardous components of a product; how to treat leaks, spills, and fires; and how to treat

improper human contact with the product. Also see: Hazardous Materials

Materials Handling: The physical handling of products and materials between procurement and

shipping.

Materials Management: Inbound logistics from suppliers through the production process. The

movement and management of materials and products from procurement through production.

Materials Requirements Planning (MRP): A decision-making methodology used to determine

the timing and quantities of materials to purchase.

Matrix Organizational Structure: An organizational structure in which two (or more) channels

of command, budget responsibility, and performance measurement exist simultaneously. For

example, both product and functional forms of organization could be implemented

simultaneously, that is, the product and functional managers have equal authority and employees

report to both managers.

MAX: The lowest inventory quantity that is desired at a ship to location or selling location. This

quantity will over-ride the forecast number if the forecast climbs above the MAX. Maximum

stock

Maximum Inventory: The planned maximum allowable inventory for an item based on its

planned lot size and target safety stock.

Maximum Order Quantity: An order quantity modifier, applied after the lot size has been

calculated, that limits the order quantity to a preestablished maximum.

m-Commerce: Mobile commerce applications involve using a mobile phone to carry out

financial transactions. This usually means making a payment for goods or transferring funds

electronically. Transferring money between accounts and paying for purchases are electronic

commerce applications. An emerging application, electronic commerce has been facilitated by

developments in other areas in the mobile world, such as dual slot phones and other smarter

terminals and more standardized protocols, which allow greater interactivity and therefore more

sophisticate services.

M-Day Calendar: See Manufacturing Calendar

  

Mean: The arithmetic average of a group of values. Syn: arithmetic mean.

Median: The middle value in a set of measured values when the items are arranged in order of

magnitude. If there is no single middle value, the median is the mean of the two middle values.

MES: See Manufacturing Execution Systems

Message: The EDIFACT term for a transaction set. A message is the collection of data,

organized in segments, exchanged by trading partners engaged in EDI. Typically, a message is

an electronic version of a document associated with a common business transaction, such as a

purchase order or shipping notice. A message begins with a message header segment, which

identifies the start of the message (e.g., the series of characters representing one purchase order).

The message header segment also carries the message type code, which identifies the business

transaction type. EDIFACT's message header segment is called UNH; in ANSI X12 protocol, the

message header is called ST. A message ends with a message trailer segment, which signals the

end of the message (e.g., the end of one purchase order). EDIFACT's message trailer is labeled

UNT; the ANSI X12 message trailer is referred to as SE.

Meta Tag: An optional HTML tag that is used to specify information about a web document.

Some search engines use "spiders" to index web pages. These spiders read the information

contained within a page's META tag. So in theory, an HTML or web page author has the ability

to control how their site is indexed by search engines and how and when it will "come up" on a

user's search. The META tag can also be used to specify an HTTP or URL address for the page

to "jump" to after a certain amount of time. This is known as Client-Pull. What this means, is a

web page author can control the amount of time a web page is up on the screen as well as where

the browser will go next.

Metrics: See Performance Measures

Milk run: A regular route for pickup of mixed loads from several suppliers. For example,

instead of each of five suppliers sending a truckload per week to meet the weekly needs of the

customer, one truck visits each of the suppliers on a daily basis before delivering to the

customer’s plant. Five truckloads per week are still shipped, but each truckload contains the

daily requirement from each supplier. Also see: Consolidation

Min – Max System: A type of order point replenishment system where the “min” (minimum) is

the order point, and the “max” (maximum) is the “order up to” inventory level. The order

quantity is variable and is the result of the max minus the available and on-order inventory. An

order is recommended when the sum of the available and on-order inve ntory is at or below the

min.

  

Misguided Capacity Plans: Plans or forecasts for capacity utilization, which are based on

inaccurate assumptions or input data.

MPS: See Master Production Schedule

MRO: See Maintenance, Repair, and Operating Supplies

MRP: See Material Requirements Planning

MRP-II: See Manufacturing Resource Planning

MSDS: See Material Safety Data Sheet

N

National Motor Freight Classification (NMFC): A tariff, which contains descriptions and

classifications of commodities and rules for domestic movement by motor carriers in the U.S.

National Stock Number (NSN): The individual identification number assigned to an item to

permit inventory management in the federal (U.S.) supply system.

Net Asset Turns: The number of times you replenish your net assets in your annual sales cycle.

A measure of how quickly assets are used to generate sales.

Calculation: Total Product Revenue / Total Net Assets

Net Assets: Total Net assets are calculated as Total Assets - Total Liabilities; where: The total

assets are made up of fixed assets (plant, machinery and equipment) and current assets which is

the total of stock, debtors and cash (also includes A/R, inventory, prepaid assets, deferred assets,

intangibles and goodwill). The total liabilities are made up in much the same way of long-term

liabilities and current liabilities (includes A/P, accrued expenses, deferred liabilities).

Net Change MRP: An approach in which the material requirements plan is continually retained

in the computer. Whenever a change is needed in requirements, open order inventory status, or

bill of material, a partial explosion and netting is made for only those parts affected by the

change. Antonym: Regeneration MRP.

  

Net Requirements: In MRP, the net requirements for a part or an assembly are derived as a

result of applying gross requirements and allocations against inventory on hand, scheduled

receipts, and safety stock. Net requirements, lot-sized and offset for lead time, become planned

orders.

New Product Introduction (NPI): The process used to develop products that are new to the

sales portfolio of a company.

NMFC: See National Motor Freight Classification

Nonconformity: Failure to fulfill a specified requirement. See: blemish, defect, imperfection.

Nondurable goods: Goods whose serviceability is generally limited to a period of less than

three years (such as perishable goods and semidurable goods).

NPI: See New Product Introduction

NSN: See National Stock Number

O

Object Linking and Embedding (OLE): An object system created by Microsoft. OLE lets an

author invoke different editor components to create a compound document.

Obsolete Inventory: Inventory for which there is no forecast demand expected. A condition of

being out of date. A loss of value occasioned by new developments that place the older property

at a competitive disadvantage.

OEE: See Overall Equipment Effectiveness

OEM: See Original Equipment Manufacturer

Offshore: Utilizing an outsourcing service provider located in a country other than where the

client is located.

  

OLE: See Object Linking and Embedding

On-Hand Balance: The quantity shown in the inventory records as being physically in stock.

On order: The quantity of goods that has yet to arrive at a location or retail store. This includes

all open purchase orders including, but not limited to, orders in transit, orders being picked, and

orders being processed through customer service.

On Order: The amount of goods that has yet to arrive at a location or retail store. This includes

all open purchase orders including, but not limited to, orders in transit, orders being picked, and

orders being processed through customer service.

On Time In Full (OTIF): Sales order delivery performance measure which can be expressed as

a target, say, of achieving 98% of orders delivered in full, no part shipments, on the requested

date.

One Piece Flow: Moving parts through a process in batches of one

One-Way Networks: The advantages generally live with either the seller or buyer, but not both.

B2C websites are one-way networks.

Open-to-Buy: A control technique used in aggregate inventory management in which

authorizations to purchase are made without being committed to specific suppliers. These

authorizations are often reviewed by management using such measures as commodity in dollars

and by time period.

Open-to-Receive: Authorization to receive goods, such as a blanket release, firm purchase order

item, or supplier schedule. Open-to-receive represents near-term impact on inventory, and is

often monitored as a control technique in aggregate inventory management. The total of opento-

receive, other longer term purchase commitments and open-to-buy represents the material and

services cash exposure of the company.

Operational Performance Measurements: 1) In traditional management, performance

measurements related to machine, worker, or department efficiency or utilization. These

performance measurements are usually poorly correlated with organizational performance. 2) In

theory of constraints, performance measurements that link causally to organizational

performance measurements. Throughput, inventory, and operating expense are examples. Also

see: Performance Measures

Optimization: The process of making something as good or as effective as possible with given

resources and constraints.

  

Option: A choice that must be made by the customer or company when customizing the end

product. In many companies, the term option means a mandatory choice from a limited

selection.

Optional Replenishment Model: A form of independent demand item management model in

which a review of inventory on hand plus on order is made at fixed intervals. If the actual

quantity is lower than some predetermined threshold, a reorder is placed for a quantity M – x,

where M is the maximum allowable inventory and x is the current inventory quantity. The

reorder point, R, may be deterministic or stochastic, and in either instance is large enough to

cover the maximum expected demand during the review interval plus the replenishment lead

time. The optional replenishment model is sometimes called a hybrid system because it

combines certain aspects of the fixed reorder cycle inventory model and the fixed reorder

quantity inventory model. Also see: Fixed Reorder Cycle Inventory Model, Fixed Reorder

Quantity Inventory Model, Hybrid Inventory System, Independent Demand Item Management

Models

Order Batching: Practice of compiling and collecting orders before they are sent in to the

manufacturer.

Order Complete Manufacture to Customer Receipt of Order: Average lead time from when

an order is ready for shipment to customer receipt of order, including the following subelements:

pick/pack time, preparation for shipment, total transit time for all components to

consolidation point, consolidation, queue time, and additional transit time to customer receipt.

(An element of Order Fulfillment Lead-Time).

Note: Determined separately for Make-to-Order, Configure/Package-to-Order,

Engineer-to-Order and Make-to-Stock products.

Order Consolidation Profile: The activities associated with filling a customer order by bringing

together in one physical place all of the line items ordered by the customer. Some of these may

come directly from the production line others may be picked from stock.

Order Cycle: The time and process involved from the placement of an order to the receipt of the

shipment.

Order Entry and Scheduling: The process of receiving orders from the customer and entering

them into a company’s order processing system. Orders can be received through phone, fax, or

electronic media. Activities may include “technically” examining orders to ensure an orderable

configuration and provide accurate price, checking the customer’s credit and accepting payment

(optionally), identifying and reserving inventory (both on hand and scheduled), and committing

nd scheduling a delivery date.

  

Order Entry Complete to Start Manufacture: Average lead-time from completion of

customer order to the time manufacturing begins, including the following sub-elements: order

wait time, engineering and design time. (An element of Order Fulfillment Lead-Time).

Note: Determined separately for Make-to-Order, Configure/Package-to-Order,

and Engineer-to-Order products. Does not apply to Make-to-Stock products.

Order Fulfillment Lead Times: Average, consistently achieved lead-time from customer order

origination to customer order receipt, for a particular manufacturing process strategy (Make-to-

Stock, Make-to-Order, Configure/Package-to-Order, Engineer-to-Order). Excess lead-time

created by orders placed in advance of typical lead times (Blanket Orders, Annual Contracts,

Volume Purchase Agreements, etc.), is excluded. (An element of Total Supply Chain Response

Time)

Calculation: Total average lead time from: [Customer signature/authorization to

order receipt] + [Order receipt to completion of order entry] + [Completion of

order entry to start manufacture] + [Start manufacture to complete manufacture] +

[Complete manufacture to customer receipt of order] + [Customer receipt of order

to installation complete]

Note: The elements of order fulfillment lead time are additive. Not all elements

apply to all manufacturing process strategies. For example, for Make-to-Stock

products, the lead-time from Start manufacture to complete manufacture equals 0.

Order Interval: The time period between the placement of orders.

Order Level System: See Fixed Reorder Cycle Inventory Model

Order Management: The planning, directing, monitoring, and controlling of the processes

related to customer orders, manufacturing orders, and purchase orders. Regarding customer

orders, order management includes order promising, order entry, order pick, pack and ship,

billing, and reconciliation of the customer account. Regarding manufacturing orders, order

management includes order release, routing, manufacture, monitoring, and receipt into stores or

finished goods inventories. Regarding purchasing orders, order management includes order

placement, monitoring, receiving, acceptance, and payment of supplier.

  

Order Management Costs: One of the elements comprising a company's total supply-chain

management costs. These costs consist of the following:

1. New Product Release Phase-In and Maintenance: This includes costs

associated with releasing new produc ts to the field, maintaining released products,

assigning product ID, defining configurations and packaging, publishing

availability schedules, release letters and updates, and maintaining product

databases.

2. Create Customer Order: This includes costs associated with creating and

pricing configurations to order and preparing customer order documents.

3. Order Entry and Maintenance: This includes costs associated with maintaining

the customer database, credit check, accepting new orders, and adding them to the

order system as well as later order modifications.

4. Contract/Program and Channel Management: This includes costs related to

contract negotiation, monitoring progress, and reporting against the customer's

contract, including administration of performance or warranty related issues.

5. Installation Planning: This includes costs associated with installation

engineering, scheduling and modification, handling cancellations, and planning

the installation.

6. Order Fulfillment: This includes costs associated with order processing,

inventory allocation, ordering from internal or external suppliers, shipment

scheduling, order status reporting, and shipment initiation.

7. Distribution: This includes costs associated with warehouse space and

management, finished goods receiving and stocking, processing shipments,

picking and consolidating, selecting carrier, and staging products/systems.

8. Transportation, Outbound Freight and Duties: This includes costs associated

with all company paid freight duties from point-of-manufacture to end-customer

or channel.

9. Installation: This includes costs associated with verification of site preparation,

installation, certification, and authorization of billing.

10. Customer Invoicing/Accounting: This includes costs associated with

invoicing, processing customer payments, and verification of customer receipt.

  

Order Picking: Selecting or “picking” the required quantity of specific products for movement

to a packaging area (usually in response to one or more shipping orders) and documenting that

the material was moved from one location to shipping. Also see: Batch Picking, Discrete Order

Picking, Zone Picking

Order Point – Order Quantity System: The inventory method that places an order for a lot

whenever the quantity on hand is reduced to a predetermined level known as the order point.

Also see: Fixed Reorder Quantity Inventory Model, Hybrid system

Order Processing: Activities associated with filling customer orders.

Order Promising: The process of making a delivery commitment, i.e., answering the question,

When can you ship? For make-to-order products, this usually involves a check of uncommitted

material and availability of capacity, often as represented by the master schedule available-topromise.

Also see: Available-to-Promise

Order Receipt to Order Entry Complete: Average lead-time from receipt of a customer order

to the time that order entry is complete, including the following sub-elements: order revalidation,

product configuration check, credit check, and order scheduling.

Note: Determined separately for Make-to-Order, Configure/Package-to-Order,

Engineer-to-Order, and Make-to-Stock products.

Original Equipment Manufacturer (OEM): A manufacturer that buys and incorporates

another supplier’s products into its own products. Also, products supplied to the original

equipment manufacturer or sold as part of an assembly. For example, an engine may be sold to

an OEM for use as that company’s power source for its generator units.

OS&D: See Over, Short and Damaged

OTIF: See On Time In Full

Out Of Stock: The state of not having inventory at a location and available for distribution or

for sell to the consumer (zero inventory).

Out of Stocks: See Stock Outs

Outbound Consolidation: Consolidation of a number of small shipments for various customers

into a larger load. The large load is then shipped to a location near the customers where it is

broken down and then the small shipments are distributed to the customers. This can reduce

overall shipping charges where many small packet or parcel shipments are handled each day.

Also see: Break Bulk

  

Outbound Logistics: The process related to the movement and storage of products from the end

of the production line to the end user.

Outlier: A data point that differs significantly from other data for a similar phenomenon. For

example, if the average sales for a product were 10 units per month, and one month the product

had sales of 500 units, this sales point might be considered an outlier. Also see: Abnormal

Demand

Outpartnering: The process of involving the supplier in a close partnership with the firm and its

operations management system. Outpartnering is characterized by close working relationships

between buyers and suppliers, high levels of trust, mutual respect, and emphasis on joint

problem solving and cooperation. With outpartnering, the supplier is viewed not as an

alternative source of goods and services (as observed under outsourcing) but rather as a source of

knowledge, expertise, and complementary core competencies. Outpartnering is typically found

during the early stages of the product life cycle when dealing with products that are viewed as

critical to the strategic survival of the firm. Also see: Customer-Supplier Partnership

Outsource: To utilize a third-party provider to perform services previously performed in-house.

Examples include manufacturing of products and call center/customer support.

Outsourced Cost of Goods Sold: Operations performed on raw material outside of the

responding entity's organization that would typically be considered internal to the entity's

manufacturing cycle. Capture the value of all outsourced activities that roll up as Cost of Goods

Sold. Some examples of commonly outsourced value are assembly by subcontract houses, test,

metal finishing or painting, and specialized assembly process.

Outsourced Cost of Goods Sold: Operations performed on raw material outside of the

responding entity's organization that would typically be considered internal to the entity's

manufactur ing cycle. Capture the value of all outsourced activities that roll up as Cost of Goods

Sold. Some examples of commonly outsourced value are assembly by subcontract houses, test,

metal finishing or painting, and specialized assembly process.

Over, short and damaged (OS&D): This is typically a report issued at warehouse when goods

are damaged. Used to file claim with carrier.

Overall Equipment Effectiveness (OEE): A measure of overall equipment effectiveness that

takes into account machine availability & performance as well as output quality.

  

P

P2P: See Path to Profitability

P2P: See Peer to Peer

Package to Order: A production environment in which a good or service can be packaged after

receipt of a customer order. The item is common across many different customers; packaging

determines the end product.

Packing and Marking: The activities of packing for safe shipping and unitizing one or more

items of an order, placing them into an appropriate container, and marking and labeling the

container with customer shipping destination data, as well as other information that may be

required.

Packing List: List showing merchandise packed and all particulars. Normally prepared by

shipper but not required by carriers. Copy is sent to consignee to help verify shipment received.

The physical equivalent of the electronic Advanced Ship Notice (ASN).

Pallet Ticket: A label to track pallet-sized quantities of end items produced to identify the

specific sublot with specifications determined by periodic sampling and analysis during

production.

Pareto: A means of sorting data for example. For example, number of quality faults by

frequency of occurrence. An analysis that compares cumulative percentages of the rank ordering

of costs, cost drivers, profits or other attributes to determine whether a minority of elements have

a disproportionate impact. For example, identifying that 20 percent of a set of independent

variables is responsible for 80 percent of the effect. Also see: 80/20 Rule

Part Period Balancing (PPB): In forecasting, a dynamic lot-sizing technique that uses the same

logic as the least total cost method, but adds a routine called look ahead/look back. When the

look ahead/look back feature is used, a lot quantity is calculated, and before it is firmed up, the

next or the previous period’s demands are evaluated to determine whether it would be

economical to include them in the current lot. Also see: Discrete Order Quantity, Dynamic lot

sizing.

  

Part standardization: A program for planned elimination of superficial, accidental, and

deliberate differences between similar parts in the interest of reducing part and supplier

proliferation. A typical goal of part standardization is to reduce costs by reducing the number of

parts that the company needs to manage.

Password: A private code required to gain access to a computer, an application program, or

service.

Path to Profitability (P2P): The step-by-step model to generate earnings.

Pay-on-Use: Pay-on-Use is a process where payment is initiated by product consumption, i.e.,

consignment stock based on withdrawal of product from inventory. This process is popular with

many European companies.

Payroll: Total of all fully burdened labor costs, including wage, fringe, benefits, overtime,

bonus, and profit sharing.

PBIT: See Profit Before Interest and Tax

PDA: See Personal Digital Assistant

PDCA: See Plan-Do-Check-Action

Peer to Peer (P2P): A computer networking environment which allows individual computers to

share resources and data without passing through an intermediate network server.

Pegged Requirement: An MRP component requirement that shows the next- level parent item

(or customer order) as the source of the demand.

Percent of Fill: Number of lines or quantity actually shipped as a percent of the original order.

Synonym: Customer Service Ratio.

Perfect Order Fulfillment: An order that meets all of the following standards: delivered

complete, on time, perfect documentation and perfect condition.

Performance and Event Management Systems: The systems that report on the key

measurements in the supply chain -- inventory days of supply, delivery performance, order cycle

times, capacity use, etc. Using this information to identify causal relationships to suggest actions

in line with the business goals.

  

Performance Measures: Indicators of the work performed and the results achieved in an

activity, process, or organizational unit. Performance measures should be both non-financial and

financial. Performance measures enable periodic comparisons and benchmarking. For

example, a common performance measure for a distribution center is % of order fill rate.

Attributes of good performance measurement include the following:

1. Measures only what is important: The measure focuses on key aspects of process

performance

2. Can be collected economically: Processes and activities are designed to easily

capture the relevant information

3. Are visible: The measure and its causal effects are readily available to everyone who

is measured

4. Is easy to understand: The measure conveys at a glance what it is measuring and how

it is derived

5. Is process oriented: The measure makes the proper trade-offs among utilization,

productivity and performance

6. Is defined and mutually understood. The measure has been defined and mutually

understood by all key parties (internal and external)

7. Facilitates trust: The measure validates the participation among various parties and

discourages “game playing”

8. Are usable: The measure is used to show progress and not just data that is

“collected”. Indicated performance vs data

Also see: Performance Measurement Program

Performance Measurement Program: A performance measurement program goes beyond just

having performance metrics in place. Many companies do not realize the full benefit of their

performance metrics because they often do not have all of the necessary elements in place that

support their metrics. Typical characteristics of a good performance measurement program

include the following:

Metrics that are aligned to strategy and linked to the “shop floor” or line level

workers

A process and culture that drives performance and accountability to delivery

performance against key performance indicators.

An incentive plan that is tied to performance goals, objectives and metrics

Tools/technology in place to support easy data collection and use. This often

includes the use of a “dashboard” or “scorecard” to allow for ease of

understanding and reporting against key performance indicators.

Also see: Performance Measures, Dashboard, Scorecard, Key Performance Indicator

  

Period Order Quantity: A lot-sizing technique under which the lot size is equal to the net

requirements for a given number of periods, e.g., weeks into the future. The number of periods

to order is variable, each order size equalizing the holding costs and the ordering costs for the

interval. Also see: Discrete Order Quantity, Dynamic Lot Sizing

Periodic Review System: See Fixed Reorder Cycle Inventory Model

Perpetual Inventory: An inventory record keeping system where each transaction in and out is

recorded and a new balance is computed.

Personal Digital Assistant (PDA): A computer term for a handheld device that combines

computing, telephone/fax, and networking features. PDA examples include the Palm and Pocket

PC devices. A typical PDA can function as a cellular phone, fax sender, and personal organizer.

Unlike portable computers, most PDAs are pen-based, using a stylus rather than a keyboard for

input. This means that they also incorporate handwriting recognition features. Some PDAs can

also react to voice input by using voice recognition technologies. Some PDAs and networking

software allow companies to use PDAs in their warehouses to support wireless transaction

processing and inquiries.

Phantom Bill of Material: A bill-of- material coding and structuring technique used primarily

for transient (nonstocked) subassemblies. For the transient item, lead time is set to zero and the

order quantity to lot- for- lot. A phantom bill of material represents an item that is physically

built, but rarely stocked, before being used in the next step or level of manufacturing. This

permits MRP logic to drive requirements straight through (blowthrough) the phantom item to its

components, but the MRP system usually retains its ability to net against any occasional

inventories of the item. This technique also facilitates the use of common bills of material for

engineering and manufacturing. Synonym: Pseudo Bill of Material. Also see: blowthrough

Physical Distribution: See Distribution

Pick-by-Light: A laser identifies the bin for the next item in the rack; when the picker completes

the pick, the bar code is scanned and the system then points the laser at the next bin.

Pick/Pack: Picking of product from inventory and packing into shipment containers.

Pick on Receipt: Product is receipted and picked in one operation (movement); therefore the

product never actually touches the ground within the warehouse. It is unloaded from one vehicle

and re-loaded on an outbound vehicle. Related to Cross Docking.

  

Piggyback: Terminology used to describe a truck trailer being transported on a railroad flatcar.

Plaintext: A computer term for data before it has been encrypted or after it has been decrypted,

e.g., an ASCII text file.

Plaintext: Data before it has been encrypted or after it has been decrypted, e.g., an ASCII text

file.

Plan Deliver: The development and establishment of courses of action over specified time

periods that represent a projected appropriation of supply resources to meet delivery

requirements.

Plan-Do-Check-Action (PDCA): In quality management, a four-step process for quality

improvement. In the first step (plan), a plan to effect improvement is developed. In the second

step (do), the plan is carried out, preferably on a small scale. In the third step (check), the effects

of the plan are observed. In the last step (action), the results are studied to determine what was

learned and what can be predicted. The plan-do-check-act cycle is sometimes referred to as the

Shewhart cycle (because Walter A. Shewhart discussed the concept in his book Statistical

Method from the Viewpoint of Quality Control) and as the Deming circle (because W. Edwards

Deming introduced the concept in Japan; the Japanese subsequently called it the Deming circle).

Synonyms: Shewhart Cycle. Also see: Deming Circle

Plan Make: The development and establishment of courses of action over specified time periods

that represent a projected appropriation of production resources to meet production requirements.

Plan Source: The development and establishment of courses of action over specified time

periods that represent a projected appropriation of material resources to meet supply chain

requirements.

Plan Stability: The difference between planned production and actual production, as a

percentage of planned production.

Calculation: [(Sum of Monthly Production Plans) + (Sum of the absolute value

of the difference between planned and actual)]/[Sum of Monthly Production

Plans]

Note: Base Production Plan is the three month removed plan

  

Planned Order: A suggested order quantity, release date, and due date created by the planning

system’s logic when it encounters net requirements in processing MRP. In some cases, it can

also be created by a master scheduling module. Planned orders are created by the computer,

exist only within the computer, and may be changed or deleted by the computer during

subsequent processing if conditions change. Planned orders at one level will be exploded into

gross requirements for components at the next level. Planned orders, along with released orders,

serve as input to capacity requirements planning to show the total capacity requirements by work

center in future time periods. Also see: Planning Time Fence, Firm Planned Order

Planned Receipt: An anticipated receipt against an open purchase order or open production

order.

Planning Bill: See Planning Bill of Material

Planning Bill of Material: An artificial grouping of items or events in bill-of- material format

used to facilitate master scheduling and material planning. It may include the historical average

of demand expressed as a percentage of total demand for all options within a feature or for a

specific end item within a product family and is used as the quantity per in the planning bill of

material. Synonym: Planning Bill. Also see: Hedge Inventory, Production Forecast, Pseudo

Bill of Material

Planning Calendar: See Manufacturing Calendar

Planning Fence: See Planning Time Fence

Planning Horizon: The amount of time a plan extends into the future. For a master schedule,

this is normally set to cover a minimum of cumulative lead time plus time for lot sizing lowlevel

components and for capacity changes of primary work centers or of key suppliers. For

longer term plans the planning horizon must be long enough to permit any needed additions to

capacity. Also see: Cumulative Lead Time, Planning Time Fence

Planning Time Fence: A point in time denoted in the planning horizon of the master scheduling

process that marks a boundary inside of which changes to the schedule may adversely affect

component schedules, capacity plans, customer deliveries, and cost. Outside the planning time

fence, customer orders may be booked and cha nges to the master schedule can be made within

the constraints of the production plan. Changes inside the planning time fence must be made

manually by the master scheduler. Synonym: Planning Fence. Also see: Cumulative Lead Time,

Demand Time Fence, Firm Planned Order, Planned Order, Planning Horizon, Time Fence.

  

Planogram: The end result of analyzing the sales data of an item or group of items to determine

the best arrangement of products on a store shelf. The process determines which shelf your topselling

product should be displayed on, the number of facings it gets, and what best to surround

it with. It results in graphical picture or map of the allotted shelf space along with a specification

of the facing and deep.

Plant Finished Goods: Finished goods inventory held at the end manufacturing location.

PLU: See Price Look-Up

PO: See Purchase Order

POD: See Proof of Delivery

Point-of-Purchase (POP): A retail sales term referring to the area where a sale occurs, such as

the checkout counter. POP is also used to refer to the displays and other sales promotion tools

located at a checkout counter.

Point Of Sale (POS): 1) The time and place at which a sale occurs, such as a cash register in a

retail operation, or the order confirmation screen in an on- line session. Supply chain partners are

interested in capturing data at the POS, because it is a true record of the sale rather than being

derived from other information such as inventory movement. 2) Also a national network of

merchant terminals, at which customers can use client cards and personal security codes to make

purchases. Transactions are directed against client deposit accounts. POS terminals are

sophisticated cryptographic devices, with complex key management processes. POS standards

draw on ABM network experiences and possess extremely stringent security requirements.

Point of Sale Information: Price and quantity data from retail locations as sales transactions

occur.

Poka Yoke (mistake-proof): The application of simple techniques that prevent process quality

failure.

POP: See Point-of-Purchase

Portal: Websites that serve as starting points to other destinations or activities on the Web.

Initially thought of as a "home base" type of web page, portals attempt to provide all Internet

needs in one location. Portals commonly provide services such as e- mail, online chat forums,

shopping, searching, content, and news feeds.

POS: See Point of Sale

  

Post-Deduct Inventory Transaction Processing: A method of inventory bookkeeping where

the book (computer) inventory of components is reduced after issue. When compared to a realtime

process, this approach has the disadvantage of a built-in differential between the book

record and what is physically in stock. Consumption can be based on recorded actual use, or

calculated using finished quantity received times the standard BOM quantity (backflush). Also

see: Backflush

Postponement: The delay of final activities (i.e., assembly, production, packaging, etc.) until the

latest possible time. A strategy used to eliminate excess inventory in the form of finished goods

which may be packaged in a variety of configurations.

PPB: See Part Period Balancing

Pre-Deduct Inventory Transaction Processing: A method of inventory bookkeeping where the

book (computer) inventory of components is reduced before issue, at the time a scheduled

receipt for their parents or assemblies is created via a bill-of-material explosion. When

compared to a real-time process, this approach has the disadvantage of a built-in differential

between the book record and what is physically in stock.

Pre-Expediting: The function of following up on open orders before the scheduled delivery

date, to ensure the timely delivery of materials in the specified quantity.

Prepaid: A freight term, which indicates that charges are to be paid by the shipper. Prepaid

shipping charges may be added to the customer invoice, or the cost may be bundled into the

pricing for the product.

Present Value: Today's value of future cash flows, discounted at an appropriate rate.

Price Erosion: What causes old- line executives to break out in a cold sweat? No question about

it; traditional business models are threatened by the market efficiencies of B2B. When prices

begin to plummet, the margin structures of older industries are also threatened.

Price Look-Up (PLU): Used for retail products sold loose, bunched or in bulk (to identify the

different types of fruit, say). As opposed to UPC (Universal Product Codes) for packaged, fixed

weight retail items. A PLU code contains 4-5 digits in total. The PLU is entered before an item

is weighed to determine a price.

Primary Manufacturing Strategy: Your company’s dominant manufacturing strategy. The

Primary Manufacturing Strategy generally accounts for 80+% of a company’s product volume.

According to a study by Pittiglio Rabin Todd & McGrath (PRTM), approximately 73% of all

companies use a make to stock strategy.

  

PRIME QR: Product Replenishment and Inventory Management Edge for Quick Response.

Private-Label: Products that are designed, produced, controlled by, and which carry the name of

the store or a name owned by the store; also known as a store brand or dealer brand. An example

would be Wal-Mart's "Sam's Choice" products.

Private Warehouse: A company-owned warehouse.

Pro Number: Any progressive or serialized number applied for identification of freight bills,

bills of lading, etc.

Process: A series of time-based activities that are linked to complete a specific output.

Process Benchmarking: Benchmarking a process (such as the pick, pack, and ship process)

against organizations known to be the best in class in this process. Process benchmarking is

usually conducted on firms outside of the organization’s industry. Also see: Benchmarking,

Best-in-Class, Competitive Benchmarking

Process Improvement: Designs or activities, which improve quality or reduce costs, often

through the elimination of waste or non- value-added tasks.

Process Manufacturing: Production that adds value by mixing, separating, forming, and/or

performing chemical reactions. It may be done in a batch, continuous, or mixed

batch/continuous mode.

Process Yield: The resulting output from a process. An example would be a quantity of finished

product output from manufacturing processes.

Procurement: The business functions of procurement planning, purchasing, inventory control,

traffic, receiving, incoming inspection, and salvage operations. Syn: Purchasing.

Product Configurator: A system, generally rule-based, to be used in design-to-order, engineerto-

order, or make-to-order environments where numerous product variations exist. Product

configurators perform intelligent modeling of the part or product attributes and often create solid

models, drawings, bills of material, and cost estimates that can be integrated into CAD/CAM and

MRP II systems as well as sales order entry systems.

Product Family: A group of products with similar characteristics, often used in production

planning (or sales and operations planning).

Production Calendar: See Manufacturing Calendar

  

Production Capacity: Measure of how much production volume may be experienced over a set

period of time.

Production Forecast: A projected level of customer demand for a feature (option, accessory,

etc.) of a make-to-order or an assemble-to-order product. Used in two- level master scheduling,

it is calculated by netting customer backlog against an overall family or product line master

production schedule and then factoring this product’s available-to-promise by the option

percentage in a planning bill of material. Also see: Assemble-to-Order, Planning Bill of Material,

Two-Level Master Schedule

Production Line: A series of pieces of equipment dedicated to the manufacture of a specific

number of products or families.

Production Planning and Scheduling: The systems that enable creation of detailed optimized

plans and schedules taking into account the resource, material, and dependency constraints to

meet the deadlines.

Production-Related Material: Production-related materials are those items classified as

material purchases and included in Cost of Goods Sold as raw material purchases.

Profit Before Interest and Tax (PBIT): The financial profit generated prior to the deduction of

taxes and interest due on loans. Also called operating profit.

Profitable to Promise: This is effectively a promise to deliver a certain order on agreed terms,

including price and delivery. Profitable-to-Promise (PTP) is the logical evolution of Availableto-

Promise (ATP) and Capable-to-Promise (CTP). While the first two are necessary for

profitability, they are not sufficient. For enterprises to survive in a competitive environment,

profit optimization is a vital technology.

Profitability Analysis: The analysis of profit derived from cost objects with the view to improve

or optimize profitability. Multiple views may be analyzed, such as market segment, customer,

distribution channel, product families, products, technologies, platforms, regions, manufacturing

capacity, etc.

Proforma Invoice: The Proforma Invoice is a legal document between the supplier and the

customer to describe the details of a certain commodity. The Proforma Invoice is needed for all

international non-document shipments, and is used for the customs in the country of destination

to determine the customs value. While the Proforma Invoice will describe the nature and value of

the business transaction, it is not generally used for billing purposes. Also see: Commercial

Invoice.

  

Promotion: The act of selling a product at a reduced price, or a buy one - get one free offer, for

the purpose of increasing sales.

Proof of Delivery (POD): Information supplied by the carrier containing the name of the person

who signed for the shipment, the time and date of delivery, and other shipment delivery related

information. POD is also sometimes used to refer to the process of printing materials just prior to

shipment (Print on Demand).

Protocol: Communication standards that determine message content and format, enabling

uniformity of transmissions.

Pseudo Bill of Materials: See Phantom Bill of Materials

Public warehouse: The warehouse space that is rented or leased by an independent business

providing a variety of services for a fee or on a contract basis.

Pull Signal: A signal from a using operation that triggers the issue of raw material.

Pull or Pull-through distribution: Supply-chain action initiated by the customer. Traditionally,

the supply chain was pushed; manufacturers produced goods and "pushed" them through the

supply chain, and the customer had no control. In a pull environment, a customer's purchase

sends replenishment information back through the supply chain from retailer to distributor to

manufacturer, so goods are "pulled" through the supply chain.

Purchase Order (PO): The purchaser’s authorization used to formalize a purchase transaction

with a supplier. The physical form or electronic transaction a buyer uses when placing order for

merchandise.

Push Distribution: The process of building product and pushing it into the distribution channel

without receiving any information regarding requirements. Also see: Pull or Pull-Through

Distribution

Push Technology: Webcasting (push technology) is the prearranged updating of news, weather,

or other selected information on a computer user's desktop interface through periodic and

generally unobtrusive transmission over the World Wide Web (including the use of the Web

protocol on Intranet). Webcasting uses so-called push technology in which the Web server

ostensibly “pushes” information to the user rather than waiting until the user specifically

requests it.

  

Q

QFD: See Quality Function Deployment

QR: See Quick Response

Qualifier: A data element, which identifies or defines a related element, set of elements or a

segment. The qualifier contains a code from a list of approved codes.

Qualitative Forecasting Techniques: In forecasting, an approach that is based on intuitive or

judgmental evaluation. It is used generally when data are scarce, not available, or no longer

relevant. Common types of qualitative techniques include: personal insight, sales force

estimates, panel consensus, market research, visionary forecasting, and the Delphi method.

Examples include developing long-range projections and new product introduction.

Quality: Conformance to requirements or fitness for use. Quality can be defined through five

principal approaches: (1) Transcendent quality is an ideal, a condition of excellence. (2)

Product-based quality is based on a product attribute. (3) User-based qua lity is fitness for use.

(4) Manufacturing-based quality is conformance to requirements. (5) Value-based quality is the

degree of excellence at an acceptable price. Also, quality has two major components: (a) quality

of conformance—quality is defined by the absence of defects, and (b) quality of design—quality

is measured by the degree of customer satisfaction with a product’s characteristics and features.

Quality Circle: In quality management, a small group of people who normally work as a unit

and meet frequently to uncover and solve problems concerning the quality of items produced,

process capability, or process control. Also see: Small Group Improvement activity

Quality Function Deployment (QFD): A structured method for translating user requirements

into detailed design specifications using a continual stream of ‘what-how’ matrices. QFD links

the needs 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 functions toward achieving this

common goal.

Quantitative Forecasting Techniques: An approach to forecasting where historical demand

data is used to project future demand. Extrinsic and intrinsic techniques are typically used. Also

see: Extrinsic Forecasting Method, Intrinsic Forecasting Method

  

Quantity Based Order System: See Fixed Reorder Quantity Inventory Model

Quarantine: In quality management, the setting aside of items from availability for use or sale

until all required quality tests have been performed and conformance certified.

Quick Response (QR): A strategy widely adopted by general merchandise and soft lines

retailers and manufacturers to reduce retail out-of-stocks, forced markdowns and operating

expenses. These goals are accomplished through shipping accuracy and reduced response time.

QR is a partnership strategy in which suppliers and retailers work together to respond more

rapidly to the consumer by sharing point-of-sale scan data, enabling both to forecast

replenishment needs.

R

Rack: A storage device for handling material in pallets. A rack usually provides storage for

pallets arranged in vertical sections with one or more pallets to a tie r. Some racks accommodate

more than one-pallet-deep storage. Some racks are static, meaning that the rack contents remain

in a fixed position until physically moved. Some racks are designed with a sloped shelf to allow

products to “flow” down as product in the front is removed. Replenishment of product on a flow

rack may be from the rear, or the front in a “push back” manner.

Racking: A function performed by a rack-jobber, a full- function intermediary who performs all

regular warehousing functions and some retail functions, typically stocking a display rack. Also

a definition that is applied to the hardware which is used to build racks.

Radio Frequency (RF or RFID): A form of wireless communications that lets users relay

information via electromagnetic energy waves from a terminal to a base station, which is linked

in turn to a host computer. The terminals can be place at a fixed station, mounted on a forklift

truck, or carried in the worker's hand. The base station contains a transmitter and receiver for

communication with the terminals. RF systems use either narrow-band or spread-spectrum

transmissions. Narrow-band data transmissions move along a single limited radio frequency,

while spread-spectrum transmissions move across several different frequencies. When

combined with a bar-code system for identifying inventory items, a radio-frequency system can

relay data instantly, thus updating inventory records in so-called "real time."

  

Ramp Rate: A statement which quantifies how quickly you grow or expand an operation

Growth trajectory. Can refer to sales, profits or margins.

Random-Location Storage: A storage technique in which parts are placed in any space that is

empty when they arrive at the storeroom. Although this random method requires the use of a

locator file to identify part locations, it often requires less storage space than a fixed-location

storage method. Also see: Fixed-Location Storage

Rate-Based Scheduling: A method for scheduling and producing based on a periodic rate, e.g.,

daily, weekly, or monthly. This method has traditionally been applied to high-volume and

process industries. The concept has recently been applied within job shops using cellular layouts

and mixed- model level schedules where the production rate is matched to the selling rate.

Rationing: The allocation of product among customers during periods of short supply. When

price is used to allocate product, it is allocated to those willing to pay the most.

Raw Materials (RM): Crude or processed material that can be converted by manufacturing,

processing, or combination into a new and useful product.

Real-Time: The processing of data in a business application as it happens - as contrasted with

storing data for input at a later time (batch processing).

Receiving: The function encompassing the physical receipt of material, the inspection of the

shipment for conformance with the purchase order (quantity and damage), the identification and

delivery to destination, and the preparation of receiving reports.

Receiving Dock: Distribution center location where the actual physical receipt of the purchased

material from the carrier occurs.

Reengineering: 1) A fundamental rethinking and radical redesign of business processes to

achieve dramatic improvements in performance. 2) A term used to describe the process of

making (usually) significant and major revisions or modifications to business processes. 3) Also

called Business Process Reengineering.

Regeneration MRP: An MRP processing approach where the master production schedule is

totally reexploded down through all bills of material, to maintain valid priorities. New

requirements and planned orders are completely recalculated or “regenerated” at that time.

Release-to-Start Manufacturing: Average time from order rele ase to manufacturing to the start

of the production process. This cycle time may typically be required to support activities such as

material movement and line changeovers.

  

Re-plan Cycle: Time between the initial creation of a regenerated forecast and the time its

impact is incorporated into the Master Production Schedule of the end-product manufacturing

facility. (An element of Total Supply Chain Response Time)

Replenishment: The process of moving or re-supplying inventory from a reserve storage

location to a primary picking location, or to another mode of storage in which picking is

performed.

Request for Proposal (RFP): A document, which provides information concerning needs and

requirements for a manufacturer. This document is created in order to solicit proposals from

potential suppliers. For, example, a computer manufacturer may use a RFP to solicit proposals

from suppliers of third party logistics services.

Request for Quote (RFQ): A document used to solicit vendor responses when a product has

been selected and price quotations are needed from several vendors.

Resellers: Organizations intermediate in the manufacturing and distribution process, such as

wholesalers and retailers.

Resource Driver: In cost accounting, the best single quantitative measure of the frequency and

intensity of demands placed on a resource by other resources, activities, or cost objects. It is

used to assign resource costs to activities, and cost objects, or to other resources.

Resources: Economic elements applied or used in the performance of activities or to directly

support cost objects. They include people, materials, supplies, equipment, technologies and

facilities. Also see: Resource Driver, Capacity

Retailer: A business that takes title to products and resells the m to final consumers. Examples

include Wal-Mart, Best Buy, and Safeway, but also include the many smaller independent stores.

Return disposal costs: The costs associated with disposing or recycling products that have been

returned due to customer rejects, end-of- life or obsolescence.

Return Disposal Costs: The costs associated with disposing or recycling products that have

been returned due to End-of-Life or Obsolescence.

Return Goods Handling: Processes involved with returning goods from the customer to the

manufacturer. Products may be returned because of performance problems or simply because the

customer doesn't like the product.

  

Return Material Authorization or Return Merchandise Authorization (RMA): A number

usually produced to recognize and give authority for a faulty, perhaps, good to be returned to a

distribution centre of manufacturer. A form generally required with a Warranty/Return, which

helps the company identify the original product, and the reason for return. The RPA number

often acts as an order form for the work required in repair situations, or as a reference for credit

approval.

Return on Assets (ROA): Financial measure calculated by dividing profit by assets.

Return on Net Assets: Financial measure calculated by dividing profit by assets net of

depreciation.

Return on Sales: Financial measure calculated by dividing profit by sales.

Return Product Authorization: Also called Return Material or Goods Authorization (RMA or

RGA). A form generally required with a Warranty/Return, which helps the company identify the

original product, and the reason for return. The RPA number often acts as an order form for the

work required in repair situations, or as a reference for credit approval.

Return to Vendor (RTV): Material that has been rejected by the customer or the buyer’s

inspection department and is awaiting shipment back to the supplier for repair or replacement.

Returns inventory costs: The costs associated with managing inventory, returned for any of the

following reasons: repair, refurbish, excess, obsolescence, End-of-Life, ecological conformance,

and demonstration. Includes all applicable elements of the Level 2 component Inventory

Carrying Cost of Total Supply Chain Management Cost

Returns Inventory Costs: The costs associated with managing inventory, returned for any of

the following reasons: repair, refurbish, excess, obsolescence, End-of-Life, ecological

conformance, and demonstration. Includes all applicable elements of the Level 2 component

Inventory Carrying Cost of Total Supply Chain Management Cost

Returns Material Acquisition, Finance, Planning and IT Costs: The costs associated with

acquiring the defective products and materials for repair or refurbishing items, plus any Finance,

Planning and Information Technology cost to support Return Activity.. Includes all applicable

elements of the Level 2 components Material Acquisition Cost (acquiring materials for repairs),

Supply Chain Related Finance and Planning Costs and Supply Chain IT Costs of Total Supply

Chain Management Cost.

  

Returns Order Management Costs: The costs associated with managing Return Product

Authorizations (RPA). Includes all applicable elements of the Level 2 component Order

Management Cost of Total Supply Chain Management Cost. See Order Management Costs.

Returns Processing Cost: The total cost to process repairs, refurbished, excess, obsolete, and

End-of- Life products including diagnosing problems, and replacing products. Includes the costs

of logistics support, materials, centralized functions, troubleshooting service requests, on-site

diagnosis and repair, external repair, and miscellaneous. These costs are broken into Returns

Order Management, Returns Inventory Carrying, Returns Material Acquisition, Finance,

Planning, IT, Disposal and Warranty Costs.

Returns To Scale: A defining characteristic of B2B. Bigger is better. It's what creates the

winner takes all quality of most B2B hubs. It also places a premium on being first to market and

first to achieve critical mass.

Reverse Engineering: A process whereby competitors’ products are disassembled & analyzed

for evidence of the use of better processes, components & technologies

Reverse Logistics: A specialized segment of logistics focusing on the movement and

management of products and resources after the sale and after delivery to the customer. Includes

product returns for repair and/or credit.

RF: See Radio Frequency

RFID: Radio Frequency Identification. Also see: Radio Frequency

RFP: See Request for Proposal

RFQ: See Request for Quote

RGA: Return Goods Authorization. See: Return Material Authorization

Rich Media: An Internet advertising term for a Web page ad that uses advanced technology

such as streaming video, downloaded applet (programs) that interact instantly with the user, and

ads that change when the user's mouse passes over it.

Rich Text Format (RFT): A method of encoding text formatting and document structure using

the ASCII character set. By convention, RTF files have an .rtf filename extension.

RM: See Raw Materials

RMA: Return Material Authorization. See Return Product Authorization

ROA: See Return on Assets

Routing or Routing Guide: 1) Process of determining how shipment will move between origin

and destination. Routing information includes designation of carrier(s) involved, actual route of

carrier, and estimated time enroute. 2) Right of shipper to determine carriers, routes and points

for transfer shipments. 3) In manufacturing this is the document which defines a process of steps

used to manufacture and/or assemble a product.

Routing Accuracy: When specified activities conform to administrative specifications, and

specified resource consumptions (both man and machine) are detailed according to

administrative specifications and are within ten percent of actual requirements.

RPA: See Return Product Authorization

RTF: See Rich Text Format

RTV: See Return to Vendor

S

Safety Stock: The inventory a company holds above normal needs as a buffer against delays in

receipt of supply or changes in customer demand.

Salable Goods: A part or assembly authorized for sale to final customers through the marketing

function.

Sales and Operations Planning (SOP): A strategic planning process that reconciles conflicting

business objectives and plans future supply chain actions. S&OP Planning usually involves

various business functions such as sales, operations and finance to agree on a single plan/forecast

that can be used to drive the entire business.

Sales Mix: The proportion of individual product-type sales volumes that make up the total sales

volume.

  

Sales Plan: A time-phased statement of expected customer orders anticipated to be received

(incoming sales, not outgoing shipments) for each major product family or item. It represents

sales and marketing management’s commitment to take all reasonable steps necessary to achieve

this level of actual customer orders. The sales plan is a necessary input to the production

planning process (or sales and operations planning process). It is expressed in units identical to

those used for the production plan (as well as in sales dollars). Also see: Aggregate planning,,

Production Planning, Sales and Operations Planning

Sales Planning: The process of determining the overall sales plan to best support customer

needs and operations capabilities while meeting general business objectives of profitability,

productivity, competitive customer lead times, and so on, as expressed in the overall business

plan. Also see: Production Planning, Sales and Operations Planning

Sawtooth Diagram: A quantity- versus-time graphic representation of the order point/order

quantity inventory system showing inventory being received and then used up and reordered.

SBT: See Scan-Based Trading

Scalability: 1) How quickly and efficiently a company can ramp up to meet demand. See also

uptime production flexibility. 2) How well a solution to some problem will work when the size

of the problem increases. The economies to scale don't really kick in until you reach the critical

mass, then revenues start to increase exponentially.

Scan-Based Trading (SBT): Scan-based trading is a method of using Point of Sale data from

scanners and retail checkout to initiate invoicing between a manufacturer and retailer (pay on

use), as well as generate re-supply orders.

Scanlon Plan: A system of group incentives on a companywide or plantwide basis that sets up

one measure that reflects the results of all efforts. The Scanlon plan originated in the 1930’s by

Joe Scanlon and MIT. The universal standard is the ratio of labor costs to sales value added by

production. If there is an increase in production sales value with no change in labor costs,

productivity has increased while unit cost has decreased.

SCE: See Supply Chain Execution

SCEM: See Supply Chain Event Management

Scenario Planning: A form of planning in which likely sets of relevant circumstances are

identified in advance, and used to assess the impact of alternative actions.

SCI: See Supply Chain Integration

  

SCM: See Supply Chain Management

SCOR: Supply Cha in Operations Reference Model. This is the model developed by the Supply

Chain Council SCC and is built around six major processes: plan, source, make, deliver, return

and enable. The aim of the SCOR is to provide a standardized method of measuring supply chain

performance and to use a common set of metrics to benchmark against other organizations.

Scorecard: A performance measurement tool used to capture a summary of the Key

Performance Indicators/metrics of a company. Metrics dashboards/scorecards should be easy to

read and usually have “red, yellow, green” indicators to flag when the company is not meeting

its targets for its metrics. Ideally, a dashboard/scorecard should be cross- functional in nature and

include both financial and non- financial measures. In addition, scorecards should be reviewed

regularly – at least on a monthly basis and weekly in key functions such as manufacturing and

distribution where activities are critical to the success of a company. The dashboard/scorecards

philosophy can also be applied to external supply chain partners such as suppliers to ensure that

suppliers’ objectives and practices align. Synonym: Dashboard.

Seasonality: A repetitive pattern of demand from year to year (or other repeating time interval)

with some periods considerably higher than others. Seasonality explains the fluctuation in

demand for various recreational products which are used during different seasons. Also see:

Base Series

Secure Electronic Transaction (SET): In e-commerce, a system for guaranteeing the security

of financial transactions conducted over the Internet.

Sell In: Units which are sold to retail stores by the manufacturer or distributor for re-sale to

consumers. The period of time in a Product Life Cycle where the manufacture works with it’s

resellers to market and build inventory for sale. Also see: Sell Through

Sell Through: Units sold from retail stores to customers. The point in a Product Life Cycle

where initial consumption rates are developed and demand established. Also See: Sell In

Selling, General and Administrative (SG&A) Expenses: Includes marketing, communication,

customer service, sales salaries and commissions, occupancy expenses, unallocated overhead,

etc. Excludes interest on debt, domestic or foreign income taxes, depreciation and amortization,

extraordinary items, equity gains or losses, gain or loss from discontinued operations and

extraordinary items.

  

Serial Number: A unique number assigned for identification to a single piece that will never be

repeated for similar pieces. Serial numbers are usually applied by the manufacturer but can be

applied at other points, including by the distributor or wholesaler. Serial numbers can be used to

support traceability and warranty programs.

Service Parts Revenue: The sum of the value of sales made to external customers and the

transfer price valuation of sales within the company of repair or replacement parts and supplies,

net of all discounts, coupons, allowances, and rebates.

SET: See Secure Electronic Transaction

SG&A: See Selling General & Administrative Expense

Shared Services: Consolidation of a company's back-office processes to form a spinout (or a

separate "shared services" unit, to be run like a separate business), providing services to the

parent company and, sometimes, to external customers. Shared services typically lower overall

cost due to the consolidation, and may improve support as a result of focus.

Shareholder Value: Combination of profitability (revenue and costs) and invested capital

(working capital and fixed capital).

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

Shelf life is a consideration for food and drugs which deteriorate over time, and for high tech

products which become obsolete quickly.

Shewhart Cycle: See Plan-Do-Check-Action

Shingo’s Seven Wastes: Shigeo Shingo, a pioneer in the Japanese Just- in-Time philosophy,

identified seven barriers to improving manufacturing. They are the waste of overproduction,

waste of waiting, waste of transportation, waste of stocks, waste of motion, waste of making

defects, and waste of the processing itself.

Shipper: The party that tenders goods for transportation.

Shipping: The function that performs tasks for the outgoing shipment of parts, components, and

products. It includes packaging, marking, weighing, and loading for shipment.

Shipping Manifest: A document that lists the pieces in a shipment. A manifest usually covers

an entire load regardless of whether the load is to be delivered to a single destination or many

destinations. Manifests usually list the items, piece count, total weight, and the destination name

and address for each destination in the load.

  

Shop Calendar: See Manufacturing Calendar

Shop Floor Production Control Systems: The systems that assign priority to each shop order,

maintaining work- in-process quantity information, providing actual output data for capacity

control purposes and providing quantity by location by shop order for work-in-process inventory

and accounting purposes.

Short Shipment: Piece of freight missing from shipment as stipulated by documents on hand.

Shrinkage: Reductions of actual quantities of items in stock, in process, or in transit. The loss

may be caused by scrap, theft, deterioration, evaporation, etc.

SIC: See Standard Industrial Classification

Sigma: A Greek letter commonly used to designate the standard deviation of a population.

Single-Period Inventory Models: Inventory models used to define economical or profit

maximizing lot-size quantities when an item is ordered or produced only once, e.g., newspapers,

calendars, tax guides, greeting cards, or periodicals, while facing uncertain demands.

Six-Sigma Quality: A term used generally to indicate that a process is well controlled, i.e.,

tolerance limits are ±6 sigma {3.4 defects per million events) from the centerline in a control

chart. The term is usually associated with Motorola, which named one of its key operational

initiatives Six-Sigma Quality.

Skills Matrix: A visible means of displaying people’s skill levels in various tasks. Used in a

team environment to identify the skills required by the team and which team members have

those skills.

SKU: See Stock Keeping Unit

Small Group Improvement Activity: An organizational technique for involving employees in

continuous improvement activities. Also see: Quality Circle

SMART: See Specific, Measurable, Achievable, Realistic, Time-Based

SOP: See Sales and Operations Planning

SOW: See Statement of Work

  

Spam: A computer industry term referring to the Act of sending identical and irrelevant postings

to many different newsgroups or mailing lists. Usually this posting is something that has nothing

to do with the particular topic of a newsgroup or of no real interest to the person on the mailing

list.

SPC: See Statistical Process Control

Specific, Measurable, Achievable, Realistic, Time -Based (SMART): A shorthand description

of a way of setting goals and targets for individuals and teams.

Splash Page: A "first" or "front" page that you often see on some websites, usually containing a

"click-through" logo or message, or a fancy Flash presentation, announcing that you have

arrived. The main content and navigation on the site lie "behind" this page (a.k.a. the homepage

or "welcome page").

Split Delivery: A method by which a larger quantity is ordered on a purchase order to secure a

lower price, but delivery is divided into smaller quantities and spread out over several dates to

control inventory investment, save storage space, etc.

Spot Demand: Demand, having a short lead time that is difficult to estimate. Usually supply for

this demand is provided at a premium price.

Stable Demand: Products for which demand does not fluctuate widely at specific points during

the year.

Staging: Pulling material for an order from inventory before the material is required. This

action is often taken to identify shortages, but it can lead to increased problems in availability

and inventory accuracy. Also see: Accumulation Bin

Stakeholders: People with a vested interest in a company, including managers, employees,

stockholders, customers, suppliers, and others.

Standard Components: Components (parts) of a product, for which there is an abundance of

suppliers. Not difficult to produce. An example would be a power cord for a computer.

Standard Cost Accounting System: A cost accounting system that uses cost units determined

before production for estimating the cost of an order or product. For management control

purposes, the standards are compared to actual costs, and variances are computed.

Standard Deviation: 1) The amount of forecast error or variance from the mathematical mean.

2) How close the forecast is to the actual demand for products, expressed as a percentage.

Standard Industrial Classification (SIC): Classification codes that are used to categorize

companies into industry groupings.

Standing Order: See Blanket Purchase Order

Start Manufacture to Order Complete Manufacture: Average lead-time from the time

manufacturing begins to the time end products are ready for shipment, including the following

sub-elements: order configuration verification, production scheduling, time to release order to

manufacturing or distribution, and build or configure time. (An element of Order Fulfillment

Lead Time)

Note: Determined separately for Make-to-Order, Configure/Package-to-Order,

and Engineer-to-Order products. Does not apply to Make-to-Stock products.

Statement of Work (SOW): 1) A description of products to be supplied under a contract. A

good practice is for companies to have SOWs in place with their trading partners – especially for

all top suppliers. 2) In projection management, the first project planning document that should

be prepared. It describes the purpose, history, deliverables, and measurable success indicators

for a project. It captures the support required from the customer and identifies contingency plans

for events tha t could throw the project off course. Because the project must be sold to

management, staff, and review groups, the statement of work should be a persuasive document.

Statistical Process Control (SPC): A visual means of measuring and plotting process and

product variation. Results are used to adjust variables and maintain product quality.

Stochastic Models: Models where uncertainty is explicitly considered in the analysis.

Stock Keeping Unit (SKU): A category of unit with unique combination of form, fit, and

function (i.e. unique components held in stock). To illustrate: If two items are indistinguishable

to the customer, or if any distinguishing characteristics visible to the customer are not important

to the customer, so that the customer believes the two items to be the same, these two items are

part of the same SKU. As a further illustration consider a computer company that allows

customers to configure a product from a standard catalogue components, choosing from three

keyboards, three monitors, and three CPUs. Customers may also individually buy keyboards,

monitors, and CPUs. If the stock were held at the configuration component level, the company

would have nine SKUs. If the company stocks at the component level, as well as at the

configured product level, the company would have 36 SKUs. (9 component SKUs + 3*3*3

configured product SKUs. If as part of a promotional campaign the company also specially

packaged the products, the company would have a total of 72 SKUs.

  

Stock-Outs: Merchandise that is requested by a customer but is temporarily unavailable. Also

referred to Out of Stocks (OOS)

Stockchase: Moving shipments through regular channels at an accelerated rate; to take

extraordinary action because of an increase in relative priority. Synonym: Expediting.

Strategic Alliance: Business relationship in which two or more independent organizations

cooperate and willingly modify their business objectives and practices to help achieve long-term

goals and objectives. Also see: Marquee Partners

Sub-Optimization: Decisions or activities in a part made at the expense of the whole. An

example of sub-optimization is where a manufacturing unit schedules production to benefit its

cost structure without regard to customer requirements or the effect on other business units.

Subcontracting: Sending production work outside to another manufacturer. This can involve

specialized operations such as plating metals, or complete functional operations. Also see:

Outsource

Sunk Cost: 1) The unrecovered balance of an investment. It is a cost, already paid, that is not

relevant to the decision concerning the future that is being made. Capital already invested that

for some reason cannot be retrieved. 2) A past cost that has no relevance with respect to future

receipts and disbursements of a facility undergoing an economic study. This concept implies

that since a past outlay is the same regardless of the alternative selected, it should not influence

the choice between alternatives.

Supplier: 1) A provider of goods or services. Also see: Vendor 2) A seller with whom the

buyer does business, as opposed to vendor, which is a generic term referring to all sellers in the

marketplace.

Supplier Certification: Certification procedures verifying that a supplier operates, maintains,

improves, and documents effective procedures that relate to the customer’s requirements. Such

requirements can include cost, quality, delivery, flexibility, maintenance, safety, and ISO quality

and environmental standards.

Supply Chain: 1) starting with unprocessed raw materials and ending with the final customer

using the finished goods, the supply chain links many companies together. 2) the material and

informational interchanges in the logistical process stretching from acquisition of raw materials

to delivery of finished products to the end user. All vendors, service providers and customers are

links in the supply chain.

  

Supply Chain Design: The determination of how to structure a supply chain. Design decisions

include the selection of partners, the location and capacity of warehouse and production

facilities, the products, the modes of transportation, and supporting information systems.

Supply Chain Execution (SCE): The ability to move the product out the warehouse door. This

is a critical capacity and one that only brick-and- mortar firms bring to the B2B table. Dot-coms

have the technology, but that's only part of the equation. The need for SCE is what is driving the

Dot-coms to offer equity partnerships to the wholesale distributors.

Supply Chain Event Management (SCEM): SCEM is an application that supports control

processes for managing events within and between companies. It consists of integrated software

functionality that supports five business processes: monitor, notify, simulate, control and

measure supply chain activities.

Supply Chain Integration (SCI): Likely to become a key competitive advantage of selected emarketplaces.

Similar concept to the Back-End Integration, but with greater emphasis on the

moving of goods and services.

Supply Chain Inventory Visibility: Software applications that permit monitoring events across

a supply chain. These systems track and trace inventory globally on a line- item level and notify

the user of significant deviations from plans. Companies are provided with realistic estimates of

when material will arrive.

Supply Chain Management (SCM) as defined by the Council of Logistics Management

(CLM): “Definition - Supply Chain Management encompasses the planning and management of

all activities involved in sourcing and procurement, conversion, and all Logistics Management

activities. Importantly, it also includes coordination and collaboration with channel partners,

which can be suppliers, intermediaries, third-party service providers, and customers. In essence,

Supply Chain Management integrates supply and demand management within and across

companies. Boundaries and Relationships - Supply Chain Management is an integrating

function with primary responsibility for linking major business functions and business processes

within and across companies into a cohesive and high-performing business model. It includes all

of the Logistics Management activities noted above, as well as manufacturing operations, and it

drives coordination of processes and activities with and across marketing, sales, product design,

finance and information technology.”

Supply Chain Network Design Systems: The systems employed in optimizing the relationships

among the various elements of the supply chain-manufacturing plants, distribution centers,

points-of-sale, as well as raw materials, relationships among product families, and other factorsto

synchronize supply chains at a strategic level.

Supply Chain-Related Finance and Planning Cost Element: One of the element s comprising

a company's total supply-chain management costs. These costs consist of the following:

1. Supply-Chain Finance Costs: Costs associated with paying invoices, auditing

physical counts, performing inventory accounting, and collecting accounts

receivable. Does NOT include customer invoicing/ accounting costs (see Order

Management Costs).

2. Demand/Supply Planning Costs: Costs associated with forecasting, developing

finished goods, intermediate, subassembly or end item inventory plans, and

coordinating Demand/Supply

Supply Chain-Related IT Costs: Information Technology (IT) costs (in US dollars) associated

with major supply-chain management processes as described below. These costs should include:

Development costs (costs incurred in process reengineering, planning, software development,

installation, implementation, and training associated with new and/or upgraded architecture,

infrastructure, and systems to support the described supply-chain management processes),

Execution costs (operating costs to support supply-chain process users, including computer and

network operations, EDI and telecommunications services, and amortization/depreciation of

hardware, Maintenance costs (costs incurred in problem resolution, troubleshooting, repair, and

routine maintenance associated with installed hardware and software for described supply-chain

management processes. Include costs associated with data base administration, systems

configuration control, release planning and management.

These costs are associated with the following processes:

PLAN

1. Product Data Management - Product phase- in/phase-out and release;

post introduction support & expansion; testing and evaluation; end-of-life

inventory management. Item master definition and control.

2. Forecasting and Demand/Supply Manage and Finished Goods -

Forecasting; end-item inventory planning, DRP, production master

scheduling for all products, all channels.

SOURCE

1. Sourcing/Material Acquisition - Material requisitions, purchasing,

supplier quality engineering, inbound freight management, receiving,

incoming inspection, component engineering, tooling acquisition,

accounts payable.

  

2. Component and Supplier Management - Part number cross-references,

supplier catalogs, approved vendor lists.

3. Inventory Management - Perpetual and physical inventory controls and

tools.

MAKE

1. Manufacturing Planning - MRP, production scheduling, tracking, mfg.

engineering, mfg. documentation management, inventory/obsolescence

tracking.

2. Inventory Management - Perpetual and physical inventory controls and

tools.

3. Manufacturing Execution - MES, detailed and finite interval

scheduling, process controls and machine scheduling.

DELIVER

1. Order Management - Order entry/ maintenance, quotes, customer

database, product/price database, accounts receivable, credits and

collections, invoicing.

2. Distribution and Transportation Management - DRP shipping, freight

management, traffic management.

3. Inventory Management - Perpetual and physical inventory controls and

tools.

4. Warehouse Management - Finished goods, receiving and stocking,

pick/pack.

5. Channel Management - Promotions, pricing and discounting, customer

satisfaction surveys.

6. Field Service/Support - Field service, customer and field support,

technical service, service/call management, returns and warranty tracking.

  

EXTERNAL ELECTRONIC INTERFACES

Plan/Source/Make/Deliver - Interfaces, gateways, and data repositories

created and maintained to exchange supply-chain related information with

the outside world. E-Commerce initiatives. Includes development and

implementation costs.

Note: Accurate assignment of IT-related cost is challenging. It can be done using

Activity-Based-Costing methods, or using other approaches such as allocation

based on user counts, transaction counts, or departmental headcounts. The

emphasis should be on capturing all costs. Costs for any IT activities that are

outsourced should be included.

Supply Chain Strategy Planning: The process of process of analyzing, evaluating, defining

supply cha in strategies, including network design, manufacturing and transportation strategy and

inventory policy.

Supply Planning: The process of identifying, prioritizing, and aggregating, as a whole with

constituent parts, all sources of supply that are required and add value in the supply chain of a

product or service at the appropriate level, horizon and interval.

Supply Planning Systems: The process of identifying, prioritizing, and aggregating, as a whole

with constituent parts, all sources of supply that are required and add value in the supply chain of

a product or service at the appropriate level, horizon and interval.

Supply Warehouse: A warehouse that stores raw materials. Goods from different suppliers are

picked, sorted, staged, or sequenced at the warehouse to assemble plant orders.

Support Costs: Costs of activities not directly associated with producing or delivering products

or services. Examples are the costs of information systems, process engineering and purchasing.

Also see: Indirect Cost

Surrogate [item] Driver: A substitute for the ideal driver, but is closely correlated to the ideal

driver, where [item] is Resource, Activity, Cost Object. A surrogate driver is used to

significantly reduce the cost of measurement while not significantly reducing accuracy. For

example, the number of production runs is not descriptive of the material disbursing activity, but

the number of production runs may be used as an activity driver if material disbursements

correlate well with the number of production runs.

Sustaining Activity: An activity that benefits an organizational unit as a whole, but not any

specific cost object.

  

SWOT: See SWOT Analysis

SWOT Analysis: An analysis of the strengths, weaknesses, opportunities, and threats of and to

an organization. SWOT analysis is useful in developing strategy.

Synchronization: The concept that all supply chain functions are integrated and interact in real

time; when changes are made to one area, the effect is automatically reflected throughout the

supply chain.

Syntax: The grammar or rules which define the structure of the EDI standard

T

Tact Time: See Takt Time

Tactical Planning: The process of developing a set of tactical plans (e.g., production plan, sales

plan, marketing plan, and so on). Two approaches to tactical planning exist for linking tactical

plans to strategic plans—production planning and sales and operations planning. See: Sales and

operational planning, strategic planning.

Taguchi Method: A concept of off- line quality control methods conducted at the product and

process design stages in the product development cycle. This concept, expressed by Genichi

Taguchi, encompasses three phases of product design: system design, parameter design, and

tolerance design. The goal is to reduce quality loss by reducing the variability of the product’s

characteristics during the parameter phase of product development.

Takt Time: Sets the pace of production to match the rate of customer demand and becomes the

heartbeat of any lean production system. It is computed as the available production time divided

by the rate of customer demand. For example, assume demand is 10,000 units per month, or 500

units per day, and planned available capacity is 420 minutes per day. The takt time = 420

minutes per day/ 500 units per day = 0.84 minutes per unit. This takt time means that a unit

should be planned to exit the production system on average every 0.84 minutes.

Tare Weight: The weight of a substance, obtained by deducting the weight of the empty

container from the gross weight of the full container.

  

Target Costing: A target cost is calculated by subtracting a desired profit margin from an

estimated or a market-based price to arrive at a desired production, engineering, or marketing

cost. This may not be the initial production cost, but one expected to be achieved during the

mature production stage. Target costing is a method used in the analysis of product design that

involves estimating a target cost and then designing the product/service to meet that cost. Also

see: Value Analysis

Tariff: A tax assessed by a government on goods entering or leaving a country. The term is also

used in transportation in reference to the fees and rules applied by a carrier for its services.

Tasks: The breakdown of the work in an activity into smaller elements.

T’s & C’s: See Terms and Conditions

TCO: See Total Cost of Ownership

Technical Components: Component (part) of a product for which there is a limited number of

suppliers. These parts are hard to make, and require much more lead time and expertise on the

part of the supplier to produce than standard components do.

Terms and conditions (T’s & C’s): All the provisions and agreements of a contract.

Theoretical Cycle Time: The back-to-back process time required for a single unit to complete

all stages of a process without waiting, stoppage, or time lost due to error.

Theory of Constraints (TOC): A production management theory which dictates that volume is

controlled by a series of constraints related to work center capacity, component availability,

finance, etc. Total throughput cannot exceed the capacity of the smallest constraint, and any

inventory buffers or excess capacity at non-related work centers is waste.

Third-Party Logistics (3PL): Outsourcing all or much of a company’s logistics operations to a

specialized company.

Third Party Logistics Provider: A firm which provides multiple logistics services for use by

customers. Preferably, these services are integrated, or "bundled" together by the provider. These

firms facilitate the movement of parts and materials from suppliers to manufacturers, and

finished products from manufacturers to distributors and retailers. Among the services which

they provide are transportation, warehousing, cross-docking, inventory management, packaging,

and freight forwarding.

  

Third-Party Warehousing: The outsourcing of the warehousing function by the seller of the

goods.

Throughput: A measure of warehousing output volume (weight, number of units). Also, the

total amount of units received plus the total amount of units shipped, divided by two.

Time Based Order System: See Fixed Reorder Cycle Inventory Model

Time Bucket: A number of days of data summarized into a columnar display. A weekly time

bucket would contain all of the relevant data for an entire week. Weekly time buckets are

considered to be the largest possible (at least in the near and medium term) to permit effective

MRP.

Time Fence: A policy or guideline established to note where various restrictions or changes in

operating procedures take place. For example, changes to the master production schedule can be

accomplished easily beyond the cumulative lead time, while changes inside the cumulative lead

time become increasingly more difficult to a point where changes should be resisted. Time

fences can be used to define these points.

Time-Definite Services: Delivery is guaranteed on a specific day or at a certain time of the day.

Time-to-Product: The total time required to receive, fill, and deliver an order for an existing

product to a customer, timed from the moment that the customer places the order until the

customer receives the product.

TL: See Truckload Carrier

TOC: See Theory of Constraints

TOFC: See Trailer-on-Flat Car, Piggyback

Total Annual Material Receipts: The dollar amount associated with all direct materials

received from Jan 1 to Dec 31.

Total Annual Sales: Total Annual Sales are Total Product Revenue plus post-delivery revenues

(e.g., maintenance and repair of equipment, system integration) royalties, sales of other services,

spare parts revenue, and rental/lease revenues.

Total Average Inventory: Average normal use stock, plus average lead stock, plus safety stock.

  

Total Cost Analysis: A decision-making approach that considers minimization of total costs and

recognizes the interrelationship among system variables such as transportation, warehousing,

inventory, and customer service.

Total Cost Curve: 1) In cost-volume-profit (breakeven) analysis, the total cost curve is

composed of total fixed and variable costs per unit multiplied by the number of units provided.

Breakeven quantity occurs where the total cost curve and total sales revenue curve intersect.

See: Break-even chart, Break-even point. 2) In inventory theory, the total cost curve for an

inventory item is the sum of the costs of acquiring and carrying the item. Also see: Economic

Order Quantity

Total Cost of Ownership (TCO): Total cost of a computer asset throughout its lifecycle, from

acquisition to disposal. TCO is the combined hard and soft costs of owning networked

information assets. 'Hard' costs include items such as the purchase price of the asset,

implementation fees, upgrades, maintenance contracts, support contracts, and disposal costs,

license fees that may or may not be upfront or charged annually. These costs are considered

'hard costs' because they are tangible and easily accounted for.

Total Cumulative Manufacture Cycle Time: The average time between commencement of

upstream processing and completion of final packaging for shipment operations as well as

release approval for shipment. Do not include WIP storage time.

Calculation: [Average # of units in WIP] / [Average daily output in units] – WIP

days of supply

Total Inventory Days of Supply: Total gross value of inventory at standard cost before reserves

for excess and obsolescence. Includes only inventory that is on the books and currently owned

by the business entity. Future liabilities such as consignments from suppliers are not included.

Calculation: [5 Point Annual Average Gross Inventory] / [Cost of Good

Sold/365]

Total Make Cycle Time: The average total processing time between commencement of

upstream processing and completion of all manufacturing process steps up to, but NOT

including, packaging and labeling operations (i.e. from start of manufacturing to final formulated

product ready for primary packaging). Do not include hold or test and release times.

Calculation: [Average # of units in active manufacturing] / [Average daily output

in units]

Total Package and Label Cycle Time: The average total processing time between the

commencement of the primary packaging and labeling steps to completion of the final packaging

steps for shipment.

Calculation: [Average # of units in packaging and labeling WIP] / [Average daily

output in units]

Total Product Revenue: The total value of sales made to external customers plus the transfer

price valuation of intra-company shipments, net of all discounts, coupons, allowances, and

rebates. Includes only the intra-company revenue for product transferring out of an entity,

installation services if these services are sold bundled with end products, and recognized leases

to customers initiated during the same period as revenue shipments, with revenue credited at the

average selling price.

Note: Total Product Revenue excludes post-delivery revenues (maintenance and

repair of equipment, system integration), royalties, sales of other services, spare

parts revenue, and rental/lease revenues.

Total Productive Maintenance (TPM): Team based maintenance process designed to

maximize machine availability and performance and product quality.

Total Sourcing Lead Time (95% of Raw Material Dollar Value): Cumulative lead time (total

average combined inside-plant planning, supplier lead time [external or internal], receiving,

handling, etc., from demand identification at the factory until the materials are available in the

production facility) required to source 95% of the dollar value (per unit) of raw materials from

internal and externa l suppliers.

Total Supply-Chain Management Cost (5 elements): Total cost to manage order processing,

acquire materials, manage inventory, and manage supply-chain finance, planning, and IT costs,

as represented as a percent of revenue. Accurate assignment of IT-related cost is challenging. It

can be done using Activity-Based-Costing methods, or based on more traditional approaches.

Allocation based on user counts, transaction counts, or departmental headcounts are reasonable

approaches. The emphasis should be on capturing all costs, whether incurred in the entity

completing the survey or incurred in a supporting organization on behalf of the entity.

Reasonable estimates founded in data were accepted as a means to assess overall performance.

All estimates reflected fully burdened actuals inclusive of salary, benefits, space and facilities,

and general and administrative allocations.

Calculation: [Order Management Costs + Material Acquisition Costs + Inventory

Carrying Costs + Supply-Chain-Related Finance and Planning Costs + Total

Supply-Chain- Related IT Costs] / [Total Product Revenue] (Please see individual

component categories for component detail and calculations)

  

Total Supply Chain Response Time: The time it takes to rebalance the entire supply chain after

determining a change in market demand. Also, a measure of a supply chain’s ability to change

rapidly in response to marketplace changes.

Calculation: [Forecast Cycle Time] + [Replan Cycle Time] + [Intra-

Manufacturing Replan Cycle Time] + [Cumulative Source/Make Cycle Time] +

[Order Fulfillment Lead Time]

Total Test and Release Cycle Time: The average total test and release time for all tests,

documentation reviews, and batch approval processes performed from start of manufacturing to

release of final packaged product for shipment.

Calculation: [Average # of units in test and release] / [Average daily output in

units]

Touch Labor: The labor that adds value to the product - assemblers, welders etc. This does not

include indirect resources such as material handlers (mover and stage product, mechanical and

electrical technicians responsible for maintaining equipment.

TPM: See Total Productive Maintenance

Traceability: 1) The attribute allowing the ongoing location of a shipment to be determined. 2)

The registering and tracking of parts, processes, and materials used in production, by lot or serial

number.

Tracing: The practice of relating resources, activities and cost objects using the drivers

underlying their cost causal relationships. The purpose of tracing is to observe and understand

how costs are arising in the normal course of business operations. Synonym: Assignment.

Tracking and Tracing: Monitoring and recording shipment movements from origin to

destination.

Tracking Signal: The ratio of the cumulative algebraic sum of the deviations between the

forecasts and the actual values to the mean absolute deviation. Used to signal when the validity

of the forecasting model might be in doubt.

Trading Partner: Companies that do business with each other via EDI (e.g., send and receive

business documents, such as purchase orders).

Trading Partner Agreement: The written contract that spells out agreed upon terms between

EDI trading partners.

  

Traffic: A department or function charged with the responsibility for arranging the most

economic classification and method of shipment for both incoming and outgoing materials and

products.

Traffic Management: The management and controlling of transportation modes, carriers and

services.

Trailer on a Flatcar (TOFC): A specialized form of containerization in which motor and rail

transport coordinate. Synonym: Piggyback.

Transaction: A single completed transmission, e.g., transmission of an invoice over an EDI

network. Analogous to usage of the term in data processing, in which a transaction can be an

inquiry or a range of updates and trading transactions. The definition is important for EDI

service operators, who must interpret invoices and other documents.

Transaction Set: Commonly used business transactions (e.g. purchase order, invoice, etc.)

organized in a formal, structured manner, consisting of a Transaction Set header control

segment, one or more Data Segments, and a Transaction Set trailer Control Data Segment.

Transaction Set ID: A three digit numerical representation that identifies a transaction set.

Transactional Acknowledgement: Specific Transaction Sets, such as the Purchase Order

Acknowledgement (855), that both acknowledges receipt of an order and provides special status

information such as reschedules, price changes, back order situation, etc.

Transfer Pricing: The pricing of goods or services transferred from one segment of a business

to another. Transfer pricing generally includes the costs associated with performing the transfer

and therefore item costs will be incrementally higher than when received through normal

channels.

Transit Inventory: Inventory in transit between manufacturing and stocking locations, or

between warehouses in a distributed warehousing model. Also see: In-transit Inventory

Transit Time: The total time that elapses between a shipment's pickup and delivery.

Translation Software: Software the converts or "translates" business application data into EDI

standard formats, and vice versa.

Transmission Acknowledgment: Acknowledgment that a total transmission was received with

no errors detected

  

Transparency: The ability to gain access to information without regard to the systems

landscape or architecture. An example would be where an online customer could access a

vendor’s web site to place an order and receive availability information supplied by a third party

outsourced manufacturer or shipment information from a third party logistics provider. See also:

Visibility

Transportation Planning: The process of defining an integrated supply chain transportation

plan and maintaining the information which characterizes total supply chain transportation

requirements, and the management of transporters both inter and intra company.

Transportation Planning Systems: The systems used in optimizing of assignments from plants

to distribution centers, and from distribution centers to stores. The systems combine "moves" to

ensure the most economical means are employed.

Trend: General upward or downward movement of a variable over time such as demand for a

product. Trends are used in forecasting to help anticipate changes in consumption over time.

Trend Forecasting Models: Methods for forecasting sales data when a definite upward or

downward pattern exists. Models includ e double exponential smoothing, regression, and triple

smoothing.

Truckload Carriers (TL): Trucking companies, which move full truckloads of freight directly

from the point of origin to destination.

Truckload Lot: A truck shipment that qualifies for a lower freight rate because it meets a

minimum weight and/or volume.

Turnover: 1) Typically refers to Inventory Turnover. 2) In the United Kingdom and certain

other countries, turnover refers to annual sales volume. Also see: Inventory Turns

Two-Level Master Schedule: A master scheduling approach in which a planning bill of

material is used to master schedule an end product or family, along with selected key features

(options and accessories). Also see: Production Forecast

U

UCC: See Uniform Code Council

UCS: See Uniform Communication Standard

Unbundled Payment/Remittance: The process where payment is delivered separately from its

associated detail.

Uniform Code Council (UCC): A U.S. association that administrates UCS, WINS, and VICS

and provides UCS identification codes and UPCs. Also, a model set of legal rules governing

commercial transmissions, such as sales, contracts, bank deposits and collections, commercial

paper, and letters of credit. Individual states give legal power to the UCC by adopting its articles

of law.

Uniform Communication Standard (UCS): A set of standard transaction sets for the grocery

industry that allows computer-to-computer, paperless exchange of documents between trading

partners. Using Electronic Data Interchange, UCS is a rapid, accurate and economical method of

business communication; it can be used by companies of all sizes and with varying levels of

technical sophistication.

Uniform Product Code (UPC): A standard product numbering and bar coding system used by

the retail industry. UPC codes are administered by the Uniform Code Council; they identify the

manufacturer as well as the item, and are included on virtually all retail packaging. Also see:

Uniform Code Council

Uniform Resource Locator (URL): A string that supplies the Internet address of a website or

resource on the World Wide Web, along with the protocol by which the site or resource is

accessed. The most common URL type is http;//, which gives the Internet address of a web page.

Some other URL types are gopher://, which gives the Internet address of a Gopher directory, and

ftp:;//, which gives the network location of an FTP resource.

Unit Cost: The cost associated with a single unit of product. The total cost of producing a

product or service divid ed by the total number of units. The cost associated with a single unit of

measure underlying a resource, activity, product or service. It is calculated by dividing the total

cost by the measured volume. Unit cost measurement must be used with caution as it may not

always be practical or relevant in all aspects of cost management.

   

Unit of Driver Measure: The common denominator between groupings of similar activities.

Example: 20 hours of process time is performed in an activity center. This time equa tes to a

number of common activities varying in process time duration. The unit of measure is a

standard measure of time such as a minute or an hour.

Unit of Measure (UOM): The unit in which the quantity of an item is managed, e.g., pounds,

each, box of 12, package of 20, or case of 144. Various UOMs may exist for a single item. For

example, a product may be purchased in cases, stocked in boxes and issued in single units.

United Nations Standard Product and Service Code (UN/SPSC): - developed jointly between

the UN and Dun & Bradstreet (D&B). Has a five level coding structure (segment, family, class,

commodity, business function) for nearly 9000 products.

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

handlings.

UN/SPSC: See United Nations Standard Product and Service Code

UOM: See Unit of Measure

UPC: See Uniform Product Code

Upside Production Flexibility: The number of days required to complete manufacture and

delivery of an unplanned sustainable 20% increase in end product supply of the predominant

product line. The one constraint that is estimated to be the principal obstacle to a 20% increase

in end product supply, as represented in days, is Upside Flexibility: Principal Constraint. Upside

Flexibility could affect three possible areas: direct labor availability, internal manufacturing

capacity, and key components or material availability.

Upstream: Principal direction of movement for customer orders which originate at point of

demand or use, as well as other flows such as return product movements, payments for

purchases, etc. Opposite of downstream.

URL: See Uniform Resource Locator

Usage Rate: Measure of demand for product per unit of time (e.g., units per month, etc.).

  

V

Validation: To check whether a document is the correct type for a particular EDI system, as

agreed upon by the trading partners, in order to determine whether the document is going to or

coming from an authorized EDI user.

Value Added: Increased or improved value, worth, functionality or usefulness.

Value-Added Network (VAN): A company that acts as a clearing-house for electronic

transactions between trading partners. A third-party supplier that receives EDI transmissions

from sending trading partners and holds them in a “mailbox” until retrieved by the receiving

partners.

Value-Added Productivity Per Employee: Contribution made by employees to total product

revenue minus the material purchases divided by total employment. Total employment is total

employment for the entity being surveyed. This is the average full-time equivalent employee in

all functions, including sales and marketing, distribution, manufacturing, engineering, customer

service, finance, general and administrative, and other. Total employment should include

contract and temporary employees on a full-time equivalent (FTE) basis.

Calculation: Total Product Revenue-External Direct Material / [FTE's]

Value-Adding/Nonvalue-Adding: Assessing the relative value of activities according to how

they contribute to customer value or to meeting an organization’s needs. The degree of

contribution reflects the influence of an activity’s cost driver(s).

Value Analysis: A method to determine how features of a product or service relate to cost,

functionality, appeal and utility to a customer (i.e., engineering value analysis). Also see: Target

Costing

Value Based Return (VBR): A measure of the creation of value. It is the difference between

economic profit and capital charge.

Value Chain: A series of activities, which combined, define a business process; the series of

activities from manufacturers to the retail stores that define the industry supply chain.

 

  

  

  

  

  

   .

Value Chain Analysis: A method to identify all the elements in the linkage of activities a firm

relies on to secure the necessary materials and services, starting from their point of origin, to

manufacture, and to distribute their products and services to an end user.

Value of Transfers: The total dollar value (for the calendar year) associated with movement of

inventory from one “bucket” into another, such as raw material to work-in-process, work- inprocess

to finished goods, plant finished goods to field finished goods or customers, and field

finished goods to customers. Value of Transfers is based on the value of inventory withdrawn

from a certain category and is often approached from a costing perspective, using cost accounts.

For example, Raw Materials Value of Transfers is the value of transfers out of the raw material

cost accounts (you may have cost centers associated with inventory locations, but all "raw

ingredients" usually share common cost accounts or can be rolled up into one financial view).

The same goes for WIP. Take the manufacturing cost centers and look at the total value of

withdrawals from those cost centers. While Average Gross Inventory represents the value of the

inventory in the cost center at any given time, the Value of Transfers is the total value of

inventory leaving the cost center during the year. The value of transfers for Finished Goods is,

in theory, equivalent to COGS.

Value Proposition: What the hub offers to members. To be truly effective, the value proposition

has to be two-sided; a benefit to both buyers and sellers.

Value-Added Network (VAN): A company that acts as a clearing-house for electronic

transactions between trading partners. A third-party supplier that receives EDI transmissions

from sending trading partners and holds them in a “mailbox” until retrieved by the receiving

partners.

VAN: See Value-Added Network

Variable Cost: A cost that fluctuates with the volume or activity level of business.

VBR: See Value Based Return

Vendor: The manufacturer or distributor of an item or product line. Also see: Supplier

  

Vendor Code: A unique identifier, usually a number and sometimes the company's DUNS

number, assigned by a Customer for the Vendor it buys from. Example; a Grocery Store Chain

buys Oreo's from Nabisco. The Grocery Store Chain , for accounting purposes, identifies

Nabisco as Vendor #76091. One company can have multiple vendor codes. Example; Welch's

Foods sells many different products. Frozen grape juice concentrate, chilled grape juice, bottled

grape juice, and grape jelly. Because each of these items is a different type of product, frozen

food, chilled food, beverages, dry food, they may have a different buyer at the Grocery Store

Chain , requiring a different vendor code for each product line.

Vendor-Managed Inventory (VMI): The practice of retailers making suppliers responsible for

determining order size and timing, usually based on receipt of retail POS and inventory data. Its

goal is to increase retail inventory turns and reduce stock outs.

Vendor Owned Inventory (VOI): See Consignment Inventory

Vertical Hub/Vertical Portal: Serving one specific industry. Vertical portal websites that cater

to consumers within a particular industry. Similar to the term "vertical industry", these websites

are industry specific, and like a portal, they make use of Internet technology by using the same

kind of personalization technology. In addition to industry specific vertical portals that cater to

consumers, another definition of a vertical portal is one that caters solely to other businesses.

Vertical Integration: The degree to which a firm has decided to directly produce multiple

value-adding stages from raw material to the sale of the product to the ultimate consumer. The

more steps in the sequence, the greater the vertical integration. A manufacturer that decides to

begin producing parts, components, and materials that it normally purchases is said to be

backward integrated. Likewise, a manufacturer that decides to take over distribution and

perhaps sale to the ultimate consumer is said to be forward integrated.

Viral Marketing: The concept of embedding advertising into web portals, pop-ups and as email

attachments to spread the word about products or services that the target audience may not

otherwise have been interested in.

Virtual Corporation: The logical extension of outpartnering. With the virtual corporation, the

capabilities and systems of the firm are merged with those of the suppliers, resulting in a new

type of corporation where the boundaries between the suppliers’ systems and those of the firm

seem to disappear. The virtual corporation is dynamic in that the relationships and structures

formed change according to the changing needs of the customer.

  

Virtual Factory: A changed transformation process most frequently found under the virtual

corporation. It is a transformation process that involves merging the capabilities and capacities of

the firm with those of its suppliers. Typically, the components provided by the suppliers are

those that are not related to a core competency of the firm, while the components managed by

the firm are related to core competencies. One advantage found in the virtual factory is that it

can be restructured quickly in response to changing customer demands and needs.

Visibility: The ability to access or view pertinent data or information as it relates to logistics and

the supply chain, regardless of the point in the chain where the data exists.

Vision: The shared perception of the organization’s future—what the organization will achieve

and a supporting philosophy. This shared vision must be supported by strategic objectives,

strategies, and action plans to move it in the desired direction. Syn: vision statement.

VMI: See Vendor Managed Inventory

VOI: See Vendor Owned Inventory

W

Wagner-Whitin Algorithm: A mathematically complex, dynamic lot-sizing technique that

evaluates all possible ways of ordering to cover net requirements in each period of the planning

horizon to arrive at the theoretically optimum ordering strategy for the entire net requirements

schedule. Also see: Discrete Order Quantity, Dynamic Lot Sizing

Wall-to-Wall Inventory: An inventory management technique in which material enters a plant

and is processed through the plant into finished goods without ever having entered a formal

stock area.

WAN: See Wide Area Network

Warehouse: Storage place for products. Principal warehouse activities include receipt of

product, storage, shipment, and order picking.

 

    

    

Warehouse Management System (WMS): The systems used in effectively managing

warehouse business processes and direct warehouse activities, including receiving, putaway,

picking, shipping, and inventory cycle counts. Also includes support of radio-frequency

communications, allowing real-time data transfer between the system and warehouse personnel.

They also maximize space and minimize material handling by automating putaway processes.

Warranty Costs: Includes materials, labor, and problem diagnosis for products returned for

repair or refurbishment.

Waste: 1) In Just- in-Time, any activity that does not add value to the good or service in the eyes

of the consumer. 2) A by-product of a process or task with unique characteristics requiring

special management control. Waste production can usually be planned and controlled. Scrap is

typically not planned and may result from the same production run as waste.

Wave Picking: A method of selecting and sequencing picking lists to minimize the waiting time

of the delivered material. Shipping orders may be picked in waves combined by a common

product, common carrier or destination, and manufacturing orders in waves related to work

centers.

Waybill: Document containing description of goods that are part of common carrier freight

shipment. Show origin, destination, consignee/consignor, and amount charged. Copies travel

with goods and are retained by originating/delivering agents. Used by carrier for internal record

and control, especially during transit. Not a transportation contract.

Web Browser: A client application that fetches and displays web pages and other World Wide

Web resources to the user.

Web Services: A computer term for information processing services that are delivered by third

parties using internet portals. Standardized technology communications protocols; network

services as collections of communicatio n formats or endpoints capable of exchanging messages.

Weighted-Point Plan: A supplier selection and rating approach that uses the input gathered in

the categorical plan approach and assigns weights to each evaluation category. A weighted sum

for each supplier is obtained and a comparison made. The weights used should sum to 100% for

all categories. Also see: Categorical Plan

What You See Is What You Get (WYSIWYG): An editing interface in which a file created is

displayed as it will appear to an end-user.

Wholesaler: See Distributor

Wide Area Network (WAN): A public or private data communications system for linking

computers distributed over a large geographic area.

Windows Meta File (WMF): A vector graphics format for Windows-compatible computers

used mostly or word processing clip art.

WIP: See Work in Process

WMF: See Windows Meta File

WMS: See Warehouse Management System

Work-in-Process (WIP): Parts and subassemblies in the process of becoming completed

finished goods. Work in process generally includes all of the material, labor and overhead

charged against a production order which has not been absorbed back into inventory through

receipt of completed products.

World Wide Web (WWW): A "multimedia hyper linked database that spans the globe" and lets

you browse through lots of interesting information. Unlike earlier Internet services, the 'Web'

combines text, pictures, sounds, and even animations, and it lets you move around with a click of

your computer mouse.

WWW: See World Wide Web

WYSIWYG: See What You See Is What You Get

X

X12: The ANSI standard for interindustry electronic interchange of business transactions.

XML: See Extensible Markup Language

Y

Yield: The ratio of usable output from a process to its input.

Z

Zone Picking: A method of subdividing a picking list by areas within a storeroom for more

efficient and rapid order picking. A zone-picked order must be grouped to a single location and

the separate pieces combined before delivery or must be delivered to different locations, such a

work centers. Also see: Batch Picking

Zone Skipping: For shipments via the US Postal Service, depositing mail at a facility one or

more zones closer to the destination. This option would benefit customers operating in close

proximity to a zone border or shipping sufficient volumes to offset additional transportation

costs.

Numbers

3PL: See Third Party Logistics

4PL: See Forth Party Logistics

5-Point Annual Average: Method frequently used in PMG studies to establish a representative

average for a one year period.

Calculation: [12/31/98 + 3/31/98 + 6/30/99 + 9/30/99 + 12/31/99] / 5

80-20 Rule: A term referring to the Pareto principle. The principle suggests that most effects

come from relatively few causes; that is, 80% of the effects (or sales or costs) come from 20% of the possible causes (or items). Also see: ABC Classification, Pareto