APICS Glossary Part One Flashcards
(200 cards)
1
Q
The classification of a group of items in decreasing order of annual dollar volume (price multipled by projected volume) or other criteria. This array is then split into three classes, called A, B, and C. The A group usually represents 10 percent to 20 percent by number of items and 50 percent to 70 percent by projected dollar volume. The next grouping, B, usually represent about 20 percent of the items and about 20 percent of the dollar volume. The C class contains 60 percent to 70 percent of the items and represent about 10 percent to 30 percent of the dollar volume. The ABC principle states that effort and money can be saved through applying looser controls to the low-dollar-volume class items than will be applied to high-dollar-volume class items. The ABC principle is applicable to inventories, purchasing, sales, and so on. (Synonyms: ABS Classification, Distribution by value.) See: Pareto analysis, Pareto’s law.
A
ABC analysis
2
Q
A self-powered radio frequency identification tag that broadcasts information. See: Radio frequency identification (RFID) tag.
A
Active tag
3
Q
Techniques that deal with analysis and planning of logistics and manufacturing during short, intermediate, and long-term time periods. APS describes any computer program that uses advanced mathematical algorithms or logic to perform optimization or simulation on finite capacity scheduling, sourcing, capital planning, resource planning, forecasting, demand management, and others. These techniques simultaneously consider a range of constraints and business rules to provide real-time planning and scheduling, decision support, available-to-promise, and capable-to-promise capabilities. APS often generates and evaluates multiple scenarios. Management then selects one scenario to use as the “official plan.” The five main components of APS systems are (1) demand planning, (2) production planning, (3) production scheduling, (4) distribution planning, and (5) transportation planning.
A
Advanced planning and scheduling (APS)
4
Q
One who acts on behalf of another (the principal) in dealing with a third party. Examples include a sales agent and a purchasing agent.
A
Agent
5
Q
Strengthening the capabilities of a key supplier.
A
Alliance development
6
Q
Additional inventories above basic pipeline stock to cover projected trends of increasing sales, planned sales promotion programs, seasonal fluctuations, plant shutdowns, and vacations.
A
Anticipation inventories
7
Q
A production environment where a good or service can be assembled after receipt of a customer’s order. The key components (bulk, semi-finished, intermediate, subassembly, fabricated, purchased, packing, and so on) used in the assembly or finishing process are planned and usually stocked in anticipation of a customer order. Receipt of an order initiates assembly of the customized product. This strategy is useful where a large number of end products (based on the selection of options and accessories) can be assembled from common components. See: Make-to-order, Make-to-stock.
A
Assemble-to-order
8
Q
A set of technologies that collect data about objects and then send these data to a computer without human intervention. Examples include radio frequency wireless devices and terminals, bar code scanners, and smart cards.
A
Automatic identification and data capture (AIDC)
9
Q
The on-hand inventory balance minus allocations, reservations, backorders, and (usually) quantities held for quality problems. Often called beginning available balance. (Synonyms: Beginning available balance, Net inventory.)
A
Available inventory
10
Q
The uncommitted portion of a company’s inventory and planned production maintained in the master schedule to support customer-order promising. The ATP quantity is the uncommitted inventory balance in the first period and is normally calculated for each period in which an MPS receipt is scheduled. In the first period, ATP includes on-hand inventory less customer orders that are due and overdue. Three methods of calculation are used: discrete ATP, cumulative ATP with look-ahead, and cumulative ATP without look-ahead.
A
Available-to-promise (ATP)
11
Q
All the customer orders received but not yet shipped. Sometimes referred to as open orders or the order board.
A
Backlog
12
Q
An unfilled customer order or commitment. A backorder is an immediate (or past due) demand against an item whose inventory is insufficient to satisfy the demand.
A
Backorder
13
Q
A financial statement showing the resources owned, the debts owed, and the owner’s share of a company at a given point in time.
A
Balance sheet
14
Q
A list of financial and operational measurements used to evaluate organizational or supply chain performance. The dimensions of the balanced scorecards might include customer perspective, business process perspective, financial perspective, and innovation and learning perspectives. It formally connects overall objectives, strategies, and measurements. Each dimension has goals and measurements.
A
Balanced scorecard
15
Q
A method of encoding data using a bar code for fast and accurate readability.
A
Bar coding
16
Q
Comparing a company’s costs, products, and services to that of a company through to have superior performance. The benchmark target if often a competitor but is not always a firm in the same industry. Seven types of benchmarking have been cited: (1) competitive benchmarking, (2) financial benchmarking, (3) functional benchmarking, (4) performance benchmarking, (5) process benchmarking, (6) product benchmarking, and (7) strategic benchmarking.
A
Benchmarking
17
Q
1) A listing of all the subassemblies, intermediates, parts, and raw materials that go into a parent assembly showing the quantity of each required to make an assembly. It is used in conjunction with the master production schedule to determine the items for which purchase requisitions and production orders must be released. A variety of display formats exist for bills of material, including the single-level bill of material, transient bill of material, matrix bill of material, and costed bill of material. 2) A list of all the materials needed to make one production run of a product, by a contract manufacturer, of piece parts/components for its customers. The bill of material may also be called the formula, recipe, or ingredient list in certain process industries.
A
Bill of material (BOM)
18
Q
A long-term commitment to a supplier for material against which short-term releases will be generated to satisfy requirements. Often blanket orders cover only one item with predetermined delivery dates. (Synonyms: Blanket order, Standing order.)
A
Blanket purchase order
19
Q
A facility, function, department, or resource whose capacity is less than the demand placed upon it. For example, a bottleneck machine or work center exists where jobs are processed at a slower rate than they are demanded. (Synonym: Bottleneck operation.)
A
Bottleneck
20
Q
1) A quantity of materials awaiting further processing. It can refer to raw materials, semifinished stores or hold points, or a work backlog that is purposely maintained behind a work center. 2) In the theory of constraints, buffers can be time or material and support throughput and/or due date performance. Buffers can be maintained at the constraint, convergent points (with a constraint part), divergent points, and shipping points.
A
Buffer
21
Q
Information collected by an organization on customers, competitors, products or services, and processes. Business intelligence provides organizational data in such a way that the organizational knowledge filters can easily associate with this data and turn it into information for the organization. Persons involved in business intelligence processes may use application software and other technologies to gather, store, analyze, and provide access to data, and present that data in a simple, useful manner. The software aids in business performance management and aims to help consumers make better business decisions by offering them accurate, current, and relevant information. Some businesses use data warehouses because they are a logical collection of information gathered from various operational databases for the purpose of creating business intelligence.
A
Business intelligence
22
Q
1) A statement of long-range strategy and revenue, cost, and profit objectives usually accompanied by budgets, a projected balance sheet, and a cash flow (source and application of funds) statement. A business plan is usually stated in terms of dollars and grouped by product family. The business plan is then translated into synchronized tactical functional plans through the production planning process (or the sales and operations planning process). Although frequently stated in different terms (dollars versus units), these tactical plans should agree with each other and with the business plan. 2) A document consisting of the business details (organization, strategy, and financing tactics) prepared by an entrepreneur to plan for a new business.
A
Business plan
23
Q
A business discipline or function that uses business practices, techniques, and methods to create and improve business processes. BPM is a holistic approach to the use of appropriate process-related business disciplines to gain business performance improvements across the enterprise or supply chain. It promotes business effectiveness and efficiency while striving for innovation, flexibility, and integration with technology. Most process improvement disciplines or activities can be considered as BPM.
A
Business process management (BPM)
24
Q
Business conducted over the internet between businesses. The implication is that this connectivity will cause businesses to transform themselves via supply chain management to become virtual organizations?reducing costs, improving quality, reducing delivery lead time, and improving due-date performance.
A
Business-to-business commerce (B2B)
25
Business being conducted between businesses and final consumers largely over the internet. It includes traditional brick and mortar businesses that also offer products online and businesses that trade exclusively electronically.
Business-to-consumer sales (B2C)
26
The process of committing orders against available capacity as well as inventory. This process may involve multiple manufacturing or distribution sites. Capable-to-promise employs a finite-scheduling model of the manufacturing system to determine when an item can be delivered. It includes any constraints that might restrict the production, such as availability of resources, lead time for raw materials or purchased parts, and requirements for lower-level components or subassemblies. The resulting delivery date takes into consideration production capacity, the current manufacturing environment, and future order commitments. The objective is to reduce the time spent by production planners in expediting orders and adjusting plans because of inaccurate delivery-date promises.
Capable-to-promise (CTP)
27
The cost of holding inventory, usually defined as a percentage of the dollar value of inventory per unit of time (generally one year). Carrying cost depends mainly on the cost of capital invested as taxes and insurance, obsolescence, spoilage, and space occupied. Such costs vary by industry. Carrying cost is ultimately a policy variable reflecting the opportunity cost of alternative uses for funds invested in inventory.
Carrying cost
28
The net flow of dollars into or out of the proposed project. The algebraic sum, in any time period, of all cash receipts, expenses, and investments. Also called cash proceeds or cash generated.
Cash flow
29
An indicator of how efficiently a company manages its assets to improve cash flow. Inventory days + accounts receivable days - accounts payable days = cash-to-cash cycle time.
Cash-to-cash cycle time
30
1) The work required to change a specific machine, resource, work center, or line from making the last good piece of item A to making the first good piece of item B. 2) The refitting of equipment to neutralize the effects of the last lot produced (e.g., teardown of the just-completed production, preparation of the equipment for production of the next scheduled item). (Synonyms: Setup, Turnaround, Turnaround time).
Changeover
31
A production planning method that maintains a stable inventory level while varying production to meet demand. Companies may combine chase and level production schedule methods. (Synonyms: Chase production method, Chase-demand strategy).
Chase strategy
32
1) A collaboration process whereby supply chain trading partners can jointly plan key supply chain activities from production and delivery of raw materials to production and delivery of final products to end customers. Collaboration encompasses business planning, sales forecasting, and all operations required to replenish raw materials and finished goods. 2) A process philosophy for facilitating collaborative communications. CPFR is considered a standard, endorsed by the Voluntary Interindustry Commerce Standards. (Synonym: Collaborative planning).
Collaborative planning, forecasting, and replenishment (CPFR)
33
An analysis of a competitor that includes its strategies, capabilities, prices and costs.
Competitive analysis
34
1) A shipment that is handled by a common carrier. 2) The process of a supplier placing goods at a customer location without receiving payment until after the goods are used or sold.
Consignment
35
An online marketplace, usually owned by a third party, that allows members to trade with each other. This site lowers members search costs and enables lower prices for the buyer.
Consortia trade exchanges (CTX)
36
1) Any element or factor that prevents a system from achieving a higher level of performance with respect to its goal. Constraints can be physical, such as a machine center or lack of material, but they can also be managerial, such as a policy or procedure. 2) One of a set of equations that cannot be violated in an optimization procedure.
Constraint
37
Computer applications that enable digital information to be changed online. These applications have the ability to store information in a repository and provide access to the data.
Content management applications
38
A process by which a supplier is notified daily of actual sales or warehouse shipments and commits to replenishing these sales (by size, color, and so on) without stockouts and without receiving replenishment orders. The result is a lowering of associated costs and an improvement in inventory turnover. (Synonym: Rapid replenishment). See: Vendor-managed inventory.
Continuous replenishment
39
An accounting classification useful for determining the amount of direct materials, direct labor, and allocated overhead associated with the products sold during a given period of time.
Cost of goods sold
40
The cost associated with providing poor quality products or services. There are four categories of costs: (1) internal failure costs (costs associated with defects found before the customer receives the product or service); (2) external failure costs (costs associated with defects found after the customer receives the product or service); (3) appraisal costs (costs incurred to determine the degree of conformance to quality requirements); and (4) prevention costs (costs incurred to keep failure and appraisal costs to a minimum). (Synonym: Cost of poor quality).
Cost of quality
41
The concept of packing products on the incoming shipments so they can easily sorted at intermediate warehouses or for outgoing shipments based on final destination. The items are carried from the incoming vehicle docking point to the outgoing vehicle docking point without being stored in inventory at the warehouse. Cross-docking reduces inventory investment and storage space requirements. (Synonym: Direct loading).
Cross-docking
42
Occurs when customers buy additional products or services after the initial purchase.
Cross-selling
43
The longest planned length of time to accomplish the activity in question. It is found by reviewing the lead time for each bill or material path below the item; whichever path adds up to the greatest number defines cumulative lead time. (Synonyms: Aggregate lead time, Combined lead time, Composite lead time, Critical path lead time, Stacked lead time). See: Planning horizon.
Cumulative lead time
44
A marketing philosophy based on putting the customer first. The collection and analysis of information designed for sales and marketing decision support (as contrasted to enterprise resources planning information) to understand and support existing and potential customer needs. It includes account management, catalog and order entry, payment processing, credits and adjustments, and other functions. (Synonym: Customer relations management).
Customer relationship management (CRM)
45
1) The ability of a company to address the needs, inquires, and requests from customers. 2) A measure of the delivery of a product to the customer at the time the customer specified.
Customer service
46
1) A measure of delivery performance of finished goods, 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. (Synonyms: Customer service level, Fill rate, Order-fill ratio, Percent of fill. Antonym: Stockout percentage). 2) In a make-to-order company, it is 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.
customer service ratio
47
1) The interval of time during which a system or process, such as seasonal demand or a manufacturing operation, periodically returns to similar initial conditions. 2) The interval of time during which an event or set of events is completed.
Cycle
48
An inventory accuracy audit technique where inventory is counted on a cyclic schedule rather than once a year. A cycle inventory count in usually taken on a regular, defined basis (often more frequently for high-value or fast-moving items and less frequently for low-value or slow-moving items). Most effective cycle counting systems require the counting of a certain number of items every workday with each item counted at a prescribed frequency. The key purpose of cycle counting is to identify items in error, thus triggering research, identification, and elimination of the cause of the errors.
Cycle counting
49
One of the two main conceptual components of any item inventory, the cycle stock is the most active component; the cycle stock depletes gradually as customer orders are received and is replenished cyclically when supplier orders are received. The other conceptual component of the item inventory is the safety stock, which is a cushion of protection against uncertainty in the demand or in the replenishment lead time. (Synonym: Cycle inventory).
Cycle stock
50
1) In industrial engineering, the time between completion of two discrete units of production. For example, the cycle time of motors assembled at a rate of 120 per hour would be 30 seconds. 2) In materials management, it refers to the length of time from when material enters a production facility until it exits. (Synonym: Throughput time).
Cycle time
51
Sifting through a database to find and fix mistakes such as misspelling, missing information, and false data.
Data cleansing
52
1) A catalog of requirements and specifications for an information system. 2) A file that stores facts about the files and databases for all systems that are currently being used or for the software involved.
Data dictionary
53
A relational database procedure that helps to minimize data duplication and protect the database from certain logical and structural anomalies when data is merged.
Data normalization
54
A repository of data that has been specially prepared to support decision-making applications. (Synonym: Decision-support data).
Data warehouse
55
The software designed for organizing data and providing the mechanism for storing, maintaining, and retrieving that data on a physical medium (i.e., a database). A DBMS separates data from the application programs and people who use the data and permits many different views of the data.
Database management system (DBMS)
56
Creating independence between supply and use of material. Commonly denotes providing inventory between operations so that fluctuations in the production rate of the supplying operation do not constrain production or use rates of the next operation.
Decoupling
57
A six sigma improvement process comprised of five stages: (1) Determine the nature of the problem, (2) Measure existing performance and commence recording data and facts that offer information about the underlying causes of the problem, (3) Study the information to determine the root causes of the problem, (4) Improve the process by effecting solutions to the problem, and (5) Monitor the process until the solutions become ingrained.
Define, measure, analyze, improve, control (DMAIC) process
58
A need for a particular product or component. The demand could come from any number of sources (e.g., a customer order or forecast, an interplant requirement, a branch warehouse request for a service part of the manufacturing of another product). At the finished goods level, demand data are usually different from sales data because demand does not necessarily result in sales (i.e., if there is no stock, there will be no sale). There are generally up to four components of demand: cyclical component, random component, seasonal component, and trend component.
Demand
59
Forecasting the demand for a particular good, component, or service.
Demand forecasting
60
1) The function of recognizing all demands for goods and services to support the marketplace. It involves prioritizing demand when supply is lacking. Proper demand management facilitates the planning and use of resources for profitable business results. 2) In marketing, the process of planning, executing, controlling, and monitoring the design, pricing, promotion, and distribution of products and services to bring about transactions that meet organizational and individual needs. (Synonym: Marketing management). See: Demand planning.
Demand management
61
Using forecasts and experience to estimate demand for various items at various points in a supply chain. Several forecasting techniques may be used during the planning process. Often, families of items are aggregated in doing this planning. Aggregation also may occur by geographical region or by life cycle stage. Forecast demand is compared to actual demand in order to measure and increase forecast accuracy. See: Demand management.
Demand planning
62
The triggering of material movement to a work center only when that work center is ready to begin the next job. In effect, it shortens or eliminates the queue at the end of a previous work center. Demand pull also can occur within a supply chain, in which case it often is called a demand chain.
Demand pull
63
The practice of using the 4 Ps (product, pricing, placement, promotion) and other market variables to influence the demand of a product or service so that the demand better matches the available supply.
Demand shaping
64
Demand that is directly related to or derived from the bill of material structure for other items or end products. Such demands are therefore calculated and need not and should not be forecast. A given inventory item may have both dependent and independent demand at any given time. For example, a part may simultaneously be the component of an assembly and sold as a service part. See: Independent demand.
Dependent demand
65
Changing a product's design to improve its production and use through the entire supply chain, from raw material to end-of-life cycle.
Design for the supply chain
66
Inventory, usually spare parts and finished goods, located in the distribution system (e.g., in warehouses, in-transit between warehouses and the consumer.)
Distribution inventory
67
1) The function of determining the need to replenish inventory at branch warehouses. A time-phased order point approach is used where the planned orders at the branch warehouse level are "exploded" via MRP logic to become gross requirements on the supplying source. In the case of multilevel distribution networks, this explosion process can continue down through the various levels of regional warehouses (master warehouse, factory warehouse, etc.) and become input to the master production schedule. Demand on the supplying sources is recognized as dependent, and standard MRP logic applies. 2) More generally, replenishment inventory calculations, which may be based on other planning approaches such as period order quantities or "replace exactly what was used," rather than being limited to the time-phased order point approach.
Distribution requirements planning (DRP)
68
A business that does not manufacture its own products, but purchases and resells these products. Such a business usually maintains a finished goods inventory. (Synonym: Wholesaler).
Distributor
69
The use of computer and telecommunication technologies to conduct business via electronic transfer of data and documents.
Electronic commerce (e-commerce)
70
The paperless (electronic) exchange or trading documents, such as purchase orders, shipment authorizations, advanced shipment notices, and invoices, using standardized document formats.
Electronic data interchange (EDI)
71
The electronic representation of a document that can be printed.
Electronic document
72
Codes that are used with RFID tags to carry information on the product that will support warranty programs.
Electronic product codes (EPCs)
73
Planning for the phase-out of one product and the phase-in of a new product to avoid both the excessive inventory of an out-of-stock situation with the old product before the replacement product is available.
End-of-life management
74
Products whose customer specifications require unique engineering design, significant customization, or new purchased materials. Each customer order results in a unique set of part numbers, bills of materials, and routings. (Synonym: Design-to-order).
Engineer-to-order
75
Framework for organizing, defining, and standardizing the business processes necessary to effectively plan and control an organization so the organization can use its internal knowledge to seek external advantage.
Enterprise resources planning (ERP)
76
This language facilitates direct communication among computers on the internet. Unlike the older hypertext markup language (HTML), which provides HTML tags giving instructions to a web browser about how to display information, XML tags give instructions to a web browser about the category of information.
Extensible markup language (XML)
77
A network connection to a partner's network using secure information processing and internet protocols to do business.
Extranet
78
A forecast method on a correlating leading indicator, such as estimating furniture sales based on housing starts. Extrinsic forecasts tend to be more useful for large aggregations, such as total company sales, than for individual product sales. (Antonym: Intrinsic forecast method).
Extrinsic forecasting method
79
The flow of information back into the control system so that actual performance can be compared with planned performance.
Feedback
80
A protocol used to transfer files over the internet.
File transfer protocol (FTP)
81
See: Customer service ratio.
Fill rate
82
Inventory that is carried as a cushion to protect against forecast error. (Synonym: Fluctuation stock).
Fluctuation inventory
83
The difference between actual demand and forecast demand, stated as an absolute value or as a percentage.
Forecast error
84
The business function that attempts to predict sales and use of products so they can be purchased or manufactured in appropriate quantities in advance.
Forecasting
85
The category of expenses on an income statement that includes the costs of general managers, computer systems, research and development, and more.
General and administrative expenses (G&A)
86
A strategy that focuses on improving worldwide performance through the sales and marketing of common goods and services with the minimum product variation by country. Its competitive advantage grows through selecting the best locations for operations in other countries.
Global strategy
87
A combination of ?globalization? and ?localization.? When used in a supply chain context, glocalization is a form of postponement where 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, culture, or preferences.
Glocalization
88
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.
Graphical user interface (GUI)
89
The difference between total revenue and the costs of goods sold. (Synonym: Gross profit margin).
Gross margin
90
An internationally standardized description of goods that uses a system of numbers to provide increasingly detailed classification and descriptions.
Harmonized system classification codes
91
An online marketplace used by buyers and sellers from multiple industries. This marketplace lowers prices by lowering transaction costs.
Horizontal marketplace
92
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 a way to format text.
Hypertext markup language (HTML)
93
A protocol that tells computers how to communicate with each other. Most internet addresses begin with http://.
Hypertext transfer protocol (HTTP)
94
A financial statement showing the net income for a business over a given period of time. See: Balance sheet.
Income statement
95
Short for International Commercial Terms; created to simplify international transactions.
Incoterms
96
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.
Independent demand
97
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.
Information system architecture
98
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.
Information technology
99
A worldwide network of computers belonging to businesses, governments, and universities 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.
Internet
100
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.
Interplant demand
101
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, providing communication and access to information, similar to the internet, with web pages, and so on for internal use only.
Intranet
102
Material moving between two or more locations, usually separated geographically; for example, finished goods being shipped from a plant to a distribution center.
In-transit inventory
103
A forecast method based on internal factors, such as an average of past sales. (Antonym: Extrinsic forecast).
Intrinsic forecast method
104
The branch of business management concerned with planning and controlling inventories.
Inventory management
105
A computer application having the capability of finding optimal inventory strategies and policies related to customer service and return on investment over several echelons of a supply chain.
Inventory optimization software
106
The number of times that an inventory cycles, or "turns over," during the year. A frequent method to compute inventory turnover is to divide the average inventory level into the annual cost of sales. For example, an average inventory of $3 million divided into an annual cost of sales of $21 million means that inventory turned over seven times. (Synonyms: Inventory turns, turnover). See: Inventory velocity.
Inventory turnover
107
See: Inventory turnover.
Inventory turns
108
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. Therefore, the cost value of inventory is usually computed on a FIFO basis, LIFO basis, or a standard cost basis to establish the cost of goods sold.
Inventory valuation
109
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.
Inventory velocity
110
The extent to which inventory information is shared within a firm and with supply chain partners.
Inventory visibility
111
ISO 26000 or ISO SR is an international standard adopted by the International Standards Organization 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 it?s not intended or appropriate for certification purposes or regulatory or contractual use.
ISO 26000 Guidance on Social Responsibility
112
A standard adopted by the International Standards Organization that outlines principles and a set of guidelines to manage risk in any endeavor. The standard outlines guidelines for understanding risk, for developing a risk management policy, for integrating risk management into organizational processes (including accountability and responsibility), and for establishing internal and external risk communication processes. ISO 31000 is not a management system standard and it?s not intended or appropriate for certification purposes or regulatory or contractual use.
ISO 31000 Risk Management: Principles and Guidelines
113
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. (Synonym: Joint replenishment).
Joint replenishment system
114
An agreement between two or more firms to risk equity capital to attempt a specific business objective.
Joint venture
115
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. (Synonyms: Short-cycle manufacturing, stockless production, zero inventories).
Just-in-Time (JIT)
116
The Japanese term for improvement; continuing improvement involving everyone?managers and workers. In manufacturing, kaizen relates to finding and eliminating waste in machinery, labor, or production methods.
Kaizen
117
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.
Kaizen event
118
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 Corporation in Japan. See: Synchronized production.
Kanban
119
A form of cooperative relationship among companies in Japan where the companies largely remain legally and economically independent, even though they work closely in various ways such as sole sourcing and 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.
Keiretsu
120
A financial or nonfinancial measure, either tactical or strategic, that is linked to specific strategic goals and objectives.
Key performance indicator (KPI)
121
This cost includes the product cost plus the costs of logistics, such as warehousing, transportation, and handling fees.
Landed cost
122
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. (Synonym: Total lead time).
Lead time
123
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 dealing with customers. 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. It contains a set of principles and practices to reduce cost through the simplification of all manufacturing and support processes. (Synonyms: Lean production, lean manufacturing).
Lean
124
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.
Legacy systems
125
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. (Synonyms: Measure of service, service level).
Level of service
126
A production planning method that maintains a stable production rate while varying inventory levels to meet demand. (Synonym: Level production method, production leveling).
Level strategy
127
Within physical distribution, cost elements that vary by distance traveled and not by weight carried (e.g., fuel, drivers' wages, wear and tear on the vehicle).
Line haul costs
128
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 as 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.
Linear programming
129
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). (Synonym: Capacity smoothing, level loading).
Load leveling
130
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.
Local area network (LAN)
131
1) In an industrial context, the art and science of obtaining, producing, and distributing material and product in the proper place and in proper quantities. 2) In a military sense (where it has greater usage), its meaning can also include the movement of personnel.
Logistics
132
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. (Synonym: Produce-to-order). See: Assemble-to-order, Make-to-stock.
Make-to-order
133
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. (Synonym: Produce-to-stock). See: Assemble-to-order, Make-to-order.
Make-to-stock
134
A method for the effective planning of all resources of a manufacturing company. Ideally, it addresses operational planning in units, financial planning in dollars, and has a simulation capability to answer what-if questions. It is made up of a variety of processes, each linked together: business planning, production planning (sales and operations planning), master production scheduling, material requirements planning, capacity requirements planning, and the execution support systems for capacity and material. Output from these systems is integrated with financial reports such as the business plan, purchase commitment report, shipping budget, and inventory projection in dollars. Manufacturing resource planning is a direct outgrowth and extension of closed-loop MRP.
Manufacturing resource planning (MRP II)
135
In marketing, the total demand that would exist within a defined customer group in a given geographical area during a particular time period given a known marketing program.
Market demand
136
Responding to customers' needs.
Market driven
137
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. (Synonym: Market research).
Market research
138
The actual portion of current market demand that a company or product achieves.
Market share
139
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).
Master planning
140
The master production schedule is 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 master production schedule is not a sales item forecast that represents a statement of demand. The master production schedule 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.
Master production schedule (MPS)
141
A set of techniques that uses bill of material data, inventory data, and the master production schedule 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 materials 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.
Material requirements planning (MRP)
142
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.
Materials management
143
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.
Mathematical programming
144
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. (Synonym: Performance measurement system).
Metrics
145
Software that interconnects incompatible applications software and databases from various trading partners into decision-support tools such as ERP.
Middleware
146
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.
Mix forecast
147
The strategy of planning and designing products so that components or subassemblies can be used in current and future products 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.
Modular design strategy
148
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 and advances in functions can be implemented without affecting other packages or modules because of the loose coupling with other modules. Once 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.
Modular system
149
A strategy in which each country market is self-contained. Customers have unique product expectations that are addressed by local production capabilities. (Synonym: Multidomestic strategy).
Multicountry strategy
150
Procurement of a good or service from more than one independent supplier. (Synonym: Multiple sourcing. Antonym: Single sourcing).
Multisourcing
151
1) The interconnection of computers, terminals, and communications channels to facilitate file and peripheral device sharing as well as effective data communications. 2) A graph consisting of nodes connected by arcs.
Network
152
1) The condition of being out of date. A loss of value occasioned by new developments that place the older property at a competitive disadvantage. A factor in depreciation. 2) A decrease in the value of an asset brought about by the development of new and more economical methods, processes, or machinery. 3) 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.
Obsolescence
153
Achieving the best possible solution to a problem in terms of a specified objective function.
Optimization
154
Capabilities of an organization in which poor performance can cause loss of business. Failure to meet customer expectations with delivery of the product is an order loser. See: Order qualifiers, Order winners.
Order losers
155
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. (Synonym: Qualifiers). See: Order losers, Order winners.
Order qualifiers
156
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/cost, quality, delivery speed, delivery reliability, product design, flexibility, after-market service, and image. See: Order losers, Order qualifiers.
Order winners
157
Used in calculating order quantities, the costs that increase as the number of orders placed increases. It 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.
Ordering cost
158
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.
Outsourcing
159
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.
Package to order
160
Using Pareto's law to divide items into classes based on the levels of a certain characteristic.
Pareto analysis
161
A concept developed by Vilfredo Pareto, an Italian economist, that states that a small percentage of a group accounts for the largest fraction of the impact, value, and so on. In an ABC classification, for example, 20 percent of the inventory items may constitute 80 percent of the inventory value.
Pareto's law
162
1) A form of business ownership that is not organized as a separate legal entity (i.e., unincorporated business), but entailing ownership by two or more persons. 2) In a supply chain, a relationship based on trust, shared risk, and rewards aimed toward achieving a competitive advantage.
Partnership
163
A RFID tag which does not send out data and is not self-powered. See: Radio frequency identification (RFID) tag.
Passive tag
164
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. (Synonym: Pipeline stock).
Pipeline inventory
165
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 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 horizon
166
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. Yahoo! Is an example of a consumer portal. Business portals are often connected with a customer relationship management or supplier relationship management system. Portals can include structured data, such as ERP information, pictures, and documents. Unlike exchanges or marketplaces, portals generally can display and aggregate data without integration between application software.
Portal
167
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 many 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.
Private trading exchange (PTX)
168
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. (Synonym: Operations process chart).
Process chart
169
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.
Process map
170
The business functions of procurement planning, purchasing, inventory control, traffic, receiving, incoming inspection, and salvage operations.
Procurement
171
A strategy of making a product distinct from the competition on a nonprice basis such as availability, durability, quality, or reliability.
Product differentiation
172
A group of products with similar characteristics, often used in production planning (or sales and operations planning). (Synonym: Product line).
Product family
173
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.
Product life cycle
174
1) Gross profit?earnings from an ongoing business after direct costs of goods sold have been deducted from sales revenue for a given period. 2) Operating profit?earnings or income after all expenses (selling, administrative, depreciation) have been deducted from gross profit. 3) Net profit?earnings or income after adjusting for miscellaneous income and expenses (patent royalties, interest, capital gains) and tax from operating profit. (Synonym: Income).
Profit
175
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 profit margin is the product selling price minus the direct material, direct labor, and allocated overhead for the product, sometimes expressed as a percentage of selling price.
Profit margin
176
1) In production, the production of items only as demanded for use or to replace those taken for use. 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 where replenishment decisions are made at the field warehouse itself, not at the central warehouse or plant.
Pull system
177
The term used in industry and management to denote the function of and the responsibility for procuring materials, supplies, and services.
Purchasing
178
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 issuing material to a job order at its start time. 3) In distribution, a system for replenishing field warehouse inventories where replenishment decision making is centralized, usually at the manufacturing site or central supply facility. See: Pull system.
Push system
179
A methodology designed to ensure that all the major requirements of the customer are identified and subsequently met or exceeded through the resulting product design process and the design and operation of the supporting production management system. QFD can be viewed as a set of communication and translation tools. QFD tries to eliminate the gap between what the customer wants in a new product and what the product is capable of delivering. QFD often leads to a clear identification of the major requirements of the customers. These expectations are referred to as the voice of the customer (VOC).
Quality function deployment (QFD)
180
A system of linking final retail sales with production and shipping schedules back through the chain of supply; employs point-of-sale scanning and electronic data interchange, and may use direct shipment from a factory to a retailer.
Quick response program (QRP)
181
A system using electronic tags to store data about items. Accessing these data is accomplished through a specific radio frequency and does not require close proximity or line-of-sight access for data retrieval. See: Active tag, Passive tag, Semipassive tag.
Radio frequency identification (RFID) tag
182
A replenishment strategy in which the supplier prepares shipments at predetermined intervals and varies the quantity based on recent sales data. Sales data may be supplied via a point-of-sale system. (Synonym: Continuous replenishment).
Rapid replenishment
183
A software program that allows users to obtain information drawn from two or more databases that are made up of two-dimensional arrays of data.
Relational database
184
1) The planning and validation of all organizational resources. 2) The effective identification, planning, scheduling, execution, and control of all organizational resources to produce a good or service that provides customer satisfaction and supports the organization's competitive edge, and ultimately, organizational goals. 3) An emerging field of study emphasizing the systems perspective, encompassing both the product and process life cycles, and focusing on the integration of organizational resources toward the effective realization of organizational goals. Resources include materials; maintenance, repair, and operating supplies; production and supporting equipment; facilities; direct and indirect employees; staff; administrative and professional employees; information; knowledge; and capital. (Synonym: Integrated resource management).
Resource management
185
Net income for the previous 12 months divided by total assets.
Return on assets (ROA)
186
A relative measure of financial performance that provides a means for comparing various investments by calculating the profits returned during a specified time period. In the theory of constraints, ROI is calculated as throughput minus operating expense divided by investment.
Return on investment (ROI)
187
An internet auction in which suppliers attempt to underbid their competitors. Company identities are known only by the buyer.
Reverse auction
188
A complete supply chain dedicated to the reverse flow of products and materials for the purpose of returns, repair, remanufacture, and/or recycling.
Reverse logistics
189
Moving items from the consumer back to the producer for repair or disposal.
Reverse supply chain
190
A method often associated with the management of inventory risk. Manufacturers and retailers that experience high variability in demand for their products can pool together common inventory components associated with a broad family of products to buffer the overall burden of having to deploy inventory for each discrete product.
Risk pooling
191
1) In general, a quantity of stock planned to be in inventory to protect against fluctuations in demand or supply. 2) In the context of master production scheduling, the additional inventory and capacity planned as protection against forecast errors and short-term changes in the backlog. Overplanning can be used to create safety stock. (Synonyms: Buffer stock, reserve stock).
Safety stock
192
A process to develop tactical plans that provide management the ability to strategically direct its business to achieve competitive advantage on a continuous basis by integrating customer-focused marketing plans for new and existing products with the management of the supply chain. The process brings together all the plans for the business (sales, marketing, development, manufacturing, sourcing, and financial) into one integrated set of plans. It is performed at least once a month and is reviewed by management at an aggregate (product family) level. The process must reconcile all supply, demand, and new-product plans at both the detail and aggregate levels and tie to the business plan. It is the definite statement of the company's plans for the near to intermediate term, covering a horizon sufficient to plan for resources and to support the annual business planning process. Executed properly, the sales and operation planning process links the strategic plans for the business with its execution and reviews performance measurements for continuous improvement. See: Tactical planning.
Sales and operations planning (S&OP)
193
A repetitive pattern of demand from year to year (or other repeating time interval) with some periods considerably higher than others. (Synonym: Seasonal variation).
Seasonality
194
An RFID tag that sends out data, is self-powered, and widens its range by harnessing power from the reader. See: Radio frequency identification (RFID).
Semipassive tag
195
1) In its narrowest sense, an organization that provides an intangible product (e.g., medical or legal advice). 2) In its broadest sense, all organizations except farming, mining, and manufacturing. This definition of service industry includes retail trade; wholesale trade; transportation and utilities; finance, insurance, and real estate; construction; professional, personal, and social services; and local, state, and federal governments.
Service industry
196
A style of information technology (IT) design that guides all aspects of creating and using business services throughout their life cycles, as well as defining and provisioning the IT infrastructure that enables different computer applications to exchange data and participate in business processes, regardless of the operating systems or programming language underlying those applications.
Service-oriented architecture (SOA)
197
1) The technique of using representative or artificial data to reproduce in a model various conditions that are likely to occur in the actual performance of a system. It is frequently used to test the behavior of a system under different operating policies. 2) Within MRPII, using the operational data to perform what-if evaluations of alternative plans to answer the question, "Can we do it?" If yes, the simulation can then be run in the financial mode to help answer the question, "Do we really want to?"
Simulation
198
A company that is selected to have 100 percent of the business for a part although alternate suppliers are available. See: Sole-source supplier.
Single-source supplier
199
A methodology that furnishes tools for the improvement of business processes. The intent is to decrease process variation and improve product quality.
Six sigma
200
Computer services are provided by a third party that keeps all of the software and hardware in its place of business and the company using the services accesses them via the internet. A very common technique used to outsource technological state-of-the-art costs that can be avoided.
Software-as-a-service (SaaS)
