2000 - 4000 Flashcards
(2000 cards)
1
Q
FPO
A
Abbreviation for firm planned order.
2
Q
framework agreement
A
A general term for agreements with suppliers that set out terms and conditions under which specific purchases (call-offs) can be made throughout the term of the agreement. This agreement may be a formal contract to which procurement rules apply.
3
Q
franchise extension
A
The placement of a brand name on products outside the company’s present sphere of activity.
4
Q
free alongside ship (FAS)
A
A term indicating the seller is responsible for the delivery of goods to a designated port close enough to an arranged shipping vessel so that the vessel’s lifting tackle can reach it to bring it on board. The seller is liable for all charges and responsibilities until the goods sold are delivered to the dock that will be used by the vessel.
5
Q
free float
A
In the critical path method of project management, the amount of time that a given activity can be delayed without delaying an immediately subsequent activity’s early start time. See: float, independent float, total float.
6
Q
free on board (FOB)
A
A shipping term which indicates at what point respective obligations, costs, and risks involved in the delivery of goods shift from the seller to the buyer.
7
Q
free slack
A
The amount of time by which the completion of an activity in a project network can increase without delaying the start of the next activity.
8
Q
freight
A
Goods transported from one place to another.
9
Q
freight all kinds (FAK)
A
A system to simplify logistics by consolidating different products to be transported or classes of shipments into one classification with one negotiated rate, regardless of individual product rates.
10
Q
freight bill
A
A freight carrier’s invoice for a shipment.
11
Q
freight broker
A
An individual or organization who finds appropriate carriers for shippers needing transportation. The broker helps negotiate terms and administers most of the documentation.
12
Q
freight carrier delivery performance evaluation
A
A formal freight carrier performance review conducted to reduce the risk of landed cost budget variances and poor delivery performance. A carrier evaluation program needs a comprehensive list of evaluation metrics to reflect overall service performance and cost-improvement objectives. Evaluation criteria should include quantitative as well as qualitative measures. Quantitative criteria could include on-time delivery performance, claims ratios, billing accuracy, cost performance, and other measurable criteria. Qualitative measures may include driver and sales representative responsiveness, the quality of customer service, stakeholder surveys, customer complaints, or other value-based assessments.
13
Q
freight carriers
A
Companies that move cargo via truck, rail, air, or sea.
14
Q
freight charge
A
The rate established for the transportation of freight.
15
Q
fringe benefits
A
Employer-granted compensations that are not directly tied to salary.
16
Q
freight claim
A
A formal legal claim filed by the transportation buyer that the carrier failed to protect the freight properly, seeking monetary compensation for damaged freight, delayed or incorrect deliveries, overcharges, or other service failures. The amount of damages can be up to the value of the goods had they been safely delivered on time.
17
Q
freight collect
A
The freight and charges to be paid by the consignee.
18
Q
freight consolidation
A
Syn.: consolidation.
19
Q
freight equalization
A
The practice by more distant suppliers of absorbing the additional freight charges to match the freight charges of a supplier geographically closer to the customer. This helps eliminate the competitive advantage of lower freight charges that the nearest supplier has.
20
Q
freight forwarder
A
The middleman between the carrier and the organization shipping the product. A freight forwarder often combines smaller shipments to take advantage of lower bulk costs.
21
Q
freight pay and audit
A
The process of examining carrier invoices to determine if the correct rate, discount, fuel surcharge, and accessorial charges have been applied to the shipment before paying the invoice. This audit is necessary due to the complexity of carrier rate structures and contracts between shippers and carriers. This process can be handled internally or can be outsourced to external freight payment companies or third- party logistics (3PL) providers.
22
Q
freight rate
A
In logistics, an established price for the transport of goods, based on any number of factors (e.g., distance, weight, measure, equipment type, package, or commodity).
23
Q
freight settlement
A
A document that compares the freight order invoice as received with the invoice as expected and authorizes payment if the documents are consistent.
24
Q
frequency distribution
A
A table that indicates the frequency with which data falls into each of any number of subdivisions of the variable. The subdivisions are usually called classes.
25
frequency of repair
Syn.: repair factor.
26
frequently asked questions (FAQs)
A list of commonly asked questions along with the answers to those questions.
27
frictionless ordering
The ability to tie products to the customer experience through the ethical collection of real-time product data in order to drive customer success in the use of the product or service to improve customer satisfaction. This capablity enables all processes associated with customers ordering products, from making suggestions to providing convenient shopping in an environment optimized for customer experience.
28
front room
The place where the customer comes into contact with the service operation. Many service operations contain front-room and back-room operations. See: back room.
29
frozen master production schedule
The parts of a master production schedule that should not be changed or should be changed rarely.
30
frozen zone
In forecasting, the periods when no changes can be made to work orders based on changes in demand. This provides stability to the master production schedule. See: liquid zone, slushy zone.
31
FRT
Acronym for future reality tree.
32
FTC
Acronym for Federal Trade Commission.
33
FTL
Abbreviation for full truckload.
34
FTP
Acronym for file transfer protocol.
35
FTZ
Acronym for foreign trade zone.
36
full cost pricing
Establishing price at some markup over the full cost (absorption costing). Full costing includes direct manufacturing as well as applied overhead.
37
full pegging
The ability of a system to automatically trace requirements for a given component all the way up to its ultimate end-item, customer, or contract number. Syn.: contract pegging.
38
full truckload (FTL)
An agreement to ship a minimum of an entire truckload or container load to a single customer. The cargo is typically homogenous and stays on the same vehicle from the origin to the destination.
39
Full-Baldrige approach
A quality award program modeled after the Malcolm Baldrige National Quality Award and using the same criteria.
40
full-container load (FCL)
A container that has been filled close to its volume or weight limit or that holds only one shipper’s order and the shipper has requested it be the only order in the container. See: full truckload (FTL).
41
fully qualified domain name
The complete, registered address, also known as the URL or uniform resource locator, of an internet site.
42
functional benchmarking
Benchmarking a single function within an organization rather than the entire organization. See: benchmarking.
43
functional layout
1) A facility configuration in which operations of a similar nature or function are grouped together. 2) An organizational structure based on departmental specialty (e.g., saw, lathe, mill, heat treat, press). Syns.: job shop layout, process layout.
44
functional manager
A manager responsible for a specialized department, such as accounting or engineering.
45
functional organization
A hierarchical organization in which each individual has one clear superior and staff areas are well defined.
46
functional organizational structure
An organizational structure based on functional specialization, such as sales, engineering, manufacturing, finance, and accounting.
47
functional product
Mature products that tend to have a low profit margin and a predictable demand.
48
functional requirements
Syn.: critical characteristics.
49
future reality tree (FRT)
In theory of constraints, a logic-based tool for constructing and testing potential solutions before implementation. The objectives are to (1) develop, expand, and complete the solution and (2) identify and solve or prevent new problems created by implementing the solution.
50
future value
A present payment’s value at some point in the future valued at a given interest rate.
51
future worth
1) The equivalent monetary value at a designated future date based on the time value of money. 2) The monetary sum, at a given future time, that is equivalent to one or more sums at given earlier times when interest is compounded at a given rate. See: time value of money.
52
functional silo
A view of an organization in which each department is operated independently of the others. Each group is referred to as a silo. See: silo effect.
53
futures
Contracts for the sale and delivery of commodities at a future time made with the intention that no commodity be delivered or received immediately.
54
functional silo syndrome
Suboptimization of an organization’s goals due to members of specific functions developing more loyalty to the function’s group goals than to the organization’s goals.
55
functional strategy
A strategy that is built from the business strategy for various business functions, such as finance, marketing, and production. See: strategic planning.
56
functional systems design
The development and definition of the business functions to be accomplished by a computer system (i.e., preparation of a statement of the proposed computer system’s data input; data manipulation; and output of information in common business terms that can be reviewed, understood, and approved by a user organization). This statement, after approval, provides the basis for the computer system’s design.
57
functional test
A measure of a production component’s ability to work as designed to meet a level of performance.
58
functionality
The degree to which a product achieves its designed purpose.
59
funds flow management
The planning, execution, and control of cash receipts and disbursements with the objective of maintaining the cash balance at a preset positive value. Syn.: cash flow management.
60
funds flow statement
A financial statement showing the flow of cash and its timing into and out of an organization or project. Syns.: cash flow statement, statement of cash flows.
61
funnel experiment
An experiment that demonstrates the effects of tampering. In the experiment, marbles are dropped through a funnel in an attempt to hit a flat-surfaced target below. The experiment shows that adjusting a stable process to compensate for an undesirable result or an extraordinarily good result will produce output that is worse than if the process had been left alone. See: tampering.
62
future order
An order entered for shipment at some future date.
63
fuzzy logic
A field of logic based on “fuzzy sets”— that is, sets in which membership is probabilistic rather than deterministic.
64
G&A
Abbreviation for general and administrative with regard to expenses.
65
GAAP
Acronym for generally accepted accounting principles.
66
gain sharing
A method of incentive compensation in which employees share collectively in savings from productivity improvements. Syn.: gain sharing plans.
67
gain sharing plans
Syn.: gain sharing.
68
GAMP
Acronym for generally accepted manufacturing practices.
69
Gantt chart
The earliest and best-known type of planning and control chart. It is especially designed to show graphically the relationship between planned performance and actual performance over time. The Gantt chart is named after its originator, Henry L. Gantt, and is used for (1) machine loading, in which one horizontal line is used to represent capacity and another to represent load against that capacity, or (2) monitoring job progress, in which one horizontal line represents the production schedule and another parallel line represents the actual progress of the job against the schedule in time. Syns.: job progress chart, milestone chart.
70
gap
The difference between the actual performance level and the expected performance level.
71
gap analysis
A tool designed to assess the differences between a service that is offered and customer expectations.
72
gap phasing
Syn.: gapped schedule.
73
gapped schedule
A schedule in which every piece in a lot is finished at one work center before any piece in the lot can be processed at the succeeding work center. The material moves in complete lots, causing time gaps between the end of one operation and the beginning of the next. It is a result of using a batched schedule at each operation (work center), when process batch and transfer batch are assumed to be the same or equal. Syns.: gap phasing, straight-line schedule. Ant.: overlapped schedule.
74
gate review
The formal review process occurring between the major phases of a new-product introduction effort. The determination to continue or to stop the project is formally made at each review point or gate.
75
gatekeeping
1) In group dynamics, a technique applied by a team leader to effectively manage a situation, discussion, or meeting. For example, in a situation when a dominant spokesperson or person of authority monopolizes a discussion, the gatekeeper will intervene by requesting additional group members’ input. 2) In logistics, the vetting of return materials and issuing of return material authorizations in accordance with the organization’s returns policy. The intent is to minimize returns and return costs while managing customer interactions and expectations to maintain intended customer service levels.
76
gateway
The connection that allows data and other information to flow between two networks.
77
gateway operation
Syn.: gateway work center.
78
gateway work center
A work center that performs the first operation of a particular routing sequence.
79
GATT
Acronym for General Agreement on Tariffs and Trade.
80
gauge
An instrument for measuring or testing.
81
GDSS
Acronym for group decision support system.
82
gemba
The place where humans create value or the real workplace. Gemba also is a philosophy: “Go to the actual place; see the actual work.”
83
gemba walk
A management approach in which managers observe the actual work being carried out in order to understand it better, coach, guide, and follow up on corrective actions with the line manager. See: gemba.
84
genchi genbutsu
A Japanese phrase meaning to visit the shop floor to observe what is occurring
85
general and administrative expenses (G&A)
The category of expenses on an income statement that includes the costs of general managers, computer systems, research and development, etc.
86
general cargo ship
A cargo ship with one or more decks that transports a variety of goods such as clothing, furniture, chemicals, and food products.
87
general merchandise warehouse
A warehouse for the storage of goods that require no special handling.
88
general stores
Syn.: supplies.
89
general warehouse
A location where goods usually are stored for long periods of time. The primary purpose is to protect goods until they are needed. The general warehouse is used because either the producer or owner does not have the necessary warehouse space or the cost of storage is better off-site. Usually use of a general warehouse involves minimal handling, movement, and transportation.
90
general warranty
An assurance that the product is fit for use. See: special warranty, warranty.
91
generally accepted accounting principles (GAAP)
Accounting practices that conform to conventions, rules, and procedures that are generally accepted by the accounting profession.
92
generally accepted manufacturing practices (GAMP)
A group of practices and principles, independent of any one set of techniques, that define how a manufacturing company should be managed. These include elements such as the need for data accuracy, frequent communication between marketing and manufacturing, top management control of the production planning process (sales and operations planning process), systems capable of validly translating high-level plans into detailed schedules, and so on. Today, GAMP includes such paradigms as just-in-time, theory of constraints, total quality management, business process reengineering, and supply chain management.
93
general-purpose machinery
Manufacturing resources that can perform several kinds of operations.
94
generation of dynamic bills of materials (BOMs)
The application of information technology to dynamically create a BOM based on customer order requirements and specifications as well as product rules.
95
generic processing
A means of developing routings or processes for the manufacture of products through a family relationship, usually accomplished by means of tabular data to establish interrelationships. It is especially prevalent in the manufacture of raw materials such as steel, aluminum, or chemicals.
96
geographical information system (GIS)
Software that collects information from GPS satellites to analyze map and route characteristics.
97
GERT
Acronym for graphical evaluation and review technique.
98
GHG
Abbreviation for greenhouse gas.
99
GHS
Abbreviation for Globally Harmonized System of Classification and Labelling of Chemicals.
100
global marketing
The use of one marketing strategy in all countries in which a company operates, selling a single product worldwide.
101
global measurements
Measurements used to judge the performance of the system as a whole.
102
global positioning system (GPS)
A system that uses satellites to locate an object’s position.
103
Global Reporting Initiative (GRI)
A network-based organization that pioneered the world’s most widely used sustainability reporting framework.
104
Global Reporting Initiative (GRI) Reporting Framework
The framework that sets out the principles and performance indicators organizations can use to measure and report their human rights, labor, environment, and anticorruption practices and outcomes.
105
global sourcing
Using international sources for supplies.
106
global strategy
A strategy that focuses on improving worldwide performance through the sales and marketing of common goods and services with minimum product variation by country. Its competitive advantage grows through selecting the best locations for operations in other countries. See: multinational strategy.
107
global supply chains
Supply chains used by organizations to deliver products and services that include international partners or markets.
108
global trade identification number (GTIN)
An identification number that uniquely identifies all products and services that are sold, delivered, and invoiced at any point in the supply chain. GTINs are typically found at points of sale and on consumer unit, inner pack, cases, and pallets of products in a distribution or warehouse environment.
109
global trade management
The management and optimization of shipments across international borders to improve operating efficiencies and cash flows. This includes ensuring compliance with all international regulations and documentation and streamlining and accelerating the movement of goods.
110
globalization
The interdependence of economies globally that results from the growing volume and variety of international transactions in goods, services, and capital and also from the spread of new technology. Globally Harmonized System of Classification and Labelling
111
of Chemicals (GHS)
An international standard created by the United Nations Economic Commission for Europe (UNECE) for classifying chemicals according to their health, physical, and environmental hazards. The system defines and classifies the hazards of chemical products and communicates health and safety information on labels and material safety data sheets. See: Harmonized Tariff Schedule (HTS).
112
glocalization
A combination of “globalization” and “localization.” In a supply chain context, glocalization is a form of postponement in which a product or service is developed for distribution globally but is modified to meet the needs of a local market. The modifications are made to conform with local laws, customs, cultures, and preferences.
113
GNP
Acronym for gross national product.
114
go/no-go
The state of a unit or product. Two parameters are possible: go (conforms to specifications) and no-go (does not conform to specifications).
115
going concern value
The value of the firm as a whole, rather than the sum of the values of the separate parts.
116
gondola freight car
A freight car with no top; a flat bottom; and low, fixed sides used primarily for hauling bulk commodities. These are commonly loaded from above.
117
good
A tangible product, merchandise, or ware.
118
goodness of fit
The degree to which a model complies with observed data.
119
goods receipt note (GRN)
A document that is completed after items are received from a supplier and inspected to confirm that the shipment conforms to the quantity, type, and specifications in the purchase order. Any discrepancies between the purchase order and the GRN must be resolved with the supplier before payment of the purchase order is authorized.
120
goodwill
An intangible item that is recorded on a company’s books only as the result of a purchase. Generally, it is inseparable from the enterprise but makes the company more valuable, such as by improving its reputation.
121
government market
A market in which most or all buyers consist of agencies of federal, state, or local governments. See: consumer market, industrial market, institutional market.
122
GPS
Acronym for global positioning system.
123
grades
The sublabeling of items to identify their particular makeup and to separate one lot from other production lots of the same item.
124
grandfather clause
A provision that exempts existing entities from a newly created regulation.
125
graphical evaluation and review technique (GERT)
A network analysis technique that allows for probability distributions of activity durations and also conditions under which some activities may not be carried out. See: critical path method (CPM), network analysis, program evaluation and review technique (PERT).
126
graphical forecasting methods
The use of visual information to predict sales patterns. This typically involves plotting information in a graphical form. It is relatively easy to convert a spreadsheet into a graph that conveys the information visually. Trends and patterns of data are easier to spot on a graph or chart, and extrapolation of previous demand can be used to predict future demands.
127
graphical user interface (GUI)
A connection between the computer and the user employing a mouse and icons so that the user makes selections by pointing at icons and clicking the mouse.
128
gravity models
An approach used for locating facilities at the “center of gravity.” Gravity is determined by the product of the masses of two bodies divided by the square of the distance between them. In gravity models, the population of each neighborhood in the region is used as the mass, and driving time is used as the distance.
129
gray box design
A situation in which the supplier and client jointly design a product or service. See: black box design.
130
gray market
Products sold through unauthorized dealers or channels that generally do not carry a factory warranty nor customer support. As a result, these products are typically less expensive to purchase.
131
green belt
A manager or team member who has been trained in six sigma improvement methods and will have full-time responsibilities for process and quality improvement.
132
green field
The initiation of a new process where no similar initiatives have previously existed.
133
green logistics
Any business practice that minimizes the environmental impact of logistics activities. This is sometimes referred to as sustainable logistics.
134
green manufacturing
A method of producing a good or service that minimizes external cost and pollution. It includes design for reuse, design for disassembly, and design for remanufacture. See: environmentally responsible business.
135
green marketing
In advertising, promoting products because of their environmental sensitivity.
136
green procurement-
Supplier selection criteria based on environmental standards or the practice of prequalifying suppliers based on specifications related to their environmental practices. Suppliers are subsequently audited based on these green practices.
137
green reverse logistics
The responsibility of the supplier to dispose of packaging materials or environmentally sensitive materials such as heavy metals.
138
green SCOR
A version of the Supply Chain Operations Reference (SCOR) model that addresses environmental sustainability efforts with best practices, metrics for measuring greening efforts, and processes to deal with waste management.
139
green supply chain
A supply chain that considers environmental impacts on its operations and takes action along the supply chain to comply with environmental safety regulations and communicate this to customers and partners. See: environmentally responsible business.
140
green zone
The highest-level buffer zone in drum-buffer-rope scheduling where the green color is used to indicate no problem in the buffer. This section of an inventory buffer indicates the buffer is full or near full. If available stock is in this zone, no additional supply is created.
141
greenhouse gas (GHG)
Gases such as carbon dioxide and methane that contribute to global warming and climate change. See: carbon emissions.
142
greenwashing
The practice of a company claiming itself to be sustainable or socially responsible while engaging in actions that nullify such claims or prove them to be greatly exaggerated. Greenwashing commonly occurs in an extended supply chain when companies proclaim themselves to be sustainable but actually utilize suppliers that pollute the environment or provide substandard working conditions for employees.
143
GRI
Abbreviation for Global Reporting Initiative.
144
grid technique
A quantitative model used for locating plants and warehouses by finding the least cost point, given the positions of raw materials and markets.
145
grievance
A complaint by an employee concerning alleged contract violations handled formally through contractually fixed procedures. If unsettled, a grievance may lead to arbitration.
146
grievance procedures
Methods identified in a collective bargaining agreement to resolve problems that develop or to determine if a contract has been violated.
147
GRN
Acronym for goods receipt note.
148
gross inventory
The standard cost value of inventory before allowance for excess or obsolete items.
149
gross margin
The difference between total revenue and the cost of goods sold. Syn.: gross profit margin.
150
gross national product (GNP)
The market value of all goods and services produced in a nation in a given year.
151
gross profit
Sales minus cost of goods sold.
152
gross profit margin
Syn.: gross margin.
153
gross profit margin rate
Sales minus cost of goods sold then divided by sales.
154
gross requirement
The total of independent and dependent demand for a component before the netting of on-hand inventory and scheduled receipts.
155
gross sales
The total amount charged to all customers during the accounting time period.
156
gross weight
Vehicle weight including freight or passengers.
157
group classification code
A part of a material classification technique that provides for designation of characteristics by successively lower-order groups of code. Classification may denote function, type of material, size, shape, and so forth.
158
group decision support system (GDSS)
The software designed to support groups in unstructured decision-making by supporting brainstorming, conflict resolution, voting, and other techniques.
159
group layout
A layout in which machine groups are arranged to process families of parts with similar characteristics.
160
group replacement
Replacing an entire set of components, whether failed or not, all at one time (e.g., replacing all the light bulbs in a ceiling fixture).
161
group technology (GT)
An engineering and manufacturing philosophy that identifies the physical similarity of parts (common routing) and establishes their effective production. It provides for rapid retrieval of existing designs and facilitates a cellular layout.
162
group technology work cells
A concentrated area for producing parts based on similar operations and/or characteristics to use equipment and labor more efficiently.
163
grouping
Matching like operations and running them together sequentially, thereby taking advantage of a common setup.
164
groupthink
A situation in which a team seizes on one solution to a problem and does not consider other viable solutions either because members are afraid of confrontation or because they convince themselves that other ideas are not worth discussing.
165
growth trajectory
Syn.: ramp rate.
166
growth-share matrix
In marketing, a division of products by relative market share and market growth rate. Products are divided as follows: (1) cash cows, which have high market share but a low growth rate; (2) stars, which have high market share and a high growth rate; (3) dogs, which have low market share and a low growth rate; and (4) question marks, which have low market share and a high growth rate. Sometimes this same set of terms is used to categorize products by market share and profitability. See: cash cow, dog, question mark, star.
167
GT
Acronym for group technology.
168
GTIN
Acronym for global trade identification number.
169
GTS
Acronym for grasps the situation.
170
guarantee
A contractual obligation of one entity to another asserting that a fact regarding a product is true. See: warranty.
171
GUI
Acronym for graphical user interface.
172
handling cost
The cost involved in the movement of material. In some cases, the handling cost depends on the size of the inventory.
173
hansei
A Japanese word meaning reflection.
174
hard automation
Use of specialized machines to manufacture and assemble products. Each machine is normally dedicated to one function, such as milling.
175
hard copy
A printed report, message, or special listing.
176
hardware
1) In manufacturing, relatively standard items such as nuts, bolts, washers, or clips. 2) In data processing, the computer and its peripherals.
177
harmonic smoothing
An approach to forecasting based on fitting some set of sine and cosine functions to the historical pattern of a time series. Syn.: seasonal harmonics.
178
harmonized system classification codes
An internationally standardized description of goods that uses a system of numbers to provide increasingly detailed classification and descriptions.
179
Harmonized Tariff Schedule (HTS)
The U.S. International Trade Commission’s mechanism by which international tariffs are standardized. Importers and exporters classify goods moved across international borders using the harmonized system of the country of import. Then, based on this classification, the amount of tariff they must pay is determined.
180
hash total
A control process used to ensure that all documents in a group are present or processed. In practice, the arithmetic sum of data not normally added together is found, the checking (audit) process adds the same data, and a comparison is made. If the sums do not agree, an error exists. For example, assume the last digit of every part number in an assembly is added, and the last digit of the sum becomes the last digit of the assembly. If the last digit of the assembly is not the same as the last digits of the components’ sum, the assembly must be missing a part or must have the wrong combination of parts.
181
Hawthorne effect
A finding based on a study conducted from 1927 to 1932 in which the Hawthorne Western Electric plant systematically improved productivity by simply having management paying attention.
182
hazardous materials
Any material that a country’s relevant government agency has classified as a risk to human, animal, or environmental health or to property—either on its own or due to interaction with other elements. A government’s transportation authority may allow transportation only when proper permits and safety precautions are implemented. Similarly, a government may regulate or supervise hazardous material disposal. Categories include explosives, flammable or corrosive liquids or gases, biohazards, and radioactive materials.
183
hazardous waste
Waste, such as chemicals or nuclear material, that is hazardous to humans or animals and requires special handling.
184
hazmat
Hazardous material defined by environmental laws and legal precedents. A product has been defined as hazardous by regulations that impose stiff fines if the regulations are ignored.
185
health, safety, and environment (HSE)
A set of processes and procedures identifying potential hazards to a certain environment, developing best practices to reduce or remove those hazards, and then training employees for accident prevention and response.
186
hedge
1) An action taken in an attempt to shield the company from an uncertain event such as a strike, price increase, or currency reevaluation. 2) In master scheduling, a scheduled quantity to protect against uncertainty in demand or supply. The hedge is similar to safety stock, except that a hedge has the dimension of timing as well as amount. A volume hedge or market hedge is carried at the master schedule or production plan level. The master scheduler plans excess quantities over and above the demand quantities in given periods beyond some time fence such that, if the hedge is not needed, it can be rolled forward before major resources must be committed to produce the hedge and put it in inventory. A product mix hedge is an approach in which several interrelated optional items are overplanned. Sometimes, using a planning bill, the sum of the percent mix can exceed 100 percent by a defined amount, thus triggering additional hedge planning. 3) In purchasing, any purchase or sale transaction having as its purpose the elimination of the negative aspects of price fluctuations. See: market hedge, option overplanning, planning bill of material, safety stock, time fence, two-level master schedule.
187
hedge inventory
A form of inventory buildup to buffer against some event that may not happen. Hedge inventory planning involves speculation related to potential labor strikes, price increases, unsettled governments, and events that could severely impair a company’s strategic initiatives. Risk and consequences are unusually high, and top management approval is often required.
188
hedging
The practice of entering into contracts on a commodity exchange to protect against future fluctuations in the commodity. This practice allows a company to isolate profits to the value-added process rather than to uncontrolled pricing factors. See: speculative buying.
189
heel
In the process industry, an item used in its own manufacture. For example, in the manufacture of plastic, the ingredients will include the parent as well as the components.
190
heijunka
In just-in-time philosophy, an approach to level production throughout the supply chain to match the planned rate of end product sales.
191
helper application
Software that assists the browser when audio, video, or large images are requested.
192
heuristics
A form of problem-solving in which the results or rules have been determined by experience or intuition instead of by optimization. Heuristics can be used in such areas as forecasting; lot sizing; or determining production, staff, or inventory levels.
193
hierarchical database
A method of constructing a database that requires related record types to be linked in tree-like structures in which no child record can have more than one physical parent record.
194
high-level language (HLL)
Relatively sophisticated computer language that allows users to employ a notation with which they are already familiar; for example, COBOL (business), ALGOL (mathematical and scientific), FORTRAN, BASIC, Java, and Visual Basic.
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high-occupancy vehicle (HOV) lanes
Restricted traffic lanes meant for vehicles with a driver and more than one passenger.
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hi-low
A forklift truck with a standing operator.
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histogram
A graph of contiguous vertical bars representing a frequency distribution in which the groups or classes of items are marked on the X axis and the number of items in each class is indicated on the Y axis. The pictorial nature of the histogram lets people see patterns that are difficult to see in a simple table of numbers. The histogram is one of the seven tools of quality.
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historical analogy
A judgmental forecasting technique based on identifying a sales history that is analogous to a present situation, such as the sales history of a similar product, and using that past pattern to predict future sales. See: management estimation.
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historical labor standard
A value determined by studying actual past labor data for the operation of interest. It is used to determine the amount of time expected to complete a task.
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HLL
Abbreviation for high-level language.
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Hofstede's cultural dimensions theory
An internationally recognized standard for understanding cultural differences that was developed by psychologist Dr. Geert Hofstede. The standard is based on six dimensions, namely: power and distance index, individualism versus collectivism, masculinity versus femininity, uncertainty avoidance index, long- versus short-term orientation, and indulgence versus restraint.
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hold order
A written order directing that certain operations or work be interrupted or terminated pending a change in design or other disposition of the material. Syn.: stop work order.
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hold points
Stockpoints for semifinished inventory.
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holding company
In financial management, a firm that controls the voting stock of other firms.
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holding costs
Syn.: carrying cost.
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holonic network
1) A network of autonomous, distributed human or computer systems that are capable of acting in an integrated manner. 2) A network of companies dynamically interacting to act as one system. Each company, or holon, has a different process and core competency. Virtual enterprises are created by organizing the holons to take advantage of core competencies.
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homogeneous product
A product that is effectively identical from producer to producer.
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honeycomb loss
The usable empty storage space in a stack created by storing only a single stock keeping unit in the stack to permit better access.
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honeycombing
The practice of moving, in an orderly fashion, a pallet of merchandise to an area where the space is not exhausted, resulting in a vacant space not usable for the storage of other items. This is one of the hidden costs of warehousing.
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hopper cars
Rail cars that permit bulk commodities to be loaded at the top and removed from the bottom of the car. Some hopper cars have permanent tops that provide protection from bad weather.
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HOQ
Acronym for house of quality.
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horizontal carousel storage system
A series of bins mounted on an oval track that brings the correct bin to the operator position for the part to be picked and confirmed.
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horizontal dependency
The relationship between the components at the same level in the bill of material in which all must be available at the same time and in sufficient quantity to manufacture the parent assembly. See: vertical dependency.
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horizontal marketplace
An online marketplace used by buyers and sellers from multiple industries. This marketplace lowers prices by lowering transaction costs.
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horizontal merger
An alliance of two or more competing firms.
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hoshin
A Japanese word meaning statement of objectives.
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hoshin kanri
See: hoshin planning.
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hoshin planning
Breakthrough planning. This Japanese strategic planning process prompts a company develops up to four vision statements that indicate where the company should be in the next five years. Company goals and work plans are developed based on the vision statements. Periodic audits are then conducted to monitor progress.
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host computer
Any computer on a network that is a repository for services available to other computers on the network. It is common to have one host machine provide several services, such as access to the internet.
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house of quality (HOQ)
A structured process that relates customer-defined attributes to the product’s technical features needed to support and generate these attributes. This technique achieves this mapping by means of a six- step process: (1) identification of customer attributes, (2) identification of supporting technical features, (3) correlation of the customer attributes with the supporting technical features, (4) assignment of priorities to the customer requirements and technical features, (5) evaluation of competitive stances and competitive products, and (6) identification of those technical features to be used (deployed) in the final design of the product. HOQ is part of the quality function deployment (QFD) process and forces designers to consider customer needs and the degree to which the proposed designs satisfy these needs. See: customer-defined attributes, quality function deployment (QFD).
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housekeeping
The manufacturing activity of identifying and maintaining an orderly environment for preventing errors and contamination in the manufacturing process.
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HTS
Acronym for Harmonized Tariff Schedule.
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hub
A large manufacturer or retailer doing business with many trading partners.
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hub-and-spoke system
In warehousing, a system that has a hub (or center point) where sorting or transfers occur, and the spokes are outlets serving the destinations related to the hub.
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human capital management (HCM)
A system that helps employers manage their people resource management through workforce acquisition, management, and optimization. HCM is especially important for companies with knowledgeable workers, where the business's most critical asset is its people.
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horizontally integrated firm
An organization that seeks to produce or sell a type of product in numerous markets. Horizontal integration exists when an organization produces or sells similar products in various geographical locations. Horizontal integration in marketing occurs more frequently than horizontal integration in production. See: vertically integrated firm.
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human factors engineering
A merging of those branches of engineering and the behavioral sciences that concern themselves principally with the human component in the design and operation of human-machine systems. Human factors engineering is based on a fundamental knowledge and study of human physical and mental abilities and emotional characteristics.
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human resource management (HRM) system
An enterprise software system that enables a company to manage its labor- related data such as details of employees, work hours, and production rates.
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human resource utilization
Using labor to its fullest potential to maximize product or service output.
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human resources
The portion or department of a company that sets and enforces personnel policies and practices.
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human-machine interface
The location where data is transferred from a worker to a computer or vice versa.
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hundredweight (cwt)
One hundred pounds.
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hurdle rate
The minimum acceptable rate of return on a project.
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hybrid EDI
A situation in which only one trading partner is
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electronic data interchange (EDI)
enabled and the other continues to use paper and fax. Usually the EDI-enabled partner has its electronic documents converted to fax.
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hybrid inventory system
An inventory system combining features of the fixed reorder quantity inventory model and the fixed reorder cycle inventory model. Features of the fixed reorder cycle inventory model and the fixed reorder quantity inventory model can be combined in many different ways. For example, in the order point-periodic review combination system, an order is placed if the inventory level drops below a specified level before the review date; if not, the order quantity is determined at the next review date. Another hybrid inventory system is the optional replenishment model. See: fixed reorder cycle inventory model, fixed reorder quantity inventory model, optional replenishment model, order point system.
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hybrid layout
A layout that combines two or more layout types.
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hybrid manufacturing process
Syn.: hybrid production method.
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hybrid organizational structure
An organizational structure that embodies multiple organizational forms (functional, product, or geographical) simultaneously. For example, some functions may be centralized (such as finance and accounting), whereas others may be duplicated geographically (such as sales).
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hybrid production method
A production planning method that combines the aspects of both the chase and level production planning methods. Syns.: hybrid manufacturing process, hybrid strategy. See: chase production method, level production method, production planning methods.
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hybrid purchasing organization
A mix of the centralized and decentralized purchasing format—usually decentralized at the corporate level and centralized at the business unit level.
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hybrid strategy
Syn.: hybrid production method.
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hypermedia
An addition to hypertext to include sound, pictures, or music.
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hypertext
A system of relating information without using menus or hierarchies.
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hypertext links
Links contained within text connecting to other websites or other pages on the current site.
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hypertext markup language (HTML)
A language used to create web pages that permits the user to create text, hypertext links, and multimedia elements within the page. HTML is not a programming language but rather a way to format text.
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hypertext transfer protocol (HTTP)
A protocol that tells computers how to communicate with each other. Most internet addresses begin with http://.
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hypothesis testing
Use of statistical models to test conclusions about a population or universe based on sample information.
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I/O
Acronym for input/output.
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I2M
Abbreviation for integrated internet marketing.
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IATA
Acronym for International Air Transport Association.
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IBP
Acronym for integrated business planning.
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ICC
Acronym for Interstate Commerce Commission.
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ideal quality
A term used by Genichi Taguchi to refer to the target value of a particular measure. Loss to society increases with the square of the deviation of an actual product from this ideal point.
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identification of obsolete capital assets
The practice of detecting products and other capital assets that are outdated or worn out and disposing of them.
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idle capacity
The available capacity that exists on non- constraint resources beyond the capacity required to support the constraint. Idle capacity has two components: protective capacity and excess capacity.
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idle inventory
The inventory generally not needed in a system of linked resources. From a theory of constraints perspective, idle inventory generally consists of protective inventory and excess inventory. See: excess inventory, productive inventory, protective inventory.
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idle time
The time when operators or resources (e.g., machines) are not producing product because of setup or maintenance requirements, lack of material, lack of tooling, or lack of scheduling.
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IFB
Acronym for invitation for bid.
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IFRS
Acronym for International Financial Reporting Standards.
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IIE
Acronym for Institute of Industrial Engineers.
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imbalanced load
A trucking route in which the truck is much more heavily loaded during one leg of the trip than the other leg(s).
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IMC
Acronym for intermodal marketing company.
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imperfection
A quality characteristic’s departure from its intended level or state. An imperfection does not affect the conformance of a product or service to its specification requirements or usability. See: blemish, defect, nonconformity.
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implementation
The act of installing a system into operation. It concludes the system project with the exception of appropriate follow-up or post-installation review.
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implied authority
The right of an agent, when directed by a principal to accomplish a task, to do what is reasonably necessary to accomplish it.
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implied contract
A binding agreement inferred from the actions of the parties.
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implied warranty
A warranty imposed on sellers beyond any express agreement in the contract.
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implode
1) Compression of detailed data in a summary-level record or report. 2) Tracing a usage and/or cost impact from the bottom to the top (end product) of a bill of material using where-used logic.
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implosion
The process of determining the where-used relationship for a given component. Implosion can be single- level, showing only the parents on the next higher level, or multilevel, showing the ultimate top-level parent. See: where- used list. Ant.: explosion.
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import broker or sales agent
Purchasing agent who charges a fee for transactions but does not take the title to the goods.
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import license
An importing country’s government document that provides an importer with the express authorization to import a particular product.
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import merchant
Purchasing agent who buys and takes the title to goods and then resells them.
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import/export license
Official authorization issued by a government allowing the shipping or delivery of a product across national boundaries.
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importer of record (IOR)
The entity responsible for ensuring the imported and exported goods comply with local laws and regulations, for filing the documentation for duty entry, and for paying any associated import duties or taxes.
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imports
Products bought in one country and produced in another.
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imposed date
A fixed date given to an activity, usually “start no earlier than” or “finish no later than.”
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improve phase
One of the six sigma phases of quality. In this phase, the improvements to products and/or processes are adopted. See: define, measure, analyze, improve, control (DMAIC) process.
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improvement program champion
An implementation expert in Supply Chain Operations Reference (SCOR) who sells the SCOR improvement program to the executive team. See: champion.
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improvement program charter
A document detailing the structure of the improvement program including resources, program schedule, organization, deliverables, and expected benefits.
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impulse response
How quickly an estimate or forecast changes when the underlying data of the estimate has changed.
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inactive inventory
1) Stock designated as in excess of consumption within a defined period. 2) Stocks of items that have not been used for a defined period.
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inbound inventory
Goods delivered to a company's receiving dock in a warehouse or manufacturing plant.
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inbound logistics
1) The group in charge of moving materials from suppliers or vendors into production processes or storage facilities. 2) The actual movement of such material.
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inbound return material authorization
A company-issued document that allows for the return of materials. The document facilitates expedited receipt and verification processes and typically includes stock keeping unit number(s), description(s), quantities, return conditions, reasons for return, and requested next actions.
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inbound staging
The receiving staging area for goods in a warehouse. See: put-away.
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inbound stockpoint
A defined location next to the place of use on a production floor. Materials are brought to the stockpoint as needed and taken from it for immediate use. Inbound stockpoints are used with a pull system of material control.
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incentive
A reward, financial or otherwise, that compensates a worker for high or continued performance above standard. An incentive is also a motivating influence to induce effort above normal.
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incentive arrangements
Incentive contract that allows for the sharing of the cost responsibility between the buyer and seller. Incentives are incorporated into the contract to motivate the supplier to improve its performance in areas such as quality, on-time delivery, and customer satisfaction. There are three elements of an incentive agreement: target cost, target profit, and the sharing agreement.
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incentive contract
A contract in which the buyer and seller agree to a target cost and maximum price. Cost savings below the target are shared between buyer and seller. If actual cost exceeds the target cost, the cost overrun is shared between buyer and seller up to the maximum price.
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incentive pay system
A way to compensate employees based on their job performance.
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incentive rate
In transportation, a discounted rate designed to convince a shipper to ship a higher volume in a particular load.
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income
Syn.: profit.
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income statement
A financial statement showing the net income for a business over a given period of time. See: balance sheet, funds flow statement.
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incoming business
The number of orders, the dollar value of orders, or the quantity of units that have been received on orders from customers. This volume is particularly important to the forecaster, who must compare incoming business against the forecast rather than against actual shipments when actual shipments do not reflect true customer demand. This situation may exist because of back-ordered items, bottlenecks in the shipping room, and so forth.
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in-control process
A process in which the statistical measure being evaluated is in a state of statistical control (i.e., the variations among the observed sampling results can be attributed to a constant system of chance causes). Ant.: out-of- control process.
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Incoterms
A series of pre-defined commercial terms published by the International Chamber of Commerce relating to international commercial law. These terms do not cover property rights.
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incremental analysis
A method of economic analysis in which the cost of a single additional unit is compared with its revenue. When the net contribution of an additional unit is zero, total contribution is maximized.
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incremental available-to-promise
Syn.: discrete available-to- promise.
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incremental cost
1) Cost added in the process of finishing an item or assembling a group of items. For example, if the cost of the components of a given assembly equals $5 and the additional cost of assembling the components is $1, the incremental assembly cost is $1, while the total cost of the finished assembly is $6. 2) Additional cost incurred as a result of a decision.
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incremental utilization heuristic
Using a worker’s full capacity by adding one task at a time (in priority order) up to the maximum capacity or waiting for the utilization to fall and then adding more tasks.
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indented bill of material
A form of multilevel bill of material. It exhibits the highest-level parents closest to the left margin, and all the components going into these parents are shown indented toward the right. All subsequent levels of components are indented farther to the right. If a component is used in more than one parent within a given product structure, it will appear more than once, under every subassembly in which it is used.
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indented tracking
The following of all lot numbers of intermediates and ingredients consumed in the manufacture of a given batch of product down through all levels of the formula.
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indented where used
A listing of every parent item and the respective quantities required as well as each of their respective parent items, continuing until the ultimate end-item or level 0 item is referenced. Each of these parent items calls for a given component item in a bill-of-material file. The component item is shown closest to the left margin of the listing, with each parent indented to the right and each of their respective parents indented even farther to the right.
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independent action
In transportation, the publication of a freight rate that differs from that of the rate bureau to which the publisher is a member. This is a permitted action.
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independent demand
The demand for an item that is unrelated to the demand for other items. Demand for finished goods, parts required for destructive testing, and service parts requirements are examples of independent demand. See: dependent demand.
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independent demand item management models
Models for the management of items whose demand is not strongly influenced by other items managed by the same company. These models can be characterized as follows: (1) stochastic or deterministic, depending on the variability of demand and other factors, or (2) fixed quantity, fixed cycle, or hybrid (optional replenishment). See: fixed reorder cycle inventory model, fixed reorder quantity inventory model, optional replenishment model.
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independent float
In project management, the amount of float on an activity that does not affect float on preceding or succeeding activities. See: float, free float, total float.
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independent project
A project which, whether or not it is accepted, does not eliminate other projects from eligibility. See: contingent project, mutually exclusive project.
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independent trading exchange
A business-to-business marketplace ownership model. These are public sites often used for indirect materials and commodity purchases where the price is the primary factor and where any buyers and sellers for a particular market meet to gain access to a wider market to find the best deals.
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index
A value, expressed as a percentage, giving the relationship of a measurement to a base value. A result of 100 is average, while numbers greater than 100 are above average, and those less than 100 are below average.
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indicator
An index of business activities.
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indifference point
The point at which two options create the same costs for a specific output level.
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indirect costs
Costs that are not directly incurred by a particular job or operation. Certain utility costs, such as plant heating, are often indirect. An indirect cost is typically distributed to the product through the overhead rates.
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indirect labor
Work required to support production in general without being related to a specific product (e.g., floor sweeping).
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indirect labor cost
The compensation paid to workers whose activities are not related to a specific product.
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indirect materials
Syn.: supplies.
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indirect procurement
Procurement goods and services that an organization needs to continue functioning but do not contribute directly to the bottom-line profitability. Examples can include maintenance, repair, and operating (MRO) supplies and service work.
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indirect retail locations
A retailer who sells products to the public but who buys products indirectly through a third-party distributor, rather than directly from the seller.
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industrial buyers
Buyers who purchase materials mainly for conversion.
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industrial engineering
The engineering discipline concerned with facilities layout, methods measurement and improvement, statistical quality control, job design and evaluation, and the use of management sciences to solve business problems.
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industrial facilities management
The installation and maintenance of the physical plant, its surroundings, and the physical assets of an organization.
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industrial market
A market in which most or all customers are individuals or businesses that buy products to produce other goods and services. Syns.: business market, producer market. See: consumer market, government market, institutional market.
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industrial revolution
A movement to the use of factories and machines and away from activities done by hand without mechanical assistance.
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industrial truck and tractor operator
A warehouse employee who uses heavy machinery to transport heavy materials around a warehouse, storage yard, factory, or construction site.
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industrial trucks
Vehicles powered by hand, electricity, or propane for material-handling activities in a warehouse. Industrial trucks are more flexible but slower and less constant than conveyors, and they are not in a fixed position. They are the most common form of material-handling equipment.
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industry
A set of companies providing a product or service in which each company’s offering is a close substitute for its competitors’ offerings.
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Industry 4.0
A concept of organizational and technological changes along with value chain integrations and new business models development that are driven by customer needs and mass customization requirements and enabled by innovation technologies, connectivity, and information technology integration.
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industry analysis
A major study of an industry; its major competitors, customers, and suppliers; and the focus and driving forces within that industry.
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industry structure types
Economic models of the types of competition faced by various firms. These types are: (1) Pure monopoly. Only one firm provides a particular product or service. The monopoly may be regulated or unregulated. (2) Pure oligopoly. A few companies produce essentially the same product or service and market it within a given area. A company is forced to price its product at the going rate unless it can differentiate its product. (3) Differentiated oligopoly. A few companies produce partially differentiated products or services that are marketed within a given area. Differentiation may be based on quality, features, styling, or services offered along with the product. (4) Monopolistic competition. Many competitors offer partially differentiated products or services. Most competitors focus on market segments where they can meet customers’ needs somewhat better than their competitors. (5) Pure competition. Many competitors offer undifferentiated products or services.
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inefficiency risk
The risk of losing customers because another firm has lower unit costs.
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infinite loading
Calculation of the capacity required at work centers in the time periods required regardless of the capacity available to perform this work. Syn.: infinite scheduling.
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infinite scheduling
Syn.: infinite loading.
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inflation
An ongoing rise in the overall level of prices. Inflation reduces the purchasing power of money.
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influence filter
In e-commerce, a device to make stakeholders better satisfied with a website.
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informal culture
Organizational characteristics and relationships that are not part of the formal structure but that influence how the organization accomplishes its goals.
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information
Data that has been interpreted and that meets the needs of one or more managers.
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information data warehouse
A (typically large) repository of corporate data that can be accessed using specialized query tools. This technique separates the analysis of data from the recording of data and is often used to combine data from different computing systems to make information access more convenient and coherent. See: data warehouse.
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information distribution
Making needed data available to stakeholders in a timely manner.
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information flow profile
A graph of the performance of information flow compared with some set of performance criteria.
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information system
Interrelated computer hardware and software along with people and processes designed for the collection, processing, and dissemination of information for planning, decision-making, and control.
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information system architecture
A model of how the organization operates regarding information. The model considers four factors: (1) organizational functions, (2) communication of coordination requirements, (3) data modeling needs, and (4) management and control structures. The architecture of the information system should be aligned with and match the architecture of the organization.
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information technology (IT)
The technology of computers, telecommunications, and other devices that integrate data, equipment, personnel, and problem-solving methods in planning and controlling business activities. Information technology provides the means for collecting, storing, encoding, processing, analyzing, transmitting, receiving, and printing text, audio, or video information.
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input/output control (I/O control)
A technique for capacity control in which planned and actual inputs and planned and actual outputs of a work center are monitored. Planned inputs and outputs for each work center are developed by capacity requirements planning and approved by manufacturing management. Actual input is compared with planned input to identify when work center output might vary from the plan because work is not available at the work center. Actual output is also compared with planned output to identify problems within the work center. Syn.: input/output analysis. See: capacity control.
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input/output devices
Modems, terminals, or various pieces of equipment whose designed purpose relates to manual, mechanical, electronic, visual, or audio entry to and from the computer’s processing unit.
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insourcing
Using the firm’s internal resources to provide goods and services. See: make-or-buy decision.
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inspection
Measuring, examining, testing, or gauging one or more characteristics of a good or service and comparing the results with specified requirements to determine whether conformity is achieved for each characteristic.
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information visibility
How extensive information is shared throughout a firm and with other stakeholders.
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inspection order
An authorization to an inspection department or group to perform an inspection operation.
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infrastructural elements
Elements of a strategy including decision rules, policies, personnel guidelines, and organizational structure.
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inspection ticket
A reporting of an inspection function performed. This phrase is frequently used as a synonym for an inspection order.
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ingredient
In the process industries, the raw material or component of a mixture. See: component.
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initial public offering (IPO)
A firm’s first sale of common stock.
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innovation risk
The risk of losing customers because another firm creates more innovative products.
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innovative products
Products that tend to have a high profit margin, be unique, have less competition, and have dynamic demand.
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in-process inventory
Syn.: work in process (WIP).
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in-process waiver requests
Requests for waivers on normal production procedures because of deviations in materials, equipment, or quality metrics where normal product specifications are otherwise maintained.
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input
Work arriving at a work center or production facility.
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input control
Management of the release of work to a work center or production facility.
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installed base
A measure of the number of units of a product or service that are actually in use, as opposed to market share, which only reflects sales over a particular period.
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instantaneous receipt
The receipt of an entire lot-size quantity in a very short period of time.
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Institute for Supply Management (ISM)
A nonprofit society for purchasing managers and others. ISM was formerly known as the National Association of Purchasing Management (NAPM).
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Institute of Industrial Engineers (IIE)
A nonprofit educational organization whose members are interested in the field of industrial engineering.
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institutional market
A market in which most or all customers are one of the following: schools, hospitals, prisons, or other institutions that provide products and services to individuals who are under their care. See: consumer market, government market, industrial market.
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instruction sheet
Syn.: routing.
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input rate capacity
Measurement that takes rates of different inputs and transforms them into a common unit to measure the input. See: capacity utilization.
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intangible
One distinguishing feature of pure services. Pure services cannot be inventoried or carried in stock for long periods of time.
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input/output analysis
Syn.: input/output control (I/O control).
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intangible costs
Those costs that are difficult to quantify, such as the cost of poor quality or of high employee turnover.
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integrated business plan
An overall business plan generated by the integrated business planning process that aligns with the strategy, tactics, and execution plans; organization and functional accountabilities; and any risk management plans. See: integrated business planning (IBP).
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integrated business planning (IBP)
A business process that integrates strategic, operational, and financial planning to maximize company profitability. The process drives decision- making across all aspects of the business by balancing customer demand, supply, and company resources. This is typically at an aggregate planning level with the ability to disaggregate to a more detailed level. The goal is to create an enterprise-wide operating plan. An IBP process typically builds upon the foundation of an established sales and operations planning (S&OP) process with continuous review meetings in each functional area. IBP may also include other advanced practices, such as scenario planning and supply chain risk management. See: sales and operations planning (S&OP), integrated business plan.
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integrated carrier
A company that provides a variety of transportation services including ground, sea, air carriage, and freight forwarding.
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integrated change control
In project management, a system under which any changes are coordinated across the entire project.
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integrated enterprise
A business or organization made up of individuals who have acquired the knowledge and skills to work with others to make the organization a greater success than the sum of each individual’s output. Integration includes increased communication and coordination among individuals and within and across teams, functions, processes, and organizations over time. See: cross-functional integration.
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integrated internet marketing (I2M)
The use of internet facilities to sell products, influence stakeholder attitudes, and improve the company’s image.
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integrated logistics
Syn.: service response logistics.
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integrated logistics service providers
Organizations that provide one or many logistics services to a customer for a fee.
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integrated resource management (IRM)
Syn.: resource management.
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integrated services digital network (ISDN)
International standard for using public phone lines to transmit voice and data over the same line.
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integrating mechanism
A physical, organizational, or informational entity that allows people and functions to interact freely by transcending boundaries.
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intellectual property
Various legal entitlements that attach to certain names, written and recorded media, and inventions.
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intelligent agent
A program that regularly gathers information without the owner being present.
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Intelligent supply
A strategy that impacts every component of the procurement function to source goods and services from leading suppliers at the best value while driving efficiencies in procurement operations, improving supplier relationships, and mitigating risks.
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Intelligent supply analytics
The ability to use both value chain analytics and industry insights to move from retrospection to prediction by aggregating disparate data sources to predict cost and price fluctuations, demand patterns, and supplier- and country-related factors to more effectively manage end-to-end costs.
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intelligent supply chain
The use of emerging and intelligent technologies such as artificial intelligence, big data, and advanced analytics software within the supply chain to improve its value and efficiency. This is accomplished through increasing visibility, anticipating disruptions, rapidly reacting to changing customer priorities, and identifying opportunities.
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interactive computer system
A computer system that supports real-time interaction with a user. The response time to the user is similar to the actual timing of the business or physical process. See: interactive system.
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interactive customer care
A generic term for a variety of services provided over the internet. These services include customer service and technical support.
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interactive scheduling
Computer scheduling where the process is either automatic or manually interrupted to allow the scheduler the opportunity to review and change the schedule.
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interactive system
Refers to those computer applications in which a user communicates with a computer program via a system, entering data and receiving responses from the computer. See: interactive computer system.
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interarrival time
Time between the arrival of two sequential customers or events.
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interest
1) Financial share in a project or enterprise. 2) Periodic compensation for lending money. 3) In an economy study, synonymous with required return or the fee for the use of capital. 4) The cost for the use of capital. See: time value of money.
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interest rate
The ratio of the interest payment to the principal for a given unit of time. It is usually expressed as a percentage of the principal.
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interleaving
Assigning multiple tasks to be performed concurrently. It often involves the assignment of multiple picking orders to a single picker to pick concurrently.
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intermediate part
Material processed beyond raw material and used in higher-level items. See: component.
395
intermediately positioned strategy
To position a warehouse halfway between the supplier and the customer.
396
international company
Any organization conducting business in multiple countries.
397
intermediately positioned warehouse
A warehouse located between customers and manufacturing plants to provide increased customer service and reduced distribution costs.
398
intermittent production
A form of manufacturing in which the jobs pass through the functional departments in lots, and each lot may have a different routing. See: job shop.
399
intermodal marketing companies (IMCs)
Organizations that are the intermediary for shippers and intermodal rail carriers.
400
intermodal transport
1) Shipments moved by different types of equipment, combining the best features of each mode. 2) The use of two or more different carrier modes in the through movement of a shipment.
401
internal analysis
Evaluating the internal strengths and weaknesses of an organization to determine its competencies and competitive advantage. See: SWOT analysis.
402
internal controls
The policies and procedures, documentation, and plan for an organization that authorize transactions, safeguard assets, and maintain the accuracy of financial records.
403
internal customer
The recipient (person or department) of another person’s or department’s output (good, service, or information) within an organization. See: customer, external customer.
404
internal environment
The chosen domain or scope of activities within which an organization operates (e.g., the tasks associated with goods or services to be delivered by the organization). See: external environment, organizational environment.
405
internal failure costs
The cost of things that go wrong before the product reaches the customer. Internal failure costs usually include rework, scrap, downgrades, reinspection, retesting, and process losses.
406
internal rate of return
The rate of compound interest at which the company’s outstanding investment is repaid by proceeds from the project.
407
internal setup time
The time associated with elements of a setup procedure performed while the process or machine is not running. Ant.: external setup time.
408
internal supply chain
A structure for sharing information within a firm and creating an atmosphere for cooperation among functions to strengthen the firm.
409
internal water carrier
Any carrier that operates on inland river channels, such as the Mississippi River System.
410
International Air Transport Association (IATA)
An international industry trade group that represents the interests of the airline industry.
411
International Financial Reporting Standards (IFRS)
A common global language for business affairs so that company accounts are understandable and comparable across international boundaries. As a result of growing international shareholding and trade, they are rules to be followed by accountants to maintain books of accounts that are comparable, understandable, reliable, and relevant whether the users are internal or external.
412
international logistics
All functions concerned with the movement of materials and finished goods on a global scale.
413
International Organization for Standardization (ISO)
Group of cooperating institutes from 155 countries working to develop and publish international standards. It acts as a bridge between public and private sectors.
414
international procurement office (IPO)
A management approach that establishes a global presence for a company by providing localized supply management services in a region that is strategically important. This approach is a long-term commitment that takes advantage of a region’s language and cultural capabilities to use trusted local staff to execute procurement activities that add value to the overall supply chain. Such tasks as local supplier development, contract negotiations, quality audits, and best practice operations provide reduced dependence on third parties and improve overall efficiency and costs.
415
international standards
Standards established by international
416
standards
setting organizations to promote interoperability among operating environments.
417
International Traffic in Arms Regulations (ITAR)
U.S. regulations that restrict the export of items that have a military application, such as firearms, chemicals, and explosives.
418
internet
A worldwide network of computers belonging to businesses, governments, universities, and individuals that enables users to share information in the form of files and to send electronic messages and have access to a tremendous store of information.
419
internet of things (IoT)
An environment in which objects, animals or people are provided with unique identifiers and the ability to transfer data over a network without requiring human- to-human or human-to-computer interaction. This allows objects to be sensed and controlled remotely across existing network infrastructure, creating opportunities for more direct integration between the physical world and computer-based systems.
420
internet operations
Operations performed over the internet encompassing such things as email, telnet, newsgroups, file transfer protocol, and the World Wide Web.
421
internet service provider (ISP)
A business or organization that sells access to the internet and related services to consumers. For a monthly fee, the service provider offers a software package, username, password, and access to the internet (via various technologies which enable users to browse the World Wide Web and send and receive email). The ISP may also provide a combination of services, including internet transit, domain name registration and hosting, web hosting, and colocation.
422
interoperation time
The time between the completion of one operation and the start of the next.
423
interplant demand
One plant’s need for a part or product that is produced by another plant or division within the same organization. Although it is not a customer order, it is usually handled by the master production scheduling system in a similar manner. See: interplant transfer.
424
interplant transfer
The shipment of a part or product by one plant to another plant or division within the corporation. See: interplant demand, transfer pricing.
425
interpolation
The process of finding values of data or a function between two known values. Interpolation may be performed numerically or graphically.
426
interrelationship digraph
A technique used to define how factors relate to one another. Complex multivariable problems or desired outcomes can be displayed with their interrelated factors. The logical and often causal relationships between the factors can be illustrated.
427
interrogate
To retrieve information from computer files by use of predefined inquiries or unstructured queries handled by a high-level retrieval language.
428
interrupt
A break in the normal flow of a computer routine such that the flow can be resumed from that point at a later time. An interrupt is usually caused by a signal from an external source.
429
interstate commerce
The movement of persons or property across one or more state lines for business purposes.
430
Interstate Commerce Commission (ICC)
A U.S. regulatory agency charged with enforcing regulations controlling railroads, motor carriers, pipelines, domestic water carriers, domestic surface freight forwarders, and brokers.
431
intranet
A privately owned network that makes use of internet technology and applications to meet the needs of an enterprise. It resides entirely within a department or company and provides communication and access to information, similar to the internet, for internal use only.
432
in-transit inventory
Material moving between two or more locations, usually separated geographically (e.g., finished goods being shipped from a plant to a distribution center).
433
in-transit lead time
The time between the date of shipment (at the shipping point) and the date of receipt (at the receiver’s dock). Orders normally specify the date by which goods should be at the dock. Consequently, this date should be offset by in- transit lead time for establishing a ship date for the supplier.
434
intrastate commerce
Moving people or materials between points within a single state.
435
intrinsic forecast method
A forecast based on internal factors, such as an average of past sales. Ant.: extrinsic forecast.
436
intrinsic motivation
Motivation to perform a task due to the inherent satisfaction, rather than a desire for an external reward or specific outcome. See: extrinsic motivation.
437
inventory
1) Those stocks or items used to support production (raw materials and work-in-process items), supporting activities (maintenance, repair, and operating supplies), and customer service (finished goods and spare parts). Demand for inventory may be dependent or independent. Inventory functions are anticipation, hedge, cycle (lot size), fluctuation (safety, buffer, or reserve), transportation (pipeline), and service parts. 2) All the money currently tied up in the system. As used in theory of constraints, inventory refers to the equipment, fixtures, buildings, and so forth that the system owns as well as inventory in the forms of raw materials, work-in-process, and finished goods.
438
inventory accounting
The branch of accounting dealing with valuing inventory. Inventory may be recorded or valued using either a perpetual or a periodic system. A perpetual inventory record is updated frequently or in real time, while a periodic inventory record is counted or measured at fixed time intervals (e.g., every two weeks or monthly). Both recording systems use the last in, first out; first in, first out; or average costs inventory valuation method.
439
inventory accuracy
When the on-hand quantity is within an allowed tolerance of the recorded balance. This important metric usually is measured as the percent of items with inventory levels that fall within tolerance. Target values usually are 95 percent to 99 percent, depending on the value of the item. For logistical operations (location management) purposes, it is sometimes measured as the number of storage locations with errors divided by the total number of storage locations.
440
inventory adjustment
A change made to an inventory record to correct the balance in order to bring it in line with actual physical inventory balances. The adjustment either increases or decreases the item record on-hand balance.
441
inventory and supply optimization
The ability to position inventory in transit supply and plan future supply flow through the supply network in order to maximize customer satisfaction, profitability, and agility. This ability is achieved through the use of routing, inventory, procurement, and production levers.
442
inventory balance location accuracy
When the inventory count is accurate at specific locations. Measuring accuracy includes comparing the actual part number to the record of the part number, the actual count at the location to the record balance at the location, and the actual location to the record of the location.
443
inventory management training
Education for key employees (e.g., schedulers, planners, and supply chain managers) about best practices and technologies in inventory management. The training should be monitored to determine participation and completion by employees and should also include emerging best practices and technologies.
444
inventory buffer
Inventory used to protect the throughput of an operation or the schedule against the negative effects caused by delays in delivery, quality problems, delivery of an incorrect quantity, and so on. Syn.: inventory cushion. See: fluctuation inventory, safety stock.
445
inventory control
The activities and techniques of maintaining the desired levels of items, whether raw materials, work in process, or finished products. Syn.: material control.
446
inventory conversion period
The time period needed to produce and sell a product, measured from procurement of raw materials to the sale of the product.
447
inventory costs
Costs associated with ordering and holding inventory. See: carrying cost, ordering cost.
448
inventory cushion
Syn.: inventory buffer.
449
inventory cycle
The length of time between two consecutive replenishment shipments.
450
inventory cycle counting
See: cycle counting.
451
inventory diversion
The shipment of parts against a project or contract other than the original project or contract for which the items were purchased.
452
inventory drivers
Those conditions that would lead a company to hold inventory.
453
inventory effectiveness index
A system to identify non-value- adding inventory and make it visible. The index provides a process to measure non-value-adding inventory and sell or write it off to keep working capital in control.
454
inventory financing evaluation
An assessment of the potential to use an external finance company to purchase inventory that is in transit and sell it back to the originating company prior to delivery to the customer.
455
inventory investment
The dollars that are in all levels of inventory.
456
inventory issue
1) Items released from an inventory location for use or sale. 2) The inventory record transaction reducing the inventory balance by the amount released.
457
inventory management
The branch of business management concerned with planning and controlling inventories.
458
Inventory management system
A software system that provides inventory information, such as quantity, location, and status, that helps a business make better decisions about how much inventory to store and maintain for future orders. See: inventory management, inventory optimization software.
459
inventory optimization
A computer application that can find optimal inventory strategies and policies related to customer service and return on investment over several echelons of a supply chain. See: inventory optimization software.
460
inventory optimization software
See: inventory optimization.
461
inventory ordering system
Inventory models for the replenishment of inventory. Independent demand inventory ordering models include fixed reorder cycle, fixed reorder quantity, optional replenishment, and hybrid models, among others. Dependent demand inventory ordering models include material requirements planning, kanban, and drum-buffer-rope.
462
inventory planner
Syn.: material planner (first definition).
463
inventory planning
The activities and techniques of determining the desired levels of items, whether raw materials, work in process, or finished products (including order quantities and safety stock levels). Syn.: material planning.
464
inventory policy
A statement of a company’s goals and approach to the management of inventories.
465
inventory pooling
The act of holding inventory in a single location instead of multiple locations.
466
inventory receipt
An inventory record transaction that records the receipt or arrival of inventory into physical stores by increasing the inventory on-hand balance by the received quantity. Often associated with receipt of a purchase or production order quantity.
467
inventory reconciliation
The process in which the stock records in the inventory record system are matched with the physical products in available. See: cycle counting.
468
inventory record
A history of the inventory transactions of a specific material.
469
inventory reserve
1) An accounting entry that represents a deduction from earnings for the purpose of fairly and reasonably representing the value of inventoried assets on a balance sheet. The inventory reserve is used to make up for the fact that all inventory will not be sold at the cost to the firm. 2) A term relating to the allowance account to reduce inventory from cost to market value by applying the lower of cost or market value rule. The reserve amount is usually calculated from inventory sheets for the specific items.
470
inventory returns
Items returned to the manufacturer as defective, obsolete, overages, and so forth. An inventory item record transaction records the return or receipt into physical stores of materials from which the item may be scrapped.
471
inventory shrinkage
Reductions of actual quantities of items in stock, in process, or in transit. The loss may be caused by scrap, theft, deterioration, evaporation, and so forth. Syn.: shrinkage.
472
islands of automation
Stand-alone pockets of automation (e.g., robots, CAD/CAM systems, numerical control machines) that are not connected to a cohesive system.
473
inventory tax
Tax based on the value of inventory on hand at a particular time.
474
ISO
Abbreviation for International Organization for Standardization.
475
inventory turnover
The number of times that an inventory cycles, or turns over, during the year. A frequently used method to compute inventory turnover is to divide the annual cost of sales by the average inventory level. For example, an annual cost of sales of $21 million divided by an average inventory of $3 million means that inventory turned over seven times. Syns.: inventory turns, turnover. See: inventory velocity.
476
inventory turns
Syn.: inventory turnover.
477
inventory usage
The value or the number of units of an inventory item consumed during a period of time.
478
inventory valuation
The value of the inventory at either its cost or its market value. Because inventory value can change with time, some recognition is taken of the age distribution of inventory. There are a variety of ways to calculate the cost value inventory to establish the cost of goods sold. See: first in, first out (FIFO); last in, first out (LIFO); average cost system.
479
inventory velocity
The speed with which inventory passes through an organization or supply chain at a given point in time as measured by inventory turnover. See: inventory turnover.
480
inventory visibility
The extent to which inventory information is shared within a firm and with supply chain partners.
481
inventory write-off
A deduction of inventory dollars from the financial statement because the inventory is of less value. An inventory write-off may be necessary because the value of the physical inventory is less than its book value or because the items in inventory are no longer usable.
482
invitation for bid (IFB)
Syn.: request for proposal (RFP).
483
invoice
A list of goods shipped by the supplier to the buyer that states prices, quantities, and other costs.
484
involuntary services
Services that are not sought by customers (e.g., those of hospitals and prisons).
485
IOR
Acronym for importer of record.
486
IoT
Acronym for the internet of things.
487
IPO
1) Acronym for initial public offering. 2) Acronym for international procurement office.
488
IRM
Acronym for integrated resource management.
489
irregular maintenance
Syn.: breakdown maintenance.
490
ISDN
Acronym for integrated services digital network.
491
Ishikawa diagram
Syn.: cause-and-effect diagram.
492
ISO 14000 Series Standards
A series of generic environmental management standards developed by the International Organization for Standardization (ISO) that provide structure and systems for managing environmental compliance with legislative and regulatory requirements and affect every aspect of a company’s environmental operations.
493
ISO 22301
An international standard that specifies requirements for setting up and managing an effective business continuity management system. The standard was developed by the International Organization for Standardization (ISO).
494
ISO 26000
An international standard developed by the International Organization for Standardization (ISO) to assist organizations in contributing to sustainable development beyond legal compliance through a common understanding of social responsibility. ISO 26000 is not a management system standard and is not intended or appropriate for certification purposes or regulatory or contractual use.
495
ISO 28000
An international standard developed by the International Organization for Standardization (ISO) that specifies the requirements for a security management system, including those aspects critical to security assurance of the supply chain.
496
ISO 31000
A standard developed by the International Organization for Standardization (ISO) that outlines principles and a set of guidelines to manage risk in any endeavor. The standard includes guidelines for understanding risk, developing a risk management policy, integrating risk management into organizational processes (including accountability and responsibility), and establishing internal and external risk communication processes. ISO 31000 is not a management system standard and is not intended or appropriate for certification purposes or regulatory or contractual use.
497
ISO 50001
An international standard developed by the International Organization for Standardization (ISO) that defines the requirements for designing, implementing, and maintaining an energy management system. It includes documentation, reporting, and procurement guidance.
498
ISO 73
An international standard that provides the definitions of generic terms related to risk management. It aims to encourage a mutual and consistent understanding of and a coherent approach to the description of activities relating to the management of risk and the use of uniform risk management terminology in processes and frameworks dealing with the management of risk.
499
ISO 9000
A set of international standards about quality management and quality assurance developed to help companies effectively document the quality system elements to be implemented to maintain an efficient quality system. The standards, initially published in 1987, are not specific to any particular industry, product, or service. The standards were developed by the International Organization for Standardization, known as ISO, a specialized international agency for standardization composed of the national standards bodies of 91 countries. The standards underwent major revision in 2015 and now include ISO 9000:2015 (definitions), ISO 9001:2015 (requirements), and ISO 9004:2015 (guidance).
500
ISO 9000:2000
A certification process requiring a third-party audit that defines in broad terms what must be done to manage company quality and to document these quality processes. It recently was updated by ISO 9000:2008, and it is managed by the International Organization for Standardization (ISO).
501
ISO certification/registration
The independent audit of an organization against a recognized management system standard such as ISO 9001 (Quality) or ISO 14001 (Environmental), which were developed by the International Organization for Standardization (ISO), by a third party. Third- party audits are known as certification or registration audits. Once compliance to the relevant standard and certification is achieved by the organization, the third party (referred to as the certification body or registrar) issues a certificate valid for three years and visits annually to ensure maintenance of the management system. Such visits are known as surveillance audits.
502
ISO/TS 16949
An International Organization for Standardization (ISO) standard written by the International Automotive Task Force that applies only to automotive companies. It includes quality management system; management responsibility; resource management; product realization; and measurement, analysis, and improvement. See: QS 9000.
503
isolation
The determination of the location of a failure through the use of accessory support and diagnostic equipment.
504
ISP
Acronym for internet service provider.
505
issue
1) The physical movement of items from a stocking location. See: disbursement. 2) The transaction reporting of this activity.
506
issue cycle time
The time required to generate a requisition for material, pull the material from an inventory location, and move it to its destination.
507
item
Any unique manufactured or purchased part, material, intermediate, subassembly, or product.
508
item master file
A file containing all item master records for a product, product line, plant, or company. See: master file.
509
item master record
Syn.: item record.
510
item number
A number that serves to uniquely identify an item. Syns.: part number, product number, stock code, stock number.
511
item rationalization
See: stock keeping unit (SKU) rationalization and cost of sales analysis.
512
item record
The master record for an item. Typically, it contains identifying and descriptive data and control values (lead times, lot sizes, etc.), and it may contain data about inventory status, requirements, planned orders, and costs. Item records are linked by bill-of-material records (or product structure records), thus defining the bill of material. Syns.: item master record, part master record, part record.
513
Java
A general-purpose computer language created by Sun Microsystems.
514
jidoka
The Japanese term for the practice of stopping the production line when a defect occurs.
515
jig
A device that holds a piece of work in a desired position and guides the tool or tools that perform the necessary operations. See: fixture.
516
jishuken
A Japanese word meaning voluntary study groups.
517
JIT
Acronym for just in time.
518
JIT master schedule
Syn.: level schedule (second definition).
519
JIT supplier environment
To effectively participate as a supplier under just in time (JIT), a company must supply components and subassemblies in exact quantities, delivery times, and quality. Shipments are made within narrow time windows that are rigidly enforced. Virtually every component must be delivered on time and be within specifications.
520
job
1) The combination of tasks, duties, and responsibilities assigned to an individual employee and usually considered his or her work assignment. 2) The contents of a work order.
521
job analysis
A process of gathering (by observation, interview, or recording systems) information about important task- oriented activities and work requirements for employees.
522
job costing
A cost accounting system in which costs are assigned to specific jobs. This system can be used with either actual or standard costs in the manufacturing of distinguishable units or lots of products. Syn.: job order costing.
523
item demand
Demand disaggregated into specific configurations of goods or services. See: item.
524
job description
A formal statement of duties, qualifications, and responsibilities associated with a particular job.
525
job design
The function of describing a job with respect to its content and the methods to be used. Criteria such as the degree of job specialization, job enrichment, and job enlargement are useful in designing work content.
526
job enlargement
An increase in the number of tasks that an employee performs. Job enlargement is associated with the design of jobs, particularly production jobs, and its purpose is to reduce employee dissatisfaction.
527
job enrichment
An increase in the number of tasks that an employee performs and an increase in the control over those tasks. It is associated with the design of jobs and especially the production worker’s job. Job enrichment is an extension of job enlargement.
528
job grade
A form of job evaluation that assigns jobs to predetermined job classifications according to the job’s relative worth to the organization. Pay scales are usually set for each job grade.
529
job lot
A specific quantity of a part or product that is produced at one time.
530
job order
Syn.: manufacturing order.
531
job order costing
Syn.: job costing.
532
job progress chart
Syn.: Gantt chart.
533
job rotation
The practice of an employee periodically changing job responsibilities to provide a broader perspective and a view of the organization as a total system in order to enhance motivation and provide cross-training.
534
job sequencing rules
A set of priorities and conditions that specify the order in which jobs are processed because of scarce resources.
535
job shop
1) An organization in which similar equipment is organized by function. Each job follows a distinct routing through the shop. 2) A type of manufacturing process used to produce items to each customer’s specifications. Production operations are designed to handle a wide range of product designs and are performed at fixed plant locations using general-purpose equipment. Syn.: jobbing. See: intermittent production, project manufacturing.
536
job shop layout
Syn.: functional layout.
537
job shop scheduling
The production planning and control techniques used to sequence and prioritize production quantities across operations in a job shop.
538
job status
A periodic report showing the plan for completing a job (usually the requirements and completion date) and the progress of the job against that plan.
539
job ticket
Syn.: time ticket.
540
jobbing
Syn.: job shop.
541
joint order
An order on which several items are combined to obtain volume or transportation discounts.
542
joint rate
A rate for a route involving two or more carriers to move a shipment.
543
joint replenishment
Coordinating the lot sizing and order release decision for related items and treating them as a family of items. The objective is to achieve lower costs because of ordering, setup, shipping, and quantity discount economies. This term applies equally to joint ordering (family contracts) and to composite part (group technology) fabrication scheduling. Syn.: joint replenishment system.
544
joint replenishment system
Syn.: joint replenishment.
545
joint venture
An agreement between two or more firms to risk equity capital to attempt a specific business objective.
546
judgment items
Those inventory items that cannot be effectively controlled by algorithms because of age (new or obsolete product) or management decision (promotional product).
547
Juran Trilogy
Syn.: quality trilogy.
548
jurisdiction
The authority of a governmental agency to undertake its activities.
549
jury of executive opinion
A forecast given by a group of executives who are knowledgeable about the industry, competition, and the firm.
550
just in time (JIT)
A philosophy of manufacturing based on planned elimination of all waste and on continuous improvement of productivity. It encompasses the successful execution of all manufacturing activities required to produce a final product, from design engineering to delivery, and includes all stages of conversion from raw material onward. The primary elements of just in time are to have only the required inventory when needed; to improve quality to zero defects; to reduce lead times by reducing setup times, queue lengths, and lot sizes; to incrementally revise the operations themselves; and to accomplish these activities at minimum cost. In the broad sense, it applies to all forms of manufacturing—job shop, process, and repetitive—and to many service industries as well. Syns.: short-cycle manufacturing, stockless production, zero inventories.
551
just-in-time purchasing
This type of purchasing uses few suppliers who have long-term commitments with the organization. Long-term contracts are used, which enable the purchaser to develop and certify the quality process at the supplier.
552
kaizen
The Japanese term for improvement. Kaizen refers to continuing improvement involving everyone—managers and workers. In manufacturing, kaizen relates to finding and eliminating waste in machinery, labor, or production methods. See: continuous process improvement (CPI).
553
kaizen blitz®
A rapid improvement of a limited process area, such as a production cell. Part of the improvement team consists of workers in that area. The objectives are to use innovative thinking to eliminate non-value-added work and to immediately implement the changes within a week or less. Ownership of the improvement by the area work team and the development of the team’s problem-solving skills are additional benefits. See: kaizen event.
554
kaizen event
A time-boxed set of activities carried out by the cell team during the week of cell implementation. The kaizen event is an implementation arm of a lean manufacturing program. See: kaizen blitz®.
555
kanban
A method of just-in-time production that uses standard containers or lot sizes with a single card attached to each. It is a pull system in which work centers signal with a card that they wish to withdraw parts from feeding operations or suppliers. The Japanese word kanban, loosely translated, means card, billboard, or sign, but other signaling devices such as colored golf balls have also been used. The term is often used synonymously for the specific scheduling system developed and used by the Toyota Motor Corporation in Japan. See: move card, production card, synchronized production.
556
kata
A set of procedural sequences involving thinking and behavior patterns that when routinely repeated creates an environment of continuous improvement.
557
keiretsu
A form of cooperative relationship among companies in Japan in which the companies largely remain legally and economically independent even though they work closely in various ways such as financial backing. A member of a keiretsu generally owns a limited amount of stock in other member companies. A keiretsu generally forms around a bank and a trading company, but distribution (supply chain) keiretsu alliances have been formed of companies ranging from raw material suppliers to retailers.
558
key performance indicator (KPI)
1) A financial or nonfinancial measure that is used to define and assess progress toward specific organizational goals and that typically is tied to an organization’s strategy and business stakeholders. A KPI should not be contradictory to other departmental or strategic business unit performance measures. 2) A metric used to measure the overall performance or state of affairs. Supply Chain Operations Reference (SCOR) level 1 metrics are considered KPIs.
559
key points
An important operations step in which at least one of the following occurs: (1) A crucial process step is carried out that can ultimately make or break the job; (2) safety is involved; and/or (3) the step is made easier to do. The step also is part of standardized work.
560
key success factors
The product attributes, organizational strengths, and accomplishments with the greatest impact on future success in the marketplace.
561
key supply chain processes
Important steps in producing, marketing, and servicing goods and services.
562
kit
1) The components of a parent item that have been pulled from stock and prepared for movement to a production area. 2) A group of repair parts to be shipped with an order. Syns.: kitted material, staged material.
563
kitted material
Syn.: kit.
564
kitting
The process of constructing and staging kits.
565
knowledge creation
The propensity for generating knowledge.
566
knowledge management
An integrated approach used by organizations to capture, share, develop, and use organizational knowledge. This information is used to more effectively produce product, interface with customers, and navigate through competitive markets.
567
knowledge management tool
A tool that provides an assortment of information quickly to stakeholders for faster and better decisions.
568
knowledge worker
A worker whose job is the accumulation, transfer, validation, analysis, and creation of information.
569
knowledge-based system
A computer program that employs knowledge of the structure of relations and reasoning rules to solve problems by generating new knowledge from the relationships about the subject.
570
KPI
Acronym for key performance indicator.
571
Kraljic matrix
Segmenting supplier relationship management strategies by mapping supply items against the dimensions of risk and profitability. Risk relates to the likelihood of unexpected events that could disrupt supply chains, and profitability describes the impact a supply item can have on the bottom line.
572
L/C
Acronym for letter of credit.
573
L4L
Abbreviation for lot-for-lot.
574
labor
The people who produce value in a product stream.
575
labor claim
A factory worker’s report that lists the jobs an employee worked on (number of pieces, number of hours, etc.) and often the amount of money to which the employee is entitled. A labor claim is usually made on a labor chit or time ticket. Syns.: labor ticket, labor voucher.
576
labor cost
The dollar amount of labor performed during manufacturing. This amount is added to direct material cost and overhead cost to obtain total manufacturing cost.
577
labor efficiency
The average of worker efficiency for all direct workers in a department or facility. Syn.: worker efficiency.
578
labor efficiency variance
The difference between the actual number of hours worked minus the standard number of hours worked, multiplied by the standard labor wage rate. The variance is unfavorable if the actual hours exceed the standard hours. Syn.: labor usage variance.
579
labor grade
A classification of workers whose capability indicates their skill level or craft. See: skill-based compensation, skills inventories.
580
labor productivity
A partial productivity measure in which the rate of output of a worker or group of workers per unit of time is compared with an established standard or rate of output. Labor productivity can be expressed as output per unit of time or output per labor hour. See: machine productivity, productivity.
581
labor rate variance
The sum of the actual wage rate minus the standard wage rate, multiplied by the actual number of labor hours. The variance is unfavorable if the actual rate is greater than the standard rate.
582
labor standard
Under normal conditions, the quantity of worker minutes necessary to finish a product or process.
583
labor ticket
Syn.: labor claim.
584
labor usage variance
Syn.: labor efficiency variance.
585
labor voucher
Syn.: labor claim.
586
laboratory order
Syn.: experimental order.
587
labor-intensive
When an operation has more expenditures on labor than capital. See: capital-intensive.
588
lading
The cargo being transported by a vehicle.
589
lag capacity strategy
Not adding capacity until the firm is operating at or beyond full capacity. This keeps unit costs minimized by working at full capacity but does not satisfy total demand.
590
laid-down cost
The sum of the product and transportation costs. The laid-down cost is useful in comparing the total cost of a product shipped from different supply sources to a customer’s point of use.
591
LAN
Acronym for local area network.
592
land bridge
Moving goods over water, then land, and then water again to the final point.
593
landed cost
This cost includes the product cost plus the costs of logistics, such as warehousing, transportation, and handling fees.
594
lap phasing
Syn.: overlapped schedule.
595
last in, first out (LIFO)
A method of inventory valuation for accounting purposes. The accounting assumption is that the most recently received (last in) is the first to be used or sold (first out) for costing purposes, but there is not necessarily any relationship with the actual physical movement of specific items. See: average cost system.
596
last-mile delivery
A term referring to the transportation of goods from a distribution hub to the final delivery destination or the door of the customer.
597
late finish date (LF)
In the critical path method of project management, the last date upon which a given activity can be completed without delaying the completion date of the project.
598
late order
Syn.: past-due order.
599
late start date (LS)
In the critical path method of project management, the last date upon which a given activity can be started without delaying the completion date of the project.
600
lateness
Delivery date minus due date. Lateness may be positive or, in the case of early jobs, negative. See: earliness, tardiness.
601
launch phase
In this last phase of product development, either the product is fed into the supply chain or the service is made available to consumers.
602
law of diminishing marginal returns
A principle stating that as the quantity of a variable factor applied to a fixed factor is increased, the additional units of the variable factor will result in smaller and smaller increases in output. See: marginal product.
603
law of variability
The more variability that exists in a process, the less productive that process will be.
604
layoff
The process by which employees who are not needed for some extended amount of time are given notice that their services are being discontinued. Benefits may or may not continue during a layoff.
605
layout
Physical arrangement of resources or centers of economic activity (machines, groups of people, workstations, storage areas, aisles, etc.) within a facility. Layout types include product (linear or line), functional (job shop or process), cellular, and fixed position.
606
LBO
Abbreviation for leveraged buyout.
607
LCA
Acronym for life cycle assessment.
608
LCL
1) Acronym for less-than-container-load or less than carload (lot shipment). 2) Acronym for lower control limit.
609
LDI
Acronym for logistics data interchange.
610
lead capacity strategy
Adding capacity to a resource in anticipation of increased future demand. This is done to ensure the ability to satisfy market demand when an increase occurs.
611
lead logistics providers (LLPs)
Organizations that oversee the third-party logistics operations of their clients.
612
lead management tool
A tool used by sales personnel that helps them follow a specified sales process to close deals.
613
lead time
1) A span of time required to perform a process (or series of operations). 2) In a logistics context, the time between recognition of the need for an order and the receipt of goods. Individual components of lead time can include order preparation time, queue time, processing time, move or transportation time, and receiving and inspection time. Syn.: total lead time. See: manufacturing lead time, purchasing lead time. Leadership in Energy and Environmental Design (LEED®
614
standards)
A green (in terms of sustainability) construction rating system that tells how environmentally friendly a building is based on five criteria: sustainable site development, water savings, energy efficiency, materials selection, and indoor environmental quality.
615
leading indicator
A specific business activity index that indicates future trends. For example, housing starts is a leading indicator for the industry that supplies builders’ hardware.
616
lead-time alert
1) A signal that the actual lead time may exceed the planned or expected lead time. 2) An alert or warning generated by a lead-time managed part. An alert will be triggered whenever the part enters a different zone in its buffer. The part progresses through the green, yellow and red zones, which represent increasing criticality.
617
lead-time alert zone
The buffer zone associated with the percentage of lead time that provides the definition for lead- time alerts.
618
lead-time inventory
Inventory that is carried to cover demand during the lead time.
619
lead-time managed part
A critical nonstocked part that will have special attention paid to it over its execution horizon. Typically, these items are critical, long lead-time components that do not have sufficient volume to justify stocking.
620
lead-time offset
A technique used in material requirements planning in which a planned order receipt in one time period requires the release of that order in an earlier time period based on the lead time for the item. Syns.: component lead-time offset, offsetting.
621
lead-time scheduling
Development of a schedule of start and completion times of planned operations for a manufacturing order by calculation of the lead time. The calculation includes the duration of all operations, interoperation times, and order administration times. See: back scheduling, central point scheduling, forward scheduling, probable scheduling.
622
lean
Syn.: lean production.
623
lean enterprise
A group of individuals, functions, and sometimes legally separate but operationally synchronized organizations. The value stream defines the lean enterprise. The objectives of the lean enterprise are to correctly specify value to the ultimate customer and to analyze and focus the value stream so that it does everything from product development and production to sales and service in a way that actions that do not create value are removed and actions that do create value proceed in a continuous flow as pulled by the customer. Lean enterprise differs from a virtual corporation, in which the organizational membership and structure keep changing.
624
lean manufacturing
Syn.: lean production.
625
lean metric
A metric that permits a balanced evaluation and response, such as improving quality without sacrificing quantity objectives. The types of metrics are financial, behavioral, and
626
core-process performance
related.
627
lean production
A philosophy of production that emphasizes the minimization of the amount of all the resources (including time) used in the various activities of the enterprise. It involves identifying and eliminating non-value-adding activities in design, production, supply chain management, and customer management. Lean producers employ teams of multiskilled workers at all levels of the organization and use highly flexible, increasingly automated machines to produce volumes of products in potentially enormous variety. Lean production contains a set of principles and practices to reduce costs through the relentless removal of waste and through the simplification of all manufacturing and support processes. Syns: lean, lean manufacturing.
628
lean six sigma
A methodology that combines the improvement concepts of lean and six sigma. It uses the seven wastes of lean and the define, measure, analyze, improve, control (DMAIC) process from six sigma and awards recognition of competence through judo-style belts.
629
learning curve
A curve reflecting the rate of improvement in time per piece as more units of an item are made. A planning technique, the learning curve is particularly useful in project- oriented industries in which new products are frequently phased in. The basis for the learning curve calculation is that workers will be able to produce the product more quickly after they get used to making it. Syns.: experience curve, manufacturing progress curve.
630
learning management system
A software system for delivering and managing education and training within an organization.
631
learning organization
1) A group of people who have woven a continuous, enhanced capacity to learn into the corporate culture. 2) An organization in which learning processes are analyzed, monitored, developed, and aligned with competitive goals.
632
lease
A rental agreement lasting an extended period.
633
level loading
Syn.: load leveling.
634
least changeover cost
Determining the lowest cost of making machine changeovers between jobs by sequencing the jobs accordingly.
635
level of effort
In project management, a support activity (e.g., customer liaising) that is not easily measured by discrete accomplishment. It usually has a uniform work rate.
636
least total cost
A dynamic lot-sizing technique that calculates the order quantity by comparing the setup (or ordering) costs and the carrying cost for various lot sizes and selects the lot size in which these costs are most nearly equal. See: discrete order quantity, dynamic lot sizing.
637
least unit cost
A dynamic lot-sizing technique that adds ordering costs and inventory carrying cost for each trial lot size and then divides by the number of units in the lot size. Ultimately, the lot size with the lowest unit cost is chosen. See: discrete order quantity, dynamic lot sizing.
638
least-squares method
A method of curve fitting that selects a line of best fit through a plot of data to minimize the sum of squares of the deviations of the given points from the line. See: regression analysis.
639
leg
A portion of a complete trip.
640
legacy systems
A computer application program that is old and interfaces poorly with other applications but is too expensive to replace. It often runs on antiquated hardware.
641
legal environment
The governmental restrictions placed on an organization regarding the goods and services provided by the business, such as environmental regulations, export or import restrictions, safety regulations, and mandated deregulations.
642
lessee
An entity to which a lease is given.
643
lessor
An entity that gives a lease.
644
less-than-container/carload (LCL)
A shipment that occupies less than the maximum cubic or weight capacity of a container and therefore is shipped in the same container with other LCL cargo. As such, these shipments do not qualify for carload quantity rate discounts. See: less-than-truckload (LTL).
645
less-than-truckload (LTL)
1) A small shipment that does not fill the truck. 2) A shipment of insufficient weight to qualify for a truckload quantity rate discount (usually set at about 10,000 pounds) normally offered to a general commodity trucker.
646
letter of credit (L/C)
An assurance by a bank that payment will be made as long as the sales terms agreed to by the buyer and seller are met. This method of payment for sales contracts provides a high degree of protection for the seller.
647
level
A code applied to every part or assembly in a product structure to signify the relative point at which that part or assembly is used within the product structure. Often end-items are assigned level 0, and the components and subassemblies that go into the end-items are assigned level 1, level 2, and so on. The material requirements planning explosion process starts at level 0 and proceeds downward one level at a time.
648
level of service
A measure (usually expressed as a percentage) of satisfying demand through inventory or by the current production schedule in time to satisfy the customers’ requested delivery dates and quantities. In a make-to-stock environment, level of service is sometimes calculated as the percentage of orders picked complete from stock upon receipt of the customer order, the percentage of line items picked complete, or the percentage of total dollar demand picked complete. In make-to-order and design-to-order environments, level of service is the percentage of times the customer-requested or acknowledged date was met by shipping complete product quantities. Syns.: measure of service, service level. See: cycle service level.
649
level production method
A production planning method that maintains a stable production rate while varying inventory levels to meet demand. Syns.: level strategy, production leveling. See: level schedule.
650
level production schedule
Syn.: level schedule.
651
level schedule
1) In traditional management, a production schedule or master production schedule that generates material and labor requirements that are as evenly spread over time as possible. Finished goods inventories buffer the production system against seasonal demand. See: level production method. 2) In just in time, a level schedule (usually constructed monthly) in which each day’s customer demand is scheduled to be built on the day it will be shipped. A level schedule is the output of the load-leveling process. Syns.: JIT master schedule, level production schedule. See: load leveling.
652
level strategy
Syn.: level production method.
653
level-demand strategy
A strategy of keeping capacity level and not variable with demand.
654
leveling
Syn.: resource leveling.
655
leverage-capital structure ratio
An indicator of whether or not a company has the ability to retire its long-term debts.
656
leveraged buyout (LBO)
A takeover of a company using borrowed funds. The assets of the acquired company are used as partial collateral for the loan.
657
leveraging purchase volume
Buying in large quantities to take advantage of volume price or shipping discounts.
658
LF
A shortened form of the phrase “late finish date.”
659
liabilities
An accounting or financial term (balance sheet classification of accounts) representing debts or obligations owed by a company to creditors. Liabilities may have a short- term time horizon, such as accounts payable, or a longer-term obligation, such as mortgage payable or bonds payable. See: assets, balance sheet, debt, owner’s equity.
660
licensing
Paying a fee for permission to manufacture and sell a product created by another.
661
life cycle analogy method
A method for forecasting the life cycle of a new product or service, including the introduction, growth, maturity, and decline phases. In addition to time frames, this qualitative technique tries to estimate demand levels.
662
life cycle analysis
A quantitative forecasting technique that is based on applying past patterns of demand data and that covers introduction, growth, maturity, saturation, and decline of similar products to a new product family.
663
life cycle assessment (LCA)
Understanding the human and environmental impacts during the life of a product, process, or service, including energy, material, and environmental inputs and outputs. Sometimes called cradle-to-grave analysis, LCA includes raw material extraction through materials processing, manufacture, distribution, use, repair and maintenance, and disposal or recycling.
664
life cycle costing
In evaluating alternatives, the consideration of all costs—including acquisition, operation, and disposition costs—that will be incurred over the entire time of product ownership.
665
life testing
The simulation of a product’s life under controlled real-world conditions to see if it holds up and performs as required.
666
lifetime buy
A process for purchasing potential discontinued components or products to support the remaining life cycle of a product.
667
LIFO
Acronym for last in, first out.
668
lighter
A short-haul flat-bottomed barge.
669
lightless plant
Syn.: dark factory.
670
LIMIT
Acronym for lot-size inventory management interpolation technique.
671
limited access
Securing inventory, usually in a locked environment, to protect it from theft and to help improve inventory count accuracy.
672
limited liability company
In the United States, a business organization that, as with a corporation, enjoys limited liability yet is not a taxable entity.
673
limited life material
Material having a finite shelf life.
674
limited partnership
A partnership having two types of partners: (1) limited partners who contribute assets to the company without participating in management and (2) general partners who manage the company and are responsible for all debts.
675
limiting operation
The operation with the least capacity in a series of operations with no alternative routings. The capacity of the total system can be no greater than the limiting operation, and as long as this limiting condition exists, the total system can be effectively scheduled by scheduling the limiting operation and providing this operation with proper buffers. See: protective capacity, protective inventory.
676
line
1) A specific physical space for the manufacture of a product that in a flow shop layout is represented by a straight line. In actuality, this may be a series of pieces of equipment connected by piping or conveyor systems. 2) A type of manufacturing process used to produce a narrow range of standard items with identical or highly similar designs. Production volumes are high, production and material-handling equipment is specialized, and all products typically pass through the same sequence of operations. See: assembly line.
677
line balancing
1) The balancing of the assignment of the tasks to workstations in a manner that minimizes the number of workstations and minimizes the total amount of idle time at all stations for a given output level. In balancing these tasks, the specified time requirement per unit of product for each task and its sequential relationship with the other tasks must be considered. See: uniform plant loading. 2) A technique for determining the product mix that can be run down an assembly line to provide a fairly consistent flow of work through that assembly line at the planned line rate.
678
line efficiency
A measure of actual work content versus cycle time of the limiting operation in a production line. Line efficiency (as a percentage) is equal to the sum of all station task times divided by the longest task time multiplied by the number of stations. In an assembly line layout, the line efficiency is 100 percent minus the balance delay percentage.
679
line functions
Areas involved in daily operations. For example, logistics line functions include inventory control, order processing, warehousing, and packaging.
680
line haul
The portion of a transportation journey that moves between two transportation terminals. It is distinguished from and excludes the pickup and delivery portions of a journey used to acquire or distribute less-than-truckload freight. For motor carrier transportation, the shipment is loaded in a semi- permanent trailer configuration that maximizes the amount of freight that each driver can legally haul over that portion of the journey. This may involve hauling multiple trailers.
681
line haul costs
Basic costs of carrier operation to move a container of freight, including drivers’ wages and usage depreciation. These vary with the cost per mile, the distance shipped, and the weight moved. A common method for representing this cost is by the hundredweight, often abbreviated as cwt.
682
line item
One item on an order, regardless of quantity.
683
line loading
The loading of a production line by multiplying the total pieces by the rate per piece for each item to come up with a finished schedule for the line.
684
line manager
A manager involved in managing a department that is directly involved in making a product.
685
line manufacturing
Repetitive manufacturing performed by specialized equipment in a fixed sequence.
686
line of balance planning
A project planning technique using a lead-time offset chart and a chart of required final assembly completions to graph a third bar chart showing the number of each component that should be completed to date. This bar chart forms a descending line, and aggregate component completions are then plotted against this line of balance. This is a crude form of material planning.
687
line of credit
A contract that enables a company to borrow funds at any time up to a predetermined limit.
688
line scrap
The worth of work in process and raw materials scrapped because of faulty processing as a percentage of the total value of production at standard cost.
689
linear decision rules
A modeling technique using simultaneous equations (e.g., the establishment of aggregate workforce levels) based upon minimizing the total cost of hiring, firing, holding inventory, backorders, payroll, overtime, and undertime.
690
linear layout
A layout of various machines in one straight line. This type of layout makes it difficult to reallocate operations among workers and machinery.
691
linear or I-shaped layout (of warehouse)
A layout of various machines in one straight line or when the receiving dock and the shipping dock are far from each other. This type of layout makes it difficult to reallocate operations among workers and takes additional transportation time and/or storage.
692
linear production
Actual production to a level schedule so that a plotting of actual output versus planned output forms a straight line even when plotted for a short segment of time.
693
linear programming
Mathematical models for solving linear optimization problems through minimization or maximization of a linear function subject to linear constraints. For example, in blending gasoline and other petroleum products, many intermediate distillates may be available. Prices and octane ratings as well as upper limits on capacities of input materials that can be used to produce various grades of fuel are given. The problem is to blend the various inputs in such a way that (1) cost will be minimized (profit will be maximized), (2) specified optimum octane ratings will be met, and (3) the need for additional storage capacity will be avoided.
694
linear regression
A statistical data technique that expresses a variable as a linear function of an independent variable. Linear regression can be used to develop forecasting models.
695
linear trend forecasting
Using simple linear regression to estimate future trends.
696
linearity
1) Production at a constant quantity. 2) Use of resources at a level rate, typically measured daily or more frequently.
697
link
The transportation method used in a logistics system to connect the nodes of the system.
698
liquid waste generated
One of the five green SCOR metrics. This includes waste that is either disposed of or released to open water or sewer systems.
699
liquid zone
The time period beyond the slushy zone when any changes can be made to the master production schedule as long as it is within the parameters of the production plan. See: frozen zone, slushy zone.
700
liquidation
The selling of assets in return for cash. The assets are usually sold into secondary markets where either the product or dissassembled component assets may be resold. This can be a viable income stream for reverse supply chains. Syn.: salvage.
701
liquidator
A secondary market company that buys products that have reached the ends of their sales lives in the primary channel. Liquidators are often contracted to move returned goods that will not provide enough value if renewed or that are past their useful lives.
702
liquidity
The ability of a firm to pay debts as they come due.
703
liquidity ratio
Financial ratios that are indicators of a firm’s ability to retire short-term financial obligations.
704
listening post
The translation of unstructured text into demand or supply signals. These are used as a form of sensing primarily for quality, warranty, demand, and customer satisfaction analysis.
705
Little’s Law
When a system has fixed capacity and is relatively stable, the lead time and work-in-process (WIP) inventory level are proportional, and an increase or decrease in either WIP or lead time will produce a proportional change in the other. The formula for the law is WIP equals throughput rate multiplied by lead time, or, more generally, total entities equals entities divided by unit time multiplied by total time.
706
live load
Syn.: available work.
707
load
The amount of planned work scheduled for and actual work released to a facility, work center, or operation for a specific span of time. This is usually expressed in terms of standard hours of work or, when items consume similar resources at the same rate, units of production. Syn.: workload.
708
load center
Syn.: work center.
709
load leveling
Spreading orders out in time or rescheduling operations so that the amount of work to be done in sequential time periods tends to be distributed evenly and is achievable. Although both material and labor are ideally level loaded, specific businesses and industries may load to one or the other exclusively (e.g., service industries). Syns.: capacity smoothing, level loading. See: level schedule.
710
load profile
A display of future capacity requirements based on released and/or planned orders over a given span of time. Syn.: load projection. See: capacity requirements plan.
711
load projection
Syn.: load profile.
712
load-distance analysis
In layout analysis, a method of choosing a facility layout based on selecting the layout with the shortest product or material travel per time period.
713
loading port
The port where cargo is loaded onto an exporting vessel.
714
local area network (LAN)
A high-speed data communication system for linking computer terminals, programs, storage, and graphic devices at multiple workstations distributed over a relatively small geographic area such as a building or campus.
715
local measures
The set of measurements that relates to a resource, operation, process, or part and usually has low correlation to global organization measures. Examples are errors per printed page, departmental efficiency, and volume discounts.
716
local rate
A rate pertaining to two points served by a single carrier.
717
local source point optimization
Assessing the impact of buying from a local source rather than a distant one to reduce both transportation and inventory costs and improve customer service-level and revenue objectives.
718
location audit
A methodical verification of the location records for an item or group of items in inventory to ensure that when the record shows an item’s location, it is, in fact, in that location.
719
location grid
A layout of a warehouse used to improve inventory management and cycle counting.
720
location tag
A bar-coded sign situated at a warehouse location. The location number can be read or scanned.
721
locational determinants
Information or factors considered in determining where to put a facility.
722
locator file
A file used in a stockroom (or anywhere) providing information about where each item is located. See: locator system.
723
locator system
A system for maintaining a record of the storage locations of items in inventory. See: locator file.
724
log normal distribution
A continuous probability distribution in which the logarithms of the variable are normally distributed.
725
logbook
A daily record kept by an interstate driver of time and miles driven and duty-related and non-duty-related activities.
726
logical relationship
In project management, a dependency between two activities or between a milestone and an activity. The four possible relationships are (1) finish-to-start—activity A must be finished before activity B can start; (2) finish-to-finish— activity A must be finished before activity B can finish; (3) start- to-start—activity A must start before activity B can start; and (4) start-to-finish—activity A must start before activity B can finish.
727
logistics
The subset of supply chain management that controls the planning, coordinating and movement of resources, such as people, materials, inventory, and equipment, from one location to another. It includes the forward and reverse movement, handling, and storage of resources between two points.
728
logistics channel
A set of supply chain partners who participate in storage, transportation, and communications that contribute to the flow of goods.
729
logistics data interchange (LDI)
The electronic transmission of logistics information via computer systems.
730
logistics management
The part of supply chain management that oversees the planning and execution of forward and reverse flows of goods and related information between points in the supply chain to meet customer requirements.
731
logistics social responsibility
The subset of corporate social responsibility that relates to logistics, including minimizing negative impacts, monitoring and controlling, reporting, and continuously improving in social responsibility areas that include the environment, health and safety, and labor issues related to warehousing, transportation, and other logistics areas.
732
logistics strategy
A plan for the logistics elements of a business—including warehousing, information systems, and transportation—that is aligned with the overall business strategy. See: strategic plan.
733
logistics system
The planning and coordination of the physical movement aspects of a firm’s operations such that a flow of raw materials, parts, and finished goods is achieved in a manner that minimizes total costs for the levels of service desired.
734
long haul
A long distance in terms of the transport of goods or passengers. The actual distance would be specific to the mode of transport. For example, in trucking, it refers to journeys too long to be made in one day.
735
long ton
Two thousand two hundred and forty (2,240) pounds.
736
longest-task-time (LTT) heuristic
The method of attaching additional jobs to a workstation based on priority order, with the longest task scheduled first.
737
long-term planning
Business planning that addresses the strategic needs of the organization. See: business plan, resource planning.
738
long-term production plan
Syn.: aggregate production plan (APP).
739
loose standard
A standard time greater than that required by a qualified worker with normal skill and effort.
740
loss leader pricing
Pricing some products below cost to attract customers into the store, in the expectation that they will buy other items as well.
741
loss to society
According to Genichi Taguchi, a loss to society occurs whenever a dimension of a product differs from its target value. This loss increases with the square of the deviation from the target. According to this concept, a loss to society occurs even though a dimension is within tolerance—as long as the dimension is not exactly on the target. For example, a loss to society might occur because an assembly made of components that are within specification, but not exactly on target, wears out faster than an assembly composed of components that are all exactly on the target.
742
lost sale
A potential sale that was not completed, usually due to lack of availability of the item in question.
743
lost-time factor
The complement of utilization; that is, one minus the utilization factor. It is the percentage of time lost to machine, tool, and worker unavailability. It can be calculated as the planned hours minus actual hours used, divided by the planned hours. See: balance delay, utilization.
744
lot
A quantity produced together and sharing the same production costs and specifications. See: batch.
745
lot control
A set of procedures (e.g., assigning unique batch numbers and tracking each batch) used to maintain lot integrity from raw materials from the supplier through manufacturing to consumers.
746
lot cost
In cost accounting, those costs associated with processing a common lot or quantity of parts having the same specifications.
747
lot number
A unique identification assigned to a homogeneous quantity of material. Syns.: batch number, mix number.
748
lot number control
Assigning a unique number to each instance of receipt and carrying forth that number into subsequent manufacturing processes so that, in review of an end-item, each lot consumed from raw materials through end- item can be identified as having been used for the manufacture of this specific end-item lot.
749
lot number traceability
Tracking parts by lot numbers to a group of items. This tracking can assist in tracing quality problems to their source. A lot number identifies a designated group of related items manufactured in a single run or received from a vendor in a single shipment.
750
lot operation cycle time
The length of time required from the start of setup to the end of cleanup for a production lot at a given operation, including setup, production, and cleanup.
751
lot size
The amount of a particular item that is ordered from the plant or a supplier or issued as a standard quantity to the production process. Syn.: order quantity.
752
lot sizing
The process of, or techniques used in, determining lot size. See: order policy.
753
lot splitting
Dividing a lot into two or more sublots and simultaneously processing each sublot on identical (or very similar) facilities as separate lots, usually to compress lead time or to expedite a small quantity. Syn.: operation splitting.
754
lot tolerance percent defective (LTPD)
Expressed in percent defective, the poorest quality in an individual lot that should be accepted. Note: The LTPD is used as a basis for some inspection systems and is commonly associated with a value for a small consumer’s risk.
755
lot traceability
The ability to identify the lot or batch number of product in terms of one or all of the following: its composition, purchased parts, manufacturing date, or shipped items. In certain regulated industries, lot traceability may be a legislative requirement.
756
lot-for-lot (L4L)
A lot-sizing technique that generates planned orders in quantities equal to the net requirements in each period. See: discrete order quantity.
757
lot-size code
A code that indicates the lot-sizing technique selected for a given item. Syn.: order policy code.
758
lot-size inventory
Inventory that results whenever quantity price discounts, shipping costs, setup costs, or similar considerations make it more economical to purchase or produce in larger lots than are needed for immediate purposes.
759
ot-size inventory management interpolation technique (LIMIT)
A technique for looking at the lot sizes for groups of similar products to determine the effect economic lot sizes will have on the total inventory, total setup costs, and machine availability.
760
lot-size system
Syn.: fixed reorder quantity inventory model.
761
machine downtimes
Periods during which a machine is unavailable due to tool breakage, worker unavailability, machine breakdown, maintenance, teardown, setup, and other factors.
762
machine flexibility
In work-cell design, choosing between general-purpose machinery versus special-purpose machinery so that the lowest cost and most adaptability is achieved.
763
low-cost-provider strategy
A strategy of offering the lowest prices in the market to gain share and increase sales volume in industries composed of numerous players offering the same type of products.
764
machine hours
The amount of time, in hours, that a machine is actually running. Machine hours, rather than labor hours, may be used for planning capacity for scheduling and for allocating costs.
765
lower control limit (LCL)
Control limit for points below the central line in a control chart.
766
lower specification limit (LSL)
In statistical process control, charting the line that defines the minimum acceptable level of random output. See: tolerance limits.
767
low-level code
A number that identifies the lowest level in any bill of material at which a particular component appears. Net requirements for a given component are not calculated until all the gross requirements have been calculated down to that level. Low-level codes are normally calculated and maintained automatically by the computer software. Syn.: explosion level.
768
LS
Abbreviation for late start date.
769
LSL
Acronym for lower specification limit.
770
LTL
Acronym for less-than-truckload.
771
LTPD
Acronym for lot tolerance percent defective.
772
LTT
Acronym for longest-task-time.
773
lumpy demand
Syn.: discontinuous demand.
774
M4SC
A supply chain management reference model for describing processes, spanning activities from interpretation of business strategy to assigning critical supply chain resources. By describing supply chain management using process building blocks, the model can be used to identify and address critical supply chain management deficiencies.
775
machine attachments
Additional machine parts that decrease the time needed to complete a task and the level of human involvement required.
776
machine center
A production area consisting of one or more machines (and, if appropriate for capacity planning, the necessary support personnel) that can be considered as one unit for capacity requirements planning and detailed scheduling.
777
machine learning
Artificial intelligence software that is capable of analysis, self-training, and observation to improve its own performance. It is often used to assist with planning and forecasting.
778
machine loading
The accumulation by workstation, machine, or machine group of the hours generated from the scheduling of operations for released orders by time period. Machine loading differs from capacity requirements planning in that it does not use the planned orders from material requirements planning but operates solely from released orders. It may be of limited value because of its limited visibility of resources.
779
machine productivity
A partial productivity measure that describes the rate of output of a machine per unit of time compared with an established standard or rate of output. Machine productivity can be expressed as output per unit of time or output per machine hour. See: labor productivity, productivity.
780
machine utilization
A measure of how intensively a machine is being used. Machine utilization compares the actual machine time (setup and run time) with available time.
781
machine-limited capacity
A production environment where a specific machine limits throughput of the process. See: constraint, throughput.
782
machining center
A machine capable of performing a variety of metal, wood, or plastic removal operations on a part, usually operated by numerical control.
783
macro environment
The environment external to a business including technological, economic, natural, and regulatory forces that marketing efforts cannot control.
784
MAD
Acronym for mean absolute deviation.
785
maintainability
The characteristic of equipment design and installation that enables the equipment to be repaired easily and efficiently. See: serviceability.
786
maintenance, repair, and operating (MRO) supplies
Items used in support of general operations and maintenance such as maintenance supplies, spare parts, and consumables used in the manufacturing process and supporting operations.
787
maintenance, repair, and overhaul (MRO)
All activities designed to ensure that an item or piece of equipment can continue to perform its required functions reliably. This often involves either repairing or remanufacturing the item to achieve the desired level of performance. MRO is prominent in the aviation industry, but it can also be applied in a general remanufacturing context.
788
major setup
The equipment setup and related activities required to manufacture a group of items in sequence, exclusive of the setup required for each item in the group.
789
make
The process that describes the activities associated with the conversion of materials or creation of content for services. The process is characterized by adding value to products or services through activities such as assembly, mixing, separating, forming, machining, and chemical processes. The Make process has been renamed to Transform in the Supply Chain Operations Reference Digital Standard (SCOR DS). See: transform.
790
make-or-buy cost analysis
A comparison of all the costs associated with making an item versus the cost of buying the item.
791
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.
792
make-to-order (MTO)
A production environment where a good or service can be made after receipt of a customer’s order. The final product is usually a combination of standard items and items custom-designed to meet the special needs of the customer. Where options or accessories are stocked before customer orders arrive, the term assemble-to-order is frequently used. Syn.: build-to-order (BTO). See: assemble-to- order (ATO), make-to-stock (MTS).
793
make-to-stock (MTS)
A production environment where products can be and usually are finished before receipt of a customer order. Customer orders are typically filled from existing stocks, and production orders are used to replenish those stocks. Syn.: produce-to-stock. See: assemble-to-order (ATO), make-to-order (MTO).
794
Malcolm Baldrige National Quality Award (MBNQA)
An award established by Congress in 1987 to raise awareness of quality management and to recognize U.S. companies that have implemented successful quality management systems. Up to four awards may be given annually in each of three categories: manufacturing company, service company, and small business. The award is named after the late U.S. Secretary of Commerce, Malcolm Baldrige, a proponent of quality management. The U.S. Commerce Department’s National Institute of Standards and Technology manages the award, and the American Society for Quality administers it. Syn.: Baldrige Award.
795
management
The functions of planning, organizing, and controlling the transformation process and its utility in providing a good or service to customers.
796
management by objectives (MBO)
A participative goal- setting process that enables the manager or supervisor to construct and communicate the goals of the department to each subordinate. At the same time, the subordinate is able to formulate personal goals and influence the department’s goals.
797
management by walking around (MBWA)
The management technique of managers touring a facility on a regular basis to talk with workers and staff about problems, trends, and potential solutions.
798
management estimation
A judgmental forecasting technique whereby responsible individuals predict the demand for new products or alter a quantitative forecast for existing products largely on the basis of experience and intuition. Other judgmental forecasting techniques may be used in combination with management estimation to improve the accuracy of the estimate. See: Delphi method, historical analogy, panel consensus, pyramid forecasting.
799
management information system (MIS)
Integrated approach for providing interpreted and relevant data that can help managers make decisions. This information can reflect the progress or lack of progress made in achieving major objectives.
800
management science
Syn.: operations research.
801
managerial accounting
A branch of accounting that uses techniques such as break-even analysis, cost-volume-profit analysis, make-buy analysis, and others to provide information used in day-to-day decision-making.
802
man-hour
A unit of measure representing one person working for one hour. The combination of n people working for h hours produces nh man-hours. Frequent qualifications to the definition include (1) designation of work effort as normal effort and (2) designation of time spent as actual hours.
803
manifest system
A production control system in which the exact sequence of items to be assembled is required.
804
manual processing
Doing any work related to material flow by hand or with simpler non-motorized equipment, such as moving items with pallet jacks.
805
manual rescheduling
The most common method of rescheduling open orders (scheduled receipts). Under this method, the material requirements planning system provides information about the part numbers and order numbers that need to be rescheduled. Due dates and order quantity changes required are then analyzed and changed by material planners or other authorized persons. Syn.: planner intervention. Ant.: automatic rescheduling.
806
manufacturability
A measure of the design of a product or process in terms of its ability to be produced easily, consistently, and with high quality.
807
manufacturer’s agent
Syn.: manufacturer’s representative.
808
manufacturer’s representative
One who sells goods for several firms but does not take title to them. Syns.: manufacturer’s agent, manufacturing representative.
809
manufacturing
A series of interrelated activities and operations involving the design, material selection, planning, production, quality assurance, management, and marketing of discrete consumer and durable goods.
810
manufacturing authorization
Syn.: manufacturing order.
811
manufacturing automation protocol (MAP)
An application- specific protocol based on the International Organization for Standardization’s open systems interconnection (ISO) standards. It is designed to allow communication between a company’s computers and computers from different vendors in the manufacturing shop floor environment.
812
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. Syns.: M-day calendar, planning calendar, production calendar, shop calendar. See: resource calendar.
813
manufacturing capital asset value
The depreciated value of manufacturing fixed assets.
814
manufacturing cycle
Syn.: manufacturing lead time.
815
manufacturing cycle efficiency
The ratio of value-added time to manufacturing lead time or cycle time. Manufacturing cycle time can be improved by the reduction of manufacturing lead time by eliminating non-value-added activities such as inspecting, moving, and queuing.
816
manufacturing data sheet
Syn.: routing.
817
manufacturing direct
The practice of shipping products and goods directly from the manufacturing plant to the customer, bypassing consolidation activities in warehouses and distribution centers. See: drop shipment.
818
manufacturing engineering
The engineering discipline concerned with designing and improving production processes. See: process engineering.
819
manufacturing environment
The framework in which manufacturing strategy is developed and implemented. Elements of the manufacturing environment include external environmental forces; corporate strategy; business unit strategy; other functional strategies (marketing, engineering, finance, etc.); product selection; product/process design; product/process technology; and management competencies. The manufacturing environment description often refers to whether a company, plant, product, or service is make-to-stock, make-to-order, or assemble-to-order. Syn.: production environment.
820
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 and then generate reports, graphical displays, and alarms that inform operations personnel what is going on in the plant currently and what occurred during 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 is generated. Cause-and-effect relationships can thereby be determined. The quality data at times affects the control parameters that are used to meet product specifications either dynamically or offline.
821
manufacturing instruction
A set of detailed instructions for carrying out a manufacturing process. It is usually referenced by the routing and thus can simplify the content of the routing.
822
manufacturing layout strategies
An element of manufacturing strategy. It is the analysis of physical capacity, geography, functional needs, corporate philosophy, and product-market/ process focus to systematically respond to required facility changes driven by organizational, strategic, and environmental considerations.
823
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-to-stock products, it is the length of time between the release of an order to the production process and receipt into inventory. Manufacturing lead time includes order preparation time, queue time, setup time, run time, move time, inspection time, and put-away time. Syns.: manufacturing cycle, production cycle, production lead time. See: lead time.
824
manufacturing order
A document, group of documents, or schedule conveying authority for the manufacture of specified parts or products in specified quantities. Syns.: job order, manufacturing authorization, production order, production release, run order, shop order, work order. See: assembly parts list, batch card, blend order, fabrication order, mix ticket, work order.
825
manufacturing order reporting
See: production reporting and status control.
826
manufacturing philosophy
The set of guiding principles, driving forces, and ingrained attitudes that helps communicate goals, plans, and policies to all employees and that is reinforced through conscious and subconscious behavior within the manufacturing organization.
827
manufacturing planning and control system (MPC)
A closed- loop information system that includes the planning functions of production planning (sales and operations planning), master production scheduling, material requirements planning (MRP), and capacity requirements planning. Once the plan has been accepted as realistic, execution begins. The execution functions include input-output control, detailed scheduling, dispatching, anticipated delay reports (department and supplier), and supplier scheduling. A closed-loop MRP system is one example of a manufacturing planning and control system.
828
manufacturing process
The series of operations performed upon material to convert it from the raw material or a semifinished state to a state of further completion. Manufacturing processes can be arranged in a process layout, product layout, cellular layout, or fixed-position layout. Manufacturing processes can be planned to support make-to- stock, make-to-order, assemble-to-order, and so forth, based on the strategic use and placement of inventories. See: production process, transformation process.
829
manufacturing process development
The definition and implementation of an execution system for making a part, good, or service that is consistent with the objectives of the firm.
830
manufacturing progress curve
Syn.: learning curve.
831
manufacturing quality improvements for return reduction
An analysis of quality losses and returns as well as opportunities for inventory reduction in an effort to address manufacturing quality and improve manufacturing costs, capacity, and service factors. This also involves formulating a process and timeline by which to move off-grade or returned products off the books.
832
manufacturing ramp-up
The final phase of new product and process development in which the new product moves from pilot production to full-scale manufacturing.
833
manufacturing release
The issuance of a manufacturing order into the factory.
834
manufacturing reliability improvement
Analysis and simulation of the manufacturing process to identify opportunities to increase equipment reliability and improve manufacturing costs, capacity, and service factors.
835
manufacturing representative
Syn.: manufacturer’s representative.
836
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 and 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 (MRP), 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.
837
manufacturing strategy
A collective pattern of decisions that acts upon the formulation and deployment of manufacturing resources. To be most effective, the manufacturing strategy should act in support of the overall strategic direction of the business and provide for competitive advantages (edges).
838
manufacturing volume strategy
An element of manufacturing strategy that includes a series of assumptions and predictions about long-term market, technology, and competitive behavior in the following areas: (1) the predicted growth and variability of demand; (2) the costs of building and operating different-sized plants; (3) the rate and direction of technological improvement; (4) the likely behavior of competitors; and (5) the anticipated impact of international competitors, markets, and sources of supply. It is the sequence of specific volume decisions over time that determines an organization’s long-term manufacturing volume strategy.
839
many-to-many communication
Communication that enables many people to exchange information with many other people.
840
MAP
Acronym for manufacturing automation protocol.
841
MAPE
Acronym for mean absolute percent error.
842
MAPI method
1) A procedure for equipment replacement analysis sponsored by the Machinery and Allied Products Institute. 2) A method of capital investment analysis that has been formulated by the Machinery and Allied Products Institute. This method uses a fixed format and provides charts and graphs to facilitate calculations. A prominent feature of this method is that it explicitly includes obsolescence.
843
mapping software
Software that plans the sequence of stops a delivery driver has to make to ensure the company can deliver shipments efficiently, safely, and accurately.
844
margin
A ratio of an organization’s operating profit to revenues, measuring management’s ability to control operating expenses.
845
marginal analysis
A decision rule that optimality occurs when incremental revenue equals incremental cost.
846
marginal cost
The incremental costs incurred when the level of output of some operation or process is increased by one unit.
847
marginal cost of capital
The cost of the next dollar, after taxes, that a firm expects to raise for investment.
848
marginal pricing
Pricing products at a markup over the marginal cost of producing the next item. Marginal costs generally include the variable cost of producing and selling an additional item.
849
marginal product
In economics, the additional quantity of total output following from a one-unit increase in variable input. See: law of diminishing marginal returns.
850
marginal revenue
The incremental sales dollars received when the level of output of some operation is increased by one unit.
851
marginal utility
The additional usefulness and enjoyment received from consuming one more unit of a good or service.
852
market
A set of buyers and sellers exchanging products. Prices tend to equalize through ongoing exchanges between buyers and sellers. Markets include institutional markets, government markets, industrial markets, and consumer markets. See: consumer market, government market, industrial market, institutional market.
853
market boundary
The boundary where the laid-down cost for two companies is equal. Laid-down cost is product cost plus unit transportation cost.
854
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.
855
market dominance
When a firm has very little competition.
856
market hedge
Scheduling or holding an inventory quantity greater than the expected demand because of expected inaccuracy or volatility in the forecasted demand. See: hedge.
857
market penetration
The degree to which a product has been accepted by the marketplace. Syn.: market reach.
858
market plan
The output of the market planning process. The market plan includes the current market position, opportunity and issue analysis, marketing objectives and strategies, action plans, programs, projects, budgets, and pro forma profit and loss statement and management controls. Syn.: brand plan, product plan.
859
market planning
The process of developing market plans for products and services. This process is composed of the following phases:(1) identification; (2) research and analysis of market opportunities; (3) selection of target markets; (4) development of marketing strategies; (5) development of the marketing plans, programs, and projects; and (6) management, execution, and control of the market plans, programs, and projects.
860
market potential lead time
The lead time that will allow an increase in price or the capture of additional business either through existing or new customer channels.
861
market reach
Syn.: market penetration.
862
market research
Syn.: marketing research.
863
market segment
A group of potential customers sharing some measurable characteristics based on demographics, psychographics, lifestyle, geography, benefits, and so forth.
864
market segmentation
A marketing strategy in which the total market is disaggregated into submarkets, or segments, that share some measurable characteristic based on demographics, psychographics, lifestyle, geography, benefits, and so forth.
865
market share
The actual portion of current market demand that a company or product achieves.
866
market strategy
The marketing plan to support the business strategy.
867
market surveys
Questionnaires designed to get feedback from potential customers about demand for a product or service.
868
market targeting
The process of developing measurements of the desirability of given market segments and deciding in which market segments to compete.
869
market value-added
In financial management, the surplus of a firm’s equity over the capital that has been invested in the firm.
870
market-driven
Responding to customers’ needs.
871
market-driven demand management
The process of using market signals, including sensing market conditions based on demand signals, and then shaping demand using programming like price optimization; trade promotion planning; new product launch plan alignment; and social, digital, and mobile applications.
872
marketing
The design, pricing, promotion, and distribution of goods to create transactions with businesses and consumers.
873
marketing channel
A set of organizations through which a good or service passes as it goes from a raw state to the final consumer. See: channels of distribution, distribution channel.
874
marketing cost analysis
The study and evaluation of the relative profitability or costs of different marketing operations in terms of customers, marketing units, commodities, territories, or marketing activities. Cost accounting is typically used.
875
marketing management
Syn.: demand management.
876
marketing mix
The concept that marketing strategy determines product, price, promotion, and channel targets in selected markets.
877
marketing research
The systematic gathering, recording, and analyzing of data about problems relating to the marketing of goods and services. Such research may be undertaken by impartial agencies or by business firms or their agents. Marketing research includes several types: (1) Market analysis (product potential is a type) is the study of the size, location, nature, and characteristics of markets; (2) sales analysis (or research) is the systematic study and comparison of sales (or consumption) data; (3) consumer research (motivation research is a type) is concerned with the discovery and analysis of consumer attitudes, reactions, and preferences. Syn.: market research.
878
marketing strategy
The basic plan the marketing function expects to use to achieve its business and marketing objectives in a particular market. The strategy includes marketing expenditures, marketing mix, and marketing allocation.
879
market-positioned strategy
A location strategy that focuses on the customer by placing warehouses closer to the customer. See: product-positioned strategy.
880
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.
881
marks and numbers
Identifying agents placed on products or containers used to identify a shipment or its parts.
882
marquis partners
Key strategic relationships. By partnering with big players, via equity offerings if necessary, a company creates barriers to entry into supply chain relationships for competitors.
883
mass customization
The use of mass production techniques to create large volume of products in a wide variety. This strategy keeps production costs low while enabling customized output primarily by utilizing postponement or delayed differentiation.
884
mass marketing
The strategy of sending the same message to all potential customers.
885
mass production
High-quantity production characterized by specialization of equipment and labor. See: continuous production.
886
master black belt
In six sigma, a quality expert capable of implementing strategic quality efforts as well as teaching other facilitators (black belts) the quality applications within all levels of the organization.
887
master budget
The document that consolidates all other budgets of an organization into an overall plan, including the projection of a cash flow statement, an operating statement for the budget period, and a balance sheet for the end of the budget period. Syn.: static budget.
888
master contract
1) A contract that lays out the general provisions of a long-term agreement and governs most of the details of future individual contracts or purchase orders for a period of time. 2) In relation to unionized labor, the contract between the labor union and the employer. Syn.: master service agreement.
889
master data
An enterprise’s essential core data consisting of basic information needed across the enterprise to conduct business. Master data describes the core entities of the enterprise, including products, customers, suppliers, sites, and charts of accounts.
890
master data accuracy assessment
The regular revalidation of existing master data items, such as those about order lead times, replenishment times, transit times, and other factors, to ensure that the data matches current operational capabilities and performance.
891
master data management (MDM)
A process in which information technology (IT) works with business managers to ensure the uniformity, accuracy, completeness, relevance, integrity, and accountability of the enterprise’s shared master data.
892
master file
A main reference file of information, such as the item master file or work center file. See: detail file, item master file.
893
master pack
A large, protective box used to contain smaller boxes. This reduces materials-handling activities.
894
master planning
A group of business processes that includes the following activities: demand management (which includes forecasting and order servicing), production and resource planning, and master scheduling (which includes the master schedule and the rough-cut capacity plan).
895
master planning of resources
A grouping of business processes that includes the following activities: demand management (the forecasting of sales, the planning of distribution, and the servicing of customer orders), sales and operations planning (sales planning, production planning, inventory planning, backlog planning, and resource planning), and master scheduling (the preparation of the master production schedule and the rough-cut capacity plan).
896
master production schedule (MPS)
A line on the master schedule grid that reflects the anticipated build schedule for those items assigned to the master scheduler. The master scheduler maintains this schedule, and in turn, it becomes a set of planning numbers that drives material requirements planning. It represents what the company plans to produce, expressed in specific configurations, quantities, and dates. The MPS is not a sales item forecast that represents a statement of demand. It must take into account the forecast, the production plan, and other important considerations such as backlog, availability of material, availability of capacity, and management policies and goals. See: master schedule.
897
master route sheet
The authoritative route process sheet from which all other format variations and copies are derived.
898
master schedule
A format that includes time periods (dates), the forecast, customer orders, projected available balance, available-to-promise, and the master production schedule. It takes into account the forecast; the production plan; and other important considerations such as backlog, availability of material, availability of capacity, and management policies and goals. See: master production schedule (MPS).
899
master schedule item
A part number selected to be planned by the master scheduler. The item is deemed critical in its impact on lower-level components or resources such as skilled labor, key machines, or dollars. Therefore, the master scheduler, not the computer, maintains the plan for these items. A master schedule item may be an end-item, a component, a pseudo number, or a planning bill of material.
900
master scheduler
Often the job title of the person charged with the responsibility of managing, establishing, reviewing, and maintaining a master schedule for select items. Ideally, the person should have substantial product, plant, process, and market knowledge because the consequences of this individual’s actions often have a great impact on customer service, material, and capacity planning. See: master production schedule (MPS).
901
master scheduling
The process in which the master schedule is generated and reviewed and adjustments are made to the master production schedule (MPS) to ensure consistency with the production plan. The MPS (the line on the grid) is the primary input to the material requirements plan. The sum of the MPSs for the items within the product family must equal the production plan for that family.
902
master service agreement
Syn.: master contract.
903
match capacity strategy
A capacity strategy that strikes a balance between the lead and lag capacity strategies by adding capacity at approximately the rate of actual demand increase.
904
material analyst
The person assigned responsibility for and identification of the planning requirements for specific items and responsibility for each order.
905
material class
A grouping of materials with similar characteristics for planning and scheduling purposes.
906
material constraint
Usually a misnomer. Material shortages are rarely the constraint; rather, temporary material shortages hinder effective constraint management by inhibiting the ability to fully exploit and/or subordinate to the constraint.
907
material control
Syn.: inventory control.
908
material definition
A definition of the properties and characteristics of a substance.
909
material flexibility
The ability of the transformation process to handle unexpected variations in material inputs.
910
material flow
The movement, protection, storage, and control of materials and products throughout manufacturing, assembly, warehousing, and distribution. These include the movement of materials from unloading to stocking to loading to shipping in a warehouse or a facility. See: process chart, process flow, flow process chart.
911
material handling equipment
Mechanical equipment used in production or warehousing and distribution centers to move, store, control, and protect materials and goods during manufacturing, distribution, consumption, and disposal. See: materials handling, materials handling system, flexible path equipment, industrial trucks.
912
material index
The total of raw material weights divided by final product weight.
913
material list
Syn.: picking list.
914
material lot
A uniquely identifiable amount of a material. A material lot describes the actual quantity or amount of material available, its current state, and its specific property values.
915
material planner
1) The person normally responsible for managing the inventory levels, schedules, and availability of selected items, either manufactured or purchased. Syn.: inventory planner. 2) In a material requirements planning system, the person responsible for reviewing and acting on order release, action, and exception messages from the system. Syn.: parts planner, planner.
916
material planning
Syn.: inventory planning.
917
material receipt inspection
The process of the receiving department comparing the incoming material to the purchase order to verify that the correct material and quantity have been received. The material is then inspected for quality and general condition. A material receipt report is prepared, and copies are distributed to the appropriate departments, such as purchasing and accounting.
918
material release
The introduction of parts into a production process.
919
material requirements plan
The result from the process of material requirements planning.
920
material requirements planning (MRP)
A set of techniques that uses bill of material data, inventory data, and the master production schedule (MPS) to calculate requirements for materials. It makes recommendations to release replenishment orders for material. Further, because it is time phased, it makes recommendations to reschedule open orders when due dates and need dates are not in phase. Time-phased MRP begins with the items listed on the MPS and determines (1) the quantity of all components and materials required to fabricate those items and (2) the date that the components and material are required. Time-phased MRP is accomplished by exploding the bill of material, adjusting for inventory quantities on hand or on order, and offsetting the net requirements by the appropriate lead times.
921
material requisition
The first step to placing a replenishment order. It is initiated by the material user.
922
material review board (MRB)
An organization within a company, often a standing committee, that determines the resolution or disposition of items that have questionable quality or other attributes.
923
material safety data sheet
See: safety data sheet (SDS).
924
material specification
An explanation of the characteristics of the material to be produced or purchased.
925
material sublot
A uniquely identifiable subset of a material lot containing quantity and location. A sublot may be a single item.
926
material usage variance
The difference between the planned or standard requirements for materials to produce a given item and the actual quantity used for a particular instance of manufacture.
927
material yield
Syn.: yield.
928
material-dominated scheduling (MDS)
A technique that schedules materials before processors (equipment or capacity). This technique facilitates the efficient use of materials. MDS can be used to schedule each stage in a process flow scheduling system. Material requirements planning systems use material-dominated scheduling logic. See: processor- dominated scheduling.
929
materials
The components that are processed by an operation.
930
materials efficiency
A concept that addresses the efficiency with which materials are obtained, converted, and shipped in the overall purchasing, production, and distribution process. It can be considered as a companion concept to labor efficiency, and it becomes potentially more significant as the materials portion of cost of goods sold continues to grow.
931
materials handler
An employee who is responsible for moving boxes, packages, and items around a facility or warehouse.
932
materials handling
The movement and storage of goods inside the distribution center. This represents a capital cost and is balanced against the operating costs of the facility.
933
materials handling system
The system of transportation that receives, moves, and delivers materials during the production or distribution process.
934
materials handling time
The time necessary to move materials from one work center to the next work center. It includes waiting for the material handling equipment and actual movement time.
935
materials management
The grouping of management functions supporting the complete cycle of material flow, from the purchase and internal control of production materials to the planning and control of work in process to the warehousing, shipping, and distribution of the finished product.
936
materials requisition
1) An authorization that identifies the items and quantities to be withdrawn from inventory. 2) An authorization that identifies the items and quantities to be included in a purchase order. Syn.: production materials requisition.
937
materials system
Connecting material flows contained in a production system.
938
matériel
A term, used more frequently in nonmanufacturing organizations, to refer to the equipment, apparatuses, and supplies used by an organization.
939
mathematical programming
The general problem of optimizing a function of several variables subject to a number of constraints. If the function and constraints are linear in the variables and a subset of the constraints restricts the variables to be nonnegative, a linear programming problem exists.
940
matrix
A mathematical array having one, two, and sometimes more dimensions into which collections of data may be stored and processed.
941
matrix bill of material
A chart based on the bills of material for a number of products in the same or similar families. It is arranged in a matrix with components in columns and parents in rows (or vice versa) so that requirements for common components can be summarized conveniently.
942
matrix diagram
A graphical technique used to analyze the relationship between two related groups of ideas.
943
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.
944
maverick spending
When employees or managers purchase from nonqualified suppliers and bypass established purchasing procedures.
945
maximum allowable cost
In service organizations, the limit of reimbursement allowed by an agency for the cost of a supply item.
946
maximum demonstrated capacity
The highest amount of actual output produced in the past when all efforts have been made to optimize the resource (e.g. overtime, additional personnel, extra hours, extra shifts, reassignment of personnel, or use of any related equipment). Maximum demonstrated capacity is the most one could ever expect to produce in a short period of time but represents a rate that cannot be maintained over a long period of time. See: demonstrated capacity.
947
maximum inventory
The planned maximum allowable inventory for an item based on its planned lot size and target safety stock.
948
maximum order quantity
An order quantity modifier, applied after the lot size has been calculated, that limits the order quantity to a pre-established maximum.
949
MBNQA
Acronym for the Malcolm Baldrige National Quality Award.
950
MBO
Acronym for management by objectives.
951
MBWA
Acronym for management by walking around.
952
M-day calendar
Syn.: manufacturing calendar.
953
M-days
Available manufacturing days, excluding holidays and weekends.
954
MDM
Acronym for master data management.
955
MDS
Acronym for material-dominated scheduling.
956
mean
The arithmetic average of a group of values. Syn.: arithmetic mean.
957
mean absolute deviation (MAD)
The average of the absolute values of the deviations of observed values from some expected value. MAD can be calculated based on observations and the arithmetic mean of those observations. An alternative is to calculate absolute deviations of actual sales data minus forecast data. This data can be averaged in the usual arithmetic way or with exponential smoothing. See: forecast error, tracking signal.
958
mean absolute percent error (MAPE)
A measure of statistical variation in a forecast. It is computed by dividing each absolute forecast error by the actual demand, multiplying that by 100 to get the absolute percentage error, and then computing the average of the percentages.
959
mean squared error (MSE)
A measure of statistical variation in a forecast. It is computed by squaring the forecast errors and then taking the average of the squared errors.
960
mean time between failures (MTBF)
The predicted elapsed time between inherent failures of a mechanical or electronic system during normal system operation. This metric must meet design, legal, quality, and customer requirements.
961
mean time to failure (MTTF))
Average time for failure of a nonrepairable product (expected life) or average time to first failure of a repairable product. See: reliability.
962
mean time to repair (MTTR)
The average time that it takes to repair a product.
963
measure of service
Syn.: level of service.
964
measure phase
A phase in the six sigma define, measure, analyze, improve, control (DMAIC) during which current performance is evaluated. See define, measure, analyze, improve, control (DMAIC).
965
measurement ton
A measurement equivalent to 40 cubic feet. It is a factor in water transportation rate-setting.
966
measures constraint
A common misnomer. Bad measures are not the constraint. Rather, bad measures hinder effective constraint management by inhibiting the ability to fully exploit and/or subordinate to the constraint.
967
MEAT awarding¬
A practice of evaluating and selecting suppliers in which the procurement function takes into account criteria that reflect qualitative, technical, and sustainable aspects of the bid as well as price when a supplier is chosen. Most economically advantageous tender (MEAT) means the offer is most economically advantageous regarding the subject matter of the contract, including quality, price, technical merit, aesthetic and functional characteristics, environmental characteristics, running costs, cost effectiveness, after-sales service, technical assistance, and delivery or completion date.
968
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.
969
mediation
The introduction of a neutral third party who attempts to provide alternatives to issues causing conflict that have not been put forth by either party or to change the way the parties perceive the situation. It is often used in collective bargaining to reach an agreement.
970
mental model
A paradigm of how the world works formed by a person’s experiences and assumptions.
971
merchandising
The practices used by organizations to promote and sell products to customers. Examples include packaging design and visual displays.
972
merchants
Buyers who purchase for the purpose of reselling.
973
Mercosur
Southern Common Market.
974
merge in transit
Combining shipments from several vendors at an intermediate point of shipment and delivering the combined load to the customer.
975
merger
The acquisition of the assets and liabilities of one company by another.
976
MES
Acronym for manufacturing execution systems.
977
message distribution
The software component of electronic commerce that enables the sending and receiving of messages.
978
metadata
Structured reference data that describes the content found in other data in an effort to make finding, using, and working with specific information within that data easier.
979
metered issues
Issues of parts or materials from stores in quantities that correspond to the rate at which materials are used.
980
methods analysis
That part of methods engineering normally involving an examination and analysis of an operation or a work cycle broken down into its constituent parts to improve the operation, eliminate unnecessary steps, and/or establish and record in detail a proposed method of performance.
981
methods study
An analysis to improve the efficiency of work by studying the existing method to identify and eliminate wasted motion.
982
methods-time measurement (MTM)
1) A system of predetermined motion-time standards. 2) A procedure that analyzes and classifies the movements of any operation into certain human motions and assigns to each motion a predetermined time standard selected by the nature of the motion and the conditions under which it will be made.
983
metric
A standard of measurement used to monitor performance.
984
microeconomics
The analysis of the behavior of individual economic decision-makers (individuals and firms).
985
micro-land-bridge traffic
A multimodal transportation solution that moves goods over water and then land, with the final destination inland. See: mini-land-bridge traffic.
986
micro-purchase
A practice to procure supplies and services below the standard purchase threshold using a simplified acquisition procedure. These purchases usually follow a procurement policy of a spend threshold where the spend is below the threshold buyers are allowed to undertake. Purchases within the threshold can be awarded without soliciting competitive price quotations if the price is reasonable.
987
middleware
Software that interconnects incompatible applications software and databases from various trading partners into decision-support tools such as an enterprise resource planning system.
988
milestone
In project management, an important event in a project, usually the realization of a significant deliverable.
989
milestone chart
Syn.: Gantt chart.
990
milestone schedule
In project management, a high-level schedule displaying important deliverables.
991
military standards
Product standards and specifications for military or defense contractors, units, suppliers, and so forth. These standards sometimes become de facto standards within the civilian community.
992
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. See: consolidation.
993
mini-land-bridge traffic
A multimodal transportation solution that moves goods over water and then land, with the final destination being on the opposite coast. See: micro-land- bridge traffic.
994
minimum cost order quantity
Syn.: economic order quantity (EOQ).
995
minimum inventory
The planned lowest amount or level of inventory for an item.
996
minimum order quantity (MOQ)
An order quantity modifier, applied after the lot size has been calculated, that increases the order quantity to a pre-established minimum.
997
minimum weight
In transportation, the rate discount volume.
998
min-max system
A type of order point replenishment system in which the minimum (min) is the order point, and the maximum (max) is the order up to inventory level. The order quantity is variable and is the result of the max minus available and on- order inventory. An order is recommended when the sum of the available and on-order inventory is at or below the min.
999
minor setup
The incremental setup activities required when changing from one item to another within a group of items.
1000
MIS
Acronym for management information system.
1001
misguided capacity plans
Plans for capacity utilization that are based on erroneous data or assumptions.
1002
mission
The overall goal(s) for an organization set within the parameters of the business scope.
1003
mission statement
The company statement of purpose.
1004
mistake-proofing
Syns.: failsafe work methods, poka-yoke (mistake-proof).
1005
mitigation costs
The sum of the costs associated with managing non-systemic risks that arise from special-cause variations within the supply chain. These variations are not predictable, have assignable causes, have patterns of occurrences that are not inherent to the system’s behavior, and are a diagnostic metric for total supply chain management cost. See: total supply chain management cost.
1006
mix
A breakdown of the total demand or production that identifies different products in an aggregate demand or production run.
1007
mix control
The control of the individual items going through the plant.
1008
mix flexibility
The ability to handle a wide range of products or variants by using equipment that has short setup times.
1009
mix forecast
Forecast of the proportion of products that will be sold within a given product family, or the proportion of options offered within a product line. Product and option mix as well as aggregate product families must be forecasted. Even though the appropriate level of units is forecasted for a given product line, an inaccurate mix forecast can create material shortages and inventory problems.
1010
mix number
Syn.: lot number.
1011
mix ticket
A listing of all the raw materials, ingredients, components, and so on that are required to perform a mixing, blending, or similar operation. This listing is often printed on a paper ticket, which also may be used as a turnaround document to report component quantities actually used, final quantity actually produced, etc. This term is often used in batch process or chemical industries. See: assembly parts list, batch card, blend formula, manufacturing order.
1012
mixed loads
A load having both regulated and exempt items in the same vehicle.
1013
mixed manufacturing
Make-to-stock and make-to-order manufacturing using a single plant and set of equipment.
1014
mixed production strategy
Syn.: hybrid production method. See: chase production method, level production method.
1015
mixed-flow scheduling
A procedure used in some process industries for building process train schedules that start at an initial stage and work toward the terminal process stages. This procedure is effective for scheduling when several bottleneck stages may exist. Detailed scheduling is done at each bottleneck stage.
1016
mixed-mode or reverse-material issue
The practice of having an automated system or human operator check the amount of leftover raw material after each item is produced and then return the leftover raw material to inventory in order to maintain an accurate count of the amount of raw material in inventory at any given time.
1017
mixed-model assembly line
An assembly line with more than one type of model passing through it.
1018
mixed-model production
Making several different parts or products in varying lot sizes so that a factory produces close to the same mix of products that will be sold that day. The mixed-model schedule governs the making and the delivery of component parts, including those provided by outside suppliers. The goal is to build every model every day according to daily demand.
1019
mixed-model scheduling
The process of developing one or more schedules to enable mixed-model production. The goal is to achieve a day’s production each day. See: mixed-model production, right size frequency of production wheel.
1020
mobile access of information
The ability to access data related to product or order status, performance metrics, supply and demand, etc., through internet-enabled mobile devices.
1021
mobile distribution center
Mobile facilities, such as a storage tanker or mobile warehouse, that can quickly be installed and positioned close to the customer in order to improve responsiveness and customer satisfaction.
1022
modal optimization
The practice of balancing the trade- offs between logistics cost reduction and increased capital costs. Factors for identifying the dimensional size to minimize transportation costs include shipment lot size, per-shipment setup costs, consumption of and demand for raw materials, and storage capacity.
1023
modal split
The breakdown of use of transportation modes. Statistics used for the calculation include passenger-miles, ton- miles, and revenue.
1024
mode
The most common or frequent value in a group of values.
1025
model
A representation of a process or system that attempts to relate the most important variables in the system in such a way that analysis of the model leads to insights into the system. Frequently, the model is used to anticipate the result of a particular strategy in the real system.
1026
model number
An item number for a finished good. This number may encompass other parts, such as a user’s manual.
1027
modes of transportation
A basic method of moving items. Modes include road, rail, air, water (ocean or inland waterway), pipeline, intermodal, and courier or parcel services.
1028
modification flexibility
The capability of the transformation process to quickly implement minor product design changes.
1029
modular architecture
A type of product architecture in which the functional pieces correspond to physical pieces. The different physical pieces have their own function, and there is little interaction between them.
1030
modular bill of material
A type of planning bill that is arranged in product modules or options. It is often used in companies where the product has many optional features (e.g., assemble- to-order companies such as automobile manufacturers). See: pseudo bill of material.
1031
modular design strategy
The strategy of planning and designing products so that components or subassemblies can be used in current and future products or assembled to produce multiple configurations of a product. Automobiles and personal computers are examples of modular designs.
1032
modular system
A system architecture design in which related tasks are grouped in self-contained packages. Each package, or module, of tasks performs all of the tasks related to a specific function. Advances in functions can be implemented without affecting other packages or modules because of the loose coupling with other modules. One example is a multitiered architecture in which application business rules are separated from the data management rules. Another example is a client- server architecture in which user interface tasks are separated from the application software. See: open system architecture.
1033
modularization
In product development, the use of standardized parts for flexibility and variety. This permits product development cost reductions by using the same item(s) to build a variety of finished goods. Modularization is the first step in developing a planning bill of material process.
1034
module
A self-contained unit of a computer program that communicates with other parts of the program solely through inputs and outputs.
1035
molds
1) Tools for plastic or chemical production. 2) Term used for the tools that shape plastic or other soft material parts.
1036
monitoring
The process of comparing actual progress with planned progress.
1037
monopolistic competition
A market in which many competitors offer partially differentiated products or services within a given geographical area. Most competitors focus on market segments where they can meet customers’ needs somewhat better than their competitors. See: industry structure types.
1038
monopoly
Sole control of a market by a company. In the United States, a monopoly is a violation of Article 2 of the Sherman Act.
1039
Monte Carlo simulation
A subset of digital simulation models based on random or stochastic processes.
1040
MOQ
Acronym for minimum order quantity.
1041
motion study
A type of methods study focused on therbligs (basic hand and body movements). See: therbligs.
1042
motive
The first deliverable in a Supply Chain Operations Reference (SCOR) implementation plan. Motive acts as the foundation for the implementation improvement program and will guide SCOR team members in the selection of SCOR framework elements.
1043
motor carrier
Motor vehicles that use the road mode of transportation.
1044
move
The physical transportation of inventory from one location to another within a facility. Movements are usually made under the direction and control of the inventory system.
1045
move card
In a just-in-time context, a card or other signal indicating that a specific number of units of a particular item are to be taken from a source (usually an outbound stockpoint) and taken to a point of use (usually an inbound stockpoint). It authorizes the movement of one part number between a single pair of work centers. The card circulates between the outbound stockpoint of the supplying work center and the inbound stockpoint of the using work center. Syn.: move signal. See: kanban.
1046
move order
The authorization to move a particular item from one location to another.
1047
move signal
Syn.: move card.
1048
move ticket
A document used in dispatching to authorize or record movement of a job from one work center to another. It may also be used to report other information, such as the actual quantity or the material storage location.
1049
move time
The time that a job spends in transit from one operation to another in the plant.
1050
movement inventory
A type of in-process inventory that arises because of the time required to move goods from one place to another.
1051
moving average
An arithmetic average of a certain number (n) of the most recent observations. As each new observation is added, the oldest observation is dropped. The value of n (the number of periods to use for the average) reflects responsiveness versus stability in the same way that the choice of smoothing constant does in exponential smoothing. There are two types of moving average: simple and weighted. See: simple moving average, weighted moving average.
1052
moving average forecast
A forecasting technique that uses a simple moving average or a weighted moving average projected forward as a forecast.
1053
MPC
Acronym for manufacturing planning and control.
1054
MPS
Acronym for master production schedule.
1055
MRB
Acronym for material review board.
1056
MRO
1) Acronym for maintenance, repair, and operating. 2) Sometimes used as an acronym for maintenance, repair, and overhaul.
1057
MRP
Acronym for material requirements planning.
1058
MRP II
Acronym for manufacturing resource planning.
1059
MRP nervousness
See: nervousness.
1060
MSDS
Acronym for material safety data sheet.
1061
MSE
Acronym for mean squared error.
1062
MTBF
Acronym for mean time between failures.
1063
MTFF
Acronym for mean time for failures.
1064
MTM
Acronym for methods-time measurement.
1065
MTTR
Acronym for mean time to repair.
1066
muda (waste)
In lean manufacturing, costs are reduced by reducing waste within a system. There are seven categories of waste: (1) overproduction—excess or too early, (2) waiting— queuing delays, (3) transportation—unneeded movements, (4) processing—poor process design, (5) motion—activities that do not add value, (6) inventory—stock that is sitting and is accumulating cost without necessarily providing value, (7) defective units—scrap or rework.
1067
multiactivity chart
A chart that shows how workers interact with each other, or with machines, for different activities.
1068
multicountry strategy
A strategy in which each country market is self-contained. Customers have unique product expectations that are addressed by local production capabilities. Syn.: multidomestic strategy.
1069
multicriteria decision models
Models that enable decision- makers to evaluate various alternatives across several decision criteria.
1070
multicurrency
Having the capability to handle orders using monies from several countries for billing purposes.
1071
multidomestic strategy
Syn.: multicountry strategy.
1072
multi-enterprise business network (MEBN)
A commerce network or platform that facilitates the exchange of information or transactions among disparate parties within the scope of supply chain processes, including finance and settlement. An MEBN in conjunction with multi-enterprise business applications is sometimes referred to as a multi-enterprise supply chain business network (MESCBN).
1073
multifactor productivity
A measure of productivity of two or more inputs, such as labor, capital costs, energy, and materials. Multifactor productivity also sometimes is referred to as multiple-factory productivity. See: single-factor productivity.
1074
multilevel bill of material
A display of all the components directly or indirectly used in a parent, together with the quantity required of each component. If a component is a subassembly, blend, intermediate, etc., all its components and all their components also will be exhibited, down to purchased parts and raw materials.
1075
multilevel master schedule
A master scheduling technique that allows any level in an end-item’s bill of material to be master scheduled. To accomplish this, master production schedule items must receive requirements from independent and dependent demand sources. See: two-level master schedule.
1076
multilevel where-used
A display for a component listing all the parents in which that component is directly used and the next higher-level parents into which each of those parents is used, until ultimately all top-level (level 0) parents are listed.
1077
multilinear regression analysis
Model used for forecasting with more than one independent variable.
1078
multimedia
An interactive combination of two or more of the following: text, graphics, video, audio, and animation, which all are controlled by a personal computer.
1079
multimedia files
Digitized image, video, and audio files that can be retrieved and converted to a form usable by a human.
1080
multimodal solutions
Transportation plans that involve multiple means of transportation and coordinate the physical and information requirements.
1081
multinational corporation
A company with capital investments in more than a single country.
1082
multinational strategy
A strategy to out-compete rivals that focuses on opportunities to achieve cross-business and cross- country coordination, thereby enabling economies of scope and an improved competitive position with regard to reducing costs, cross-country subsidization, and so on. See: global strategy.
1083
multiple regression models
A form of regression analysis in which the model involves more than one independent variable, such as developing a forecast of dishwasher sales based upon housing starts, gross national product, and disposable income.
1084
multiple sourcing
Syn.: multisourcing. See: dual sourcing.
1085
multiple-channel queuing system
A waiting line system that has parallel waiting lines with queues.
1086
multiple-item lot-sizing models
Processes or systems used to determine the total replenishment order quantity for a group of related items.
1087
multiple-phase queuing system
A queuing system that performs a service in two or more sequential steps when there are several waiting lines. See: channel, queuing theory.
1088
multiprocessing
The simultaneous use by a computer of two or more central processing units, with each executing its own instruction set and each controlled by a single operating system.
1089
multiskilled
Individuals who are capable of carrying out a variety of tasks.
1090
multisourcing
Procurement of a good or service from more than one independent supplier. Syn.: multiple sourcing. Ant.: single sourcing. See: dual sourcing.
1091
multitiered supplier audit
The practice of officially inspecting a supplier's tiers by the buying organization or an independent third party to ensure compliance with requirements and standards. Buyers can use questionnaires or visit suppliers onsite to gather information about the suppliers' attitudes toward ethical concerns and sustainable practices. The audits are investigative by their nature because buying organizations seek to find evidence regarding violations of human rights or other corporate social responsibility issues. See: UN Global Compact Management Model.
1092
multivariate control chart
A control chart for evaluating the stability of a process in terms of the levels of two or more variables or characteristics.
1093
mura
A Japanese word meaning unevenness or variability.
1094
muri
A Japanese word meaning strain or overburden.
1095
mutually exclusive project
In capital budgeting, a project that will not be accepted if a competing project is accepted. See: contingent project, independent project.
1096
mystery shoppers
People who pose as customers but who are really studying an organization’s service quality to provide feedback to the organization for improvement purposes.
1097
n
Sample size (the number of units in a sample).
1098
N7
Abbreviation for seven new tools of quality.
1099
NAFTA
Acronym for North American Free Trade Agreement.
1100
National Association of Purchasing Management (NAPM)
A nonprofit society for purchasing managers and others, now known as the Institute for Supply Management (ISM).
1101
National Environmental Policy Act (NEPA)
An act in the United States that requires federal agencies to consider the environmental impact of all plans before they can be implemented. National Institute for Occupational Safety and Health
1102
(NIOSH)
A branch of the U.S. Centers for Disease Control and Prevention that conducts research and makes recommendations for the prevention of work-related injuries and illness.
1103
National Labor Relations Board (NLRB)
In the United States, the federal agency that regulates labor law.
1104
national stock number (NSN)
The individual identification number assigned to an item to permit inventory management in the U.S. supply system.
1105
nationalization
Public ownership and operation of a business enterprise.
1106
natural variations
Variations in measurements that are caused by environmental elements and cannot be removed. See: common cause variability.
1107
NC
Acronym for numerical control.
1108
near-critical activity
In project management, a project activity with a low slack or float value.
1109
need date
The date when an item is required for its intended use. In a material requirements planning system, this date is calculated by a bill-of-material explosion of a schedule and the netting of available inventory against that requirement.
1110
negative float
In project management, the amount of time that must be made up on an activity to get the project back on schedule. See: float.
1111
negligence
Causing injury to another by failing to use reasonable care.
1112
negotiation
The process by which a buyer and a supplier agree upon the conditions surrounding the purchase of an item or a service.
1113
negotiation planning
The practice of thoroughly preparing for negotiation with suppliers in advance, including researching, clarifying the objectives, understanding potential concessions, and having a best alternative to a negotiated agreement.
1114
nemawashi
A Japanese word meaning getting a group to agree on a strategy before beginning to implement it.
1115
nervousness
In a material requirements planning system, a state in which minor changes in higher-level (e.g., level 0 or 1) records or the master production schedule cause significant timing or quantity changes in lower-level (e.g., level 5 or 6) schedules and orders. Syn.: system nervousness.
1116
nesting
The act of combining several small processes to form one larger process.
1117
net assets
Total assets minus total liabilities.
1118
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. MRP is an acronym for material requirements planning. Ant.: regeneration MRP.
1119
net income (loss)
The final figure in the income statement.
1120
net inventory
Syn.: available inventory.
1121
net operating cash flow
In finance management, the difference between cash inflow and cash outflow for a given period. It is found by taking the change in net operating profit after taxes and adding the change in depreciation then subtracting the increase in net working capital requirements.
1122
net operating income
The income before interest and taxes are subtracted. Syn.: earnings before interest and taxes (EBIT).
1123
net operating profit after taxes (NOPAT)
Operating profit less applicable taxes.
1124
net present value (NPV)
A metric used to determine the profitability of an investment by comparing the present value of expected cash flowing in (revenue) with that of cash flowing out (expenses) for a certain time period. See: time value of money.
1125
net profit
An absolute measure of financial performance that is calculated as the difference between revenues and expenses. In throughput accounting, net profit is calculated as throughput minus operating expense.
1126
net requirements
In material requirements planning, the net requirements for a part or an assembly are derived as a result of applying gross requirements and allocations against inventory on hand, scheduled receipts, and safety stock. After being lot-sized and offset for lead time, net requirements become planned orders.
1127
net sales
Sales dollars the company receives. It is calculated by gross sales minus returns and allowances.
1128
net weight
The weight of an article exclusive of the weights of all packing materials and containers.
1129
net working capital
The current assets of a firm minus its current liabilities. Syn.: working capital.
1130
netting
The process of calculating net requirements.
1131
network
1) The interconnection of computers, terminals, and communications channels to facilitate file and peripheral device sharing as well as effective data communication. 2) A graph consisting of nodes connected by arcs.
1132
network analysis
In project management, the calculation of early and late start and finish times for those activities not yet completed. See: critical path method (CPM), graphical evaluation and review technique (GERT), program evaluation and review technique (PERT).
1133
network chain
A route through a chain involving multiple network paths, with switching of paths due to resource conflicts.
1134
network design
1) In supply chain management, the design of a supply chain’s sourcing, manufacturing, and, distribution facilities and information flows to meet the organization’s strategic goals. These strategic goals can include being efficient, responsive, customer-focused, or some other mix of priorities. The design includes determining the best locations, numbers, sizes, capacities, capabilities, and ownership models of facilities to support these goals. 2) In logistics, the design and periodic review of inbound and outbound transportation networks—all types of warehouses by number, location, size, layout, and optimum mix of inventory levels per location— to meet the organization’s strategic goals. Considerations are made to balance tradeoffs among warehouse costs, transportation times and expenses, and customer service goals.
1135
network diagram
A graphical tool that shows the dependencies between activities in a project (i.e., which activities precede other activities and which can be done in parallel).
1136
network logic
Activity dependencies that make up a project schedule network diagram.
1137
network loop
A network path that crosses the same activity or node twice. A network loop cannot be analyzed by the critical path method, critical chain, or other traditional network schedule analysis techniques.
1138
network optimization
Determining the optimal manufacturing and warehouse locations based on the goal of reducing total supply chain costs. This is done by reviewing the supply chain to consolidate inventory-stocking locations.
1139
network path
Any continuous series of project activities connected by precedence relationships in a project schedule network diagram.
1140
network planning
A generic term for techniques that are used to plan complex projects. Two of the best-known network planning techniques are the critical path method (CPM) and the program evaluation and review technique (PERT).
1141
network prioritization for risk identification
The process of prioritizing parts of a supply chain for risk analysis based on the overall risk potential in each portion of the supply chain.
1142
networking
Developing relationships with people who may be able to enhance the performance of duties or responsibilities.
1143
neural network
A software system loosely based on how the brain works. It tries to simulate the multiple layers of elements called neurons. Each neuron is tied to several neighbors with a value that signifies the strength of the connections. Learning is accomplished by changing the values to cause the network to report appropriate results. Neural networks have been used for market forecasts and other applications.
1144
new product development team
Syn.: participative design/engineering.
1145
new product introduction
The development and release of an item that is new to a company’s set of offerings.
1146
newsvendor model
Syn.: newsvendor problem.
1147
newsvendor problem
A problem in inventory management dealing with determining the single period (e.g., day or week) order quantity that will minimize the cost of sometimes having too much inventory and sometimes having too little. The name is derived from the scenario of a newsvendor determining how many copies of a daily paper must be stocked amid demand uncertainty. A model is used to deal with the problem by determining optimum inventory levels. Syn.: newsvendor model.
1148
NLRB
Abbreviation for National Labor Relations Board.
1149
node
In project management, a point connected by arrows in a network.
1150
noise
The unpredictable or random difference between the observed data and the true process.
1151
nominal capacity
Syn.: rated capacity.
1152
nominal group technique
A technique, similar to brainstorming, used by teams to generate ideas about a particular subject. Team members are asked to silently come up with as many ideas as possible and write them down. Each member is then asked to share one idea, which is recorded. After all the ideas are recorded, they are discussed and prioritized by the group.
1153
nominal interest rate
The non-inflation-adjusted interest rate.
1154
nominal trading partner
Any organization external to the firm that provides an essential material or service but whose financial success is largely independent of the financial success of the supply chain community.
1155
nomogram
A computational aid consisting of two or more scales drawn and arranged so that the results of calculations may be found by the linear connection of points on them. Historically, it was used for calculating economic lot sizes or sample sizes for work measurement observations. It also is called an alignment chart.
1156
nonconforming material
Any raw material, part, component, or product with one or more characteristics that depart from the specifications, drawing, or other approved product description.
1157
nonconformity
Failure to fulfill a specified requirement. See: blemish, defect, imperfection.
1158
noncurrent assets
An accounting or financial term (balance sheet classification of accounts) representing the long-term resources owned by a company, including property, plant, and equipment.
1159
non-defective defectives
A product returned by a customer claiming it to be defective when, in fact, the problem is not with the product itself but rather with the customer's ability to properly operate the product. See: reliability.
1160
nondurable goods
Goods whose serviceability is generally limited to a period of less than three years, such as perishable goods and semidurable goods.
1161
nonevident failure
Failure occurring in either a product or a production process that is not immediately evident. This may be indicative of a faulty design.
1162
nonexempt employee
A person filling a nonexempt position. See: nonexempt positions.
1163
nonexempt positions
Employees not meeting the test of executive, supervisory, or administrative personnel who are paid overtime, as defined by the Fair Labor Standards Act. See: nonexempt employee.
1164
nongovernmental organization (NGO)
A legally constituted organization that operates independently from any government. The term is usually applied only to organizations that pursue some wider social aim with political aspects but that are not overtly political organizations, like political parties are. These types of organizations may be called civil society organizations or other names in some jurisdictions.
1165
nonlinear programming
Programming similar to linear programming but incorporating either (1) a nonlinear objective function and linear constraints, (2) a linear objective function and nonlinear constraints, or (3) both a nonlinear objective function and nonlinear constraints.
1166
nonproduction material
Items (indirect materials and supplies) in the manufacturing process or in the maintenance or operation of a facility that do not generally become part of the final product.
1167
nonrecurring material
Tooling, gauges, and facilities necessary in the manufacturing of the final product that are not consumed during manufacturing or shipped with the final product.
1168
nonrenewable resources
Energy resources that once used up cannot be replaced. This includes coal, natural gas, oil, and nuclear energy.
1169
nonscheduled hours
Hours when a machine is not generally available to be scheduled for operation, such as during nights, weekends, holidays, lunch breaks, major repairs, and rebuilding.
1170
nonsignificant part number
A part number that is assigned to each part but does not convey any information about the part. Nonsignificant part numbers are identifiers, not descriptors. Ant.: significant part number.
1171
non-strategic inventory reduction
Identifying idle assets and selling or disposing of unneeded inventory.
1172
non-value-added
An activity that does not add value to a product. An example is moving a product from one work center to another inside a facility. One aspect of continuous improvement is the elimination or reduction of non-value-added activities.
1173
non-vessel-operating common carrier (NVOCC)
A consolidator of ocean freight shipments that operates similarly to a freight forwarder and issues its own bills of lading, thus acting as a carrier even though it does not own the means of transportation being used.
1174
NOPAT
Acronym for net operating profit after taxes.
1175
normal and proper usage
Operation of the equipment with a program of regular maintenance in accordance with generally accepted practices and within the rated capacity and service classification for which it was specified and designed.
1176
normal distribution
A particular statistical distribution in which most of the observations fall fairly close to one mean and a deviation from the mean is as likely to be plus as it is to be minus. When graphed, the normal distribution takes the form of a bell-shaped curve.
1177
normal time
In time study, adjusting the actual time observed by a factor called pace rating. See: pace rating.
1178
normalize
To adjust observed data to a standard base.
1179
North American Free Trade Agreement (NAFTA)
An agreement among the United States, Canada, and Mexico to promote economic prosperity by reducing trade barriers.
1180
no-touch exchange of dies (NTED)
The exchange of dies without human intervention.
1181
NP chart
A control chart for evaluating the stability of a process in terms of the total number of units in a sample in which an event of a given classification occurs. Syn.: number of affected units chart.
1182
NSN
Acronym for national stock number.
1183
NTED
Acronym for no-touch exchange of dies.
1184
number defective chart
Syn.: C chart.
1185
number of affected units chart
Syn.: NP chart.
1186
numerical control (NC)
A means of operating a machine tool automatically by the use of coded numerical instructions.
1187
NVOCC
Abbreviation for non-vessel-operating common carrier.
1188
obeya
A Japanese word meaning big room. It also is a term for a command center.
1189
objective function
The goal or function that is to be optimized in a model. Most often it is a cost function that should be minimized subject to some restrictions or a profit function that should be maximized subject to some restrictions.
1190
object-oriented programming (OOP)
Within computer programming, the use of coding techniques and tools that reflect the concept of viewing the business environment as a set of elements (or objects) with associated properties (e.g., data, data manipulation or actions, inheritance). The objects encapsulate, through data and functions, the properties of the business that are of interest.
1191
obligated material
Syn.: reserved material.
1192
observational research
A form of research (frequently used in marketing research) in which data is gathered by direct observation of consumers in the marketplace. See: marketing research.
1193
obsolescence
1) The condition of being out of date. 2) A loss of value occasioned by new developments that place the older property at a competitive disadvantage. 3) A factor in depreciation. 4) A decrease in the value of an asset brought about by the development of new and more economical methods, processes, or machinery. 5) The loss of usefulness or worth of a product or facility as a result of the appearance of better or more economical products, methods, or facilities.
1194
obsolete inventory
Inventory items that have met the obsolescence criteria established by the organization, such as inventory that has been superseded by a new model or otherwise made obsolescent. Obsolete inventory will never be used or sold at full value. Disposing of the inventory may reduce a company’s profit.
1195
OC curve
Abbreviation for operating characteristic curve.
1196
Occupational Safety and Health Act (OSHA)
A U.S. law that applies to all employers in the United States who are engaged in interstate commerce. Its purpose is to ensure safe and healthful working conditions by authorizing enforcement of the standards provided under the act.
1197
occurrence factor
Within the repair or remanufacturing environment, the occurrence factor is associated with how often a repair is required to bring the average part to a serviceable condition (some repair operations do not occur 100 percent of the time). The factor is expressed at the operation level in the routing. See: repair factor, replacement factor.
1198
ocean bill of lading
A contract between an ocean carrier and a shipper arranging for carriage of freight. It provides evidence of the carrier’s receipt of the cargo and lists the origin and destination ports, rates, quantities, weight, and any special handling requirements. The shipper is responsible for all losses other than for negligence on the part of the ocean carrier.
1199
OCR
Acronym for optical character recognition.
1200
OD
Acronym for organizational development.
1201
ODD
Abbreviation for earliest operation due date.
1202
OECD
Acronym for Organization for Economic Cooperation and Development.
1203
OEE
Acronym for overall equipment effectiveness.
1204
OEM
Acronym for original equipment manufacturer.
1205
offal material
The by-product or waste of production processes (e.g., chips, shavings, turnings).
1206
offer
A contractual communication that proposes definite terms. A contract is created if the other party accepts those terms.
1207
offgrade
A product whose physical or chemical properties fall outside the acceptable ranges.
1208
offline
Computer work completed when disconnected either from the internet or from an intranet. This term also describes anytime a person, operation, or work center not accessible or operating.
1209
offload
To reschedule or use alternate routings to reduce the workload on a machine, work center, or facility.
1210
offset quantity
Syn.: overlap quantity.
1211
offsetting
Syn.: lead-time offset.
1212
offshore
Outsourcing a business function to another company in a different country than the original company’s country.
1213
offshore factory
A plant that imports or acquires locally all components and then exports the finished product.
1214
OJT
Acronym for on-the-job training.
1215
omni-channel network
A cross-channel sales approach in which all sales channels, including online, mobile, telephonic, mail order, self-service, and physical retail establishments, are aligned and fulfillment processes are integrated to provide consumers with a seamless shopping experience in alignment with the company’s brand proposition. Examples of this include integrated fulfillment, dedicated fulfillment, pool distribution, direct store delivery, store fulfillment, and flow-through fulfillment.
1216
omnichannel order fulfillment
The ability to confirm, aggregate, orchestrate, and fulfill orders through multiple service points, including warehouses, stores, and suppliers, through the application of distributed order management, advanced warehouse management, and transportation management systems. The objective is to reduce fulfillment time and costs while enhancing the customer experience. Some of the network designs include integrated, dedicated, pool, direct-store- delivery, store, and flow-through fulfillment.
1217
on order
The number or value of goods or services that have been ordered but not received at a location.
1218
on-demand
A description meaning that work is completed only when demand occurs. More specifically, this refers to a process in which a product or service is made only after an order is placed for that product or service.
1219
one less at a time
A process of gradually reducing the lot size of the number of items in the manufacturing pipeline to expose, prioritize, and eliminate waste.
1220
one-card kanban system
A kanban system in which only a move card is employed. Typically, the work centers are adjacent; therefore, no production card is required. In many cases, squares located between work centers are used as the kanban system. An empty square signals the supplying work center to produce a standard container of the item. Syn.: single-card kanban system. See: two-card kanban system.
1221
one-piece flow
A concept in which items are processed directly from one step to the next, one unit at a time. This helps to shorten lead times and lines of communication, thus more quickly identifying problems.
1222
one-to-one marketing
A marketing strategy for sending a particular message to a single customer, often assisted by a marketing database.
1223
one-touch exchange of die (OTED)
The ideal of reducing or eliminating the setup effort required between operations on the same equipment. It is an exchange performed in a single motion rather than in multiple steps.
1224
on-hand balance
The quantity shown in the inventory records as being physically in stock.
1225
online processing
A method of computer processing in which data is processed immediately on entry into the computer.
1226
online receiving
An unloading process characterized by computers or terminals located wherever shipments are received and employees entering delivery data into the system as the shipments are unloaded.
1227
online requisitioning system
An e-procurement or sourcing platform that facilitates requisition orders to the purchasing department. The purchasing department reviews the requisition, performs sourcing and pricing, rejects or accepts the requisition, and releases the purchase order to the supplier. See: parts requisition, purchase requisition.
1228
online service
The processing of transaction data as soon as the transaction occurs (real-time processing as opposed to batch processing). See: real time.
1229
on-order stock
The total of all outstanding replenishment orders. The on-order balance increases when a new order is released and decreases when material is received against an order or when an order is canceled.
1230
on-the-job training (OJT)
Learning the skills and necessary related knowledge useful for the job at the place of work or possibly while at work.
1231
on-time delivery
A metric measuring the percentage of receipts that were received on time by customers. See: on-time in-full (OTIF).
1232
on-time in-full (OTIF)
A delivery scoring system in which a target delivery goal—usually expressed as a percentage—is set and the deliverer tries to meet that delivery goal fully and by the delivery date.
1233
on-time schedule performance
A measure (percentage) of meeting the customer’s originally negotiated delivery request date. Performance can be expressed as a percentage based on the number of orders, line items, or dollar value shipped on time.
1234
ontology
A formal representation of phenomena of a universe of discourse with an underlying vocabulary including definitions and axioms that make the intended meaning explicit and describe phenomena and their interrelationships. This representational phenomena framework provides a set of terms for consistent description (or annotation or tagging) of data and information across disciplinary and research community boundaries in order to promote greater consistency in description of data.
1235
OOP
Acronym for object-oriented programming.
1236
open account payment
A method of payment for goods shipped in advance of payment in which the seller or exporter sends the buyer or importer an invoice requesting payment by a certain date.
1237
open master production schedule
The part of the master production schedule that still has available capacity for assigning new orders.
1238
open office
An office with movable partitions and furniture that de-emphasizes the compartmentalization of people.
1239
open order
1) A released manufacturing order or purchase order. Syn.: released order. See: scheduled receipt. 2) An unfilled customer order.
1240
open period
Accounting time period for which the books will still accept adjusting entries and postings. Ant.: closed period.
1241
open system architecture
The capability of software and diverse hardware environments to communicate with each other through the use of standard messaging and protocols, respectively. See: modular system.
1242
open tendering
The practice of widely advertising a tender to be available for any supplier to make a bid. The bid can be made through journals, websites, mass communication, social media, or e-procurement portals. In some instances, suppliers may express their interest in order to obtain the invitation to tender.
1243
open-book costing
A contract-pricing practice in which the buying organization and supplier agree to have a book costing reported to the buying organization to guarantee fair price paid for the service or products supplied. The supplier bills the customer based on the actual costs incurred for each type of service plus the agreed margin or include incentives above cost incurred by supplier. This type of arrangement is sometimes referred to as a cost-plus contract.
1244
open-end purchase order
A purchase agreement similar to a blanket purchase order that provides the added convenience of being able to negotiate additional items and expiration dates.
1245
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.
1246
open-to-receive
Authorization to receive goods, such as a blanket release, firm purchase order item, or supplier schedule. Open-to-receive represents near-term impact on inventory and is often monitored as a control technique in aggregate inventory management. The total of open-to-receive, other longer-term purchase commitments, and open-to-buy represents the material and services cash exposure of the company.
1247
operating assets
An accounting or financial term representing the resources owned by a company for productive purposes (to generate a profit), including cash, accounts receivable, inventories, equipment, and facilities.
1248
operating characteristic curve (OC curve)
A graph used to determine the probability of accepting lots as a function of the quality level of the lots or processes when using various sampling plans. There are three types: (1) Type A curves, which give the probability of acceptance for an individual lot coming from finite production (will not continue in the future); (2) Type B curves, which give the probability of acceptance for lots coming from a continuous process; and (3) Type C curves, which, for a continuous sampling plan, give the long-run percentage of product accepted during the sampling phase.
1249
operating cycle
The average period of time required to perform the three primary activities of a company’s operating cycle— purchasing, producing, and selling a product. The operating cycle is calculated by adding the inventory conversion period to the receivables conversion period.
1250
operating decision
Planning operations to meet demand in the short or intermediate term.
1251
operating efficiency
A ratio (represented as a percentage) of the actual output of a piece of equipment, department, or plant as compared with the planned or standard output.
1252
operating environment
The global, domestic, environmental, and stakeholder influences that affect the key competitive factors, customer needs, culture, and philosophy of each individual company. This environment becomes the framework in which business strategy is developed and implemented. Syn.: business environment.
1253
operating expense
All the money an organization spends in generating goal units.
1254
operating exposure
The risk introduced by flexible exchange rates when operating in the global environment, including their effect on production, storage, and buying and selling prices.
1255
operating leverage
Comparing an organization’s annual sales to its annual costs.
1256
operation number
A sequential number, usually two, three, or four digits long (such as 010, 020, 030), that indicates the sequence in which operations are to be performed within an item’s routing.
1257
operation overlapping
Syn.: overlapped schedule.
1258
operating profit
Gross profit minus all expenses, including selling and administrative expenses and depreciation.
1259
operating profit margin ratio
Earnings before interest and taxes divided by sales.
1260
operating system
A set of software programs that controls the execution of the hardware and application programs. The operating system manages the computer and network resources through storage management, disk input/output, communications linkages, program scheduling, and monitoring system usage for performance and cost allocations.
1261
operation
1) A job or task, consisting of one or more work elements, usually done essentially in one location. 2) The performance of any planned work or method associated with an individual, machine, process, department, or inspection. 3) One or more elements that involve one of the following: the intentional changing of an object in any of its physical or chemical characteristics; the assembly or disassembly of parts or objects; the preparation of an object for another operation, transportation, inspection, or storage; or planning, calculating, or giving or receiving information.
1262
operation chart
Syn.: routing.
1263
operation costing
A method of costing used in batch manufacturing environments when the products produced have both common and distinguishing characteristics (e.g., suits). The products are identified and costed by batches or by production runs, based on the variations.
1264
operation description
The details or description of an activity or operation to be performed. The operation description is normally contained in the routing document and could include setup instructions, operating instructions (feeds, speeds, heats, pressure, etc.), and required product specifications or tolerances.
1265
operation due date
1) The date when an operation should be completed so that its order due date can be met. It can be calculated based on scheduled quantities and lead times. 2) A job sequencing algorithm (dispatching rule) giving earlier operation due dates higher priority.
1266
operation duration
The total time that elapses between the start of the setup of an operation and the completion of the operation. Syn.: operation time.
1267
operation list
Syn.: routing.
1268
operation priority
1) The relative importance an operation is given based on its scheduled due date and/or start date, usually as determined by the back-scheduling process. 2) The relative importance a job is given in a queue of jobs by a priority dispatching heuristic such as shortest processing time first or least slack remaining first.
1269
operation reporting
The recording and reporting of every manufacturing (shop order) operation occurrence on an operation-to-operation basis.
1270
operation setback chart
A graphical display of the bill of material and lead-time information provided by the routing for each part. The horizontal axis provides the lead time from raw materials purchase to component manufacture to assembly of the finished product.
1271
operation sheet
Syn.: routing.
1272
operation splitting
Syn.: lot splitting.
1273
operation start date
The date when an operation should be started so that its order due date can be met. It can be calculated based on scheduled quantities and lead times or on the work remaining and the time remaining to complete the job.
1274
operation time
The total of setup and run time for a specific task. Syn.: operation duration.
1275
operation/process yield
The ratio of usable output from a process, process stage, or operation to the input quantity, usually expressed as a percentage.
1276
operational availability
The portion of time a system is available to sustain operations in full.
1277
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. See: strategic performance measurements.
1278
operational plan(s)
The set of short-range plans and schedules detailing specific actions. Operational plans are more detailed than strategic and tactical plans and cover a shorter time horizon. See: operational planning, strategic plan, tactical plan(s).
1279
operational planning
The process of setting goals and targets and establishing measures constrained by and targeted for achieving the strategic and tactical plans. See: operational plan(s), strategic planning, tactical planning.
1280
operational resilience
See: resilience.
1281
operational-level agreemen
An agreement between a service provider and another part of the same organization. It supports the service providers’ delivery of services to customers and defines the goods or services to be provided and the responsibilities of both parties.
1282
operations
The group that produces the goods and/or services that a company sells.
1283
operations command center
The ability to provide real-time visibility into operations performance and identify deviations from standards by applying data science methods to the digital process twin as well as other enterprise systems across the production ecosystem.
1284
operations finite loading
A finite loading technique that aims to minimize possible delays to individual operations and, thus, the potential delay of each scheduled order. Eligible operations from an order or a group of orders are loaded period by period onto a work center or a group of work centers, according to operation-level priority rules. Syn.: operations sequencing. See: constraint-oriented finite loading, drum-buffer-rope (DBR), order-oriented finite loading.
1285
operations management
1) The planning, scheduling, and control of the activities that transform inputs into finished goods and services. 2) A field of study that focuses on the effective planning, scheduling, use, and control of a manufacturing or service organization through the study of concepts from design engineering, industrial engineering, management information systems, quality management, production management, inventory management, accounting, and other functions as they affect the operation.
1286
operations plan
Syn.: production plan.
1287
operations planning
The planning of activities that transform inputs into finished goods and services.
1288
operations process chart
Syn.: process chart.
1289
operations research
1) The development and application of quantitative techniques to the solution of problems. More specifically, theory and methodology in mathematics, statistics, and computing are adapted and applied to the identification, formulation, solution, validation, implementation, and control of decision-making problems. 2) An academic field of study concerned with the development and application of quantitative analysis to the solution of problems faced by management in public and private organizations. Syn.: management science.
1290
operations scheduling
The actual assignment of starting or completion dates to operations or groups of operations to show when these operations must be done if the manufacturing order is to be completed on time. These dates are used in the dispatching function. Syns.: detailed scheduling, order scheduling, shop scheduling.
1291
operations sequence
The sequential steps for an item to follow in its flow through the plant. This information is normally maintained in the routing file. Here is an example: Operation 1: cut bar stock; Operation 2: grind bar stock; Operation 3: shape; Operation 4: polish; Operation 5: inspect and send to stock.
1292
operations sequence analysis
Method of planning a facility layout by using graphics to determine the placement of departments.
1293
operations sequencing
A technique for short-term planning of actual jobs to be run in each work center based upon capacity (i.e., existing workforce and machine availability) and priorities. The result is a set of projected completion times for the operations and simulated queue levels for facilities.
1294
operations strategy
The total pattern of decisions that shape the long-term capabilities of an operation and their contribution to overall strategy. Operations strategy should be consistent with overall strategy. See: strategic plan.
1295
operator flexibility
Training machine workers to perform tasks outside their immediate jobs and in problem-solving techniques to improve process flexibility. This is a necessary process in developing a fully cross-trained workforce.
1296
opportunity cost
1) The return on capital that could have resulted had the capital been used for some purpose other than its present use. 2) The rate of return investors must earn to continue to supply capital to a firm.
1297
optical character
A printed character frequently used in utilities billing and credit applications that can be read by a machine without the aid of magnetic ink.
1298
optical character recognition (OCR)
A mechanized method of collecting data involving the reading of hand-printed material or special character fonts. If handwritten, the information must adhere to predefined rules of size, format, and locations on the form.
1299
optical scanning
A technique for machine recognition of characters by their images.
1300
optimal order period
Within a fixed order period inventory system, the time between a status check on the material that balances ordering costs with carrying costs.
1301
optimal path selection
The ability to dynamically and automatically select or adjust in transit the optimal modes and routes for shipping a product given logistics requirements, hub locations, costs, planned shipments and available transportation options.
1302
optimization
Achieving the best possible solution to a problem in terms of a specified objective function.
1303
optimization models
A class of mathematical models used when the modeler wishes to find the ideal (maximum or minimum) value of some objective function subject to a set of constraints.
1304
optimize outbound customer shipments
Analyzing the cost of maintaining inventory compared with the cost of transportation to find opportunities to improve total cost.
1305
option
A choice that must be made by the customer or company when customizing the end product. In many companies, the term option means a mandatory choice from a limited selection. See: feature.
1306
option overplanning
Typically, scheduling extra quantities of a master schedule option greater than the expected sales for that option to protect against unanticipated demand. This schedule quantity may be planned only in the period when new customer orders are currently being accepted, typically just after the demand time fence. This technique is usually used on the second level of a two-level master scheduling approach to create a situation in which more of the individual options than of the overall family are available. The historical average of demand for an item is quantified in a planning bill of material, and option overplanning is accomplished by increasing this percentage to allow for demands greater than forecast. See: demand time fence (DTF), hedge, planning bill of material.
1307
optional replenishment model
A form of independent demand item management model in which a review of inventory on hand plus inventory 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 minus 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 internal review 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. See: fixed reorder cycle inventory model, fixed reorder quantity inventory model, hybrid inventory system, independent demand item management models.
1308
order
A general term that may refer to such diverse items as a purchase order, shop order, customer order, planned order, or schedule.
1309
order backlog
A past-due or open customer order yet to be fulfilled. Syn.: backlog.
1310
order batching
The process of gathering a group of orders or data before sending them out to the next stage.
1311
order complete manufacture to customer receipt of order
The average time from when an order is ready for delivery to a customer to when the customer actually receives the delivery.
1312
order consolidation profile
The process of filling the entire order of one customer by bringing all parts of the order together in one place. These items may or may not come from different places or departments.
1313
order control
Control of manufacturing activities by individual manufacturing, job, or shop orders that are released by planning personnel and authorizing production personnel to complete a given batch or lot size of a particular manufactured item. Information needed to complete the order (components required, work centers and operations required, tooling required, etc.) may be printed on paper or tickets, often called shop orders or work orders, which are distributed to production personnel. This use of order control sometimes implies an environment where all the components for a given order are picked and issued from a stocking location, all at one time, and then moved as a kit to manufacturing before any activity begins. It is most frequently seen in job shop manufacturing. See: shop floor control.
1314
order cost
A direct labor cost incurred when a purchaser places an order.
1315
order cycle
The progression used by a company starting with receipt of a customer’s order and ending with delivery to that customer.
1316
order dating
Syn.: order promising.
1317
order delivery
The duration of time between when the transportation carrier picks up a shipment and when it is received by the customer.
1318
order entry
The process of accepting and translating what a customer wants into terms used by the manufacturer or distributor. The commitment should be based on the available- to-promise line in the master schedule. This can be as simple as creating shipping documents for finished goods in a make-to- stock environment, or it might be a more complicated series of activities, including design efforts for make-to-order products. See: master schedule, order service.
1319
order entry complete to start manufacture
The average time from when an order is placed by a customer to when the manufacturing of that order is completed.
1320
order fill rate
1) A measure of customer orders fulfilled from stock, usually expressed as a percentage. In a make-to-stock company, this percentage usually represents the number of items or dollars (on one or more customer orders) that were shipped on schedule for a specific time period, compared with the total that were supposed to be shipped in that time period. 2) In a make-to-order company, usually some comparison of the number of jobs or dollars shipped in a given time period (e.g., a week) compared with the number of jobs or dollars that were supposed to be shipped in that time period. Syns.: customer service ratio, fill rate.
1321
order fill ratio
Syn.: customer service ratio.
1322
order fulfillment cycle time
The average time from order receipt to customer acceptance of the order to fulfill customer orders. See: order fulfillment lead time.
1323
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. Syn.: order selection. See: batch picking, discrete order picking, zone picking.
1324
order placement
The commitment of a customer to buy a product and the subsequent administrative and data processing steps followed by the supplier.
1325
order point
A set inventory level where, if the total stock on hand plus on order falls to or below that point, action is taken to replenish the stock. The order point is normally calculated as forecasted usage during the replenishment lead time plus safety stock. Syns.: reorder point (ROP), statistical order point, trigger level. See: fixed reorder quantity inventory model.
1326
order fulfillment lead time
The average amount of time between the customer’s order and the customer’s receipt of delivery. This includes every manufacturing or processing step in between.
1327
order point system
An inventory replenishment system based on the stock on hand plus on order. Syn.: statistical order point system. See: order point, reorder point (ROP), fixed reorder quantity inventory model, hybrid inventory system.
1328
order interval
The time period between the placement of orders.
1329
order point/order quantity system
Syn.: fixed reorder quantity inventory model.
1330
order level system
Syn.: fixed reorder cycle inventory model.
1331
order losers
Areas or aspects of an organization in which poor performance can cause loss of business. For example, failure to meet customer expectations with delivery of the product is an order loser. See: order qualifiers, order winners.
1332
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.
1333
order multiples
An order quantity modifier applied after the lot size has been calculated that increases the order quantity to a predetermined multiple.
1334
order penetration point
The key variable in a logistics configuration. It is the point (in time) when a product becomes earmarked for a particular customer. Downstream from this point, the system is driven by customer orders; upstream processes are driven by forecasts and plans. Syn.: principle of postponement. See: booked orders.
1335
order policy
A set of procedures for determining the lot size and other parameters related to an order. See: lot sizing.
1336
order policy code
Syn.: lot-size code.
1337
order preparation
All activities relating to the administration, picking, and packaging of individual customer or work orders.
1338
order preparation lead time
The time needed to analyze requirements and open order status and to create the paperwork necessary to release a purchase order or a production order.
1339
order priority
The scheduled due date to complete all the operations required for a specific order.
1340
order processing
The activity required to administratively process a customer’s order and make it ready for shipment or production.
1341
order processing and communication
All activities needed to fill customer orders.
1342
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-to-promise. Syns.: customer order promising, order dating. See: available-to-promise (ATP), order service.
1343
order qualifiers
Those competitive characteristics that a firm must exhibit to be a viable competitor in the marketplace. For example, a firm may seek to compete on characteristics other than price, but in order to qualify to compete, its costs and the related price must be within a certain range to be considered by its customers. Syn.: qualifiers. See: order losers, order winners.
1344
ordering cost
The costs that increase as the number of orders placed increases. Ordering cost is used in calculating order quantities and includes costs related to the clerical work of preparing, releasing, monitoring, and receiving orders; the physical handling of goods; inspections; and setup costs, as applicable. See: acquisition cost, inventory costs.
1345
order quantity
Syn.: lot size.
1346
order quantity modifiers
Adjustments made to a calculated order quantity. Order quantities are calculated based upon a given lot-sizing rule, but it may be necessary to adjust the calculated lot size because of special considerations (scrap, testing, etc.).
1347
order quotation system
A formal process for receiving, managing, and responding to requests for quotes (RFQs) from customers.
1348
order-oriented finite loading
A set of finite loading techniques to schedule orders according to order-level priority rules. The techniques aim to either (1) maximize capacity utilization or (2) deliver a high proportion of on-time orders with low work in process. See: constraint-oriented finite loading, drum-buffer- rope (DBR).
1349
order-to-delivery cycle
The period of time that starts when the customer places an order and ends when the customer receives the order.
1350
order release
The activity of releasing materials to a production process to support a manufacturing order. See: planned order release.
1351
order-up-to level
Syn.: target inventory level.
1352
organization chart
A graphical depiction of relationships between people who work together.
1353
order reporting
Recording and reporting the start and completion of the manufacturing order (shop order) in its entirety.
1354
order scheduling
Syn.: operations scheduling.
1355
order selection
Syn.: order picking.
1356
order service
The function that encompasses receiving, entering, and promising orders from customers, distribution centers, and interplant operations. Order service is also typically responsible for responding to customer inquiries and interacting with the master scheduler on availability of products. In some companies, distribution and interplant requirements are handled separately. See: order entry, order promising.
1357
order shipment
Activity that extends from the time the order is placed upon the vehicle for movement until the order is received, verified, and unloaded at the buyer’s destination.
1358
order to cash cycle
The activities and processes that take place from the time an order is placed by a customer until payment is received and credited. The goal is to translate sales into financial benefit as rapidly as possible. See: cash conversion cycle.
1359
order transmittal
The time interval between a customer placing an order and when the seller receives it.
1360
order winners
Those competitive characteristics that cause a firm’s customers to choose that firm’s goods and services over those of its competitors. Order winners can be considered to be competitive advantages for the firm. Order winners usually focus on one (rarely more than two) of the following strategic initiatives: price or cost, quality, delivery speed, delivery reliability, product design, flexibility, aftermarket service, and image. See: order losers, order qualifiers. Organization for Economic Cooperation and Development
1361
(OECD) Guidelines for Multinational Enterprises
A set of recommendations about responsible business conduct addressed by governments to multinational enterprises (MNEs) operating in or from adhering countries that encourage and maximize the positive impact MNEs can make to sustainable development and enduring social progress. See: multinational corporation.
1362
organizational breakdown structure
In project management, a representation of a project’s organization relating work packages to organizational units.
1363
organizational change management
The fostering and support of people who champion new technologies, new operating practices, and new products and services that will transform the organization, maintaining its viability and improving its competitive position in step with changes in the business environment in which it functions.
1364
organizational design
The creation of an organizational structure to support the strategic business plans and goals of an enterprise (e.g., for-profit versus not-for-profit companies). Given the mission and business strategy, the organizational structure design provides the framework within which the business’s operational and management activities will be performed.
1365
organizational development (OD)
The process of building and strengthening core competencies and organizational capabilities that enable the execution of the business strategy and provide a sustainable competitive advantage over time. It includes staffing the organization, building core competencies and organizational capabilities, and continuous improvement initiatives in response to the changing business environment.
1366
organizational drivers
Elements that determine how an organization is structured, its culture, and focus. Drivers often impact how value is generated, risks are avoided, or performance is measured. Organizational drivers should be aligned with the company strategies and business objectives.
1367
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. See: abnormal demand.
1368
organizational environment
Consists of an external environment (e.g., laws and regulations, technology, economy, competition) and an internal environment (e.g., the domain of products and services to be provided, the processes to be executed, the organizational structure). See: external environment, internal environment.
1369
original equipment manufacturer (OEM)
A manufacturer that buys and incorporates another suppliers products into its own products. OEMS incorporate entire products supplied to them as well as items 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.
1370
orthogonal arrays
Tools that help maintain independence between different iterations of a product design experiment. This quality analysis technique was first introduced Genichi Taguchi.
1371
OS&D
Abbreviation for over, short, and damaged.
1372
OSHA
Acronym for Occupational Safety and Health Act.
1373
OSI
Acronym for open systems interconnection.
1374
OTED
Acronym for one-touch exchange of die.
1375
OTIF
Acronym for on-time in-full.
1376
out of spec
A term used to indicate that a unit does not meet a given specification.
1377
out-of-control process
A process in which the statistical measure being evaluated is not in a state of statistical control (i.e., the variations among the observed sampling results can be attributed to a constant system of chance causes). Ant.: in- control process.
1378
out-of-pocket costs
Costs that involve direct payments such as labor, freight, or insurance, as opposed to depreciation, which does not.
1379
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 an 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. See: customer-supplier partnership, supplier partner, customer partner.
1380
output
The product being completed by a process or facility.
1381
output control
A technique for controlling output in which actual output is compared with planned output to identify problems at the work center or facility.
1382
out of stock
A situation in which there is no inventory at a location available for sale to the customer. See: stockout.
1383
output standard
The expected number of units from a process against which actual output will be measured.
1384
outbound consolidation
The gathering of a number of small shipments to a variety of customers into a larger load, which is then shipped to a point near the customers where it is broken down for delivery.
1385
outbound inventory
Goods shipping from a plant or warehouse to a customer or another facility. See: in- transit inventory, outbound consolidation, pipeline stock, transportation inventory.
1386
outside shop
Suppliers. This term is used to convey the idea that suppliers are an extension of the inside shop or the firm’s production facilities.
1387
outsourced cost of goods sold
Costs of goods sold that are not created within the producing company’s manufacturing process. Instead, they are outsourced to another company and include the costs of purchasing the service from another company.
1388
outbound logistics
Every process that is involved in the shipping and holding of products after they are completed until they are received by the customer.
1389
outbound stockpoint
A designated location near the point of use on a plant floor to which material produced is taken until it is pulled to the next operation.
1390
outsourced reverse logistics
The practice of contracting with a third-party service provider to manage returns.
1391
outsourcing
The process of having suppliers provide goods and services that were previously provided internally. Outsourcing involves substitution—the replacement of internal capacity and production by that of the supplier. See: subcontracting.
1392
over, short, and damaged (OS&D) report
A report submitted by a freight agent showing discrepancies in billing received and actual merchandise received.
1393
overall equipment effectiveness (OEE)
Measuring the effectiveness of all of the equipment of a company based on usage, performance, and production quality.
1394
overrun
1) The quantity received from manufacturing or a supplier that is in excess of the quantity ordered. 2) The condition resulting when expenditures exceed the budget.
1395
overall factors
Syn.: capacity planning using overall factors (CPOF).
1396
overall value at risk (VAR)
The sum of the probability of risk events times the monetary impact of the events. Overall VAR can impact any core supply chain functions (e.g., Plan, Order, Source, Transform, Fulfill, and Return) or key dependencies.
1397
overhead
The costs incurred in the operation of a business that cannot be directly related to the individual goods or services produced. These costs, such as light, heat, supervision, and maintenance, are grouped in several pools (e.g., department overhead, factory overhead, general overhead) and distributed to units of goods or services by some standard allocation method such as direct labor hours, direct labor dollars, or direct materials dollars. Syn.: burden. See: expense.
1398
overhead allocation
In accounting, the process of applying overhead to a product on the basis of a predetermined rate.
1399
overhead base
The denominator used to calculate the predetermined overhead rate used in applying overhead (e.g., estimated direct labor hours, estimated direct labor dollars).
1400
overhead pool
The collection of overhead costs that are to be allocated over a specified group of products.
1401
overissue
Syn.: excess issue.
1402
overlap quantity
The number of items that need to be run and sent ahead to the following overlap operation before the following operation can begin. Syn.: offset quantity. See: process batch, transfer batch.
1403
overlapped production
A method of production in which completed pieces of a production lot are processed at one or more succeeding stations while remaining pieces continue to be processed at the original workstation. See: overlapped schedule.
1404
overlapped schedule
A manufacturing schedule that overlaps successive operations. Overlapping occurs when the completed portion of an order at one work center is processed at one or more succeeding work centers before the pieces left behind are finished at the preceding work centers. Syns.: lap phasing, operation overlapping, telescoping. See: send ahead. Ant.: gapped schedule, overlapped production.
1405
overload
A condition in which the total hours of work outstanding at a work center exceed that work center’s capacity.
1406
overpack
1) Reducing total shipping costs by reducing the per- item shipping cost. This is done by including multiple smaller items in one larger box. 2) Nesting or packing items into a larger container or box to simplify handling or provide additional protection against damage during shipment.
1407
overstated master production schedule
A schedule that includes either past-due quantities or quantities that are greater than the ability to produce, given current capacity and material availability. An overstated master production schedule should be made feasible before material requirements planning is run.
1408
overstock
A supply or quantity of inventory in excess of demand or requirements.
1409
overtime
Work beyond normal established working hours that usually requires that a premium be paid to the workers.
1410
owner’s equity
An accounting or financial term (balance sheet classification of accounts) representing the residual claim by the company’s owners or shareholders, or both, to the company’s assets less its liabilities. See: assets, balance sheet, liabilities.
1411
P chart
A control chart for evaluating the stability of a process in terms of the percentage of the total number of units in a sample in which an event of a given classification occurs over time. P charts are used when it is difficult or costly to make numerical measurements or when combining multiple types of defects into one measurement is desired. Syn.: percent chart.
1412
P:D ratio
A ratio in which P is the manufacturing lead time and D is the customer required delivery time. If the P:D ratio exceeds 1.00, either a customer’s order will be delayed or production will start as the result of a forecast (make-to-stock) or an anticipated customer order (make-to-order).
1413
PAC
Acronym for production activity control.
1414
pace rating
Estimating the level of effort of a subject of methods study, where 100 percent would be the sustainable pace of an average skilled worker.
1415
pacemaker
In lean, the resource that is scheduled based on the customer demand rate for that specific value stream. This resource performs an operation or process that governs the flow of materials along the value stream. Its purpose is to maintain a smooth flow through the manufacturing plant. A larger buffer is provided for the pacemaker than other resources so that it can maintain continuous operation. See: constraint.
1416
pacing process
The process in a production line used to signal all other processes in line of the time to produce another unit. It generally is the final process, but it does not have to be.
1417
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.
1418
packaging
Materials surrounding an item to protect it from damage during transportation. The type of packaging influences the danger of such damage.
1419
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.
1420
packing list
A list showing merchandise packed. A copy of this list is sent to the consignee to help verify the shipment. It often is used as part of order picking and processing.
1421
packing slip
A document that itemizes in detail the contents of a particular package, carton, pallet, or container for shipment to a customer. The details include a description of the items, the shipper’s or customer’s part number, the quantity shipped, and the stock keeping units of the items shipped.
1422
pack-out department
The department that performs the final steps (often including packaging and labeling) before shipment to the customer. See: final assembly department. paired-cell overlapping loops of cards with authorization
1423
(POLCA)
A special material control and replenishment system developed to be used with quick-response manufacturing in cellular manufacturing environments. It is a hybrid push-pull system in which the push authority to proceed is generated by high-level manufacturing resources planning. See: quick- response manufacturing (QRM).
1424
pallet
A platform designed to be loaded with packages and moved by a forklift.
1425
pallet jack
A type of material handling equipment that combines pallets horizontally but has no lifting capability.
1426
pallet positions
A calculation that determines the space needed for the number of pallets for inventory storage or transportation based on a standard pallet size. Pallet dimensions vary around the globe but are typically constant in regional markets. The term is frequently used to quote storage and transportation rates.
1427
pallet rack
A single- or multiple-level structure for storage used to support high stacking of palletized loads.
1428
pallet ticket
A label to track pallet-sized quantities of end- items produced that identifies the specific sublot with specifications determined by periodic sampling and analysis during production.
1429
panel consensus
A judgmental forecasting technique by which a committee, sales force, or group of experts arrives at a sales estimate. See: Delphi method, management estimation.
1430
paperless purchasing
A purchasing operation that does not employ purchase requisitions or hard-copy purchase orders. In actual practice, a small amount of paperwork usually remains, normally in the form of the supplier schedule.
1431
par level
In service operations, the maximum supply volume based on established quotas from previous use for a particular supply item in a particular department and for a specified time period.
1432
parallel conversion
A method of system implementation in which the operation of the new system overlaps with the operation of the system being replaced. The old system is discontinued only when the new system is shown to be working properly, thus minimizing the risk and negative consequences of a poor system implementation.
1433
parallel engineering
Syn.: participative design/engineering.
1434
parallel implementation strategy
A system implementation technique whereby the current system and the new system are both executed for some period of time. The results of the two systems are compared to ensure that the new system is executing properly. When a level of confidence is built that the new system is executing properly, the old system is turned off, and the new system becomes the designated business system.
1435
parallel schedule
The use of two or more machines or job centers to perform identical operations on a lot of material. Duplicate tooling and setup are required.
1436
parameter
A coefficient appearing in a mathematical expression, each value of which determines the specific form of the expression. Parameters define or determine the characteristics or behavior of something, as when the mean and standard deviation are used to describe a set of data.
1437
parameter design
Specifying the product characteristics and production process that will create the expected product performance.
1438
parametric estimating
The use of statistical and historical data to estimate activity parameters such as time or budget.
1439
parent
Syn.: parent item.
1440
parent item
The item produced from one or more components. Syn.: parent.
1441
parent-child relationship
The logical linkage between higher- and lower-level items in the bill of material.
1442
Pareto analysis
Use of the Pareto principle in prioritizing or ranking a range of items to separate the vital few from the trivial many. See: 80-20.
1443
Pareto chart
A bar graph that displays the results of a Pareto analysis. It may or may not display the 80-20 variation, but it does show a distinct variation from the few compared with the many.
1444
Pareto diagram
Syn.: Pareto chart.
1445
Pareto’s law
A concept developed by Vilfredo Pareto, an Italian economist, that states that a small percentage of a group accounts for the largest fraction of its impact or value. In ABC classification, for example, 20 percent of the inventory items may constitute 80 percent of the inventory value. See: ABC classification, 80-20.
1446
parity
When performance of a company is basically equivalent to that of competitors in the same market space. This criterion would be deemed sufficient for products and processes for which the company does not seek to gain and hold marketplace leadership. The goal is not to perform below this base benchmark.
1447
parking lot
A meeting device whereby off-agenda items are noted for possible inclusion in future agendas. Often a flip chart or whiteboard is used.
1448
part
Generally, a material item that is used as a component and is not an assembly, subassembly, blend, intermediate, etc.
1449
part coding and classification
A method used in group technology to identify the physical similarity of parts.
1450
part family
A collection of parts grouped for some managerial purpose.
1451
part master record
Syn.: item record.
1452
part number
Syn.: item number.
1453
part period balancing (PPB)
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. See: discrete order quantity, dynamic lot sizing.
1454
part record
Syn.: item record.
1455
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.
1456
part type
A code for a component within a bill of material (e.g., regular, phantom, or reference).
1457
partial order
Any shipment received or shipped that is less than the amount ordered.
1458
partial productivity factor
Syn.: single-factor productivity.
1459
participative design/engineering
A concept that refers to the simultaneous participation of all the functional areas of the firm in the product design activity. Suppliers and customers are often also included. The intent is to enhance the design with the inputs of all the key stakeholders. Such a process should ensure that the final design meets all the needs of the stakeholders and should ensure a product that can be quickly brought to the marketplace while maximizing quality and minimizing costs. Syns.: co-design, concurrent design, concurrent engineering, new product development team, parallel engineering, simultaneous design/engineering, simultaneous engineering, team design/engineering. See: early manufacturing involvement.
1460
participative management
A system that encompasses various activities of high involvement in which subordinates share a significant degree of decision-making power with their immediate superiors. Participative management draws on the rationale that everyone in an organization is capable of and willing to help guide and direct the organization toward agreed- on goals and objectives.
1461
partner relationship management (PRM)
A business strategy and set of application tools designed to increase the long-term value of a firm’s customer channel network through partner recruitment, development, and profiling; timely communication of marketplace opportunities; sales management; services management; collaboration to improve sales, productivity, and competitiveness; and metrics ensuring that each trading partner contributes to customer satisfaction.
1462
partnering
The act of one organization committing to a long- term relationship with another organization based on trust and a shared concept of how to satisfy the customer.
1463
partnership
1) A form of business ownership that is not organized as a separate legal entity (i.e., unincorporated business) but entails ownership by two or more persons. See: private ownership, public ownership, sole proprietorship. 2) In a supply chain, a relationship based on trust, shared risk, and shared rewards aimed toward achieving a competitive advantage.
1464
parts bank
1) In the narrow sense, an accumulation of inventory between operations that serves to keep a subsequent operation running despite there being interruptions in the preceding operations. See: buffer. 2) In the larger sense, a stockroom or warehouse. The implication is that the contents of these areas should be controlled like the contents of a bank.
1465
parts list
A list of parts, materials, and components required to make an item. See: single-level bill of material.
1466
parts planner
Syn.: material planner.
1467
parts requisition
An authorization that identifies the item and quantity required to be withdrawn from an inventory. Syn.: requisition. See: purchase requisition.
1468
part-to-picker system
A materials handling approach for order picking in which the pick location is brought to the order picker (e.g., carousels).
1469
PDF
Acronym for portable document format.
1470
PDM
Acronym for product data management.
1471
passenger-mile
One passenger transported one mile. For example, a bus carrying 40 passengers for 100 miles would accrue 4,000 passenger miles.
1472
passive data gathering
Data gathered when a customer initiates the transaction process by filling out a card or sending an email. The firm develops the feedback form, but the customer initiates the use of it.
1473
passive tag
A radio frequency identification tag that does not send out data and is not self-powered. See: radio frequency identification (RFID).
1474
PE ratio
Abbreviation for price to earnings ratio.
1475
peak demand
A specific time when the quantity demanded is greater than at all other times.
1476
pegged requirement
A requirement that shows the next-level parent item (or customer order) as the source of the demand.
1477
pegging
In material requirements planning and master production scheduling, the ability to identify for a given item the sources of its gross requirements and/or allocations. Pegging can be thought of as active where-used information. See: requirements traceability.
1478
past-due order
A line item on an open customer order that has an original scheduled ship date that is earlier than the current date. Syns.: delinquent order, late order, backorder. See: backlog.
1479
penetration pricing
Introducing a product below its long-run price to secure entry into a market.
1480
people involvement
Syn.: employee involvement (EI).
1481
patent
A legal document giving exclusive rights to the production, use, sale, or other action regarding a product or process.
1482
perceived quality
One of the eight dimensions of quality that refers to a subjective assessment of a product’s quality based on criteria defined by the observer.
1483
path
In project management, a set of serially related activities in a network diagram.
1484
percent chart
Syn.: P chart.
1485
path convergence
In project management, the point in a network diagram where one or more parallel paths come together. A delay on any of the parallel paths can conceivably delay network completion.
1486
path divergence
Having parallel network paths exiting from a single node.
1487
path float
Syn.: float.
1488
pattern recognition
Classifying raw data based on experience or statistical information.
1489
pay for knowledge
A pay restructuring scheme by which competent employees are rewarded for the knowledge they acquire before or while working for an organization, regardless of whether such knowledge is actually being used at any given time.
1490
pay point
Syn.: count point.
1491
payback
A method of evaluating an investment opportunity that provides a measure of the time required to recover the initial amount invested in a project.
1492
payback period
The period of time required for the stream of cash flows resulting from a project to equal the project’s initial investment.
1493
payment terms
Conditions surrounding payment for a sale, providing a time frame in which a customer can pay without late penalties or additional fees. See: terms and conditions.
1494
PDCA
Acronym for plan-do-check-action.
1495
percent completed
A comparison of work completed to the current projection of total work.
1496
percent of fill
Syn.: customer service ratio.
1497
percent recycled waste
One of the five green SCOR metrics representing the percentage of solid waste that is recycled.
1498
percent value-added time
The percentage of total cycle time that is spent on activities that provide value to the product or customer.
1499
percentage of orders delivered in full
The proportion of orders in which all of the items are received by the appropriate customer in the quantities committed.
1500
perfect condition percentage
The proportion of orders delivered in an undamaged state that meet specifications, have the correct configuration, are faultlessly installed (as applicable), and are accepted by the customer.
1501
perfect order
1) An order in which the seven Rs—the right product, the right quantity, the right condition, the right place, the right time, the right customer, and the right cost— are satisfied. 2) A fulfillment metric used to measure order proficiency, including being on time, complete, accurate, and undamaged.
1502
perfect order fulfillment
A measure of an organization’s ability to deliver a perfect order. See: perfect order.
1503
perfect pick put-away
The practice of ensuring that items are in the correct quantity, physical location, and condition so that they can be picked accurately when they are ordered.
1504
performance
1) The degree to which an employee or group applies skill and effort to an operation or task as measured against an established standard. 2) One of the eight dimensions of quality that refers to product attributes pertaining to the functioning of a product (e.g., horsepower, signal-to-noise ratio, or decibel output). 3) One of the four parts of the Supply Chain Operations Reference (SCOR) framework. This section contains the standard metrics to describe process performance and define strategic goals.
1505
performance and event management systems
Systems that record and measure the performance of key supply chain processes. With this data, employees can determine when the key processes have changed and why they have changed. This data then is utilized to adjust the existent data.
1506
performance appraisal
Supervisory or peer analysis of work performance. This appraisal may be made in connection with wage and salary review, promotion, transfer, or employee training.
1507
performance benchmarking
Syn.: competitive benchmarking. See: benchmarking, process benchmarking.
1508
performance criterion
The characteristic to be measured (e.g., parts per million defective or business profit). See: performance measure, performance measurement system, performance standard.
1509
performance efficiency
A ratio, usually expressed as a percentage, of the standard processing time for a part divided by its actual processing time. Setups are excluded from this calculation to prevent distortion. A traditional definition includes setup time as part of operation time, but significant distortions can occur as a result of dependent setups.
1510
performance management
Proactively ensuring that the goals of an operating entity (e.g., an organization, a department, or an employee) are consistently being met in an effective and efficient manner.
1511
performance measure
In a performance measurement system, the actual value measured for the criterion. Syn.: performance measurement. See: performance criterion, performance measurement system, performance standard.
1512
performance measurement
Syn.: performance measure.
1513
performance measurement baseline
An approved plan used to compare against actual execution to identify variances for management control.
1514
performance measurement system
A system for collecting, measuring, and comparing a measure to a standard for a specific criterion for an operation, item, good, service, business, etc. A performance measurement system consists of a criterion, a standard, and a measure. Syn.: metric. See: performance criterion, performance measure, performance standard.
1515
performance measurement units
Time, error rates, accuracy rates, cost, and other measures of system performance.
1516
performance objectives
Measurements that enable the firm to monitor whether or not the firm’s strategy is being accomplished. Thus, the measurement should be aligned to strategy. Performance objectives may differ based on the hierarchical level of the firm (e.g., department, business unit, or corporation) and should be aligned with the corresponding strategy for that level.
1517
performance rating
Observation of worker performance that rates the productivity of the workers as a percentage of the standard or normal worker performance.
1518
performance standard
In a performance measurement system, the accepted, targeted, or expected value for the criterion. See: performance criterion, performance measure, performance measurement system.
1519
performance variance
The difference between a performance standard and actual performance.
1520
performing organization
The enterprise directly involved in the execution of work.
1521
period capacity
The number of standard hours of work that can be performed at a facility or work center in a given time period.
1522
period costs
All costs related to a period of time rather than a unit of product (e.g., marketing costs or property taxes).
1523
period order quantity (POQ)
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. See: discrete order quantity, dynamic lot sizing.
1524
periodic inventory
A physical inventory taken at some recurring interval (e.g., monthly, quarterly, or annual physical inventory). See: physical inventory.
1525
periodic maintenance
Syn.: preventive maintenance.
1526
periodic replenishment
A method of aggregating requirements to place deliveries of varying quantities at evenly spaced time intervals rather than variably spaced deliveries of equal quantities.
1527
periodic review system
Syn.: fixed reorder cycle inventory model.
1528
perishability
The fact that an item has a limited shelf life and may be fragile and require special handling.
1529
permission marketing
Syn.: relationship marketing.
1530
perpetual inventory
An inventory recordkeeping system in which each transaction in and out is recorded and a new balance is computed.
1531
perpetual inventory record
A computer record or manual document on which each inventory transaction is posted so that a current record of the inventory is maintained.
1532
personal fatigue and unavoidable delay allowance
Factor by which the motion study term “normal time” is increased to allow for personal needs and unavoidable delays.
1533
personal protective equipment (PPE)
Items worn by an individual to protect against or minimize exposure to hazards or risks, including physical impact, electricity, heat, chemicals, biohazards, and airborne particulate matter.
1534
personnel class
A means to describe a grouping of people with similar characteristics for purposes of scheduling and planning.
1535
PERT
Acronym for program evaluation and review technique.
1536
PESTLE analysis
An analysis of the political, economic, social and ethical, technological, legal, and environmental factors in the external environment of an organization that can affect performance. This analysis often is used in conjunction with a SWOT (strengths, weaknesses, opportunities, threats) analysis. It aids organizations in determining the environment in which they operate. See: SWOT analysis.
1537
PFEP
Acronym for plan for every part.
1538
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 material requirements planning (MRP) logic to drive requirements straight through the phantom item to its components, although 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. Syns.: blowthrough, transient bill of material. See: pseudo bill of material.
1539
physical distribution
Syn.: distribution.
1540
physical inventory
1) The actual inventory itself. 2) The determination of inventory quantity by actual count. Physical inventories can be taken on a continuous, periodic, or annual basis. Syns.: annual inventory count, annual physical inventory. See: periodic inventory.
1541
physical supply
The movement and storage of goods from suppliers to manufacturing. The cost of physical supply is ultimately passed on to the customer.
1542
pick and place
Equipment that picks up parts from one station on an assembly line and places them on the next.
1543
pick date
The start date of picking components for a production order. On or before this date, the system produces a list of orders due to be picked, pick lists, tags, and turnaround cards.
1544
pick list generation
See: picking list.
1545
pick on receipt
A practice in which a product is unloaded from an inbound vehicle and loaded directly onto an outbound vehicle. Product is received and picked simultaneously, never residing in the warehouse. Pick on receipt is similar to cross- docking.
1546
pick slots
Areas on shelves in a warehouse where products are stored.
1547
picker-to-part system
A materials handling approach for order picking in which the picker goes to the product location (e.g., forklifts or order picking trucks).
1548
picking
1) The process of withdrawing from stock the components to make assemblies or finished goods. 2) In distribution, the process of withdrawing goods from stock to ship to a distribution warehouse or to a customer.
1549
picking list
A document that lists the material to be picked for manufacturing or shipping orders. Syns.: disbursement list, material list, stores issue order, stores requisition. See: pick list generation.
1550
pick-to-light
A pick system that uses software to light up displays at each pick location to guide the human picker to the necessary picking location.
1551
pick-to-trailer
An order-picking system that allows the picker to transfer materials to the trailer from the pick source without any confirmation or checking stages.
1552
pick-to-voice system
A method of performing order-picking activities in a warehouse or distribution center using verbal commands. Syn.: voice pick system.
1553
pickup and delivery costs
Carrier charges for a shipment pickup plus the weight of that shipment. Costs can be reduced if several smaller shipments are consolidated and picked up in one trip.
1554
piece parts
Individual items in inventory at the simplest level in manufacturing (e.g., bolts and washers).
1555
piece rate
The amount of money paid for a unit of production. It serves as the basis for determining the total pay for an employee working in a piecework system.
1556
piece rate pay system
A compensation system based upon the volume of output of an individual worker.
1557
piecework
Work done on a piece rate.
1558
piggyback
Syn.: trailer on a flatcar (TOFC).
1559
pilot
Syn.: pilot test.
1560
pilot lot
A relatively small preliminary order for a product. The purpose of this small lot is to correlate the product design with the development of an efficient manufacturing process.
1561
pilot order
Syn.: experimental order.
1562
pilot plant
A small-scale production facility used to develop production processes and to manufacture small quantities of new products for field testing and so forth. Syn.: semiworks.
1563
plan make
Establishing plans for action over time that project the appropriation of production resources to meet production requirements.
1564
pilot test
1) In computer systems, a test before final acceptance of a new business system using a subset of data with engineered cases and documented results. 2) Generally, production of a quantity to verify manufacturability, customer acceptance, or other management requirements before implementation of ongoing production. Syns.: pilot, walkthrough.
1565
pinwheel loading
Loading the pallets in alternate directions by placing one pallet straight and one pallet sideways to more fully utilize space in a trailer or container. Pipeline and Hazardous Material Safety Administration
1566
(PHMSA)
A United States Department of Transportation agency responsible for developing and enforcing regulations for the safe, reliable, and environmentally sound transportation of energy and other hazardous materials that are essential to our daily lives.
1567
pipeline inventory
Syn.: pipeline stock.
1568
pipeline stock
Inventory in the transportation network and the distribution system, including the flow through intermediate stocking points. The flow time through the pipeline has a major effect on the amount of inventory required in the pipeline. Time factors involve order transmission, order processing, scheduling, shipping, transportation, receiving, stocking, review time, and so forth. Syn.: pipeline inventory. See: distribution system, transportation inventory.
1569
place
One of the four Ps (product, price, place, and promotion) that constitute the set of tools used to direct the business offering to the customer. Place is the distribution tactic used to provide the product to the customer. Distribution answers the questions of where, when, and how the product is made available. See: four Ps.
1570
place utility
Usefulness to the customer created by having the product delivered to a desired location.
1571
plain boxcar
An enclosed railcar with side doors of different sizes and adjustable bulkheads. It is used to carry most loads.
1572
plan
A predetermined course of action over a specified period of time that represents a projected response to an anticipated environment to accomplish a specific set of adaptive objectives.
1573
plan deliver
Establishing plans for action over time that also show the supply resources to meet delivery requirements.
1574
plan for every part (PFEP)
A method of materials management that involves the use of kanban signals to suppliers for replenishment along with timed delivery routes and supermarket locations broken down by value stream.
1575
plan source
Establishing plans for action over time that project the appropriation of material resources to meet supply chain requirements.
1576
plan stability
The percent difference between the production that was planned and the production that was actually completed. The numerator is the difference between actual and planned production, and the denominator is the planned production. This information then is used to adjust production standards.
1577
plan-do-check-act cycle
Syn.: plan-do-check-action (PDCA).
1578
plan-do-check-action (PDCA)
A four-step process for quality improvement. In the first step (plan), a performance gap is identified, and 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 monitored. In the last step (action), the results are studied to determine what was learned and what can be predicted to take corrective action or institutionalize the changes. Syn.: plan- do-check-act cycle, Shewhart circle of quality, Shewhart cycle, Deming circle.
1579
planned adjustment factor
See: seasonal index.
1580
planned finish date
Syn.: scheduled finish date.
1581
planned issue
A disbursement of an item predicted by material requirements planning through the creation of a gross requirement or allocation. Syn.: controlled issue.
1582
planned issue receipt
A transaction that updates the on-hand balance and the related allocation or open order.
1583
planned load
The standard hours of work required by planned production orders.
1584
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 material requirements planning. In some cases, it can also be created by a master scheduling module. Planned orders are created by the computer, exist only within the computer, and may be changed or deleted by the computer during subsequent processing if conditions change. Planned orders at one level will be exploded into gross requirements for components at the next level. Planned orders, along with released orders, serve as input to capacity requirements planning to show the total capacity requirements by work center in future time periods. See: planning time fence.
1585
planned order receipt
The quantity planned to be received at a future date as a result of a planned order release. Planned order receipts differ from scheduled receipts in that they have not been released. Syn.: planned receipt.
1586
planned order release
A row on a material requirements planning table that is derived from planned order receipts by taking the planned receipt quantity and offsetting it to the left by the appropriate lead time. See: order release.
1587
planned receipt
An anticipated receipt against an open purchase order or open production order. Syn.: planned order receipt.
1588
planned start date
Syn.: scheduled start date.
1589
planned value
In project management, the total value (including overhead) of approved estimates for planned activities.
1590
planner
Syn.: material planner.
1591
planner intervention
Syn.: manual rescheduling.
1592
planner/buyer
Syn.: supplier scheduler.
1593
planning
The process of setting goals for the organization and choosing various ways to use the organization’s resources to achieve the goals.
1594
planning and control process
A process consisting of the following steps: plan, execute, measure, and control.
1595
planning and scheduling inventory training
Educating employees about best practices related to inventory control and inventory management.
1596
planning bill
Syn.: planning bill of material.
1597
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. It is used as the quantity per in the planning bill of material. Syn.: planning bill. See: hedge, option overplanning, production forecast, pseudo bill of material.
1598
planning board
Syn.: control board.
1599
planning calendar
Syn.: manufacturing calendar.
1600
planning fence
Syn.: planning time fence.
1601
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 low- level components and time 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. See: cumulative lead time, planning time fence.
1602
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 can be booked, and changes 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. Syn.: planning fence. See: cumulative lead time, demand time fence (DTF), firm planned order (FPO), planned order, planning horizon, time fence.
1603
planning values
Values that decision-makers use to translate the sales forecast into resource requirements to determine the feasibility and costs of alternative approaches.
1604
planogram
A graph or map of allotted shelf space based on an analysis of sales data indicating the best arrangement of products on a store shelf.
1605
plant finished goods
Finished goods inventory held in the plant rather than being shipped to a customer.
1606
plant layout
Configuration of the plant site with lines, buildings, major facilities, work areas, aisles, and other pertinent data such as department boundaries.
1607
plant rate
The total value added by a plant divided by the total direct labor hours in a particular time period. This percentage allows the scheduling at the rough-cut and capacity requirements level of the plan.
1608
plant within a plant
Syn.: factory within a factory.
1609
platform products
A grouping of products to share common parts, components, and characteristics (a common platform) so that design and production resources can be used to reduce cost and time to market.
1610
PLC
Acronym for programmable logic controller.
1611
PLCOR
Acronym for product life cycle operations reference.
1612
pledging of accounts receivable
The act of securing a loan by pledging a company’s accounts receivable.
1613
PLM
Abbreviation for product life cycle management.
1614
Plossl’s law of lead time
The premise that lead times will be what it is said they are and would be better if it is said they were shorter. Shorter stated lead times lead to the slower release of new orders, allowing the plant to work off backlogs, thus shortening actual lead times.
1615
PMBOK®
Acronym for project management body of knowledge. It is a registered trademark of the Project Management Institute, Inc.
1616
POD
Acronym for proof of delivery.
1617
point of sale (POS)
The relief of inventory and computation of sales data at the time and place of sale, generally through the use of barcoding or magnetic media and equipment.
1618
point reporting
The recording and reporting of milestone manufacturing order occurrences, typically done at checkpoint locations rather than by operations and easily controlled from a reporting standpoint.
1619
population
The entire set of items from which a sample is drawn.
1620
POQ
Acronym for period order quantity.
1621
point-of-purchase (POP) display
A sales promotion tool located at a checkout counter.
1622
point-of-sale information
Information about customers collected at the time of sale.
1623
point-of-use delivery
Direct delivery of material to a specified location on a plant floor near the operation in which it is to be used.
1624
point-of-use inventory
Inventory placed in the production process near the operation in which it is to be used. See: dock- to-stock inventory.
1625
point-of-use storage
Keeping inventory in specified locations on a plant floor near the operation in which it is to be used.
1626
Poisson distribution
A type of statistical distribution frequently used to model the arrival of customers or entities into a queuing system.
1627
poka-yoke (mistake-proof)
Mistake-proofing techniques, such as manufacturing or setup activity, designed in a way to prevent an error from resulting in a product defect. For example, in an assembly operation, if each correct part is not used, a sensing device detects that a part was unused and shuts down the operation, thereby preventing the assembler from moving the incomplete part to the next station or beginning another operation. This is sometimes spelled poke-yoke. Syns.: failsafe techniques, failsafe work methods, mistake-proofing.
1628
POLCA
Acronym for paired-cell overlapping loops of cards with authorization.
1629
policies
Definitive statements of what should be done in the business.
1630
policy constraint
A common misnomer. Bad policies are not the constraint; rather, they hinder effective constraint management by inhibiting the ability to fully exploit and/or subordinate to the constraint.
1631
political environment
External factors related to the political process—including laws and regulations and taxation codes—at the local, state, federal, and international levels of government.
1632
pooling
1) In transportation, placing shipments from multiple companies together in the same shipment in order to reduce the costs of each shipment. 2) In production, that action that combines in parallel previously independent processes to reduce the total variance compared with the variances that would occur when the processes were independent.
1633
POP
Acronym for point of purchase.
1634
portal
A multiservice website that provides access to data that may be secured by each user’s role. Users can aggregate data and perform basic analysis. Portal ownership can be independent, private, or consortium-based. Business portals are often connected with a customer relationship management or supplier relationship management system. Portals can include structured data such as enterprise resource planning information, pictures, and documents. Unlike exchanges or marketplaces, portals generally can display and aggregate data without integration between application software.
1635
portfolio
In project management, a collection of projects that are grouped to facilitate management. They are not necessarily interdependent.
1636
portfolio analysis
The practice of segmenting sourcing into four categories so that the appropriate level of management attention and resources can be applied to the sourcing and procurement processes. The model is used to determine which suppliers are most appropriate for each of the four types of goods or services: (1) Commodity materials and services are of low strategic importance and low supply chain difficulty, (2) bottleneck materials and services are of low strategic importance but are of high supply chain difficulty, (3) leverageable materials and services have high strategic importance but low difficulty, and (4) direct or core competency materials and services are of high strategic importance and high difficulty.
1637
portfolio life cycle planning
The ability to grow, sustain, and optimize product portfolios, including packaging and service, through measures of portfolio health such as product productivity; supporting launch and phase-out roadmaps; and alignment with commercialization plans, including brand and packaging plans. See: product life cycle operations reference (PLCOR), product life cycle management (PLM).
1638
POS
Acronym for point of sale.
1639
positioning strategy
Within manufacturing, a plan for inventory, product design, and the production process.
1640
possession utility
Product desirability created by marketing efforts.
1641
post deduct
In a just-in-time system, when work-in-process materials used to build finished goods are relieved from inventory by multiplying the number of units completed by the number of parts in the bill of material. This is effective only if the bill of material is accurate and manufacturing lead times are short. See: backflush.
1642
post-deduct inventory transaction processing
Syn.: backflush.
1643
postponement
A product design or supply chain strategy that deliberately delays final differentiation of a product (assembly, production, packaging, tagging, etc.) until the latest possible time in the process. This shifts product differentiation closer to the consumer to reduce the anticipatory risk of producing the wrong product. The practice reduces excess finished goods in the supply chain. Syn.: delayed differentiation.
1644
post-release
The period after the product design has been released to manufacturing, during which the product has ongoing support and product enhancement.
1645
post-transaction elements
Customer services that are provided after a product or service is sold, including warranties, returns, and complaint resolution.
1646
potency
The measurement of active material in a specific lot, normally expressed in terms of an active unit. It is typically used for such materials as solutions.
1647
PPAP
Acronym for production part approval process.
1648
PPB
Acronym for part period balancing.
1649
PPfM
Abbreviation for project portfolio management.
1650
PPP
Abbreviation for public-private partnering.
1651
practices
One of the four parts of the Supply Chain Operations Reference (SCOR) framework that contains management activities producing significantly better process performance.
1652
precedence relationship
In the critical path method of project management, a logical relationship that one node has to the succeeding node. The terms precedence relationship, logical relationship, and dependency are used somewhat interchangeably.
1653
predatory pricing
Lowering prices below cost to drive out competition and then raising prices again. In the United States, this is a violation of Article 2 of the Sherman Act.
1654
predecessor activity
1) In project management, in an activity- on-arrow network, the activity that enters a node. 2) In project management, in an activity-on-node network, the node at the tail of the arrow.
1655
pre-deduct inventory transaction processing
A method of inventory bookkeeping in which the book (computer) inventory of components is reduced before issue and at the time a scheduled receipt for their parents or assemblies is created via a bill-of-material explosion. This approach has the disadvantage of a built-in differential between the book record and the amount of inventory physically in stock. See: backflush.
1656
predetermined motion time
An organized body of information, procedures, techniques, and motion times employed in the study and evaluation of manual work elements. It is useful in categorizing and analyzing all motions into elements whose unit times are computed according to such factors as length, degree of muscle control, and precision. The element times provide the basis for calculating a time standard for the operations. Syn.: synthetic time standard.
1657
predetermined time standards
A table of times of basic motions used to prepare artificial standards (i.e., without direct observation of a worker). See: therbligs.
1658
predictable maintenance
Syn.: predictive maintenance.
1659
prediction
An intuitive estimate of demand taking into account changes and new factors influencing the market, as opposed to a forecast, which is an objective projection of the past into the future.
1660
predictive analytics
A method of extracting information from existing data in order to identify patterns and predict future outcomes and trends.
1661
predictive maintenance
A type of preventive maintenance based on nondestructive testing and statistical analysis that helps predict when required maintenance should be scheduled. Syn.: predictable maintenance.
1662
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.
1663
preferred stock
A type of stock entitling the owner to dividends before common stockholders are entitled to them.
1664
preferred supplier
The supplier of choice.
1665
pre-issued return authorization
A return authorization number that is issued at the time of ordering or shipment of goods to the customer in order to reduce the time, cost, and possible errors associated with the process of receiving and validating a return authorization request.
1666
prepaid
A term denoting that transportation charges have been or are to be paid at the point of shipment by the sender.
1667
prepaid return shipping label
A return label that covers shipping costs that is provided to the customer at the time the order is sold and shipped. Instructions for how to return the item typically are included.
1668
pre-receiving
Paying for materials before receipt to prepare for incoming products and goods.
1669
prerelease
The period of product specification, design, and design review.
1670
prerequisite tree (PRT)
A necessity-based logic diagram that facilitates answering the third question in the change sequence: How do we effect the change? The diagram shows the relationship between the injections, desirable effects or ambitious target and the obstacles that block the implementation of the injections. It also includes the intermediate objectives required to overcome the obstacles and shows the sequence in which they must be achieved for successful implementation.
1671
present value
The value today of future cash flows. For example, the promise of $10 a year from now is worth something less than $10 in hand today.
1672
pre-transaction elements
Customer service elements that pertain to the period before a product or service is sold, including flexibility, customer policies, and mission statement.
1673
prevention costs
The costs caused by improvement activities that focus on the reduction of failure and appraisal costs. Typical costs include education, quality training, and supplier certification. Prevention costs are one of four categories of quality costs.
1674
prevention versus detection
A term used to contrast two types of quality activities. Prevention refers to those activities designed to prevent nonconformances in goods and services. Detection refers to those activities designed to detect nonconformances already in goods and services. Syn.: designing in quality versus inspecting in quality.
1675
preventive maintenance
The activities, including adjustments, replacements, and basic cleanliness, that forestall machine breakdowns. The purpose is to ensure that production quality is maintained and that delivery schedules are met. In addition, a machine that is well cared for will last longer and cause fewer problems. Syn.: periodic maintenance.
1676
preventive returns
The practice of issuing notices to consumers and customers requesting the return of goods or materials due to possible product defects or damage.
1677
price
One of the four Ps (product, price, place, and promotion) that constitute the set of tools used to direct the business offering to the customer. Price is the amount charged for the product offering. The price set must take into account competition, substitute products, and internal business costs to return a desirable product margin. See: four Ps.
1678
price analysis
The practice of testing whether or not the price paid for goods and services is fair. The testing involves comparing the price against reasonable comparators such prices that have been paid in the past, published prices, pricing formulas, and competitive bidding comparisons.
1679
price break
A discount given for paying early, buying in quantity, and so forth. See: cash discount, discount, quantity discount, volume discount.
1680
price discrimination
Selling the same products to different buyers at different prices.
1681
price elasticity
The degree of change in buyer demand in response to changes in product price. It is calculated by dividing the percentage of change in quantity bought by the percentage of change in price. Prices are considered elastic if demand varies with changes in price. If demand changes only slightly when the price changes, demand is said to be inelastic. For example, demand for most medical services is relatively inelastic, but demand for automobiles is generally elastic.
1682
price erosion
Occurs when increased competition and efficiencies in production over time cause the price to gradually reduce.
1683
price point
The relative price position at which the product will enter the market compared with direct and indirect competitors’ prices. It is considered within the context of the price-range options available: high, medium, or low.
1684
price prevailing at date of shipment
An agreement between a purchaser and a supplier that the price of the goods ordered is subject to change at the supplier’s discretion between the date the order is placed and the date the supplier makes shipment. The subsequently established price is the contract price.
1685
price protection
An agreement between a supplier and a purchaser to grant the purchaser any reduction in price that the supplier may establish on its goods before shipment of the purchaser’s order or to grant the purchaser the lower price should the price increase before shipment. Price protection is sometimes extended for an additional period beyond the date of shipment.
1686
price schedule
The list of prices applying to varying quantities or kinds of goods.
1687
price skimming
Introducing a product above its long-run price to maximize product margin before others can enter the market.
1688
price to earnings (PE) ratio
The current price of a stock relative to its earnings per share.
1689
price-break model
Syn.: quantity discount model.
1690
prima facie
Latin for at first sight or on the face of it. It is used to refer to something that is presumed to be true.
1691
primary demand
The demand for a category of products rather than for a specific brand.
1692
primary location
The designation of a certain storage location as the standard, preferred location for an item.
1693
primary operation
A manufacturing step normally performed as part of a manufacturing part’s routing. Ant.: alternate operation.
1694
primary process
A process that performs the main value-added activities of an organization.
1695
primary work center
The work center where an operation on a manufactured part is normally scheduled to be performed. Ant.: alternate work center.
1696
prime costs
Direct costs of material and labor. Prime costs do not include general, sales, or administrative costs.
1697
prime operations
Critical or most significant operations whose production rates must be closely planned.
1698
prime rate
The interest rate charged by banks to their most preferred customers.
1699
principal
The party authorizing an agent to act on his or her behalf.
1700
principle of postponement
Syn.: order penetration point.
1701
principles of material flow
Seven principles that ensure that material flow through a warehouse is efficient, safe, environmentally sustainable, and profitable.
1702
prioritization matrix
A special type of matrix chart used to show the priorities of items by applying criteria and weighting factors to each item.
1703
priority
In a general sense, the relative importance of jobs (i.e., the sequence in which jobs should be worked on). It is a separate concept from capacity.
1704
priority control
The process of communicating start and completion dates to manufacturing departments in order to execute a plan. The dispatch list is the tool normally used to provide these dates and priorities based on the current plan and status of all open orders.
1705
priority planning
The function of determining what material is needed and when. Master production scheduling and material requirements planning are the elements used for the planning and replanning processes to maintain proper due dates on required materials.
1706
priority report
Syn.: dispatch list.
1707
priority rules
Simple heuristics used to select the order in which jobs will be processed.
1708
private brand
A brand applied by a distributor rather than a manufacturer.
1709
private carrier
A group that provides transportation exclusively within an organization. Ant.: common carrier.
1710
private key
In information systems, an encryption key that is known only by the sender and receiver of the message. See: public key.
1711
private label
Also known as store or dealer brands, these are products that are designed and produced by one company but carry the name of the store that sells them. These products also can be referred to as generic.
1712
private ownership
A form of business ownership in which the business is either owned by a single person (proprietorship) or organized under law as a separate legal entity but for which company stock is not publicly traded. See: partnership, public ownership.
1713
private trading exchange (PTX)
A trade exchange hosted by a single company to facilitate collaborative e-commerce with its trading partners. As opposed to public e-marketplaces, a private exchange provides the host company with control over many factors, including who may participate (and in what manner), how participants may be connected, and what contents should be presented (and to whom). The ultimate goal might be to improve supply chain efficiencies and responsiveness through improved process visibility and collaboration, advanced integration platforms, and customization capabilities.
1714
private warehouse
A company-owned warehouse.
1715
pro forma financial statements
Financial statements that are based on an assumed scenario rather than an actual experience.
1716
pro forma invoice
A quote provided by a seller or exporter prior to the delivery of products or services, informing the buyer or importer of the price. This document is submitted to customs for valuation purposes.
1717
proactive
A strategy of anticipating issues and presenting beneficial solutions to the customer.
1718
probabilistic demand models
Statistical procedures that represent the uncertainty of demand by a set of possible outcomes (i.e., a probability distribution) and that suggest inventory management strategies under probabilistic demands.
1719
probability
Mathematically, a number between 0 and 1 that estimates the fraction of experiments (if the same experiment were being repeated many times) in which a particular result would occur. This number can be either subjective or based upon the empirical results of experimentation. It can also be derived for a process to give the probable outcome of experimentation.
1720
probability and impact matrix
A matrix combining two dimensions of risk: (1) the likelihood of an event’s occurrence and (2) the impact if the event occurs.
1721
probability distribution
A table of numbers or a mathematical expression that indicates the frequency with which each of all possible results of an experiment should occur.
1722
probability tree
A graphic display of all possible outcomes of an event based on the possible occurrences and their associated probabilities.
1723
probable scheduling
A variant of scheduling that considers slack time to increase or decrease the calculated lead time of an order. Interoperation and administrative lead time components are expanded or compressed by a uniform stretching factor until no difference exists between the schedule of operations obtained by forward and backward scheduling. See: lead-time scheduling.
1724
problem-solving storyboard
A technique based on the plan- do-check-action problem-solving process. The steps being taken and the progress toward the resolution of a problem are continuously planned and updated.
1725
procedure manual
A formal organization and indexing of a firm’s procedures. Manuals are usually printed and distributed to the appropriate functional areas.
1726
process
1) A planned series of actions or operations (e.g., mechanical, electrical, chemical, inspection, or test) that advances a material or procedure from one stage of completion to another. 2) A planned and controlled treatment that subjects materials or procedures to the influence of one or more types of energy (e.g., human, mechanical, electrical, chemical, or thermal) for the time required to bring about the desired reactions or results.
1727
process and metrics alignment
The organized and deliberate development of metrics across an organization. The process starts with developing organizational, business, or supply chain metrics and then moves to developing metrics for organizational processes and more specific levels, if desired.
1728
process average
Expected value of the percentage defective of a given manufacturing process.
1729
process batch
The quantity or volume of output that is to be completed at a workstation before switching to a different type of work or changing an equipment setup.
1730
process benchmarking
Benchmarking focused on the target firm’s business processes (including process flows, operating systems, and process technologies). See: benchmarking.
1731
process capability
The ability of the process to produce parts that conform to (engineering) specifications. Process capability relates to the inherent variability of a process that is in a state of statistical control. See: Cp, Cpk, process capability analysis.
1732
process capability analysis
A procedure to estimate the parameters defining a process. The mean and standard deviation of the process are estimated and compared with the specifications, if known. This comparison is the basis for calculating capability indexes. In addition, the form of the relative frequency distribution of the characteristic of interest may be estimated. Syn.: capability study. See: process capability.
1733
process capability index
The value of the tolerance specified for the characteristic divided by the process capability. There are several types of process capability indices, including the widely used Cpk and Cp.
1734
process chart
A chart that represents the sequence of work or the nature of events in process. It serves as a basis for examining and possibly improving the way the work is carried out. Syn.: operations process chart. See: flow process chart, process flow.
1735
process control
1) The function of maintaining a process within a given range of capability by feedback, correction, and so forth. 2) The monitoring of instrumentation attached to equipment (valves, meters, mixers, liquid, temperature, time, etc.) from a control room to ensure that a high-quality product is being produced to specification.
1736
process control chart
Syn.: control chart.
1737
process controllers
Computers designed to monitor the manufacturing cycle during production, often with the capability to modify conditions in order to bring the production back to within prescribed ranges.
1738
process costing
A cost accounting system in which the costs are collected by time period and averaged over all the units produced during the period. This system can be used with either actual or standard costs in the manufacture of a large number of identical units.
1739
process decision program chart
A technique used to show alternate paths to achieving given goals. Applications include preparing contingency plans and maintaining project schedules.
1740
process design
The design of the manufacturing method.
1741
process engineering
The discipline of designing and improving the manufacturing equipment and production process to support the manufacture of a product line. See: manufacturing engineering.
1742
process flexibility
The design of the manufacturing system, including operators and machinery, that allows quick changeovers to respond to near-term changes in product volume and mix. It is a necessary tool in lean and just in time.
1743
process flow
The sequence of activities that, when followed, results in a product or service deliverable. See: flow process chart, process chart.
1744
process flow analysis
A procedure to evaluate the effectiveness of a sequence of business activities. The analysis determines which elements of the flow are value-added and eliminates those that are not, determines which parts of the process can be automated, evaluates activities as to whether they contribute to the core competencies of the business or are candidates for outsourcing, and designs a structure for the remaining activities of the process to improve productivity.
1745
process flow diagram
A graphical and progressive representation of the various steps, events, and tasks that make up an operations process. It provides the viewer with a picture of what actually occurs when a product is manufactured or a service is performed.
1746
process flow production
A production approach with minimal interruptions in the actual processing in any one production run or between production runs of similar products. Queue time is virtually eliminated by integrating the movement of the product into the actual operation of the resource performing the work.
1747
process flow scheduling
A generalized method for planning equipment usage and material requirements that uses the process structure to guide scheduling calculations. It is used in the flow environments common in process industries.
1748
process flowchart
Syn.: flow process chart.
1749
process focused
A type of manufacturing organization in which both plant and staff management responsibilities are delineated by the production process. A highly centralized staff coordinates plant activities and intracompany material movements. This type of organization is best suited to companies whose dominant orientation is to a technology or material and whose manufacturing processes tend to be complex and capital-intensive. See: product focused, process- focused organization.
1750
process hours
The time required to perform any specific operation or task needed to process the product.
1751
process improvement
The activities designed to identify and eliminate causes of poor quality, process variation, and non- value-added activities.
1752
process industries
Manufacturers that produce products by mixing, separating, forming, and/or performing chemical reactions. Paint manufacturers, refineries, and breweries are examples of process industries.
1753
process integration
Coordinating operations and consolidating data to simplify processes and increase efficiency.
1754
process layout
Syn.: functional layout.
1755
process list
A list of operations and procedures in the manufacture of a product. It may also include a statement of material requirements.
1756
process manufacturing
Production that adds value by mixing, separating, forming, and/or performing chemical reactions. It may be done in either batch or continuous mode. See: project manufacturing.
1757
process map
A diagram of the flow of a production process or service process through the production system. Standardized symbols are used to designate processing, flow directions, branching decisions, input/output, and other aspects of the process.
1758
process mapping
Drawing the processes or relationships that form an organization's business processes.
1759
process organization structure
An organizational structure in which people are removed from their functional departments and placed into a group that works as a single unit to perform the entire linked process, as opposed to a functional organization in which the activities that make up the process are performed by people in multiple functionally oriented departments.
1760
process oriented
An environment in which the focus is on the interrelated processes in a business. It includes the activities to transform inputs into outputs that have value.
1761
process planning
Determining the technological steps and sequence required to produce a product or service at the required quality level and cost.
1762
process selection
An economic analysis used to decide which process should be used when operations can be performed by more than one process.
1763
process sheet
Detailed manufacturing instructions issued to the plant. The instructions may include specifications on speeds, feed, temperatures, tools, fixtures, and machines and sketches of setups and semifinished dimensions.
1764
process steps
The operations or stages within the manufacturing cycle required to transform components into intermediates or finished goods. From a larger perspective, the operations or stages within any business required to turn inputs into outputs.
1765
process stocks
Raw ingredients or intermediates available for further processing into marketable products.
1766
process time
The time during which the material is being changed, whether through a machining operation or an assembly. Syn.: residence time.
1767
process train
A representation of the flow of materials through a process industry manufacturing system that shows equipment and inventories. Equipment that performs a basic manufacturing step, such as mixing or packaging, is called a process unit. Process units are combined into stages, and stages are combined into process trains. Inventories decouple the scheduling of sequential stages within a process train.
1768
process yield
See: yield.
1769
process-focused organization
An organization that is oriented toward executing linked activities that constitute a given end-to-end business process with a given set of resources. Responsibilities of the members of the organization are oriented toward the performance of the process that creates the product or service and not toward a product or functional silo. See: process focused, product focused.
1770
process-focused production
A type of factory operation that requires frequent machine changeover and produces small batches of unique products that flow along different paths.
1771
processor-dominated scheduling
A technique that schedules equipment (processor) before materials. This facilitates scheduling equipment in economic run lengths and the use of low-cost production sequences. Processor-dominated scheduling is used in some process industries. See: material- dominated scheduling (MDS).
1772
procure to pay cycle
The activities and processes that take place from the time a purchase order is placed until payment is made.
1773
procurement
The business functions of procurement planning, purchasing, inventory control, traffic, receiving, incoming inspection, and salvage operations.
1774
procurement card (p-card)
A purchasing card similar to a personal credit card for authorized employees to make low- volume, inexpensive purchases. The card user makes these limited buying decisions, bypassing the purchasing department altogether. Syn.: corporate purchasing cards, procurement credit card.
1775
procurement credit card
Credit cards with a predetermined credit limit issued to buyers. Syn.: corporate purchasing cards.
1776
procurement cycle
Syn.: procurement lead time.
1777
procurement governance
The established procurement policies and procedures, values and ethical standards, performance management, board accountability to procurement integrity, whistle blowers' protection, fraud detection, reporting line and authority for the department, and internal and external audit procedures. These policies also include ways to prevent conflicts of interest and the adherence to the code of conduct for the procurement department to maintain the highest ethical standards. In addition, it can include establishing fair competition practices in the procurement process, assuring non-disclosure of information, and abolishing unethical standards in procurement and supply.
1778
procurement lead time
The time required to design a product, modify or design equipment, conduct market research, and obtain all necessary materials. Lead time begins when a decision has been made to accept an order to produce a new product and ends when production commences. Syns.: procurement cycle, total procurement lead time. See: time-to-market.
1779
procurement services provider
A company that has product, sourcing, and supply management knowledge; acts as an outsourced process by other companies; and provides procurement help. This is most often used as a third-party process by companies in which procurement is a significant part of business but the company lacks the expertise to effectively manage the process.
1780
producer
One who creates a good or service.
1781
producer market
Syn.: industrial market.
1782
producer’s risk (a)
For a given sampling plan, the probability of not accepting a lot, the quality of which has a designated numerical value representing a level that is generally desired to accept. Usually the designated value will be the acceptable quality level (AQL). See: type I error.
1783
produce-to-stock
Syn.: make-to-stock (MTS).
1784
producibility
The characteristics of a design that enable the item to be produced and inspected in the quantity required at the least cost and minimum time.
1785
product
1) Any good or service produced for sale, barter, or internal use. 2) One of the four Ps (product, price, place, and promotion) that constitute the set of tools for directing the business offering to the customer. The product can be promoted as a distinctive item. See: four Ps.
1786
product and market focus
Developing products based on dimensions like service to similar customers, volume, or customization.
1787
product and portfolio management
An operating model and framework for end-to-end product or service life cycle management in an organization. The objective is to optimize the ideas, product portfolios, and profitability by interlocking them with future product plans and end-of-life procedures.
1788
product audit
The reinspection of any product to verify the adequacy of acceptance or rejection decisions made by inspection and testing personnel.
1789
product benchmarking
Benchmarking used for new product design or for a product upgrade. This often includes reverse engineering (dismantling) competing products to determine their strengths and weaknesses. See: benchmarking.
1790
product configuration catalog
A listing of all upper-level configurations contained in an end-item product family. Its application is most useful when there are multiple end-item configurations in the same product family. This catalog is used to provide a transition linkage between the end-item level and a two-level master production schedule. It also provides a correlation between the various units of upper level product definition.
1791
product configurator
A system, generally rule-based, to be used in design-to-order, engineer-to-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 manufacturing resource planning systems as well as sales order entry systems.
1792
product cost
Cost allocated by some method to the products being produced. Initially recorded in asset (inventory) accounts, product costs become an expense (cost of sales) when the product is sold.
1793
product data management (PDM)
A system that tracks the configurations of parts and bills of material and also the revisions and history of product designs. It facilities the design release, distributes the design data to multiple manufacturing sites, and manages changes to the design in a closed-loop fashion. It provides the infrastructure that controls the design cycle and manages change.
1794
product design influencing
The simultaneous participation of procurement and other stakeholders, such as suppliers and customers, in the product-design activity. The intent of the process is to influence the design with the inputs of the procurement department and suppliers to ensure that the final design meets the needs of all stakeholders. The participation results in products being brought to market more quickly while maximizing quality and minimizing costs.
1795
product development
Developing and managing products and services that are responsive to customer experience in a manner that results in improved market timeliness, higher design quality, increased productivity, and enhanced communication and visibility.
1796
product development collaboration
The ability to collaborate beyond an organization’s conventional internal boundaries and integrate product strategy and development processes across internal and external stakeholders for faster product or service development cycles. This collaboration reduces time to market and provides the opportunity to exceed customer expectations. product development, engineering, and disposition
1797
collaboration
The practice of product development and engineering teams working with the permission-granting authority to ensure the authority is aware of key decisions to ensure the authority can update technical documentation, the configuration management system, and product specifications as needed.
1798
product differentiation
A strategy of making a product distinct from the competition on a nonprice basis such as availability, durability, quality, or reliability.
1799
product diversification
A marketing strategy that seeks to develop new products to supply current markets.
1800
product engineering
The discipline of designing a product or product line to take advantage of process technology and improve quality, reliability, and so forth.
1801
product family
A group of products or services that pass through similar processing steps, have similar characteristics, and share common equipment prior to shipment or delivery to the customer. A product family can be from different overlapping product lines that are produced in one factory. This classification is often used in production planning (or sales and operations planning). See: product line.
1802
product flexibility
The ease with which current designs can be modified in response to changing market demands.
1803
product focused
A type of manufacturing organization in which both plant and staff responsibilities are delineated by product, product line, or market segment. Management authority is highly decentralized, which tends to make the company more responsive to market needs and more flexible when introducing new products. This type of organization is best suited to companies whose dominant orientation is to a market or consumer group and where flexibility and innovation are more important than coordinated planning and tight control. See: process focused, process-focused organization.
1804
product genealogy
A record, usually on a computer file, of the history of a product from its introduction into the production process through its termination. The record includes lot or batch sizes used, operations performed, inspection history, options, and where-used information.
1805
product grade
The categorization of goods based upon the range of specifications met during the manufacturing process.
1806
product group
Syn.: product line.
1807
product group forecast
A forecast for a number of similar products. See: aggregate forecast, product group.
1808
product layout
Another name for flow process layout. Product layout is a system that is set up for a limited range of similar products. Focused-factory production is also considered to be in this category. See: flow processing, focused factory.
1809
product life cycle
1) The stages a new product goes through from beginning to end (i.e., the stages that a product passes through from introduction through growth, maturity, and decline). 2) The time from initial research and development to the time at which sales and support of the product to customers are withdrawn. 3) The period of time during which a product can be produced and marketed profitably.
1810
product life cycle management (PLM)
The process of facilitating the development, use, and support of products that customers want and need. It helps professionals envision the creation and preservation of product information, both to the customer and along the reverse-logistics portion of the supply chain.
1811
product life cycle operations reference (PLCOR)
A reference model for innovation, product, and portfolio management. It spans all product life cycle activities, from the first idea to broad adoption in the mass market. PLCOR is applicable to the life cycles of both products and service offerings.
1812
product line
A group of products associated by function, consumer group, distribution channel, manufacturing characteristics, or price range. The grouping typically reflects the marketing and sales aspects of a product or service (similar in customer needs) and is used in aggregate planning, marketing, costing, and sales planning. See: product family, product group.
1813
product load profile
A listing of the required capacity and key resources needed to manufacture one unit of a selected item or family. The resource requirements are further defined by a lead-time offset to predict the impact of the product on the load of the key resources by specific time period. The product load profile can be used for rough-cut capacity planning to calculate the approximate capacity requirements of the master production schedule. See: bill of resources, resource profile, rough-cut capacity planning (RCCP).
1814
product manager
Syn.: brand manager.
1815
product manager concept
A marketing method in which a manager is given complete responsibility for managing the introduction, stocking policy, marketing, and sales of a specific product.
1816
product mix
The proportion of individual products that make up the total production or sales volume. Changes in the product mix can mean drastic changes in the manufacturing requirements for certain types of labor and material.
1817
product number
Syn.: item number.
1818
product or service liability
The obligation a company bears for loss related to personal injury, property damage, or other harm caused by its goods or services.
1819
product plan
Syn.: market plan.
1820
product positioning
The marketing effort involved in placing a product in a market to serve a particular niche or function. Syn.: service positioning.
1821
product profiling
1) A graphical device used to ascertain the level of fit between a manufacturing process and the order- winning criteria of its products. It can be used at the process or company level to compare the manufacturing capabilities with the market requirements to determine areas of mismatch and identify steps needed for realignment. 2) Removing material around a predetermined boundary by means of numerically controlled machining. The numerically controlled tool path is automatically generated on the system.
1822
product quality
An attribute that reflects the capability of a product to satisfy customers’ needs.
1823
product road map
A plan that communicates the product portfolio of offerings and product life cycles over time. The product road map serves to detail product offerings, product manufacturing, and execution plans, and it should tie to customer expectations and marketing plans.
1824
product segments
1) The shared information between a plan- of-resources and a production rule for a specific product. 2) A logical grouping of personnel resources, equipment resources, and material specifications required to carry out the production step.
1825
product specification
A statement of acceptable physical, electrical, and/or chemical properties or an acceptable range of properties that distinguish one product or grade from another.
1826
product structure
The sequence of operations that components follow during their manufacture into a product. A typical product structure shows raw material converted into fabricated components, components put together to make subassemblies, subassemblies going into assemblies, and so forth.
1827
product structure record
A computer record defining the relationship of one component to its immediate parent and containing fields for quantity required, engineering effectivity, scrap factor, application selection switches, and so forth.
1828
product tree
A graphical (or tree) representation of the bill of material.
1829
product velocity
Units sold per period.
1830
product/service hierarchy
In sales and operations planning, a general approach to dividing products or services into families, brands, and subfamilies for various planning levels. This ensures that a correct top-down or bottom-up approach is taken to grouping (or aggregating) demand at each subsequent level. Forecasts are more accurate the higher up the product hierarchy they are developed; consequently, forecasts should usually be driven down from the top.
1831
product-based layout
A type of layout in which resources are arranged sequentially according to the steps required to make a particular complex product.
1832
product-focused production
A type of operation designed to process only a few different products, which are usually produced for inventory. Production rates tend to be greater than the demand rate.
1833
production
The conversion of inputs into finished products.
1834
production activity control (PAC)
The function of routing and dispatching the work to be accomplished through the production facility and of performing supplier control. PAC encompasses the principles, approaches, and techniques needed to schedule, control, measure, and evaluate the effectiveness of production operations. See: shop floor control.
1835
production and inventory management
General term referring to the body of knowledge and activities concerned with planning and controlling rates of purchasing, production, distribution, and related capacity resources to achieve target levels of customer service; backlogs; operating costs; inventory investment; manufacturing efficiency; and ultimately, profit and return on investment.
1836
production and operations management (POM)
1) Managing an organization’s production of goods or services. 2) Managing the process of taking inputs and creating outputs.
1837
production calendar
Syn.: manufacturing calendar.
1838
production capability
1) The highest sustainable output rate that could be achieved for a given product mix, raw materials, worker effort, plant, and equipment. 2) The collection of personnel, equipment, material, and process segment capabilities. 3) The total of the current committed, available, and unattainable capability of the production facility. The capability includes the capacity of the resource.
1839
production card
In a just-in-time context, a card or other signal for indicating that items should be made for use or that some items removed from pipeline stock should be replaced. See: kanban.
1840
production control
The function of directing or regulating the movement of goods through the entire manufacturing cycle from the requisitioning of raw material to the delivery of the finished products.
1841
production line sequencing
Ordering, shipping, receiving, and staging materials in the same sequence they will be used.
1842
production lot
A group of materials that is processed in one stage of production and put in inventory for further production (or for shipment to customers).
1843
production management
1) The planning, scheduling, execution, and control of the process of converting inputs into finished goods. 2) A field of study that focuses on the effective planning, scheduling, use, and control of a manufacturing organization. It examines concepts from design engineering, industrial engineering, management information systems, quality management, inventory management, accounting, and other functions to determine how they affect the transformation process.
1844
production material
Any material used in the manufacturing process.
1845
production cycle
Syn.: manufacturing lead time.
1846
production materials requisition
Syn.: materials requisition.
1847
production network
The complete set of all work centers, processes, and inventory points, from raw materials sequentially to finished products and product families. It represents the logical system that provides the framework to attain the strategic objectives of the firm based on its resources and the products’ volumes and processes. It also provides the general sequential flow and capacity requirement relationships among raw materials, parts, resources, and product families.
1848
production order
Syn.: manufacturing order.
1849
production part approval process (PPAP)
A Big Three automotive process outlining requirements for approval of production parts. Its purpose is to measure whether a supplier can, with regularity, fulfill these requirements.
1850
production plan
The agreed-upon plan that comes from the production planning (sales and operations planning) process— specifically the overall level of manufacturing output planned to be produced, usually stated as a monthly rate for each product family (group of products, items, options, features, and so on). Various units of measurement (e.g., units, tonnage, standard hours, or number of workers) can be used to express the plan. The plan represents management’s authorization for the master scheduler to convert it into a more detailed plan—that is, the master production schedule. See: sales and operations planning (S&OP), sales plan.
1851
production cycle elements
Elements of manufacturing strategy that define the span of an operation by addressing the following areas: (1) the established boundaries for the firm’s activities; (2) the construction of relationships outside the firm’s boundaries (i.e., suppliers, distributors, and customers); (3) circumstances under which changes in established boundaries or relationships are necessary; and (4) the effect of such boundary or relationship changes on the firm’s competitive position. The production cycle elements must explicitly address the strategic implications of vertical integration in regard to (a) the direction of such expansion, (b) the extent of the process span desired, and (c) the balance among the resulting vertically linked activities.
1852
production environment
Syn.: manufacturing environment.
1853
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. See: assemble-to-order (ATO), planning bill of material, two-level master schedule.
1854
production kanban
A signal, usually a card, used to trigger the production of a part.
1855
production lead time
Syn.: manufacturing lead time.
1856
production level
Syn.: production rate.
1857
production leveling
Syn.: level production method.
1858
production line
A series of pieces of equipment dedicated to the manufacture of a specific number of products or families.
1859
production planning
A process to develop tactical plans based on setting the overall level of manufacturing output (production plan) and other activities to best satisfy the current planned levels of sales (sales plan or forecasts), while meeting general business objectives of profitability, productivity, competitive customer lead times, etc., as expressed in the overall business plan. The sales and production capabilities are compared, and a business strategy that includes a sales plan, a production plan, budgets, pro forma financial statements, supporting plans for materials and workforce requirements, and so on, is developed. A primary purpose is to establish production rates that will achieve management’s objective of satisfying customer demand by maintaining, raising, or lowering inventories or backlogs, while usually attempting to keep the workforce relatively stable. Because this plan affects many company functions, it is normally prepared with information from marketing and coordinated with the functions of manufacturing, sales, engineering, finance, human resources, etc. See: aggregate planning, production plan, sales and operations planning (S&OP), sales plan.
1860
production planning and control strategies
An element of manufacturing strategy that includes the design and development of manufacturing planning and control systems in relation to the following considerations: (1) market-related criteria—the required level of delivery speed and reliability in a given market segment; (2) process requirement criteria— consistency between process type (job shop, repetitive, continuous, etc.) and the production planning and control system; and (3) organization control levels—systems capable of providing long-term planning and short-term control capabilities for strategic and operational considerations by management. These strategies help firms develop systems that enable them to exploit market opportunities while satisfying manufacturing process requirements.
1861
production planning methods
The approach taken in setting the overall manufacturing output to meet customer demand by setting production levels, inventory levels, and backlog. Companies can use a chase, level, or hybrid production planning method. See: chase production method, hybrid production method, level production method.
1862
production process
The activities involved in converting inputs into finished goods. See: manufacturing process, transformation process.
1863
production rate
The rate of production usually expressed in units, cases, or some other broad measure, expressed by a period of time (e.g., per hour, shift, day, or week). Syn.: production level.
1864
production release
Syn.: manufacturing order.
1865
production report
A statement of the output of a production facility for a specified period. The information normally includes the type and quantity of output; workers’ efficiencies; departmental efficiencies; costs of direct labor, direct material, and the like; overtime worked; and machine downtime.
1866
production reporting and status control
A vehicle to provide feedback to the production schedule and allow for corrective action and maintenance of valid on-hand and on-order balances. It normally includes manufacturing order authorization, release, acceptance, operation start, delay reporting, move reporting, scrap and rework reporting, order close-out, and payroll interface. Syns.: manufacturing order reporting, shop order reporting.
1867
production schedule
A plan that authorizes the factory to manufacture a certain quantity of a specific item. It is usually initiated by the production planning department.
1868
production scheduling
The process of developing the production schedule.
1869
production sharing
A network of companies that participates in product design, production, marketing, distribution, and service.
1870
production standard
A time standard to produce piece parts and assemblies.
1871
production system
A system that accepts inputs and converts them to the desired outputs.
1872
production time
Setup time plus total processing time, where total processing time is processing time per piece multiplied by the number of pieces.
1873
production validation
Demonstrating that a production process will consistently lead to the expected results.
1874
productive capacity
In theory of constraints, the maximum of the output capabilities of a resource (or series of resources) or the market demand for that output for a given time period. See: excess capacity, idle capacity, protective capacity.
1875
productive inventory
In theory of constraints, the inventory required to meet production requirements without allowance for unplanned delays. See: idle inventory, protective inventory.
1876
productivity
1) An overall measure of the ability to produce a good or a service. It is the actual output of production compared with the actual input of resources. Productivity is a relative measure across time or against common entities (labor, capital, etc.). In the production literature, attempts have been made to define total productivity where the effects of labor and capital are combined and divided into the output. One example is a ratio that is calculated by adding the dollar value of labor, capital equipment, energy, and material, and so forth and dividing it into the dollar value of output in a given time period. This is one measure of total factor productivity. See: efficiency, labor productivity, machine productivity, utilization. 2) In economics, the ratio of output in terms of dollars of sales to an input such as direct labor in terms of the total wages. This is also known as single-factor productivity or partial-factor productivity.
1877
product-market-focused organization
A firm in which individual plants are dedicated to manufacturing a specific product or product group.
1878
product-mix flexibility
The ability to change over quickly to other products produced in a facility, as required by demand shifts in mix.
1879
product-positioned strategy
Locating operations close to the sources of supply. See: market-positioned strategy.
1880
product-positioned warehouse
A warehouse located close to the manufacturing plants that acts as a consolidation point for products.
1881
profit
See: gross profit, net profit, operating profit.
1882
profit center
An assigned responsibility center that has the authority to affect both the revenues earned and the costs incurred by and allocated to the center. Operational effectiveness is evaluated in terms of the amount of profit generated.
1883
profit margin
1) The difference between the sales and cost of goods sold for an organization, sometimes expressed as a percentage of sales. 2) In traditional accounting, the product selling price minus the direct material, direct labor, and allocated overhead for the product, sometimes expressed as a percentage of selling price.
1884
profit ratio
Profit divided by sales.
1885
profit sharing
A plan by which employees receive compensation above their normal wages based on company profitability. The purpose is to motivate employees and recognize their efforts.
1886
profitability
A measure of the excess income over expenditure during a given period of time.
1887
profitability analysis
In activity-based cost accounting, the examination of profit received from cost objects to attempt to optimize profitability. A variety of views may be examined, including customer, distribution channel, product, and regions.
1888
profitability index
In financial management, the net present value of a projected stream of income from a project (potential investment) divided by the investment in the project. It is used to select among competing potential investments.
1889
profitability ratio
An indicator of whether or not a company is generating profits at an acceptable rate. It includes such measurements as return on total assets, return on equity, and profit margin.
1890
profound knowledge
A quality-related concept created by W. Edwards Deming. The four aspects of profound knowledge are appreciation of a system, knowledge about variation, theory of knowledge, and psychology.
1891
program
In project management, a coordinated set of related projects, usually including ongoing work.
1892
program directive
A report by the program manager to inform supporting departments concerning an active or planned program or project.
1893
program evaluation and review technique (PERT)
In project management, a network analysis technique in which each activity is assigned a pessimistic, most likely, and optimistic estimate of its duration. The critical path method is then applied using a weighted average of these times for each node. PERT computes a standard deviation of the estimate of project duration. See: critical path method (CPM), graphical evaluation and review technique (GERT), network analysis.
1894
program management
The activities involved in the realization of a product or service offered to customers. Responsibilities include planning, directing, and controlling one or more projects of a new or continuing nature; initiating any acquisition processes necessary to get the project work under way; and monitoring performance. See: program manager.
1895
program manager
A person assigned program management responsibilities for the implementation activities associated with a new or ongoing product or service offering to customers. See: program management.
1896
programmable logic controller (PLC)
An electronic device that is programmed to test the state of input process data and to set output lines in accordance with the input state, thus providing control instructions or branching to another set of tests. Programmable controllers provide factory floor operations with the ability to monitor and rapidly control hundreds of parameters, such as temperature and pressure.
1897
progress payments
The practice of paying suppliers based on predefined milestones and progress. These partial payments are made after the completion of predefined stages of work and replace other payment approaches such as advances, deferred, single, or lump-sum payment at the end of a contract.
1898
progressive operations
Passing work from station to station.
1899
project
An endeavor with a specific objective to be met within predetermined time and dollar limitations and that has been assigned for definition or execution. See: project manufacturing, project management.
1900
project calendar
A calendar of working days and nonworking days that shows when scheduled activities are idle. Typically, it includes holidays and weekends. See: resource calendar.
1901
project costing
An accounting method of assigning valuations generally used in industries where services are performed on a project basis. Each assignment is unique and costed without regard to other assignments. Examples are shipbuilding, construction projects, and public accounting firms. Project costing is different from process costing, in which the products to be valued are homogeneous.
1902
project duration
The elapsed duration from project start date through the project finish date.
1903
project life cycle
In project management, a set of project phases (objectives definition, requirements definition, external and internal design, construction, system test, and implementation and maintenance), whose definition is determined by the needs of those controlling the project.
1904
project management
The use of skills and knowledge in coordinating the organizing, planning, scheduling, directing, controlling, monitoring, and evaluating of prescribed activities to ensure that the stated objectives of a project, manufactured good, or service are achieved. See: project.
1905
Project Management Body of Knowledge (PMBOK®)
All the knowledge within the project management profession, including all published and unpublished material, knowledge that rests with practitioners and academics, and practices that range from traditional to innovative.
1906
project management team
In project management, the personnel assigned to a project who are directly involved in management activities.
1907
project manufacturing
A type of manufacturing process used for large, often unique, items or structures that require a custom design capability (engineer-to-order). This type of process is highly flexible and can cope with a broad range of product designs and design changes. This process usually uses a fixed-position type layout. See: batch (fourth definition), continuous production, job shop (second definition), process manufacturing, project, repetitive manufacturing.
1908
project model
A time-phased project planning and control tool that itemizes major milestones and points of user approval.
1909
project network
A diagram showing the technological relationships among activities in a project.
1910
project phase
In project management, a set of related project activities that usually go together to define a project deliverable.
1911
project plan
In project management, a document that has been approved by upper management for use in executing and controlling a project. It documents assumptions, facilitates communication, and documents the approved budget and schedule. A project plan may exist at a summary or a detailed level.
1912
project portfolio management (PPfM)
A process in which an organization's projects are evaluated to ensure strategic alignment with the company’s goals, and to understand the benefits and risks of a potential project.
1913
project production
Production in which each unit or small group of units is managed by a project team created especially for that purpose.
1914
project risk management
In project management, a systematic process of controlling project risk. It includes maximizing the likelihood and effect of positive events and minimizing the likelihood and effect of negative events.
1915
project schedule
In project management, a list of activities and their planned completion dates that collectively achieve project milestones.
1916
project scope
In project management, the work required to create a product with given features and options.
1917
project summary work breakdown structure
A work breakdown structure that is developed down to the subproject level of detail. See: work breakdown structure.
1918
project team
An inclusive term incorporating the workers assigned to the project, the project managers, and sometimes the project sponsor.
1919
project team directory
A list of team member names, roles, and contact information.
1920
project-based layout
A type of layout in which the good or product is stationary, and the workers come to the site to work on it.
1921
projected available balance (PAB)
An inventory balance projected into the future. It is the running sum of on-hand inventory minus requirements plus scheduled receipts and planned orders. Syn.: projected available inventory.
1922
projected available inventory
Syn.: projected available balance (PAB).
1923
projected finish date
The current estimate of the date when an activity will be completed.
1924
projected on hand
Projected available balance, excluding planned orders.
1925
projected start date
The current estimate of the date when an activity will begin.
1926
projection
Syn.: extrapolation.
1927
promissory note
An agreement to pay a stipulated amount during an agreed time period.
1928
promotion
One of the four Ps (product, price, place, and promotion) that constitute the set of tools used to direct the business offering to the customer. Promotion is the mechanism whereby information about the product offering is communicated to the customer. It includes public relations, advertising, sales promotions, and other tools used to persuade customers to purchase the product offering. See: four Ps.
1929
promotional product
A product that is subject to wide fluctuations in sales because it is usually sold at a reduced price or with some other sales incentive.
1930
proof of delivery (POD)
Carrier’s records indicating the person signing for delivery with the date, time, and other related information.
1931
proportional rate
A lower rate applied to specific parts of a shipment instead of charging the entire rate for only one part of the shipment.
1932
proprietary assembly
An assembly designed by a manufacturer that may be serviced only with component parts supplied by the manufacturer and whose design is owned or licensed by its manufacturer.
1933
proprietary data
Any financial, technical, or other information that is developed at the expense of the person or other entity submitting it and deemed to be of strategic or tactical importance to the company. It may be offered to customers on a restricted-use basis.
1934
protection time
Syn.: safety lead time.
1935
protective capacity
The resource capacity needed to protect system throughput—ensuring that some capacity above the capacity required to exploit the constraint is available to catch up when disruptions inevitably occur. Non-constraint resources need protective capacity to rebuild the bank in front of the constraint or capacity-constrained resource and/or on the shipping dock before throughput is lost and to empty the space buffer when it fills.
1936
protective inventory
In theory of constraints, the amount of inventory required relative to the protective capacity in the system to achieve a specific throughput rate at the constraint. See: limiting operation.
1937
protective packaging
Wrapping or covering of material that provides containment, protection, and identification of inventory in a warehouse. The material must be contained in such a way that will support movement and storage and will fit into the dimensions of storage space and transportation vehicles.
1938
protocol
In information systems, a set of rules for defining the format and relationships for sharing information between devices. These rules govern the transmission of data across a network and serve as the grammar of data communication languages.
1939
prototype
1) A product model constructed for testing and evaluation to see how the product performs before releasing the product to manufacture. 2) Model consisting of all files and programs needed for a business application.
1940
prototyping
1) A specialized product design and development process for developing a working model of a product. 2) A specialized system development process for performing a determination where user needs are extracted, presented, and developed by building a working model of the system. Generally, these tools make it possible to create all files and processing programs needed for the evaluation of a business application in a matter of days or hours.
1941
provisioning
The process of identifying and purchasing the support items and determining the quantity of each support item necessary to operate and maintain a system.
1942
proxy
1) A written document authorizing an agent to vote a shareholder’s stock at a shareholder meeting. 2) The agent designated in 1).
1943
PRT
Abbreviation for prerequisite tree.
1944
pseudo bill of material
An artificial grouping of items that facilitates planning. See: modular bill of material, phantom bill of material, planning bill of material, super bill of material.
1945
psychic stock
Inventory items that are prominently displayed in large quantities in an effort to stimulate customer interest in purchasing them.
1946
psychographics
The grouping of consumers according to their behavior patterns and lifestyles.
1947
psychosocial hazards
Elements of work or work environment that have the capacity to cause psychological or physical harm to an employee.
1948
public key
In information systems, a system in which one person holds a private key (an encryption code defining access rights) but shares another key with a set of people with whom that person will communicate. See: private key.
1949
public ownership
A business formed under law as a separate legal entity and for which stock is publicly traded. See: partnership, private ownership.
1950
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. These services can include product inspection, product rating, and repackaging. These facilities are typically located near primary roads, railways, or inland waterways to facilitate rapid receiving and shipping of products. Syn.: duty paid warehouses.
1951
publicly traded corporation
A corporation whose stock is available on a national exchange.
1952
public-private partnering
Cooperation between a government entity and one or more private enterprises to perform work or utilize facilities.
1953
publish production plan
The act of sharing the production plan with the people developing the sales and operations plan and other key stakeholders who need the information to perform their jobs.
1954
pull signal
Any signal that indicates when to produce or transport items in a pull replenishment system. For example, in just-in-time production control systems, a kanban card is used as the pull signal to replenish parts to the using operation. See: pull system.
1955
pull system
1) In production, the production of items only as demanded for use or to replace those taken for use. See: pull signal. 2) In material control, the withdrawal of inventory as demanded by the using operations. Material is not issued until a signal comes from the user. 3) In distribution, a system for replenishing field warehouse inventories in which replenishment decisions are made at the field warehouse itself, not at the central warehouse or plant.
1956
pull-based inventory replenishment
See: pull-through distributions.
1957
pull-through distributions
Supply chain activities that are started by the consumer. Instead of the manufacturer pushing products to stores, consumer purchases signal the manufacturer to produce more of a given product. Effectively, the consumer is pulling products to the store. See: pull-based inventory replenishment.
1958
punitive damages
The money awarded a plaintiff not as payment for the plaintiff’s losses but as punishment for the defendant’s conduct.
1959
pup
A 28-foot trailer, usually used in trucking enterprises.
1960
purchase consolidation
The pooling of purchasing requirements by multiple areas in a company or even across companies.
1961
purchase order
The purchaser’s authorization used to formalize a purchase transaction with a supplier. A purchase order, when given to a supplier, should contain statements of the name, part number, quantity, description, and price of the goods or services ordered; agreed-to terms as to payment, discounts, date of performance, and transportation; and all other agreements pertinent to the purchase and its execution by the supplier. See: discrete purchase order.
1962
purchase price arrangement
The practice of determining the appropriate cost- or price-contracting mechanism that governs any price and cost changes during the life of the contract.
1963
purchase price cost analysis
The practice of analyzing the costs of the individual materials, components, and activities that make up a purchase item. This analysis is one way to review prices offered by a supplier with the purpose of understanding how the price sums up with cost elements and can assist buyers to more effectively negotiate with their suppliers.
1964
purchase price discount
A pricing strategy in which a seller offers a customer a cheaper price in exchange for purchasing more goods.
1965
purchase price variance
The difference in price between the amount paid to the supplier and the planned or standard cost of that item.
1966
purchase requisition
An authorization to the purchasing department to purchase specified materials in specified quantities within a specified time. See: parts requisition.
1967
purchased part
An item sourced from a supplier.
1968
purchasing
The term used in industry and management to denote the function of and the responsibility for procuring materials, supplies, and services.
1969
purchasing agent
A person authorized by the company to purchase goods and services for the company.
1970
purchasing capacity
The act of buying capacity or machine time from a supplier. A company can then schedule and use the capacity of the machine or a part of the capacity of the machine as if it were in its own plant.
1971
purchasing lead time
The total lead time required to obtain a purchased item. Included here are order preparation and release time; supplier lead time; transportation time; and receiving, inspection, and put-away time. See: lead time, supplier lead time, time-to-product.
1972
purchasing performance measurement
Syn.: supplier measurement.
1973
purchasing unit of measure
Syn.: unit of measure (purchasing).
1974
pure competition
A market in which many competitors offer undifferentiated products or services within a given geographical area. Competitors are forced to accept the market price for their product. See: industry structure types.
1975
pure monopoly
A market in which only one firm provides a particular product or service within a given area. The monopoly may be regulated or unregulated. See: industry structure types.
1976
pure oligopoly
A market in which a few companies produce essentially the same product or service and market it within a given area. A company is forced to price its product at the going rate unless it can differentiate its product. See: industry structure types.
1977
pure services
Services that result in few or no tangible products to the customer (e.g., education).
1978
push system
1) In production, the production of items at times required by a given schedule planned in advance. 2) In material control, the issuing of material according to a given schedule or the issuing of material to a job order at its start time. 3) In distribution, a system for replenishing field warehouse inventories in which replenishment decision-making is centralized, usually at the manufacturing site or central supply facility. See: pull system.
1979
push technology
The automatic updates in selected services, such as news or weather, that occur periodically as information is sent via the internet. The source of the information pushes it onto the customer. Syn.: webcasting.
1980
push-back rack
A wheeled rack structure on which palletized materials are stored and pushed up a slightly sloping ramp from which they can eventually slide down to an aisle.
1981
push-pull boundary
The decoupling point at which a system changes from being driven by a forecast to being driven by customer demand.
1982
put-away
Removing the material from the dock (or other location of receipt), transporting the material to a storage area, placing that material in a staging area and then moving it to a specific location, and recording the movement and identification of the location where the material has been placed.
1983
put-away time
The lead time between when a raw material or component arrives and when the items are available in the store. Syn.: dock-to-stock time. See: inbound staging.
1984
put-to-light
A process that uses lights to ensure materials are placed in the correct locations. It is also used to ensure that picked items are placed correctly.
1985
pyramid forecasting
A forecasting technique that enables management to review and adjust forecasts made at an aggregate level and to keep lower-level forecasts in balance. The approach combines the stability of aggregate forecasts and the application of management judgment with the need to forecast many end-items within the constraints of an aggregate forecast or sales plan. The procedure begins with the roll up (aggregation) of item forecasts into forecasts by product group. The management team then establishes a new forecast for the product group. The value is then forced down (disaggregation) to individual item forecasts so they are consistent with the aggregate plan. See: management estimation, planning bill of material, product group forecast.
1986
Q chart
A control chart for evaluating the stability of a process in terms of a quality score. The quality score is the weighted sum of the count of events of various classifications, where each classification is assigned a weight. Syns.: quality chart, quality score chart.
1987
QCD
Acronym for quality, cost, delivery.
1988
QFD
Acronym for quality function deployment.
1989
QRM
Abbreviation for quick-response manufacturing.
1990
QRP
Abbreviation for quick-response program.
1991
QS 9000
A variation of ISO 9000 certification with additional requirements tailored for the automobile industry, including suppliers. QS 9000 is being superseded by ISO/TS 16949, which incorporates many European standards. See: ISO 9000, ISO/TS 16949.
1992
qualified suppliers
Suppliers that have passed qualifications requirements and are considered approved for future business but are not considered first-tier suppliers. See: first-tier supplier.
1993
qualifiers
Syn.: order qualifiers. See: order losers, order winners.
1994
qualitative forecasting techniques
An approach to forecasting that is based on intuitive or judgmental evaluation. It is used generally when data is 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 introductions.
1995
quality
Conformance to requirements or fitness for use. Quality can be defined through five principal approaches: (1) Transcendent quality is an ideal and a condition of excellence. (2) Product-based quality is based on a product attribute. (3) User-based quality 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: (1) quality of conformance, which is quality defined by the absence of defects, and (2) quality of design, which is quality measured by the degree of customer satisfaction with a product’s characteristics and features.
1996
quality assurance/control
Two terms that have many interpretations because of the multiple definitions for the words assurance and control. For example, assurance can mean the act of giving confidence, the state of being certain, or the act of making certain. Control can mean an evaluation to indicate needed corrective responses, the act of guiding, or the state of a process in which the variability is attributable to a constant system of chance causes. One definition of quality assurance is all the planned and systematic activities implemented within the quality system that can be demonstrated to provide confidence that a good or service will fulfill requirements for quality. One definition for quality control is the operational techniques and activities used to fulfill requirements for quality. Often, however, quality assurance and quality control are used interchangeably, referring to the actions performed to ensure the quality of a good, service, or process. See: quality control.
1997
quality at the source
A producer’s responsibility to provide 100 percent acceptable quality material to the consumer of the material. The objective is to reduce or eliminate shipping or receiving quality inspections and line stoppages as a result of supplier defects.
1998
quality audit
A systematic, independent examination and review to determine whether quality activities and related results comply with planned arrangements and whether these arrangements are implemented effectively and are suitable to achieve the objectives.
1999
quality characteristic
A property of a product or service that is important enough to count or measure. See: performance measurement system.
2000
quality chart
Syn.: Q chart.
