BSCM Vocabulary

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  1. Andon
    An electronic board that provides visibility of floor status and supplies info to help coordinate efforts to linked workcenters. Signal lights are Green (running), Red (stop), Yellow (needs attention).
  2. anticipation inventories
    additional inventory above basic pipeline stock to cover projected trends of increasing sales, planned sales promotion programs, seasonal fluctuations, plant shut-downs and vacations.
  3. Assignable Cause
    A source of variation in a process that can be isolated, especially when it's significantly larger magnitude or different origin readily distinguishes itself from random causes of variation.
  4. available inventory
    inventory on hand, minus defective, reserved, allocated, backorder, etc.
  5. available to promise
    uncommitted inventory balance in the first period, calculated for each period in which an MPS receipt is scheduled.
  6. backflush
    inventory bookkeeping where the computer automatically deducts lower level items, according to the b.o.m., from inventory when there is activity on it's upper level part. Has the built in disadvantage of not being completely accurate. 
  7. backhauling
    A trasport vehicle's travel from the destination, back to the point of origin. Obviously you try to have them haul something back home. If they don't, it's called "Deadhauling".
  8. backlog
    Orders received, but not yet shipped. Different from Backorder, because you may have the items for the order, but it has yet to ship for some other reason.
  9. backorder
    order that has not shipped because you don't have the items on the order.
  10. backscheduling
    where you take the due-date of an order, and schedule backward from there to the start date, according to the scheduling requirements of each operation sequence.
  11. What three things does a balance sheet show?
    Resources owned, debts owed, and the owner's share of the company at any given point in time.
  12. batch picking
    arranging orders by product to reduce movement.
  13. bias
    a consistent deviation from the mean
  14. bill of lading
    a carrier's contract and receipt for goods they agree to transport.
  15. bonded warehouse
    buildings or parts of building designated by the US secretary of Treasury to hold imported merchandise, operated under US customs supervision.
  16. break-bulk
    dividing truckloads of homogenous items into smaller quantities more appropriate for use
  17. break-even point
    level of production or volume of sales where operations is neither profitable nor unprofitable.
  18. buffer
    a quantity of materials awaiting further processing.
  19. buffer management
    in Theory of Constraints, when all expediting in a shop is driven by what is scheduled to be in the buffers. By expediting into the buffers, you avoid idleness.
  20. bullwhip effect
    when a disproportionate effect occurs between upstream and downstream, often resulting in overproduction status from backorder status. The remedy is to make sure the supply chain is synchronized.
  21. business plan
    Plan of strategy, revenue, cost, profit, budget, projected balance sheet, and cashflow statement. Usually stated in terms of dollars and grouped by product family.
  22. capable-to-promise
    the process of committing orders against available CAPACITY as well as inventory.
  23. capacity available
    The capability of a system to produce a quantity of product in a period of time.
  24. capacity control
    The process of measuring production output and comparing it with the capacity plan, determining if the variance exceeds pre-established limits, and taking corrective action to get back on plan if the limits are exceeded.
  25. capacity management
    The function of establishing, measuring, monitoring, and adjusting limits or levels of capacity in order to execute all manufacturing schedules.
  26. capacity planning
    The process of determining the amount of capacity required to produce in the future.
  27. capacity required
    The capacity of a system or resource needed to produce a desired output in a particular time period.
  28. capacity requirements planning (CRP)
    The function of establishing, measuring and adjusting limits or levels of capacity
  29. carrying cost
    The cost of holding inventory, usually defined as a percentage of the dollar value of inventory per unit of time (generally one year).
  30. cash flow
    The net flow of dollars into or out of the proposed project.
  31. cause-and-effect diagram
    A tool for analyzing process dispersion.
  32. cellular manufacturing
    A manufacturing process that produces families of parts within a single line or cell of machines controlled by operators who work only within the line or cell.
  33. centralized inventory control
    Inventory decision making for all stockkeeping units exercised from one office or department for an entire company.
  34. certified supplier
    A status awarded to a supplier who consistently meets predetermined quality, cost, delivery, financial, and count objectives.
  35. chase production method
    A production planning method that maintains a stable inventory level while varying production to meet demand.
  36. closed-loop MRP
    A system built around material requirements planning that includes the additional planning processes of production planning (sales and operations planning), master production scheduling, and capacity requirements planning.
  37. common carrier
    Transportation available to the public that does not provide special treatment to any one party and is regulated as to the rates charged, the liability assumed, and the service provided.
  38. competitive advantage
    The advantage a company has over its rivals in attracting customers and defending against competitors.
  39. component
    The raw material, part, or subassembly that goes into a higher level assembly, compound, or other item.
  40. consignment
    A shipment that is handled by a common carrier.
  41. constraint
    Any element or factor that prevents a system from achieving a higher level of performance with respect to its goal.
  42. continuous process improvement (CPI)
    A never-ending effort to expose and eliminate root causes of problems: small step improvement as opposed to big-step improvement.
  43. continuous production
    A production system in which the productive equipment is organized and sequenced according to the steps involved to produce the product. The routing of the jobs is fixed and the setups are seldom changed.
  44. continuous replenishment
    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 one) without stockouts and without receiving replenishment orders.
  45. contract carrier
    A carrier that does not serve the general public, but provides transportation for hire for one or a limited number of shippers under a specific contract.
  46. control chart
    A graphic comparison of process performance data with predetermined computed control limits.
  47. control limit
    A statistically determined line on a control chart (upper control limit or lower control limit).
  48. cost of goods sold
    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.
  49. cost of poor quality
    What are the 4 costs associated with providing poor quality products or services? Internal failure costs, external failure costs, appraisal costs, and prevention costs.
  50. critical chain method
    In the theory of constraints, a network planning technique for the analysis of a project's completion time, used for planning and controlling project activities.
  51. critical path method (CPM)
    A network planning technique for the analysis of a project's completion time used for planning and controlling the activities in a project.
  52. cross-docking
    The concept of packing products on the incoming shipments so they can be easily sorted at intermediate warehouses or for outgoing shipments based on final destination.
  53. cumulative lead time
    The longest planned length of time to accomplish the activity in question.
  54. customer relationship management (CRM)
    A marketing philosophy based on putting the customer first.
  55. customer service
    The ability of a company to address the needs, inquiries, and requests from customers.
  56. customs broker
    A person who manages the paperwork required for international shipping and tracks and moves the shipments through the proper customers.
  57. cycle counting
    An inventory accuracy audit technique where inventory is counted on a cyclic schedule rather than once a year.
  58. cycle stock
    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.
  59. cycle time
    In industrial engineering, the time between completion of two discrete units of production.
  60. days of supply
    Inventory-on-hand metric converted from units to how long the units will last.
  61. decentralized inventory control
    Inventory decision making exercised at each stocking location for SKUs at that location.
  62. decoupling inventory
    An amount of inventory kept between entities in a manufacturing or distribution network to create independence between processes or entities.
  63. delivery lead time
    The time from the receipt of the customer order to the delivery of the product.
  64. demand
    A need for a particular product or component.
  65. demand lead time
    The amount of time potential customers are willing to wait for the delivery of a good or service.
  66. demand management
    The function of recognizing all demands for goods and services to support the marketplace.
  67. demand planning
    Using forecasts and experience to estimate demand for various items at various points in a supply chain.
  68. demand pull
    The triggering of material movement to a work center only when that work center is ready to begin the next job.
  69. demonstrated capacity
    Proven capacity calculated from actual performance data, usually expressed as the average number of items produced multiplied by the standard hours per item.
  70. demurrage
    The carrier charges and fees applied when rail freight cars and ships are retained beyond a specified loading or unloading time.
  71. dependent demand
    Demand that is directly related to or derived from the bill of material structure for other items or end products.
  72. detention
    Carrier charges and fees applied when truck trailers are retained beyond a specified loading or unloading time.
  73. direct labor
    Labor that is specifically applied to the good being manufactured or used in the performance of the service.
  74. direct material
    Material that becomes a par of the final product in measurable quantities.
  75. discrete manufacturing
    The production of distinct items such as automobiles, appliances, or computers
  76. discrete order picking
    A method of picking orders in which the items on one order are picked before the next order is picked.
  77. dispatching
    The selecting and sequencing available jobs to be run at individual workstations and the assignment of those jobs to workers.
  78. distribution
    The activities associated with the movement of material, usually finished goods or service parts, from the manufacturer to the customer.
  79. distribution center
    A warehouse with finished goods and/or service items.
  80. distribution channel
    The distribution route, from raw materials through consumption, along which products travel.
  81. distribution inventory
    Inventory, usually spare parts and finished goods, located in the distribution system.
  82. distribution requirements planning (DRP)
    The function of determining the need to replenish inventory at branch warehouses.
  83. distribution warehouse
    A facility that receives items in large lots, stores them temporarily, and breaks them into smaller lots destined for a variety of locations.
  84. dock-to-stock
    A program by which specific quality and packaging requirements are met before the product is released.
  85. drop ship
    To take the title of the product by not actually handle, stock, or deliver it.
  86. drum-buffer-rope (DBR)
    The theory of constraints method for scheduling and managing operations that have internal constraint or capacity-constrained resource.
  87. drum schedule
    The detailed production schedule for a resource that sets the pace for the entire system.
  88. economic order quantity (EOQ)
    A type of fixed order quantity model that determines the amount of an item to be purchased or manufactured at one time.
  89. efficiency
    A measurement (usually expressed as a percentage) of the actual output to the standard output expected.
  90. eletronic data interchange (EDI)
    The paperless exchange of trading documents, such as purchase orders, shipment authorizations, advance shipment notices, and invoices, using standardized document formats.
  91. employee empowerment
    The practice of giving non-managerial employees the responsibility and the power to make decisions regarding their jobs or tasks.
  92. employee involvement (EI)
    the concept of using the experience, creative energy, and intelligence of all employees by treating them with respect, keeping them informed, and including them and their ideas in decision-making processes appropriate to their areas of expertise.
  93. engineer-to-order
    Products whose customer specifications require unique engineering design, significant customization, or new purchased materials.
  94. enterprise resources planning (ERP)
    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.
  95. explode
    Tor perform a bill of material explosion.
  96. external failure costs
    The costs related to problems found after the product reaches the customer.
  97. external setup time
    The time associated with elements of a setup procedure performed while the process or machine is running.
  98. extrinsic forecasting method
    A forecast method on a correlated leading indicator, such as estimating furniture sales based on housing starts.
  99. field service
    The functions of installing and maintainting a product for acustomer after the sale or during the lease.
  100. final assembly schedule (FAS)
    A schedule of end items to finish the product for specific customers' orders in a make-to-order or assembly-to-order environment.
  101. finished goods inventory
    Those items on which all manufacturing operations, including final test, have been completed.
  102. finite forward scheduling
    And equiment scheduling techique that builds a schedule by proceeding sequentially from the initial period to the final period while observing capacity limits.
  103. finite loading
    Assigning no more work to a work center than the work center can be expected to execute in a given time period.
  104. firm planned order (FPO)
    A planned order that can be frozen in quanitity and time.
  105. five focusing steps
    • In theorgy of constraints, a process to continuously improve organizational profit by evaluating the production system and market mix to determine how to make the most profit using the system of contraint.
    • 1) identifying the contraint to the system
    • 2) deciding how to exploit the contraint to the system
    • 3) subordinating all nonconstraints to the constraint
    • 4) elevating the constraint to the system
    • 5) returning to step 1 if the constraint is broken in any previous step, while not allowing inertia to set in.
  106. five Ss
    • Five terms beginning with "S" used to crfeate a workplace suitable for lean production.
    • (Sort, simplify, scrub, standardize, sustain)
  107. five whys
    The common practive in total quality management is to ask "why" five times when confronted with a problem.
  108. fixed-location storage
    A method of storage in which a relatively permanent location is assigned for the storage of each item in a storeroom or warehouse.
  109. fixed order quantitiy
    A lot-sizing techique in MRP or inventory management that will always cause the planned or actual orders to be generated for a predetermined fixed quantitiy, or multiples therof, if net requirements for the period exceed the fixed order quantity.
  110. fixed overhead
    Traditionally, all manufacutring costs-other than direct labor and direct materials - that continue even if products are not produced.
  111. fixed-position manufacturing
    Similar to project manufacturing, this type of manufacturing is mostly used for large, complex projects, where the product remains in one location for its full assemgly period or may mobe from location to location after considerable work and time are spent on it.
  112. flowchart
    The output of a flowcharting process, a chart that shows the operations, transportation, storage, delays, inspections, and so on related to a process.
  113. flow processing
    A system in which work flows over a stationary path, usually with little variance in the rate of flow.
  114. flow shop
    A form of manufacturing organization in which machines and operators handle a standard, usually uniterrupted, material flow.
  115. fluctuation inventory
    Inventory that is carried as a cushion to protect against forecast error.
  116. forecast
    An estimate of furture demand.
  117. forecast error
    The difference between actual demand and forecast demand, stated as an absolute value or as a percentage.
  118. forward scheduling
    A scheduling techique where the scheduler proceeds from a known start date and computes the completion date for an order, usually proceeding from the first operation to the last.
  119. four Ps (product, price, place, promotion)
    A set of marketing tools to direct the business offering to the customer.
  120. freight consolidation
    The grouping of shipments to obtain reduced costs or improved utilization of the transportation function.
  121. freight forwarder
    The "middle man" between the carrier and the organization shipping the product.
  122. functional layout
    A facility configuration in which operations of a similar natur or function are grouped together; and orgonaizational structure based on departmental specialty.
  123. Gantt chart
    The earliest and best-known type of planning and control chart, especially designed to show graphically the relationship between planned performance and actual performance over time.
  124. gemba
    A Japanese word meaning shop floor.
  125. genchi genbutsu
    A Japanese phrase meaning visit the shop floor to observe what is occurring.
  126. 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, and more.
  127. generally accepted accounting practices/principles (GAAP)
    A group of practices and principles, independent of any one set of techiques, that define how a manufacturing company should be managed.
  128. green reverse logistics
    The responsibility of the supplier to dispose of packing materials or environmentally sensitive materials such as heavy metals.
  129. gross margin
    The difference between total revenue and the cost of goods sold.
  130. gross requirement
    The total of independent and dependent demand for a component before the netting of on-and inventory and scheduled receipts.
  131. hansei
    A Japanese word meaning reflection.
  132. hedge inventory
    A form of inventory buildup to buffer against some event that may not happen.
  133. heijunka
    In Just-in-Time philosophy, and approach to level production throughout the supply chain to match the planned rate of end product sales.
  134. 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.
  135. hoshin
    A Japanese word meaning statement of objectives.
  136. hoshin planning
    Breakthrough planning. A Japanese strategic planning process in which a company develops up to four vision statements that indicate where the company should be in the next five years.
  137. idle capacity
    The available capacity that exists on nonconstraint resources beyond the capacity required to support the constraint.
  138. income statement
    A financial statement showing the net income for a business over a given period of time.
  139. incoterms
    Short for International Commercial Terms; created to simplify international transactions.
  140. indented bill of material
    A form of multilevel bill of material.
  141. independent demand
    The demand for an item that is unrelated to the demand for other items.
  142. industrial trucks
    Material handling devices used in warehouses.
  143. infinite loading
    Calculation of the capacity required at work centers in the time periods required regardless of the capacity available to perform this work.
  144. input/output control (I/O)
    A technique for capacity control where planned and actual inputs and planned and actual outpus of work center are monitored.
  145. 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.
  146. intermodal transport
    Shipments moved by different types of equipment combining the best features of each mode.
  147. internal failure costs
    The cost of things that go wrong before the product reaches the customer.
  148. internal setup time
    The time associated with elements of a setup procedure performed while the process or machine is not running.
  149. interplant demand
    One plant's need for a part or product that is produced by another plant or division within the same organization.
  150. in-transit inventory
    Material moving between two or more locations, usually separated geographically; for example, finished goods being shipped from a plant to a distribution center.
  151. intrinsic forecast method
    A forecast based on internal factors, such as an average of past sales.
  152. inventory accuracy
    When the on-hand quantity is within an allowed tollerance of the recorded balance.
  153. inventory adjustment
    A change made to an inventory record to correct the balance, to bring it in line with actual physical inventory balances.
  154. 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 incorrect quantity, and so on.
  155. inventory control
    The activities and techniques of maintaining the desired levels of items, whether raw materials, work in process, or finished products.
  156. inventory management
    The branch of business management concerned with planning and controlling inventories.
  157. inventory ordering system
    Inventory models for the replenishment of inventory.
  158. inventory turnover
    The number of times that an inventory cycles, or "turns over", during the year.
  159. kaizen
    The Japanese term for improvement; continuing improvement involving everyone - managers and workers.
  160. kanban
    A method of Just-in-Time production that uses standard containers or lot sizes with a single card attached to each.
  161. key performance indicator (KPI)
    A financial or nonfinancial measure, either tactical or strategic, that is linked to specific strategic goals and objectives.
  162. landed cost
    This cost includes the product cost plus the costs of logistics, such as warehousing, transportation, and handling fees.
  163. lead time
    A span of time required to perform a process (or series of operations).
  164. lead-time offset
    A techique used in NRP where a planned order receipt in one time period will require the release of that order in an earlier time period based on the lead time for the item.
  165. leading indicator
    A specific business activity index that indicates future trends.
  166. 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.
  167. 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.
  168. level of production method
    A rpduction planning method that maintains a stable production rate while varying inventory levels to meet demand.
  169. level schedule
    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.
  170. liabilities
    An accounting/financial term (balance sheet classification of accounts) representing debts or obligations owed by a company to creditors.
  171. line haul costs
    Within physical distribution, cost elements that very by distance traveled and not by weight carried (e.g., fule, drivers' wages, wear and tear on the vehicle).
  172. 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.
  173. 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.
  174. logistics
    In an industrial contex, the art and science of obtaining, producting, and distributing material and product in the proper place and in proper quantities.
  175. lot
    A quantity produced together and sharing the same production costs and specifications.
  176. 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.
  177. lot-for-lot
    A lot-sizing technique that generates planned orders in quantities equal to the net requirements in each period.
  178. 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.
  179. lot-size inventory
    Inventory that results whenever quanity 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.
  180. maintenance, repair, and operating supplies (MRO)
    An item for reprocessing in the remanufaturing industry.
  181. marke-or-buy decision
    The act of deciding whether to produce an item internally or buy it from an outside supplier.
  182. make-to-order
    A production environment where a good or service can be made after receipt of a customer's order.
  183. make-to-stock
    A production environment where products can be and usually are finished before receipt of a customer order.
  184. 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.
  185. manufacturing lead time
    The total time required to manufacture an item, exclusive of lower level purchasing lead time.
  186. manufacturing order
    A document, group of documents, or schedule conveying authority for the manufacture of specified parts or products in specified quantities.
  187. manufacturing philosophy
    The set of guiding principles, driving forces, and ingrained attitueds that helps communicate goals, plans, and policies to all employees and that is reinforced through conscious and subconscious behavior within the manufacturing organization.
  188. manufacturing process
    The series of operations performed upon material to convert it from the raw material or a semifinished state to state of further completion.
  189. manufacturing resource planning (MRP II)
    A method for the effective planning of all resources of a manufacturing company.
  190. market driven
    Responding to customers' needs.
  191. market strategy
    The marketing plan to support the business strategy.
  192. mass customization
    The creation of a high-volume product with large variety so that a customer may specify an exact model out of a large volume of possible end items while manufacturing cost is low due to large volume.
  193. master planning
    A group of business processes that includes the follwoing activities: demand management, production and resource planning, and master shceduling.
  194. master production scheduling (MPS)
    The master production shcedule is a line on the master shcedule grid that reflects the anticipated build schedule for those items assigned to the master scheduler.
  195. master schedule
    The master schedule is a format that includes time periods, forecast, customer orders, projected available balance, available-to-promise, and the master production shcedule.
  196. material requirements planning (MRP)
    A set of techniques that uses bill of material data, inventory data, and the master production schedule to calculate requirements for materials.
  197. materials handling
    The movement of items from one point to another inside a facility or between facilities.
  198. 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 warehousing, shipping, and distribution of the finished product.
  199. mean absolute deviation (MAD)
    The average of the absolute values of the deviations of observed values from some expected value.
  200. mental model
    A paradigm of how the world works formed by a person's experience and assumptions.
  201. milk run
    A regular route for pickup of mixed loads from several suppliers.
  202. min-max system
    A type of order point replenishment system where the minimum is the order point, and the meaximum is the "order up to" inventory level.
  203. 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.
  204. mixed-model shceduling
    The process of developing one or more schedules to enable mixed-model production.
  205. modularization
    Using the same set of components in a variety of finished goods.
  206. move time
    The time that a job spends in transit from one operation to another in the plant.
  207. muda (waste)
    • In lean manufacturing, costs are reduced by reducting waste within a system. What are the seven categories of waste?
    • overproduction
    • waiting
    • transportation
    • processing
    • motion
    • inventory
    • defective units
    • (I simplified this. there are examples after each waste listed in the book)
  208. 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.
  209. multisourcing
    Procurement of a good or service from more than one independent supplier.
  210. mura
    A Japanese word meaning unevenness or variability.
  211. muri
    A Japanese word meaning strain or overburden.
  212. nesting
    The act of combining several small processes to form one larger process.
  213. net requirements
    In MRP, the net requirements for a part or an assembly are derived as a result of applying gross requirements and allocations against inventory on hand, scheduled receipts, and safety stock.
  214. on-hand balance
    The quantity shown in the inventory records as being physically in stock.
  215. on-time schedule performance
    A measure (percentage) of meeting the customer's originally negotiated delivery request date.
  216. one-card kanban system
    A kanban system where only a move card is employed.
  217. open order
    A released manufacturing order or purchase order.
  218. operating expense
    All the money an organization spends in generating "goal units".
  219. operations management
    The planning, shceduling, and control of the activities that transform inputs into finished goods and services.
  220. operator flexibility
    Machine operators having the flexibility to solve problems and to do other tasks beyond their immediate responsibilities.
  221. order entry
    The process of accepting and translating what customer wants into terms used by the mnaufacturer or distributor.
  222. order picking
    Selecting or "picking" the required quantity of specific products for movement to a packaging area.
  223. 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.
  224. order promising
    The process of making a delivery commitment.
  225. order qualifiers
    Those competitive characteristics that a firm must exhibit to be a viable competitor in the marketplace.
  226. order winners
    Those competitive characteristics that cause a firm's customers to choose that firm's goods and services over those of its competitors.
  227. ordering cost
    Used in calculating order quantities, the costs that increase as the number of orders placed increases.
  228. outsourcing
    The process of having suppliers provide goods and services that were previously provided internally.
  229. overhead
    The costs incurred in the operation of a business that cannot be directly related to the individual goods or services produced.
  230. overlapped schedule
    A manufacturing schedule that "overlaps" successive operations.
  231. owner's equity
    An accounting/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.
  232. pacemaker
    In lean the philosophy is to produce at the market rate of consumption.
  233. package to order
    A production environment in which a good or service can be packaged after receipt of a customer order.
  234. pallet positions
     A calculation of the space needed to store a certain number of pallets.
  235. parent item
    The item produced from one or more components.
  236. 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 the impact, value, and so on.
  237. participative design/engineering
    A concept that refers to the simultaneous participation of all the functional areas of the firm in the product design activity.
  238. pegging
    In MRP and MPS, the capability to identify for a given item the sources of its gross requirements and/or allocations.
  239. performance standard
    In a performance measurement system, the accepted, targeted, or expected value for the criterion.
  240. period order quantity
    A lot-sizing technique under which the lot size is equal to the net requirements for a given number of periods.
  241. 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.
  242. perpetual inventory record
    A computer record or manual document on which each inventory transaction is posted so that a current record of the inverntory is maintained.
  243. physical inventory
    The actual inventory itself.
  244. physical supply
    The transportation of goods from supplier to buyer.
  245. picking list
    A document that lists the material to be picked for manufacturing or shipping orders.
  246. pickup and delivery costs
    Transportation costs based on the number of pick ups and the weight of the cargo.
  247. pipeline stock
    Inventory in the transportation network and the distribution system, including the flow through intermediate stocking point.
  248. plan-do-check-action (PDCA)
    • A four-step process for quality improvement.
    • plan, do, check, and action
  249. planned order
    A suggested order quantity, release date, and due date created by the planning system's logic when it encounters net requirements in processing MRP.
  250. planned order receipt
    The quantity planned to be received at a future date as a result of a planned order release.
  251. planning bill of material
    an artificial grouping of items or events in bil-of-material format used to facilitate master scheduling and material planning.
  252. planning horizon
    The amount of time a plan extends into the future.
  253. point of sale (POS)
    The relief of inventory and computation of sales data at the time and place of sale, generally thorugh the use of bar coding or magnetic media and equipment.
  254. postponement
    A product design strategy that shifts product differentiation closer to the consumer by postponing identity changes, such as assembly or packaging, to the last possible supply chain location.
  255. prevention costs
    The costs caused by improvement activities that focus on the reduction of failure and appraisal costs.
  256. preventative maintenance
    The activities, including adjustments, replacements, and basic cleanliness.
  257. priority control
    The process of communicating start and completion dates to manufacturing departments in order to execute a plan.
  258. priority planning
    the function of determining what material is needed and when.
  259. private carrier
    A group that provides transportation exclusively within an organization.
  260. process
    A planned series of actions or operations.
  261. process batch
    The quatity 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.
  262. process flexibility
    The speed and ease with which the manufacturing transformation tasks can respond to internal or external changes.
  263. procurement
    The business functions of procurement planning, purchasing, inventory control, traffic, receiving, incoming inspection, and salvage operations.
  264. procurement lead time
    The time required to design a product, modify or design equipment, conduct market research, and obtain all necessary materials.
  265. product
    Any good or service produced for sale, barter, or internal use.
  266. product cost
    Cost allocated by some method to the products being produced.
  267. product differentiation
    A strategy of making a product distinct from the competition on a nonprice basis such as availability, durability, quality, or reliability.
  268. product family
    A group of products with similar characteristics, often used in production planning.
  269. product layout (product-based layout)
    A type of layout where resources are arranged sequentially according to the steps required to make a particular complex product.
  270. product life cycle
    The stages a new product goes through from beginning to end.
  271. product mix
    The proportion of individual products that make up the total production or sales volume.
  272. production activity control (PAC)
    The function of routing and dispatching the work to be accomplished through the production facility and of performing supplier control.
  273. production line
    A series of pieces of equipment dedicated to the manufacture of a specific number of products or families.
  274. product plan
    The agreed-upon plan that comes from the production planning process, specifically the overall level of manufacturing output planned to be produced, usually state as a monthly rate for each product family.
  275. 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, and so on, as expressed in the overall business plan.
  276. productive capacity
    In the theorgy 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.
  277. productivity
    An overall measure of the ability to produce a good or a service.
  278. profit margin
    The difference between the sales and cost of goods sold for an organization, sometimes expressed as a percentage of sales.
  279. projected available balance
    An inventory balance projected into the future.
  280. protective capacity
    The resource capacity needed to protect system throughput-ensuring that some capacity above the capacity required to exploit the contraint is available to catch up when distruptions invevitably occur.
  281. protective inventory
    In the theorgy of constraints, the amout of inventory requred relative to the protective capacity in the sytem to achive a specific throughput rate at the contraint.
  282. protective packaging
    Protecting items by surrounding them with impackt absorbing material.
  283. pull system
    In production, the production of items only as demanded for use or to replace those taken for use.
  284. purchase order
    the purchaser's authorization used to formalize a purchase transaction with a supplier.
  285. purchase requisition
    An authorization to the purchasig department to purchase specified materials in specified quantities within a specified time.
  286. purchasing lead time
    The total lead time required to obtain a purchased item.
  287. push system
    In production, the production of items at times required by a given schedule planned in advance.
  288. quality
    • Can be defined through 5 principal approaches:
    • 1) Transcendent quality is an ideal, and condition of excelence.
    • 2) Product-based quality is based on a product atribute.
    • 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.

    Two major components of quality are (1) quality of conformance (2) quality of design
  289. quality at the source
    A producer's responsibility to provide 100 percent acceptable quality material to the consumer of the material.
  290. quality control
    The process of measuring quality conformance by comparing the actual with a standard for the characteristic and acting on the difference.
  291. quality costs
    The overall costs associated with prevention activities and the improvement of quality throughout the firm before, during, and after production of a product.
  292. quantity discount
    A price reduction allowance determined by the quantity or value of a purchase.
  293. queue
    A waiting line.
  294. quick changeover
    Having a small setup time in order to have small production batches and small WIP inventory.
  295. radio frequency identification (RFID)
    A system using electronic tags to store data about items.
  296. random-location storage
    A storage technique in which parts are placed in any space that is empty when they arrive at the storeroom.
  297. random variation
    A fluctuation in data that is caused by the uncertain or randon occurences.
  298. rated capacity
    The expected output cabability of a resource or sytem.
  299. raw material
    Purchased items or extracted materials that are converted via the manufacturing prcess into components and products.
  300. receiving
    The function encompassing the physical receipt of material, the inspection of the shipment for conformance with the purchase order (quantity and damage), the identification and delivery to destination, and the preparation of receiving reports.
  301. record accuracy
    A measure of the conformity or recorded values in a bookkeeping system to the actual values; for example, the on-hand balance of an item maintained in a computer record relative to the actual on-hand balance of the items in the stockroom.
  302. remanufacturing
    An industrial process in which wornout products are restored to like-new condition.
  303. reorder quantity
    In a fixed-reorder quantity system of inventory control, the fixed quantity that should be ordered each time the available stock (on-hand plus on-order) falls to or below the reorder point.
  304. repetitive manufacturing
    The repeated production of the same discrete products or families of products.
  305. replenishment lead time
    The total period of time that elapses from the moment it is determined that a product should be reordered until the product is back on the shelf available for use.
  306. request for quote (RFQ)
    A document used to solicit vendor responses when a product has been selected and price quotations are needed from several vendors.
  307. requirements explosion
    The process of calculating the demand for the components of a parent item by multiplying the parent item requirements by the component usage quantity specified in the bill of material.
  308. resource planning
    Capacity planning conducted at the business plan level.
  309. reverse auction
    An internet auction in which suppliers attempt to underbid their competitors.
  310. reverse logistics
    A complete supply chain dedicated to the reverse flow of products and materials for the purpose of returns, repair, remanufacture, and/or recycling.
  311. root cause analysis
    Analitical methods to determine the core problem(s) of an organization, process, product, market, and so forth.
  312. rough-cut capacity planning (RCCP)
    The process of converting the master production shcedule into requirements for key resources, often including labor; machinery; warehouse space; suppliers' capabilities; and, in some cases, money.
  313. routing
    In formation detailing the method of manufacture of a particular item.
  314. run time
    The time required to proces a piece or lot at a specific operation.
  315. safety stock
    In general, a quantity of stock planned to be in inventory to protect against fluctuations in demand or supply.
  316. sales and operations planning (S&OP)
    A process to develop tactical plans that provide management the ability to strategically direct its businesses 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.
  317. sales plan
    A time-phased statement of expected customer orders anticipated to be received (incoming sales, not outgoing shipments) for each major product family or item.
  318. sawtooth diagram
    A quantity-versus-time graphic representation of the order point/order quantity inventory system showing inventory being received and then used up and reordered.
  319. scatter chart
    A graphical technique to analyze the relationship between two variables.
  320. scatterplot
    see scatter chart.
  321. scheduled receipt
    An open order that has an assigned due date. See: open order.
  322. scheduling
    The act of creating a schedule, such as a shipping shcedule, master production schedule, maintenance schedule, or supplier schedule.
  323. scrap
    Material outside of the specifications and possessing characteristics that make rework impractical.
  324. seasonal inventory
    Inventory built up to smooth production in anticipation of a peak seasonal demand.
  325. seasonality
    A repetitive pattern of demand from year to year (or other repeating time interval) with some periods considerably higher than others.
  326. sensei
    A Japanese word meaning teacher or one with experience.
  327. service
    Sometimes used to describe those activities that support the production or distribution functions in any organization, such as customer service and field service.
  328. service industry
    An organization that provides an intangible product.
  329. service parts
    Those modules, components, and elements that are planned to be used without modification to replace an original part.
  330. setup
    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.
  331. setup time
    The time required for a specific machine, resource, work center, process, or line to convert from the production of the last good piece of item A to the first good piece of item B.
  332. Shingo's seven wastes
    Shigeo Shingo, a pioneer in the Japanese Just-in-Time philosophy, identified seven barriers to improving manufacturing:

    • waste of waiting
    • waste of transportation
    • waste of stocks
    • waste of motion
    • waste of making defects
    • waste of processing itself
  333. shipping manifest
    A document that lists the pieces in a shipment.
  334. single-level bill of material
    A display of components that are directly used in a parent item.
  335. single-source supplier
    A company that is selected to have 100 percent of the business for a part although alternate suppliers are available.
  336. six sigma
    A methodology that furnishes tools for the improvement of business process. The intent is to decrease process veriation and improve product quality.
  337. SMART
    Abbreviation for simple, measurable, achievable, reasonable, and trackable.
  338. split lot
    A manufacturing order quantity that has been divided into two or more smaller quanitities, usually after the order has been released.
  339. spread
    Variable of an action. Often measured by the range or standard deviation of a particular dimension.
  340. standard costs
    The target costs of an operation, process or product including direct material, direct labor, and overhead charges.
  341. standard time
    The length of time that should be required to (1) set up a given machine or operation and  (2) run one batch or one or more parts, assemblies, or end products through that operation.
  342. start date
    In project management, the time an activity begins; this may be defined as an actual start date or a planned start date.
  343. statistical process control (SPC)
    The application of statistical techniques to monitor and adjust an operation.
  344. stockkeeping unit (SKU)
    An inventory item. For example, a shirt in six colors and fives sizes would represent 30 different SKUs.
  345. stockout costs
    The costs associated with a stockout. Those may include lost sales, backorder costs, expediting, and additional manufacturing and purchasing costs.
  346. stockout percentage
    A measure of the effectiveness with which a company responds to actual demand or requirements.
  347. store
    A storage point located upstream of a work station intended to make it easier to see customer requirements.
  348. strategic plan
    The plan for how to marshal and determin actions to support the mission, goals, and objectives of an organization.
  349. subcontracting
    Sending production work outside to another manufacturer.
  350. summarized bill of material
    A form of multilevel bill of material that lists all the parts and their quanitities required in a given product structure.
  351. supplier
    Provider of goods or services.
  352. supplier certification
    Certification procedure verifying that a supplier operates, maintains, improves, and documents effective procedures that relate to the customer's requirements.
  353. supplier lead time
    The amount of time that normally elapses between the time an order is received by a supplier and the time the order is shipped.
  354. supplier partnership
    The establishment of a working relationship with a supplier organization whereby two organizations act as one.
  355. supplier relationship management (SRM)
    A comprehensive approach to managing an enterprise's interactions with the organization that supply the goods and servivces the enterprises uses.
  356. supply chain
    The global network used to deliver products and services from raw materials to end customers through an engineered flow of information, physical distribution, and cash.
  357. supply chain management (SCM)
    The design, planning, execution, control, and monitoring of supply chain activities with the objective of creating net value, building a competitive infrastructure, leveraging worldwide logistics, synchronizing supply with demand, and measruing performance globally.
  358. sustainability
    Activities that provide present benefit without compromising the needs of future generations.
  359. tactical plan(s)
    The set of functional plans synchronizing activities across functions that specify production levels, capacity levels, staffing levels, and funding levels, and so on, for achieving the intermediate goals and objectives to support the organization's strategic plan.
  360. takt time
    Sets the pace of production to match the rate of customer demand and becomes the heartbeat of any lean production system.
  361. tariff
    An official schedule of taxes and fees imposed by a country on imports or exports.
  362. terminal
    A place where vehicles are loaded and unloaded.
  363. terminal handling costs
    Charges based on the number of times a package is loaded or unloaded.
  364. terms and conditions
    All the provisions and agreements of a contract.
  365. theory of constraints (TOC)
    A holistic management philosophy developed by Dr. Eliyahu M. Goldratt that is based on the principle that complex systems exhibit inherent simplicity.
  366. theory of constraints accounting
    • A cost and managerial accounting system that accumulates costs and revenues into three areas - throughput, inventory, and operating
    • expense.
  367. third-party logistics (3PL)
    A buyer and supplier team with a third party that provides product delivery services.
  368. throughput
    The rate at which the system generates "goal units."
  369. time bucket
    A number of days of data summarized into columnar or row-wise display.
  370. time buffer
    Protection against uncertainty that takes the form of time.
  371. time fence
    A policy or guideline established to note where various restrictions or changes in operating procedures take place.
  372. time-phased order point (TPOP)
    MRP-like time planning logic for independent demand items, where gross requirements come from a forecast, not via explosion.
  373. tolerance
    Allowable departure from a nominal value established by design engineers that is deemed acceptable for the functioning of the good or service over its life cycle.
  374. total cost curve
    In cost-volume-profit (breakeven) analysis, the total cost curve is composed of total fixed and variable costs per unit multiplied by the number of units provided. Breakeven quantity occurs where the total cost curve and total sales revenue curve intersect.
  375. total cost of ownership (TCO)
    In supply chain management, the total cost of ownership of the supply delivery system is the sum of all costs associated with every activity of the supply stream.
  376. total costs
    All the costs of operating a firm; total variable costs plus total fixed costs.
  377. total line-haul cost
    The essential costs to move a freight cargo including driver's wages and depreciation of the vehicle. These costs vary with the distance shipped.
  378. total productive maintenance (TPM)
    Preventive maintenance plus continuing efforts to adapt, modify, and refine equipment to increase flexibility, reduce material handling, and promote continuous flows.
  379. total quality management (TQM)
    A term coined to describe Japanese-style management approaches to quality improvement. TQM is a management approach to long-term success through customer satisfaction.
  380. traceability
    The attribute allowing the ongoing location of a shipment to be determined.
  381. tracking signal
    The ratio of the cumulative algebraic sum of the deviations between the forecasts and the actual values to the mean absolute deviation.
  382. traffic
    A department or function charged with the responsibility for arranging the most economic classification and method of shipment for both incoming and outgoing materials and products.
  383. transaction channel
    A distribution network that deals with change of ownership of goods and services including the activities of negotiation, selling, and contracting.
  384. transit inventory
    Inventory in transit between manufacturing and stocking locations.
  385. transit time
    A standard allowance that is assumed on any given order for the movement of items from one operation to the next.
  386. transportation
    The function of planning, scheduling, and controlling activities related to mode, vendor, and movement of inventories into an out of an organization.
  387. transportation inventory
    Inventory that is in transit between locations.
  388. trend
    General upward or downward movement of a variable over time.
  389. truckload carriers
    Carriers that deliver/charge only for full truckload shipments.
  390. two-bin inventory system
    A type of fixed-order system in which inventory is carried in two bins. A replenishment quantity is ordered when the first bin (working) is empty.
  391. two-card kanban system
    A kanban system where a move card and production card are employed. The move card authorizes the movement of a specific number of parts from a source to a point of use. The move card is attached to the standard container of parts during movement to the point of use of the parts. The production card authorizes the production of a given number of parts for use or replenishment.
  392. U-lines
    Production lives shaped like the letter "U". The shape allows workers to easily perform several nonsequential tasks without mush walk time.
  393. uniform plant loading
    In lean, the distribution of work between work stations so that the time required for each station to complete all tasks is as close to equal as possible.
  394. unit cost
    Total labor, material, and overhead cost for one unit of production.
  395. unit loads
    A unit to be transported that consists of several items arranged so that package can be moved as a single unit.
  396. unit of measure
    The unit in which the quantity of an item is managed.
  397. unitization
    In warehousing, the consolidation of several units into larger units for fewer handling.
  398. upstream
    Used as a relative reference within a firm or supply chain to indicate moving in the direction of the raw material supplier.
  399. utilization
    A measure (usually expressed as a percentage) of how intensively a resource is being used to produce a good or service. Traditionally, utilization is the ratio of direct time charged (run time plus setup time) to clock time available. Utilization is a percentage between 0 percent and 100 percent that is equal to 100 percent minus the percentage of time lost due to the unavailability of machines, tools, workers, and so forth.
  400. value added
    In accounting, the addition of direct labor, direct material, and allocated overhead assigned at an operation. It is the cost roll-up as a part goes through a manufacturing process to finished inventory.
  401. value analysis
    The systematic use of techniques that identify a required function, establish a value for that function, and finally provide that function at the lowest overall cost. This approach focuses on the functions of an item rather than the methods of producing the present product design.
  402. value chain analysis
    An examination of all links a company uses to produce an deliver its products and services starting from the origination point and continuing through deliver to the final customer.
  403. value stream
    The process of creating, producing, and delivering a good or service to the market.
  404. value stream mapping
    Drawing the current production process/flow and then attempting to draw the most effective production process/flow.
  405. variable cost
    An operating cost that varies directly with a change of one unit in the production volume.
  406. variance
    The difference between the expected (budgeted or planned) value and the actual.
  407. velocity
    The rate of change of an item with respect to time.
  408. vendor-managed inventory (VMI)
    A means of optimizing supply chain performance in which the supplier has access to the customer's inventory data and is responsible for maintaining the inventory level required by the customer.
  409. visual review system
    A simple inventory control system where the inventory reordering is based on actually looking at the amount of inventory on hand. Usually used for low-value items, such as nuts and bolts.
  410. voice of the customer (VOC)
    Actual customer descriptions in words for the functions and features customers desire for goods and services.
  411. wait time
    The time a job remains at a work center after an operation is completed until it is moved to the next operation. It is often expressed as a part of move time.
  412. wall-to-wall inventory
    An inventory management technique in which material enters a plant and is processed through the plant into finished goods without ever having entered a formal stock area.
  413. warehousing
    The activities related to receiving, storing, and shipping materials to and from production or distribution locations.
  414. waste
    Any activity that does not add value to the good or service in the eyes of the customer.
  415. wave picking
    A method of selecting and sequencing picking lists to minimize the waiting time of the delivered material. Shipping orders may be picked in waves combined by common carrier or destination, and manufacturing orders in waves related to work centers.
  416. waybill
    A document containing a list of goods with shipping instructions related to a shipment.
  417. ways
    Paths over which a transportation company moves cargo, including right-of-way, roadbed, and railroad tracks. Ways may be publicly or privately owned.
  418. what-if-analysis
    The process of evaluating alternate strategies by answering the consequences of changes to forecasts, manufacturing plans, inventory levels, and so forth.
  419. where-used list
    A listing of every parent item that calls for a given component, and the respective quantity required, from a bill-of-material file.
  420. work cell
    Dissimilar machines grouped together into a production unit to produce a family of parts having similar routings.
  421. work center
    A specific production area, consisting of one or more people an/or machines with similar capabilities, that can be considered as one unit for purposes of capacity requirements planning and detailed scheduling.
  422. work in process (WIP)
    A good or goods in various stages of completion throughout the plant, including all material from raw material that has been released for initial processing up to completely process material awaiting final inspection and acceptance as finished goods inventory. Many accounting systems also include the value of semifinished stock and components in this category.
  423. work order
    An order to the machine shop for tool manufacture or equipment maintenance; not to be confused with a manufacturing order.
  424. yield
    The amount of good or acceptable material available after completion of a process.
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BSCM Vocabulary
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