A-I.txt

The classification of a group of items in decreasing order of annual dollar volume (price multiplied by projected volume) or other criteria. The underlying principle states that effort and money can be saved through applying looser controls to the low-dollar items than will be applied to high-dollar items; is applicable to inventories, purchasing, sales, and so on.

An inventory control approach based on the ABC classification.

Demand in any period that is outside the limits established by management policy; may come from a new customer or from existing customers whose own demand is increasing or decreasing. See: outlier.

A manager who has direct responsibility for a customer's interest.

Certification by a recognized body of the facilities, capability, objectivity, competence, and integrity of an agency, service, operational group, or individual to provide the specific service or operation needed.

In e-commerce, a site that records a visitor's behavior, uses artificial intelligence software to "learn" this behavior, and chooses what to present to the visitor based on this learning.

Techniques that deal with analysis and planning of logistics and manufacturing over the short-, intermediate-, and long-term time periods and describe 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. Acronym: APS.

Synonym: advanced planning and scheduling. Acronym: APS.

Sponsored promotions that are nonpersonal in nature.

A sworn written statement.

A process to develop tactical plans to support an organization's business plan. Usually includes the development, analysis, and maintenance of plans for total sales, total production, targeted inventory, and targeted customer backlog for families of products. See: production planning, sales and operations planning, sales plan.

The ability to successfully manufacture and market a broad range of low-cost, high-quality products and services with short lead times and varying volumes that provide enhanced value to customers through customization; merges the four distinctive competencies of cost, quality, dependability, and flexibility.

Automated guided vehicle system.

A prescribed set of well-defined rules or processes for solving a problem in a finite number of steps, e.g., the full statement of the arithmetic procedure for calculating the reorder point.

Standard seven-bit character code used by computer manufacturers to represent 128 characters for information interchange among data processing systems, communications systems, and other information system equipment. An eighth bit is added as a parity bit to check a string of characters for correct transmission. Acronym: ASCII.

Synonym: physical inventory.

A negotiated agreement with a supplier for one year that sets pricing, helps ensure a continuous supply of material, and provides the supplier with estimated future requirements.

A not-for-profit educational organization founded in 1957 as the American Production and Inventory Control Society. It consists of 60,000 members in the production/operations, materials, and integrated resource management areas.

A computer program or set of programs designed for a specific application, e.g., inventory control, MRP.

A computer program or set of programs designed to assist in the performance of a specific task, such as word processing, accounting, or inventory management. See: application system.

A set of programs of specific instructions for processing activities needed to compute specific tasks for computer users, as opposed to operating systems that control the computer's internal operations. Examples are payroll, spreadsheets, and word processing programs. See: application software.

Advanced planning and scheduling, advanced planning system.

Synonym: mean.

Computer programs that can learn and reason in a manner similar to humans. A problem is defined in terms of states and operators to generate a search space that is examined for the best solution. Acronym: AI.

Automated storage/retrieval system.

American Standard Code for Information Interchange.

Available-to-promise.

An objective comparison of actions to policies and plans.

Any device such as a bar-code reader or optical character reader that mechanizes the entry of information into an information system.

A transportation network that automatically routes one or more material handling devices, such as carts or pallet trucks, and positions them at predetermined destinations without operator intervention. Acronym:AGVS.

A high-density rack inventory storage system with vehicles automatically loading and unloading the racks. Acronym: AS/RS.

The substitution of machine work for human physical and mental work, or the use of machines for work not otherwise able to be accomplished, entailing a less continuous interaction with humans than previous equipment used for similar tasks.

Synonym: capacity available

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; normally calculated for each period in which an MPS receipt is scheduled. In the first period, includes on-hand inventory less customer orders that are due and overdue. Acronym: ATP. See: cumulative available-to-promise.

Business-to-business commerce.

Business-to-consumer sales.

In information systems, the term for the primary, high-speed connection among large computer centers. These large computer centers are then linked to other computers.

A method of inventory bookkeeping where the book (computer) inventory of components is automatically reduced by the computer after completion of activity on the component's upper-level parent item based on what should have been used as specified on the bill of material and allocation records. This approach has the disadvantage of a built-in differential between the book record and what is physically in stock.

The process of a transportation vehicle returning from the original destination point to the point of origin.

A list of financial and operational measurements used to evaluate organizational or supply chain performance. Dimensions include customer perspective, business process perspective, financial perspective, and innovation and learning perspectives. It formally connects overall objectives, strategies, and measurements.

A set of measurements (or metrics) that is used to establish goals for improvements in processes, functions, products, and so on. These measures are often derived from other firms that display best-in-class achievement.

The process of measuring the company's products, services, costs, and practices. Two types exist--competitive, a comparison against your industry best, and process, a comparison of a process to the best in class. See: competitive benchmarking, process benchmarking.

In benchmarking, the measurement or performance standard by which similar items are evaluated.

An organization, often from another industry, recognized for excellence in a specific process area. See: process benchmarking.

A term used to describe the pilot evaluation of a good or service, i.e., "the second evaluation."

A comparison of supplier quotes for a product based on price, quality, leadtime, delivery performance, and other criteria and, based on that comparison, selecting a supplier.

A carrier's contract and receipt for goods the carrier agrees to transport from one place to another and to deliver to a designated person. In case of loss, damage, or delay, it is the basis for filing freight claims.

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. 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. Acronym: BOM.

In six-sigma, team leader for process improvement. Responsibilities include defining, measuring, and controlling the improvement process.

A long-term commitment to a supplier for material against which short-term releases will be generated to satisfy requirements. Often cover only one item with predetermined delivery dates.

Bill of material.

The tendency of some consumers to stay with a preferred product in spite of a competitor's advantages.

The degree to which customers recognize a particular brand identity and associate it with a particular product line relative to other available brands.

The use of a name, term, symbol, or design, or a combination of these, to identify a product.

Software used on the Web to retrieve and display documents on-screen, connect to other sites using hypertext links, display images, and play audio files.

A time period, usually a week.

An MRP, DRP, or other time-phased system in which all time-phased data are accumulated into time periods.

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, time or material and support throughput and/or due date performance. Can be maintained at the constraint, convergent points (with a constraint part), divergent points, and shipping points.

Synonym: safety stock.

An extreme change in the supply position upstream in a supply chain generated by a small change in demand downstream in the supply chain. This is caused by the serial nature of communicating orders up the chain with the inherent transportation delays of moving product down the chain.

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. 2) A document consisting of the business details (organization, strategy, and financing tactics) prepared by an entrepreneur to plan for a new business.

The process of constructing the business plan. See: business plan.

Business being 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. Acronym: B2B.

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. Acronym: B2C.

An individual whose functions may include supplier selection, negotiation, order placement, supplier follow-up, measurement and control of supplier performance, value analysis, and evaluation of new materials and processes.

The way individuals or organizations behave in a purchasing situation

Computer-aided design.

The integration of computer-aided design and computer-aided manufacturing to achieve automation from design through manufacturing.

Computer-aided engineering.

The process of committing orders against available capacity as well as inventory. Capable-to-promise is used to determine when a new or unscheduled customer order can be delivered. 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 times 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. Acronym: CTP.

1) The capability of a system to perform its expected function. 2) Required mental ability to enter into a contract. 3) The capability of a worker, machine, work center, plant, or organization to produce output per time period. See: capacity available.

The capability of a system or resource to produce a quantity of output in a particular time period. Synonym: available capacity. See: capacity.

A rough-cut capacity planning method that takes into account any shifts in product mix. Bill of material and routing information are required with direct labor-hour or machine-hour data available for each operation.

A purchasing practice whereby a company commits to a supplier for a given amount of its capacity per unit of time. Subsequently, schedules for individual items are given to the supplier in quantities to match the committed level of capacity.

The function of establishing, measuring, and adjusting limits or levels of capacity. Refers to the process of determining in detail the amount of labor and machine resources required to accomplish the tasks of production. Acronym: CRP.

The combination of permanent short-term debt, long-term debt, preferred stock, and common equity used to finance a firm.

1) In retailing, the length of time between the sale of products and the cash payments for a company's resources. 2) In manufacturing, the length of time from the purchase of raw materials to the collection of accounts receivable from customers for the sale of products or services.

A method of selecting and evaluating suppliers that considers input from many departments and functions within the buyer's organization and systematically categorizes that input. Engineering, production, quality assurance, and other functional areas evaluate all suppliers for critical factors within their scope of responsibility.

The electronic processing unit of a computer, where mathematical calculations are performed. Acronym: CPU.

The organization of the dispatching function into one central location. Often involves the use of data collection devices for communication between functions and departments.

A supplier's certification that the supplies or services in question meet specified requirements.

A status awarded to a supplier who consistently meets predetermined quality, cost, delivery, financial, and count objectives. Incoming inspection may not be required.

The sequence of customers who in turn consume the output of each other, forming a chain.

Any series of firms or individuals that participates in the flow of goods and services from the raw material supplier and producer to the final user or consumer. See: distribution channel.

A production planning method that maintains a stable inventory level while varying production to meet demand. Synonym: chase strategy.

Synonym: chase production method.

The process of customers changing their buying preferences because they find better and/or cheaper products and services elsewhere.

In information systems, a software program that is used to contact and obtain data from a server program on another computer.

A distributed computing system in which work is assigned to the computer best able to perform it from among a network of computers.

A planning and control system that monitors system progress toward the plan and has an internal control and replanning capability.

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.

The evolution of a supply chain from intraorganizational management to interorganizational management.

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. Acronym: CPFR.

Synonym: supplier partnership.

An item that is traded in commerce. The term usually implies an undifferentiated product competing primarily on price and availability.

Grouping like parts or materials under one buyer's control for the procurement of all requirements to support production.

The purchasing plan for a family of items. This would include the plan to manage the supplier base and solve problems.

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.

A system of values, beliefs, and behaviors inherent in a company.

The advantage a company has over its rivals in attracting customers and defending against competitors.

Comparing a product or service against that of competitors. See: benchmarking, process benchmarking.

Synonym: lead-time offset.

The use of computers in interactive engineering drawing and storage of designs. Programs complete the layout, geometric transformations, projections, rotations, magnifications, and interval (cross-section views of a part and its relationship with other parts. Acronym: CAD.

The process of generating and testing engineering specifications on a computer workstation. Acronym: CAE.

Synonym: participative design/engineering.

A purchase order issued to a supplier, listing the goods or services and terms of an order placed orally or otherwise before the usual purchase document.

The ability to communicate effectively with supply chain partners to facilitate interorganization synchronization.

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.

Packages and lots that move from suppliers to a carrier terminal and are sorted and then combined with similar shipments from other suppliers for travel to their final destination.

Any element or factor that prevents a system from achieving a higher level of performance with respect to its goal. Can be physical, such as a machine center or lack of material, or managerial, such as a policy or procedure.

Synonym: theory of constraints.

The practice of managing resources and organizations in accordance with theory of constraints (TOC) principles. See: theory of constraints.

A large box in which commodities to be shipped are placed.

The characteristics of the product that make it transportable with ease of handling and stowability.

A never-ending effort to expose and eliminate root causes of problems; small-step improvement as opposed to big-step improvement. Acronym: CPI. See: kaizen.

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. See: vendor-managed inventory.

An agreement between two or more competent persons or companies to perform or not to perform specific acts or services or to deliver merchandise.

Managing all aspects of a contract to guarantee that the contractor fulfills his or her obligations.

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.

Situation in which an investment by one stakeholder may benefit others in the supply chain.

A graphic comparison of process performance data with predetermined computed control limits. Primary use is to detect assignable causes of variation in a process as opposed to random variations.

Bundles of skills or knowledge sets that enable a firm to provide the greatest level of value to its customers in a way that is difficult for competitors to emulate and that provides for future growth. Embodied in the skills of workers and in the organization; developed through collective learning, communication, and commitment to work across levels and functions in the organization and with the customers and suppliers.

Unique capability that is central to a company's competitive strategy.

A cross-functional team of specialists formed to manage new product introduction. See: cross-functional team.

The set of important assumptions that members of the company share. It is a system of shared values about what is important and beliefs about how the company works. These common assumptions influence the ways the company operates.

The implementation of solutions resulting in the reduction or elimination of an identified problem.

The cost associated with providing poor-quality products or services. Synonym: cost of quality.

Synonym: cost of poor quality.

A variation of the weighted-point plan of supplier evaluation and selection. Obtained by dividing the bid price by the weighted scores determined by the weighted-point plan. This procedure determines the true costs by taking into account compensating factors.

Collaborative planning, forecasting, and replenishment.

Continuous process improvement.

Central processing unit.

Customer relationship management, customer relations management.

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. The items are carried from the incoming vehicle docking point to the outgoing vehicle docking point without being stored in inventory at the warehouse. This reduces inventory investment and storage space requirements.

Thread that weaves an entire organization and manufacturing process into one fabric in which each of the different parts serves and supports the whole.

A set of individuals from various departments assigned a specific task such as implementing new computer software. See: core team.

Material flow activity where materials are shipped to customers from a secondary shipping point rather than from a preferred shipping point.

Capacity requirements planning.

Customer service representative.

Capable-to-promise.

A calculation based on the available-to-promise (ATP) figure in the master schedule; can be done with or without look-ahead calculations. With look-ahead, ATP calculation equals the ATP from the previous period plus the MPS of the period minus the backlog of the period minus the sum of the differences between the backlogs and MPSs of all future periods until, but not to include, the period where point production exceeds the backlogs. Without look-ahead, procedure equals the ATP in the previous period plus the MPS minus the backlog in the period being considered. See: available-to-promise.

In marketing, the rate at which new customers are switching to an organization's brand.

A customer organization with which a company has formed a customer-supplier partnership.

Synonym: customer relationship management. Acronym: CRM.

A marketing philosophy based on putting the customer first. The collection and analysis of information designed for sales and marketing decision support (as contrated 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. Acronym: CRM.

1) The ability of a company to address the needs of and inquiries and requests from customers. 2) A measure of the delivery of a product to the customer at the time the customer specifies.

Personnel assigned to customer relations who answer customer questions and provide technical support. Acronym: CSR.

In marketing, a measurement (usually a percentage) of how many potential customers are attracted to a brand. It is a measurement of the recognition of the brand in the marketplace and the predisposition of the customer to buy the brand when presented with a choice of competing brands.

An inventory accuracy audit technique where inventory is counted on a cyclic schedule rather than once a year. Inventory count is 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 systems require the counting of a certain number of items every workday with each item counted at a prescribed frequency. The key purpose is to identify items in error, thus triggering research, identification, and elimination of the cause of the errors.

The act of compiling data for recording, analysis, or distribution.

The transmission of data over a distance.

A structure of relationships between data elements (or records) that can be expressed in a treelike structure. All of the subordinate data segments in a multilevel structure are dependent on the keys of the parent data segments. All of the relationships between records are one to many.

The process of studying data to search for previously unknown relationships. This knowlee is then applied to achieving specific business goals.

The movement by electronic means of data from one location to another. The data can take the form of voice, text, image, or others. The movement is accomplished by communication links between computers and a variety of input/output devices.

A repository of data that has been specially prepared to support decision-making applications.

A data processing file-management approach designed to establish the independence of computer programs from data files. Redundancy is minimized, and data elements can be added to, or deleted from, the file structure without necessitating changes to existing computer programs.

The software designed for organizing data and providing the mechanism for storing, maintaining, and retrieving those data on a physical medium (i.e., a database). Separates data from the application programs and people who use the data and permits many different views of the data. Acronym: DBMS.

A label on products with the date of production. In food industries, it is often an integral part of the lot number.

Database management system.

Drum-buffer-rope.

The return of an empty transportation container to its point of origin.

A network where there is no central computer or computers linked to all other computers in the group. Decentralized dispatching The organization of the dispatching function into individual departmental dispatchers.

A computer system designed to assist managers in selecting and evaluating courses of action by providing a logical, usually quantitative, analysis of the relevant factors. Acronym: DSS.

An amount of inventory kept between entities in a manufacturing or distribution network to create independence between processes or entities. The objective is to disconnect the rate of use from the rate of supply of the item. See: buffer.

A qualitative forecasting technique where the opinions of experts are combined in a series of iterations. The results of each iteration are used to develop the next, so that convergence of the experts' opinions is obtained.

A need for a particular product or component. Could come from any number of sources, e.g., customer order or forecast, an interplant requirement, or a request from a branch warehouse for a service part or for manufacturing another product.

A supply chain inventory management approach that concentrates on demand pull rather than supplier push inventory models.

1) The function of recognizing all demands for goods and services to support the marketplace. It involves prioritizing demand when supply is lacking and can facilitate 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.

The triggering of material movement to a work center only when that work center is ready to begin the next job. It in effect eliminates the queue from in front of a work center, but it can cause a queue at the end of a previous work center.

That point in time inside of which the forecast is no longer included in total demand and projected available inventory calculations; inside this point, only customer orders are considered. Beyond this point, total demand is a combination of actual orders and forecasts, depending on the forecast consumption technique chosen. Acronym: DTF.

Synonym: 14 Points. 

In marketing, dividing potential markets by characteristics of potential customers, such as age, gender, income, and education.

The characteristics of a specific population, such as a set of potential customers.

The carrier charges and fees applied when rail freight cars and ships are retained beyond a specified loading or unloading time.

A product development approach that involves the manufacturing function in the initial stages of product design to ensure ease of manufacturing and assembly. Acronym: DFMA.

Design for manufacture and assembly.

Labor that is specifically applied to the good being manufactured or used in the performance of the service.

Communicating directly with consumers in an effort to elicit a response or a transaction.

Material that becomes a part of the final product in measurable quantities.

The process of eliminating an intermediate stage or echelon in a supply chain. Total supply chain operating expense is reduced, total supply chain inventory is reduced, total cycle time is reduced, and profits increase among the remaining echelons. See: echelon.

Computer systems in multiple locations throughout an organization, working in a cooperative fashion, with the system at each location primarily serving the needs of that location but also able to receive and supply information from other systems within a network.

The activities associated with the movement of material, usually finished goods or service parts, from the manufacturer to the customer. These activities encompass the functions of transportation, warehousing, inventory control, material handling, order administration, site and location analysis, industrial packaging, data processing, and the communications network necessary for effective management. It includes all activities related to physical distribution, as well as the return of goods to the manufacturer. In many cases, this movement is made through one or more levels of field warehouses.

A warehouse with finished goods and/or service items.

The distribution route, from raw materials through consumption, along which products travel. See: channels of distribution.

The planned channels of inventory disbursement from one or more sources to field warehouses and ultimately to the customer. There may be one or more levels in the disbursement system.

The planning activities associated with transportation, warehousing, inventory levels, materials handling, order administration, site and location planning, industrial packaging, data processing, and communications networks to support distribution.

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. Acronym: DRP.

The extension of distribution requirements planning into the planning of the key resources contained in a distribution system: warehouse space, workforce, money, trucks, freight cars, etc. Acronym: DRP II.

• A group of interrelated facilities (manufacturing and one or more levels of warehousing) linking the production, storage, and consumption activities for spare parts and finished goods inventory. See: pipeline stock.
• `
• Distributor
• A business that does not manufacture its own products but purchases and resells these products. Such a business usually maintains a finished goods inventory.

Domain name service.

A service that records and tracks all Internet addresses. Acronym: DNS.

A relative reference within a firm or supply chain that indicates moving in the direction of the end customer.

Distribution requirements planning.

Distribution resource planning.

In the theory of constraints, the generalized process used to manage resources to maximize throughput. Acronym: DBR.

Decision support system.

Demand time fence.

Electronic commerce.

Electronic bill presentation and payment.

A level of supply chain nodes. See: disintermediation.

An index of total business activities at the regional, national, and global levels.

Electronic data interchange.

A set of United Nations rules for electronic data interchange. These are international guidelines and standards for the electronic exchange of data regarding trade. Acronym: EDIFACT.

EDI for administration, commerce, and transport.

A measurement (usually expressed as a percentage) of the actual output compared to the standard output expected. It measures how well something is performing relative to existing standards.

1) A grocery industry-based, demand-driven replenishment system that links suppliers to develop a large flow-through distribution network. Accurate, instantaneous data are essential to this concept. 2) A management approach that streamlines the supply chain by improving its effectiveness in providing customer service and reducing costs through innovation and technology.

Electronic funds transfer.

The ratio of the percentage change in quantity demanded (supplied) to the percentage change in price.

A system that connects the bill issuer, bill payer, and the payer's bank to facilitate electronic payment. Payment is usually by credit card. Acronym: eBPP.

The use of computer and telecommunication technologies to conduct business via electronic transfer of data and documents. Abbreviation: e-commerce.

The paperless (electronic) exchange of trading documents, such as purchase orders, shipment authorizations, advanced shipment notices, and invoices, using standardized document formats. Acronym: EDI.

A computerized system that processes financial transactions and information about these transactions or performs the exchange of value between two parties. Acronym: EFT.

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. Acronym: ERP.

Enterprise resources planning.

A for-hire carrier that is free from economic regulation.

A type of artificial intelligence computer system that mimics human experts by using rules and heuristics rather than deterministic algorithms.

A type of weighted moving average forecasting technique in which past observations are geometrically discounted according to their age.

The notion that supply chain partners form a larger entity.

A language that 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, tags in this language give instructions to a Web browser about the category of information. Acronym: XML.

A person or organization that receives a good, a service, or information but is not part of the organization supplying it.

A forecast method on a correlated leading indicator, such as estimating furniture sales based on housing starts. Tend to be more useful for large aggregations, such as total company sales, than for individual product sales.

A purchase order that groups families of similar parts together to obtain pricing advantages and a continuous supply of material.

An analysis designed to establish the practicality and cost justification of a given project and, if it appears to be advisable to do so, to determine the direction of subsequent project efforts.

The common practice in TQM to ask "why" five times when confronted with a problem. By the time the answer to the fifth "why" is found, the ultimate cause of the problem is identified. See: root cause analysis.

A form of independent demand management model in which an order is placed every n time units. The order quantity is variable and essentially replaces the items consumed during the current time period. In the simplest model, the order quantity will be M (maximum inventory desired at any time) - x (quantity on hand at the time the order is placed). The quantity M must be large enough to cover the maximum expected demand during the lead time plus a review interval. The order quantity model becomes more complicated whenever the replenishment lead time exceeds the review interval, because outstanding orders then have to be factored into the equation.

1) The ability of a manufacturing system to respond quickly, in terms of range and time, to external or internal changes. 2) The ability of a supply chain to mitigate, or neutralize, risks, such as risk of demand forecast variability and supply continuity variability.

1) The amount of work-in-process inventory between two manufacturing operations, especially in repetitive manufacturing. 2) In supply chains, the time necessary for items such as documents and checks to go from one supply chain partner to another. 3) In the critical path method of project management, the amount of time that an activity's early start or early finish time can be delayed without delaying the completion time of the entire project.

Free on board.

A set of people who are interviewed together for the purpose of collecting marketing data.

A set of marketing tools to direct the business offering to the customer; product, price, place, and promotion.

The terms of sale that identify where title passes to the buyer. Acronym: FOB.

An area within a country that is treated as foreign territory by the U.S. Customs Service. Goods can be landed, stored, and processed within the area without incurring any import duties or domestic taxes. Acronym: FTZ.

Free trade zone.

An organizational structure based on functional specialization, such as sales, engineering, manufacturing, finance, and accounting.

Contracts for the sale and delivery of commodities at a future time, made with the intention that no commodity be delivered or received immediately.

Generally accepted manufacturing practices. A group of practices and principles, independent of any one set of techniques, that defines how a manufacturing company should be managed. Included are such elements as the need for data accuracy, frequent communication between marketing and manufacturing, top management control of the production planning process, and systems capable of validly translating high-level plans into detailed schedules. Acronym: GAMP.

The use of one marketing strategy in all countries in which a company operates, selling a single product worldwide.

A strategy that focuses on improving worldwide performance through the sales and marketing of common goods and services with minimum product variation by country. Its competitive advantage grows through selecting the best locations for operations in other countries. See: multinational strategy.

The interdependence of economies globally that results from the growing volume and variety of international transactions in goods, services, and capital and also from the spread of new technology.

1) An action taken in an attempt to shield a company from an uncertain event such as a strike, price increase, or currency reevaluation. 2) In master scheduling, a scheduled quantity to protect against uncertainty in demand or supply. 3) In purchasing, any purchase or sale transaction having as its purpose the elimination of the negative aspects of price fluctuations.

A form of problem solving in which the results or rules have been determined by experience or intuition instead of by optimization. Can be used in such areas as forecasting; lot sizing; or determining production, staff, or inventory levels.

A method of constructing a database that requires that related record types be linked in tree-like structures, where no child record can have more than one physical parent record.

A situation in which only one trading partner is EDI-enabled while the other continues to use paper and fax. Usually the EDI-enabled partner would have electronic documents converted to fax.

A system of relating information without using menus or hierarchies.

Links contained within text connecting to other Web sites or other pages on the current site.

A language used to create Web pages that permits the user to create text, hypertext links, and multimedia elements within the page. Not a programming language, but a way to format text. Acronym: HTML.

A protocol that tells computers how to communicate with each other. Acronym: HTTP.

Material moving between two or more locations, usually separated geographically; for example, finished goods being shipped from a plant to a distribution center.

Interrelated computer hardware and software along with people and processes designed for the collection, processing, and dissemination of information for planning, decision making, and control.

A model of how an organization operates regarding information. Considers four factors: (1) organizational functions, (2) communication of coordination requirements, (3) data modeling needs, and (4) management and control structures.

The technology of computers, telecommunications, and other devices that integrate data, equipment, personnel, and problem-solving methods in planning and controlling business activities. Provides the means for collecting, storing, encoding, processing, analyzing, transmitting, receiving, and printing text, audio, or video information.

All functions concerned with the movement of materials and finished goods on a global scale.

Group of cooperating institutes from 140 countries working to develop and publish international standards. Acts as a bridge between public and private sectors. Acronym: ISO.

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.

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.

1) Those stocks or items used to support production (raw materials and workin-process items), supporting activities (maintenance, repair, and operating supplies), and customer service (finished goods and spare parts). 2) In the theory of constraints, those items purchased for resale, including finished goods, work in process, and raw materials.

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. See: safety stock.

The activities and techniques of maintaining the desired levels of items, whether raw materials, work in process, or finished products.

The time period needed to produce and sell a product, measured from procurement of raw materials to the sale of the product.

The length of time between two consecutive replenishment shipments.

The branch of business management concerned with planning and controlling inventories.

Inventory models for the replenishment of inventory. Independent demand models include but are not limited to fixed reorder cycle, fixed reorder quantity, optional replenishment, and hybrid models; dependent demand models include material requirements planning, kanban, and drum bufferrope.

The activities and techniques of determining the desired levels of items, whether raw materials, work in process, or finished products including order quantities and safety stock levels.

Losses of inventory resulting from scrap, deterioration, pilferage, etc.

The number of times that an inventory cycles during the year. Frequently computed by dividing the average inventory level into the annual cost of sales. See: inventory velocity.

The speed with which inventory passes through an organization or supply chain at a given point in time as measured by inventory turnover. See: inventory turnover.

International Organization for Standardization.

A set of international standards on quality management and quality assurance developed to help companies effectively document the quality system elements to be implemented to maintain an efficient quality system. Are not specific to any particular industry, product, or service.

A file containing all item master records for a product, product line, plant, or company.