Supply chain Terminology list

council of supply chain management professionals’ glossary and supply chain visions logistics terms and glossary
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NathanBenett,Germany,Researcher
Published Date:11-07-2017
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SUPPLY CHAIN and LOGISTICS TERMS and GLOSSARY Updated February, 2010 A A3 Method: The A3 system is a means of describing a business process in a compact form. It was originally created by the Toyota Motor Corporation and was named for the paper size on which it was printed: A3 (11” x 17”). Toyota used the A3 methodology to help develop its famed Toyota Production System(TPS). Abandonment: (1) The decision ofa carrier to give up or to discontinue service over a route. Railroads must seek ICC permission to abandon routes. (2) As in the phrase "call abandonment". This refers to people who, being placed on hold in an incoming call, elect to hang up ("abandon") the call. Call centers monitor closely the "abandonment rate" as a measure oftheir inefficiency. ABB:See: Activity Based Budgeting ABC: See:Activity Based Costing ABC Classification: A method ofclassifying inventory items relative to their impact on total control. ABC typically uses movement and cost data to calculate the value ofstock usageover the prior period, and uses the result as an element in ranking items under an 80/20 Pareto rule for cycle counting purposes. The group is divided into classes called A, B, and C (and sometimes D) with The A group represents the highest value with 10 to 20% by number ofitems. The B, C and D (ifused) groups are each lower values but typically higher populations. Items with higher usage value are (the 20%) are counted more frequently. Specific bars to be used in setting ABC levels will vary by organization as they will impact the financial control applied to inventory and thelevel ofeffort spent counting. See: Cycle Counting ABC Costing: See: Activity Based Costing ABC Frequency of Access:Location method where thedetermination ofa product’s location within the warehouse, ordistribution center, is based on 1)product’s ABC Classification and 2) thenumber oftimes or rate ofwhich theproduct is accessed. ABC Inventory Control: A method ofinventory control which divides items into categories based on valueofusage, something like aPareto division where the items which constitutethe highest dollar value are tracked more closely than thosewith lowervalue movement. In this method an itemwith high volumes ofmovement, but low cost, such as a small cheap fastener, would likely be counted less frequently than a slower mover which has a very high cost. Items are typically divided by a company defined set ofvalues into “A”,“B” and “ C”groups, and sometimes even a“D” group. The count frequencies are then applied to thegroups. For example“ A” class items may be counted weekly,“B” monthly,“C” quarterly, etc. as a part ofa cycle counting program. ABC Model: In cost management, a representation of resource costs during a time period that are consumed through activities and traced to products, services, and customers or to any otherobject that creates a demand for the activity to be performed. ABC System: In cost management, a system that maintains financial and operating data on an organization’s resources, activities, drivers, objects and measures. ABC models are created and maintained within this system. ABM: See:Activity Based Management Abnormal Demand: Demand for a product which is either greater or lower than expected by a given percentage which is determined by the organization. When observed, it should be determined whether it may be a one-time spike, or if the effect is part of a trend which should be considered during future forecasts. ABI: See:Automated Broker Interface ABP: See:Activity Based Planning Absorption Costing: A cost accounting approach which captures overhead and other indirect costs as separate from unit costs for a given period, and then applies (absorbs) those costs into unit costs at the period end based on various factors such as movement and COGS elements. Please note: The International Warehouse Logistics Association (IWLA) does not take responsibility for the content of these definitions and does not endorse these as official definitions. Definitions compiled by: Supply Chain Visions www.scvisions.com Bellevue, Washington Page 1 of 136SUPPLY CHAIN and LOGISTICS TERMS and GLOSSARY Updated February, 2010 ACAT: See: Acquisition Categories Acceptable Quality Level (AQL): In quality assessment, acceptable quality level, also known as assured quality level, describes the maximum number ofdefects acceptable during the randomsampling ofan inspection. Acceptable Sampling Plan: A quality management procedure which defines the sample sizes and acceptable defect levels for validating quality of products. Acceptance Number: See: Acceptable Quality Level Acceptance Sampling:A statistical quality control method which tests samples ofproducts at defined points as opposed to testing each product. Accessibility: The ability ofa carrier to provide service between an origin and a destination. Accessory: A feature which can optionally be added to a finished good at the discretion of the customer. An example would be the addition of a special trimfeature to an automobile. Accessorial Charges:A carrier’s charge for accessorial services such as loading, unloading, pickup, and delivery. Also see: Upcharges. Accessorial Fee: See: Accessorial charges Accountability: The act of making a group or individual responsible for certain activities or outcomes. For example, managers and executives are accountable for business performance even though they may not actually performthe work. Accounts Payable (A/P): 1) a financial term referring to the amount of transactions which have been accrued but not paid to a vendor. 2) An accounting function Accounts receivable (A/R): On a company's balance sheet, accounts receivable is the amount that customers oweto that company. Sometimes called trade receivables, they are classified as current assets assuming that they are due within oneyear. Accreditation: The process in which certification of competency, authority, or credibility is presented. An example of accreditation is the accreditation of testing laboratories and certification specialists that are permitted to issue official certificates of compliance with established standards. Accredited Standards Committee (ASC): A committee of the ANSI chartered in 1979 to develop uniform standards for the electronic interchange ofbusiness documents. The committee develops and maintains U.S. generic standards (X12) for Electronic Data Interchange. Accumulation bin: An area where itemto beused in assembly ofa product are staged prior to work being done. See: Staging Accuracy: A value, usually expressed as a percentage, which expresses the level of precision incurred during transactions. An example would be seen when comparing actual inventory levels to what was expected frombookkeeping records. ACD: See: Automated Call Distribution ACE: See:Automated Commercial Environment ACH: See:Automated Clearinghouse Acknowledgment: Typically this is a response, either electronic or as a physical document, which confirms the receipt ofan order from the supplier to the buyer. Acquisition Categories (ACAT): U.S. DoD ACAT 1 programs are Milestone Decision Authority Programs or programs designated ACAT 1 by the Milestone Decision Authority. Please note: The International Warehouse Logistics Association (IWLA) does not take responsibility for the content of these definitions and does not endorse these as official definitions. Definitions compiled by: Supply Chain Visions www.scvisions.com Bellevue, Washington Page 2 of 136SUPPLY CHAIN and LOGISTICS TERMS and GLOSSARY Updated February, 2010 Acquisition Cost: The net price plus other costs needed to purchase the item and get it to the point of use. These other costs can include: the item's purchasing costs (closing, research, accounting, commissions, legal fees), transportation, preparation and installation costs ACSI:See: American Customer Satisfaction Index Action Message: A system message usually created during MRP calculations to call attention to a current or potential problem and suggest corrective action. Action Plan: A specific method or process to achieve the results called for by one or more objectives. An action plan may be a simpler version of a project plan. Action Report: See:Action Message Activation: TOC recognizes that it is possible to produce without contributing to throughput. TOC defines production that contributes to throughput as utilization.Production that does not contribute to throughput is known as activation. Activation is not desired because it not only fails to increase throughput, but it also increases inventory and operating expense. This is consistent with the Just-In-Time (JIT) philosophy. Active Inventory: Materials held in a facility, which are intended to be consumed in manufacturing / assembly, or sold in a specified period Active Stock: Goods in active pick locations and ready for order filling. Activity: Work performed by people, equipment, technologies or facilities. Activities are usually described by the “action-verb-adjective-noun” grammar convention. Activities may occur in a linked sequence and activity-to-activity assignments may exist. Activity Analysis: The process of identifying and cataloging activities for detailed understanding and documentation of their characteristics. An activity analysis is accomplished by means ofinterviews, group sessions, questionnaires, observations, and reviews ofphysical records ofwork. Activity Based Budgeting (ABB): An approach to budgeting where a company uses an understanding of its activities and driver relationships to quantitatively estimate workload and resource requirements as part of an ongoing business plan. Budgets show the types, number of and cost of resources that activities are expected to consume based on forecasted workloads. The budget is part of an organization’s activity-based planning process and can beused in evaluating its success in setting and pursuing strategicgoals. Activity Based Costing (ABC): A methodology that measures the cost and performance of cost objects, activities and resources. Cost objects consume activities and activities consume resources. Resource costs are assigned to activities based on theiruse ofthose resources, and activity costs are reassigned to cost objects (outputs) based on the cost objects proportional use of those activities. Activity-based costing incorporates causal relationships between cost objects and activities and between activities and resources. Activity-Based Management (ABM): A discipline focusing on the management of activities within business processes as the route to continuously improve both the value received by customers and the profit earned in providing that value. ABM uses activity-based cost information and performance measurements to influence management action.See:Activity-Based Costing Activity Based Planning (ABP): Activity-based planning (ABP) is an ongoing process to determine activity and resource requirements (both financial and operational) based on the ongoing demand of products or services by specific customer needs. Resource requirements are compared to resources available and capacity issues are identified and managed. Activity-based budgeting (ABB) is based on the outputs of activity-based planning. Activity Dictionary: A listing and description of activities that provides a common/standard definition of activities across the organization. An activity dictionary can include information about an activity and/or its relationships, such as activity description, business process, function source, whether value-added, inputs, outputs, supplier, customer, output measures, cost drivers, attributes, tasks, and other information as desired to describe the activity. Activity Driver: The best single quantitative measure of the frequency and intensity of the demands placed on an activity by cost objects or other activities. It is used to assign activity costs to cost objects or to other activities. Activity Level: A description of types of activities dependent on the functional area. Product-related activity levels may include unit, batch, and product levels. Customer-related activity levels may include customer, market, channel, and project levels. Please note: The International Warehouse Logistics Association (IWLA) does not take responsibility for the content of these definitions and does not endorse these as official definitions. Definitions compiled by: Supply Chain Visions www.scvisions.com Bellevue, Washington Page 3 of 136SUPPLY CHAIN and LOGISTICS TERMS and GLOSSARY Updated February, 2010 Activity Network Diagram: An arrow diagramused in planning and managing processes and projects. Actual Cost System: A managerial accounting systemthat records and measures all cost elements at their actual acquisition value. Indirect costs are then applied as overhead using a cost allocation technique Actual Costs: The actual labor, material, and allocated overhead costs incurred in the acquisition or production ofa product. Actual Demand: The known demand for a specific product based on customer orders and production orders which are open. Once an order is shipped or production is completed, specific demand quantity will become usage. Actual demand should be netted against any forecast for the same period, meaning that as orders are received the are considered to be part ofan earlier forecast and forecasts should be considered as satisfied. Actual to Target Gap Analysis: See:Gap Analysis Actual to Theoretical Cycle Time: The ratio of the measured time required to produce a given output divided by the sum of the time required to produce a given output based on the rated efficiency ofthe machinery and laboroperations. Adaptive Smoothing: A special type ofexponential smoothing that takes the success ofprevious forecasts into account when setting a value of ALPHA for the next period. In this manner, periods that experienced high error wll cause ALPHA to be set high and, thus, adjust quickly. When error is low, AS assumes the technique is doing well and sets ALPHA at a low level. This makes ES much more responsive to changes in thelevel of the data and less reactive to noise. The advantageto adaptivesmoothing is that the decision ofwhat valueofALPHA to use in exponential smoothing is eliminated. A disadvantage to adaptive smoothing is that trend and seasonality are ignored ADR: See: Alternate Dispatch Resolution Advance Material Request: A request for materials which is created in advance offormal need dueto long lead times for components, etc. Advanced Planning and Scheduling (APS): Refers to a manufacturing management process by which raw materials and production capacity are optimally allocated to meet demand. APS is especially well-suited to environments where simplerplanning methods cannot adequately address complex trade-offs between competing priorities. Advanced Shipping Notice (ASN): Detailed shipment information transmitted to a customer or consignee in advance of delivery, designating the contents (individual products and quantities ofeach) and nature ofthe shipment. In EDI data standards it is referred to as an “856 transaction.” It may also include carrier and shipment specifics, including time ofshipment and expected time ofarrival. Also known as an assumed receipt. Aftermarket: A market for parts and accessories used in the repair or enhancement of a product. A secondary market created after the original market sales are finished. After-Sale Service: Services provided to the customer after products have been delivered. This can include repairs, maintenance and/or telephone support. Synonym: Field Service. Agency Tariff:A publication ofa rate bureau that contains rates for many carriers. Agent: An enterprise authorized to transact business for, or in thename of, another enterprise. Agile Manufacturing—Tools, techniques, and initiatives that enable a plant or company to thrive under conditions of unpredictable change. Agile manufacturing not only enables a plant to achieve rapid response to customer needs, but also includes the ability to quickly reconfigure operations— and strategic alliances—to respond rapidly to unforeseen shifts in the marketplace. In some instances, it also incorporates “ mass customization” concepts to satisfy unique customer requirements. In broad terms, it includes the ability to react quickly to technical or environmental surprises. Agglomeration: A net advantage gained by a common location with other companies. Aggregate Forecast: Forecasting of future demand for a family of products or for a single product across multiple dimensions of source - including planned production and customer orders. Please note: The International Warehouse Logistics Association (IWLA) does not take responsibility for the content of these definitions and does not endorse these as official definitions. Definitions compiled by: Supply Chain Visions www.scvisions.com Bellevue, Washington Page 4 of 136SUPPLY CHAIN and LOGISTICS TERMS and GLOSSARY Updated February, 2010 Aggregate Inventory: The total inventory available for any given product across multiplelocations and/or multiple stock-keeping units. Aggregate Inventory Management: A method ofmanaging inventory through the use oflevels set against overall inventory or class value. Aggregate Plan: A plan for theproduction process, 2 to 18 months in advance to give management an ideato ofwhat quantity ofmaterials and other resources are to be procured and when, so that the total cost ofoperations ofthe organization is kept to the minimumover that period. Aggregate Planning: An operational activity which compiles an aggregate plan for the production process. Aggregate Tender Rate: A reduced rate offered to a shipperwho tenders two or more class-rated shipments at one time and one place. Agility: The ability to rapidly and cost effectively adapt to market changes with no significant negative impact on quality or dependability. AGVS: See:Automated Guided Vehicle System. Air Cargo: Freight that is moved by air transportation. Air Cargo Containers: Containers designed to conformto the insideofan aircraft. There are many shapes and sizes ofcontainers. Air cargo containers fall into three categories: 1) air cargo pallets 2) lower deck containers 3) box type containers. Airport and Airway Trust Fund: A federal fund that collects passengerticket taxes and disburses those funds for airport facilities. Air Taxi:An exempt for-hire air carrier that will fly anywhere on demand: airtaxis are restricted to a maxi mumpayload and passenger capacity per plane. Air TransportAssociation of America: A U.S. airline industry association. Air Waybill (AWB): A bill oflading for air transport that serves as a receipt for the shipper, indicates that the carrier has accepted the goods listed, obligates the carrier to carry the consignment to the airport ofdestination according to specified conditions. AlaskanCarrier: A for-hire air carrier that operates within thestate ofAlaska. Alert: See:Action Message. Algorithm: A clearly specified mathematical process for computation; a set ofrules, which, iffollowed, give a prescribed result. All-Cargo Carrier: An air carrier that transports cargo only. Allocated Item: A feature of an inventory control and order management system which allows for quantities available in inventory to be associated with a customer or production orderso that the quantity cannot otherwise be used Allocation: 1)In cost accounting, a distribution of costs using calculations that may be unrelated to physical observations or direct or repeatable cause-and-effect relationships. Because of the arbitrary nature of allocations, costs based on cost causal assignment are viewed as more relevant for management decision-making. 2) In order management, allocation ofavailable inventory to customer and production orders. Allocation Costing: A method of allocating indirect / overhead costs to inventory items and costs of sales. See: Absorption Costing Alpha Release:A very early release ofa product to get preliminary feedback about the feature set and usability. Alternate Routing: In a production environment this is an optional process for manufacturing or assembly ofa product, which may be employed due to unavailability of a primary work center, or choice of non-standard components. May also refer to a transportation route which is different than what would normally betaken, perhaps due to weather. Alternate Dispute Resolution (ADR): Any ofa number of methods (such as mediation, arbitration, mock trials, etc) used to resolve disputes outside oflitigation. Please note: The International Warehouse Logistics Association (IWLA) does not take responsibility for the content of these definitions and does not endorse these as official definitions. Definitions compiled by: Supply Chain Visions www.scvisions.com Bellevue, Washington Page 5 of 136SUPPLY CHAIN and LOGISTICS TERMS and GLOSSARY Updated February, 2010 American Customer Satisfaction Index (ACSI): Released for the first time in October 1994, an economic indicator and cross industry measure of the satisfaction of U.S. household customers with the quality of the goods and services available to them—both those goods and services produced within the United States and those provided as imports from foreign firms that have substantial market shares or dollar sales. The ACSI is co- sponsored by the University ofMichigan Business School, ASQ and the CFI Group. American National Standards Institute (ANSI): A non-profit organization chartered to develop, maintain, and promulgate voluntary U.S. national standards in a number of areas, especially with regards to setting EDI standards. ANSI is the U.S. representative to the International Standards Organization (ISO). American Society for Quality (ASQ): A professional organization with more than 100,000 members which advances learning, quality improvement, and knowledge exchange to improve business results, and to create betterworkplaces and communities worldwide. American Society for Testing and Materials (ASTM): Not-for-profit organization that provides a forum for the development and publication of voluntary consensus standards for materials, products, systems and services. American Society for Training and Development (ASTD): A membership organization providing materials, education and support related to workplace learning and performance. American Society of TransportationandLogistics: A professional organization in the field oflogistics. American Standard Codefor Information Interchange (ASCII): ASCII format - simple text based datawith no formatting. The standard code for information exchange among dataprocessing systems. Uses a coded character set consisting of7-bit coded characters (8 bits including parity check). American Trucking Association, Inc.: A motor carrier industry association that is made up of subconferences representing various sectors of the motor carrier industry. American Waterway Operators: A domesticwater carrierindustry association representing bargeoperators on the inland waterways. AMC: The USAF Air Mobility Command's mission is to provide global air mobility. The command also plays a crucial role in providing humanitarian support at home and around the world. AMCAirmenactive duty, AirNational Guard, Air Force Reserve and Civil Reserve Air Fleet AMFC: Air Force Materiel Command conducts research, development, testing and evaluation, and provides the acquisition management services and logistics support necessary to keep Air Force weapon systems ready for war. The command develops, acquires and sustains the aerospacepower needed to defend theUnited States and its interests for today and tomorrow. Amtrak: The National Railroad Passenger Corporation, a federally created corporation that operates most of the United States’ intercity passenger rail service. AnimatedGIF: A file containing a series ofGIF (Graphics Interchange Format) images that are displayed in rapid sequence by some Web browsers, giving an animated effect. Also See: GIF. AMS: See: Automated Manifest System Analysis of Variance (ANOVA): A statistical term that refers to a collection of statistical models which test the means of several groups to determine ifthe means are equal. Andon: A manufacturing term referring to a signboard incorporating signal lights, audio alarms, and text or other displays installed at a workstation to notify management and other workers ofa quality or process problem. ANSI:See: American National Standards Institute. ANSI ASC X12: American National Standards Institute Accredited Standards Committee X12. The committee of ANSI that is charted with setting EDI standards. Please note: The International Warehouse Logistics Association (IWLA) does not take responsibility for the content of these definitions and does not endorse these as official definitions. Definitions compiled by: Supply Chain Visions www.scvisions.com Bellevue, Washington Page 6 of 136SUPPLY CHAIN and LOGISTICS TERMS and GLOSSARY Updated February, 2010 ANSI Standard: A published transaction set approved by ANSI. The standards are reviewed every six months. Anti-Deficiency Act Title 31, U.S. Code, Sec1341and1517: Prohibits making or authorizing an obligation in excess of the amount available; forbids obligation to pay money fromthe US Treasury in advance ofthe appropriation; requires agency to fix responsibility for violations ofthe Act. Anticipated Delay Report: A report, normally handwritten, which is created by the procurement and production areas to advise management regarding orders which are not expected to be completed on time. Anticipation Inventories: Extra stocks of inventory which are being held above known requirement is order to accommodate trends or promotions. May also be used to hedge against risk ofsupply problems. Anticipation Order: An order placed in advanceofthe availability ofa product for delivery at a future date. Anticipation orders are frequently used in the retail environment where suppliers are previewing new products at tradeshows and want to get a commitment fro mtheir retail customers prior to production ofseasonal items.. Any-Quantity Rate (AQ): The same rate applies to any sizeshipment tendered to a carrier; no discount rateis available for largeshipments. Anti-Dumping Duty: An additional import duty imposed in instances where imported goods are priced at less than the normal price charged in the exporter's domestic market and cause material injury to domestic industry in the importing country A/P: See: Accounts Payable Applicability Statement 2 (AS2): A specification for Electronic Data Interchange between businesses using the Internet's Web pageprotocol, the Hypertext Transfer Protocol (HTTP). The specification is an extension ofthe earlier version, Applicability Statement 1 (AS1). Both specifications were created by EDI over the Internet (EDIINT), a working group ofthe Internet Engineering Task Force (IETF) that develops secure and reliable business communications standards. Application Service Provider (ASP): A company that offers access over the Internet to application (examples of applications include word processors, database programs, Web browsers, development tools, communication programs) and related services that would otherwise have to be located in their own computers. Sometimes referred to as “apps-on-tap", ASP services are expected to become an important alternative, especially for smaller companies with low budgets for information technology. The purpose is to try to reduce a company's burden by installing, managing, and maintaining software. Application-to-Application: Thedirect interchangeofdata between computers, without re-keying. Approved Vendor List (AVL): List of the suppliers approved for doing business. The AVL is usually created by procurement or sourcing and engineering personnel using a variety of criteria such as technology, functional fit of the product, financial stability, and past performance of the supplier. APS: See: Advanced Planning and Scheduling AQ: See: Any quantity rate AQL:See: Acceptable Quality Level A/R: See: Accounts Receivable Army Corps of Engineers: A federal agency responsible for the construction and maintenance orwaterways. Arrival Notice: A notice from the delivering carrier to the Notify Party indicating the shipment's arrival date at a specific location (normally the destination). Arrow Diagram: A planning tool to diagram a sequence of events or activities (nodes) and the interconnectivity of such nodes. It is used for scheduling and especially for determining the critical path through nodes. Please note: The International Warehouse Logistics Association (IWLA) does not take responsibility for the content of these definitions and does not endorse these as official definitions. Definitions compiled by: Supply Chain Visions www.scvisions.com Bellevue, Washington Page 7 of 136SUPPLY CHAIN and LOGISTICS TERMS and GLOSSARY Updated February, 2010 Artificial Intelligence: Understanding and computerizing the human thought process. ASC: See:Accredited Standards Committee of ANSI. ASC X12: Accredited Standards Committee X12. A committee of ANSI chartered in 1979 to develop uniform standards for the electronic interchange ofbusiness documents. ASCII: See:American Standard Code for Information Interchange ASN: See:Advanced Shipping Notice. ASP: See: Application ServiceProvider ASQ:See: American Societyfor Quality AS/RS:See: Automated Storageand Retrieval System Association of American Railroads: A railroad industry association that represents thelarger U.S. railroads. ASTM: See: American Society for Testing and Materials ASTD: See: American Society for Training and Development AS2: See: ApplicabilityStatement 2 Assemble-To-Order: A strategy employed in production and light manufacturing environments where complete subassemblies and components are assembled into a finished product just prior to customer shipment. Synonym: Finish to Order. Also See: Make to Order, Make to Stock. Assembly: A collection ofcomponents which have been put together into a unit, or the activity involved with putting components togetherto forma unit Assembly Line: A manufacturing process where products are completed fromcomponents as a result ofa series ofcontinuous activities. Henry Ford is widely recognized as the father ofthe assembly line. Assignment: A distribution of costs using causal relationships. Because cost causal relationships are viewed as more relevant for management decision-making, assignment ofcosts is generally preferableto allocation techniques. (Synonymous with Tracing. Contrast with Allocation.) Assumed Receipt: The principle of assuming that the contents of a shipment are the same as those presented on a shipping or delivery note. Shipping and receiving personnel do not check the delivery quantity. This practice is used in conjunction with bar codes and an EDI-delivered ASN to eliminateinvoices and facilitate rapid receiving.. Assured Source of Supply: A guaranteed supply sourceusually designated by a contractual agreement. Also known as a certified supplier. Asynchronous Process: A situation where two related processes are started and run concurrently without waiting for the other to complete. Atomic: Refers to the lowest level of division for a process, product structure, network, etc. Atomic elements cannot typically be sub-divided. In a process this refers to a unique activity, in a product structure this would be a single part component, in a network this could represent a single warehouse or location. ATP: See: Available to Promise ATS: See: Available to Sell Attachment: A pieceofequipment which is typically sold as a optional separateunit and may be combined with the main product at the factory or in the field. Please note: The International Warehouse Logistics Association (IWLA) does not take responsibility for the content of these definitions and does not endorse these as official definitions. Definitions compiled by: Supply Chain Visions www.scvisions.com Bellevue, Washington Page 8 of 136SUPPLY CHAIN and LOGISTICS TERMS and GLOSSARY Updated February, 2010 Attributes: A label used to provide additional classification or information about a resource, activity, or cost object. Used for focusing attention and may be subjective. Examples are a characteristic, a score or grade ofproduct or activity, or groupings oftheseitems, and performance measures. Audit: The inspection and examination of a process or quality system to ensure compliance to requirements. An audit can apply to an entire organization or may be specific to a function, process or production step. Audit Trail: Manual or computerized tracing ofthe transactions affecting the contents or origin ofa record. Auditing: Determining the correct transportation charges due the carrier: auditing involves checking the accuracy of the freight bill for errors, correct rate, and weight. Auditability: A characteristic of modern information systems, gauged by the ease with which data can be substantiated by trading it to source documents and the extent to which auditors can rely on pre-verified and monitored control processes. Authentication: 1) The process of verifying the eligibility of a device, originator, or individual to access specific categories of information or to enter specific areas of a facility. This process involves matching machine-readable code with a predetermined list of authorized end users. 2) A practice of establishing the validity of a transmission, message, device, or originator, which was designed to provide protection against fraudulent transmissions. Authentication Key: A short string ofcharacters used to authenticate transactions between trading partners. Autodiscrimination: The functionality of a bar code reader to recognize the bar code symbology being scanned thus allowing a reader to read several different symbologies consecutively AutoID: An automated identification system. This includes technology such as bar coding and radio frequency tagging (RFID). Automated Broker Interface (ABI): The U.S. Customs program to automate the flow of customs-related information among customs brokers, importers, and carriers. Automated Call Distribution (ACD): A feature of large call center or “Customer Interaction Center” telephone switches that routes calls by rules such as next available employee, skill-set etc. Automated Clearinghouse (ACH): Automated Clearinghouse. A nationwide electronic payments system, which more than 15,000 financial institutions use, on behalf of 100,000 corporations and millions of consumer in the U.S. The funds transfer system of choice among businesses that make electronic payments to vendors, it is economical and can carry remittance information in standardized, computerprocessable data formats. Automated Commercial Environment (ACE): Update of outmoded Automated Commercial System (ACS). It is intended to provide automated information system to enable the collection, processing and analysis of commercial import and export data, allowing for moving goods through the ports faster and at lower cost, as well as detection ofterrorist threats. Automated Guided Vehicle System (AGVS): A system for material handling equipment which uses wired or wireless guidance to move materials around facilities based on systemcommands Automated Manifest System (AMS): A multi-modular cargo inventory control and release notification systemthrough which carriers submit their electronic cargo declaration 24 hours before loading. See: 24-hour Rule. Automated Storage / Retrieval System (AS/RS): An inventory storage system which uses un-manned vehicles to automatically perform stock put- away and picking actions. Automatic Relief: A An accounting method where bookkeeping is performed either as a result ofcompleted or pending activities. See: Backflushing AvailableInventory: Also called net inventory, this is thequantity ofstock which is availableto use after considering allocations, reservations, backorders, and quantities set aside to compensate for quality problems. Also known as net inventory. Synonyms: Available-to-Promise. Please note: The International Warehouse Logistics Association (IWLA) does not take responsibility for the content of these definitions and does not endorse these as official definitions. Definitions compiled by: Supply Chain Visions www.scvisions.com Bellevue, Washington Page 9 of 136SUPPLY CHAIN and LOGISTICS TERMS and GLOSSARY Updated February, 2010 Available-to-Promise (ATP): The quantity ofa product which is or will be available to promise to a customer based on their required shipment date. ATP is typically ‘time phased’ to allow for promising delivery at a future date based on anticipated purchase or production receipts. Available to Sell (ATS): Total quantity of goods committed to the pipeline for a ship to or selling location. This includes the current inventory at a location and any open purchase orders. Average Annual Production Materials Related A/P (Accounts Payable): The value of direct materials acquired in that year for which payment has not yet been made. Production-related materials are those items classified as material purchases and included in the Cost ofGoods Sold (COGS) as raw material purchases. Calculate using the 5-Point Annual Average. Average Cost per Unit: The average cost ofstock ofany given itembased on having incurred different costs for each time a receipt was processed. Usually calculated at the time of a new receipt by multiplying old inventory quantity by old avg. cost, then adding the received count and total cost, then dividing the new total cost by thenew inventory quantity. Average Inventory: The averageinventory level over a period oftime. Implicit in this definition is a“sampling period”which is the amount oftime between inventory measurements. For example, daily inventory levels over a two-week period oftime, hourly inventory levels over oneday,etc. The average inventory for thesame total period oftime can fluctuate widely depending upon the sampling period used. Average Payment Period (for materials): The average time from receipt of production-related materials and payment for those materials. Production-related materials are those items classified as material purchases and included in the Cost of Goods Sold (COGS) as raw material purchases. (An element ofCash-to-Cash Cycle Time) Calculation: Fivepoint annual average production-related material accounts payable / Annual production-related material receipts/365 AVL: See: Approved Vendor List. Avoidable Cost: That part ofthe cost ofany activity associated with an output,that could be saved by not performing that activity. Award Fee: based on subjective assessment by Government on how well contractor meets/exceeds performance standards. B B2B:See: Business to Business B2C: See:Business to Consumer Back-Charged: 1) A payment credited to a company’s account for not performing based on contract terms, and 2) An amount charged to a contractor for materials, equipment, services, or other charges which were paid by the owner and furnished to the contractor. Back Order: Product ordered but out ofstock and promised to ship when the product becomes available. Back Scheduling: A technique used to calculating activities based on a series of known activities, the time required to complete them, and the desired end date for completing the series. Backflush: A method used to relieve inventory and charge costs based on completed units. Backflushing is an alternative to processing actual issue or labor transactions related to production. Typically a bill of materials is used to determine the quantity required to build a product, and relief is based on quantity required per time units complete. It works well in environments where the time spent in WIP is short, otherwise the delay in recording book on hand can causeproblems with inventory control Also See: Pre-deduct Inventory Transaction Processing Backhaul: The portion of a transport trip, typically associated with trucking, that is incurred when returning a vehicle to its point of origin. Ideally the carrierwith find some sort of freight to carry back, ifthe trip is empty it is called deadhead. Also See:Deadhead Backlog Customer: Customer orders received but not yet shipped; also includes backorders and future orders. Please note: The International Warehouse Logistics Association (IWLA) does not take responsibility for the content of these definitions and does not endorse these as official definitions. Definitions compiled by: Supply Chain Visions www.scvisions.com Bellevue, Washington Page 10 of 136SUPPLY CHAIN and LOGISTICS TERMS and GLOSSARY Updated February, 2010 Backorder: 1) The act of retaining a quantity to ship against an order when other order lines have already been shipped. Backorders are usually caused by stock shortages. 2) The quantity remaining to be shipped if an initial shipment(s) has been processed. Note: In some cases backorders are not allowed, this results in a lost sale when sufficient quantities are not available to completely ship and orderor orderline. Also See:Balanceto Ship Backsourcing: The process of recapturing and taking responsibility internally for processes that were previously outsourced to a contract manufacturer, fulfillment or other service provider. Backsourcing typically involves the cancellation or expiration ofan outsourcing contract and can be nearly as complex as the original outsourcing process Back Order: Product ordered but out ofstock and promised to ship when theproduct becomes available. Balance of Trade: The surplus or deficit which results fromco mparing a country's exports and imports ofmerchandise only. Balance to Ship (BTS): Balance or remaining quantity ofa promotion or order that has yet to ship. Also See: Backorder Balanced Operational Performance Goals:See: Balanced Scorecard. Balanced Scorecard: A strategic performance management tool used for measuring whether the smaller-scale operational activities of a company are aligned with its larger-scale objectives in terms of vision and strategy By focusing not only on financial outcomes but also on the operational, marketing and developmental inputs to these, the Balanced Scorecard helps provide a more comprehensive view of a business, which in turn helps organizations act in their best long-terminterests. Also See: Scorecard BAM: See:Business Activity Monitoring Bar Code: A symbol consisting ofa series ofprinted bars representing values. A systemof optical character reading, scanning, and tracking ofunits by reading a series of printed bars for translation into a numeric or alphanumeric identification code. A popular example is the UPC code used on retail packaging. Bar code scanner: A device to read bar codes and communicate datato computer systems. Barge: The cargo-carrying vehicle used primarily by inland water carriers. The basic barges have open tops, but there are covered barges for both dry and liquid cargoes. Barrier to Entry: Reasons that companies perceive will stop them from participating in a particular market. These include cost of entry, significant competition, limited knowledge, etc. Base Demand: The level ofdemand for a product which is based on actual history and / or known customer contracts. Synonym: Baseload Demand. Base Stock System: An inventory systemin which a replenishment order is issued each time a withdrawal is made, and the order quantity s equal to the amount ofthe withdrawal. . This typeofsystemis also referred to as a par-stock system(bringing stock back to par level). Baseline: A basis for comparison set by monitoring the initial performance of a process. The baseline is used as a reference point to evaluate performance improvement efforts. Baseload Demand: See: BaseDemand Basing-Point Pricing: A pricing system that includes a transportation cost from a particular city or town in a zone or region even though the shipment does not originate at thebasing point. Basis pointBPS: A basis point is a unit that is equal to 1/100th of 1%, and is often used instead of percentages when discussing interest rates, rates of return, and other percentage-based performance metrics that can occur as fractions of a percent. 1% change = 100 basis points, and 0.01% = 1 basis point. Please note: The International Warehouse Logistics Association (IWLA) does not take responsibility for the content of these definitions and does not endorse these as official definitions. Definitions compiled by: Supply Chain Visions www.scvisions.com Bellevue, Washington Page 11 of 136SUPPLY CHAIN and LOGISTICS TERMS and GLOSSARY Updated February, 2010 Batch Control Totals: The result of grouping transactions at the input stage and establishing control totals over them to ensure proper processing. These control totals can be based on document counts, record counts, quantity totals, dollar totals, or hash (mixed data, such as customer AR numbers) totals. Batch Number: A sequence number associated with a specific batch or production run of products and used for tracking purposes. Synonym: Lot Number. Batch Picking: An order picking method where orders are grouped into small batches, an order picker will pick all orders within the batch in one pass. Batch picking is usually associated with pickers with multi-tiered picking carts moving up and down aisles picking batches of usually 4 to 12 orders, however, batch picking is also very common when working with automated material handling equipment such as carousels. Also See: Discrete Order Picking, Order Picking, Zone Picking Batch Release: Orders are released to be fulfilled or picked at specific times during the course of a day. Accumulation of the orders before release results in a batch. See:Batch Picking. Batch Processing: A computer term which refers to the processing of computer information after it has been accumulated in one group, or batch. This is the opposite of“ real-time” processing wheretransactions are processed in their entirety as they occur. Baud: A computer term describing the rate of transmission over a channel or circuit. The baud rate is equal to the number of pulses that can be transmitted in one second, often the same as the number of bits per second. Common rates are now 1200, 2400, 4800, 9600 bits and 19.2 and 56 kilobytes (Kbs) for“dial-up” circuits, and may be much higher for broadband circuits. BCP: See:Business ContinuityPlan Beginning AvailableBalance:See: Available Inventory Belly Cargo:Air freight carried in the belly ofpassenger aircraft. Benchmark: A measured, "best in class" achievement; a reference or measurement standard for comparison; this performance level is recognized as the standard ofexcellence for a specific business process. Any metric which is being used to compare actual performance against. Benchmarking: The process of comparing performance against the practices of other leading companies for the purpose of improving performance. Companies also benchmark internally by tracking and comparing current performance with past performance. Benchmarking seeks to improve any given business process by exploiting "best practices" rather than merely measuring the best performance. Best practices are the cause of best performance. Studying best practices provides the greatest opportunity for gaining a strategic, operational, and financial advantage. Benefit-cost ratio: An analytical tool used in public planning; a ratio oftotal measurable benefits divided by the initial capital cost. Bespoke: An individual or custom-made product or service. Traditionally applied to custom-tailored clothing, the term has been extended to information technology, especially for custom-designed software as an alternative to commercial (COTS) software Best-in-Class: An organization, usually within a specific industry, recognized for excellence in a specific process area. Best Practice: A specific process or group ofprocesses which havebeen recognized as the best method for conducting an action. Best Practices may vary by industry or geography depending on the environment being used. Best practices methodology may be applied with respect to resources, activities, cost object, orprocesses. Beta Release:A pre-released version ofa product that is sent to customers for evaluation and feedback. BI:See: Business Intelligence. Bilateral Contract: An agreement in which each ofthe parties to the contract makes a promise or promises to the other party. Bill of Activities: A listing of activities required by a product, service, process output or other cost object. Bill of activity attributes could include volume and or cost ofeach activity in the listing. Please note: The International Warehouse Logistics Association (IWLA) does not take responsibility for the content of these definitions and does not endorse these as official definitions. Definitions compiled by: Supply Chain Visions www.scvisions.com Bellevue, Washington Page 12 of 136SUPPLY CHAIN and LOGISTICS TERMS and GLOSSARY Updated February, 2010 Bill of Lading (BOL): A transportation document that is the contract ofcarriage containing the terms and conditions between theshipper and carrier. Bill of Lading, Through:A bill oflading that covers goods frompoint oforigin to final destination, when interchange or transfer fro mone carrier to another is necessary to complete the journey. Bill of Material (BOM): A structured list ofall the materials or parts and quantities needed to produce a particular finished product, assembly, subassembly, or manufactured part, whether purchased or not. Bill of Material Accuracy: Conformity of the list of specified items contained in a Bill of Material to administrative specifications, with all quantities correct Bill of Resources: A listing ofresources required by an activity. Resource attributes could include cost and volumes. Bin:An inventory location which is typically a box or tray used to hold quantities ofsmaller parts. Binary: A computer termreferring to a systemofnumerical notation that assumes only two possible states or values, zero (0) and one (1). Computer systems use a binary technique where an individual bit or “Binary Digit” of data can be “on” or “off” (1 or 0). Multiple bits are combined into a “Byte” which represents a character or number. Bisynchronous: A computer term referring to a communication protocol whereby messages are sent as blocks of characters. The blocks ofdata are checked for completeness and accuracy by the receiving computer. Bitmap Image (BMP): The standard image format on Windows-compatible computers. Bitmap images can be saved for Windows or OS/2 systems and support 24-bit color. Blanket Order: See: Blanket Purchase Order Blanket Purchase Order: A blanket order is defined as an order the customer makes with its supplier which contains multiple delivery dates scheduled over a period oftime, sometimes at predetermined prices. It is normally used when there is a recurring need for expendable goods. Hence, items are purchased under a single purchase order (P.O) rather than processing a separate P.O. each time supplies are needed. Synonym: Blanket Order, Standing Order. Blanket Purchasing Agreement (BPA): A US Government Service Administration buying schedule for buyers and sellers which denotes not only that prices have already been determined to be fair and reasonable but goes a step further by determining the terms under which goods and services will beprovided and possibly establishing a singlesource to deliver themover a period oftime. Blanket Release: An authorization, similar to a purchase request, which is used to confirm a customer’s agreement to produce or deliver products identified in an earlierblanket P.O. agreement or contract. Blanket Rate: A rate that does not increase according to the distance the commodity is shipped. Bleeding Edge: An unproven process ortechnology so far ahead ofits time that it may create a competitive disadvantage. Block Diagram: A diagram of a system, in which the principal parts or functions are represented by blocks connected by lines that show the relationships of the blocks. The block diagram is typically used for a higher level, less detailed description aimed more at understanding the overall concepts and less at understanding thedetails ofimplementation. Block stacking: A storage method which uses no formal racking or shelves to contain the products. Items to be stored (pallets, cases or cartons) are stacked upwards fromthe floor surface to whatever height is practical. Blocking Bug: A defect that prevents further or more detailed analysis or verification ofa functional area or feature, or any issue that would prevent the product fromshipping. Please note: The International Warehouse Logistics Association (IWLA) does not take responsibility for the content of these definitions and does not endorse these as official definitions. Definitions compiled by: Supply Chain Visions www.scvisions.com Bellevue, Washington Page 13 of 136SUPPLY CHAIN and LOGISTICS TERMS and GLOSSARY Updated February, 2010 Blow Through: An MRP process which uses a“phantombill ofmaterial” and permits MRP logic to drive requirements straight through the phantom item to its components. The MRP system usually retains its ability to net against any occasional inventories of the item. Also See: Phantom Bill of Material Body of Knowledge (BOK): The prescribed aggregation of knowledge in a particular area an individual is expected to have mastered to be considered or certified as a practitioner. BOL: See:Bill of Lading BOK: See:Body of Knowledge BOM: See: Bill of Materials Bona Fide Need Rule: Requires funds to be used only for needs or services in the yearofthe appropriations obligation period. Book Inventory: An accounting term used to refer to the value or quantity of inventory shown in the company’s accounting ‘books” such as an inventory control database or the general ledger. Book inventory is compared to physical inventory during audit processes for validation and to determine any variances. Bookings: The sumofthe valueofall orders received (but not necessarily shipped), net ofall discounts, coupons, allowances, and rebates. Bonded Warehouse: Warehouse approved by the Treasury Department and under bond/guarantee for observance of revenue laws. Used for storing goods until duty is paid or goods are released in some other proper manner. Bottleneck: A constraint, obstacle or planned control that limits throughput orthe utilization ofcapacity. Bottom-up Replanning: A manual technique ofresource planning that allows the user to interact with the systemat much low levels ofdetail using disaggregated demand and supply orders and tracing thedemand ofa lower level component to higherlevel assemblies and products. BounceBack The practice ofsending another identical (or similar) catalog back to someonewho has just ordered something fromone ofyour catalogs. Box-Jenkins Model: In time series analysis, the Box–Jenkins methodology applies autoregressive moving average models to find the best fit of a time series to past values ofthis time series, in orderto make forecasts. See: Forecast. Boxcar: An enclosed rail car typically 40 to 50 feet long; used for packaged freight and some bulk commodities. BMP: See: Bitmap Imagine BPM: See: Business PerformanceMeasurement BPO: See: Business Process Outsourcing BPR: See:Business Process Reengineering BRs: See:Business Reviews. Bracing: Securing a shipment inside a carrier’s vehicleto prevent damage. Bracketed Recall: A method of performing product recalls where a range of known lot numbers is expanded on the front and back end in order to capture any risk. Branding: The act of assigning a name or image to a product in such a way that consumers will associate one with the other. Branding typically includes doing background research to ensurethat thename can be trademarked and is not currently in useby another company for a similar product. Please note: The International Warehouse Logistics Association (IWLA) does not take responsibility for the content of these definitions and does not endorse these as official definitions. Definitions compiled by: Supply Chain Visions www.scvisions.com Bellevue, Washington Page 14 of 136SUPPLY CHAIN and LOGISTICS TERMS and GLOSSARY Updated February, 2010 Breadman: A specific application of Kanban, used in coordinating vendor replenishment activities. In making bread or other route type deliveries, the deliveryman typically arrives at the customer's location and fills a designated container or storage location with product. The size of the order is not specified on an ongoing basis, nor does the customer even specify requirements for each individual delivery. Instead, the supplier assumes the responsibility for quantifying theneed against a prearranged set ofrules and delivers the requisite quantity. Break-Bulk: The separation of a single consolidated bulk load into smaller individual shipments for delivery to the ultimate consignees. This is preceded by a consolidation of orders at the time of shipment, where many individual orders which are destined for a specific geographic area are grouped into one shipment in orderto reduce cost. Break-Even Chart: A graphical tool used to chart the“break-even point” – the point wherethe total sales revenue axis line intersects with total cost axis line. Sales revenue, variable and fixed costs are plotted on the vertical axis whilevolume is plotted on the horizontal axis. Break-Even Point: A chart which graphically represents the point at which cost or expenses and revenue are equal: there is no net loss or gain, and one has "broken even". Also See: Total Cost Curve Bricks and Mortar: The act ofselling through a physical location. The flip side ofclicks and mortar, where selling is conducted via the Internet. An informal term for representing the old economy versus new economy or the Industrial economy versus information economy. Broadband: A high-speed, high-capacity transmission channel. Broadband channels are carried on radio wave, coaxial or fiber-optic cables that have a wider bandwidth than conventional telephone lines, giving themthe ability to carry video, voice, and data simultaneously. Broken Case: An open case. The term is often used interchangeably with "repack" or "less-than-full-case" to name the area in which materials are picked in that form. Broker: An intermediary between the shipper and the carrier. The broker arranges transportation for shippers and represents carriers. Brokered Systems: Independent computer systems, owned by independent organizations or entities, linked in a manner to allow one system to retrieve information fromanother. For example, a customer's computer systemis able to retrieve order status froma supplier's computer. Browser: A utility that allows an internet user to look through collections of things. For example, Netscape Navigator and Microsoft Explorer allow you to view contents on the World Wide Web. BTS: See:Balance to Ship Bucket-Brigade Picking: A way of organizing workers on an pick line so that the line balances itself. Each worker starts down a pick line, at the speed they can accomplish given their skill and the difficulty ofthe next pick. When the last worker finishes his pick at the end ofthe pick line, he or she walks back upstreamto take over thework oftheir predecessor, who walks back and takes over thework ofhis or her predecessor and so on. Bucketed System: A technique used in requirements planning where available resources are represented in buckets – typically weekly or monthly periods – showing a beginning balance, anticipated supply and demand for the period and the calculated forecast availability. Bucketless System: A technique used in requirements planning where available resources are calculated on demand using a beginning balance and known or planned supply and demand for the period. Buffer: The level of merchandise / goods to be stocked as needed to accommodate regular sales orders, taking into consideration low and peak periods. Buffer Management: A technique used in theory ofconstraints (TOC) based management systems to overcome shortages and idle constraints. Buffer Stock:See: Buffer, SafetyStock. BulkArea:A storage area for large items which at a minimumare most efficiently handled by thepallet load. Please note: The International Warehouse Logistics Association (IWLA) does not take responsibility for the content of these definitions and does not endorse these as official definitions. Definitions compiled by: Supply Chain Visions www.scvisions.com Bellevue, Washington Page 15 of 136SUPPLY CHAIN and LOGISTICS TERMS and GLOSSARY Updated February, 2010 Bulk Storage: The process of housing or storing materials and packages in larger quantities, generally using the original packaging or shipping containers orboxes. Bulk Packing: The process or act of placing numbers of small cartons or boxes into a larger single box to aid in the movement of product and to prevent damage or pilferage to thesmaller cartons or boxes. BulletinBoard: An electronic forumthat hosts posted messages and articles related to a common subject. Bullwhip Effect: Also known as “ Whiplash Effect” it is an observed phenomenon in forecast-driven distribution channels. The oscillating demand magnification upstream a supply chain is reminiscent of a cracking whip. The concept has its roots in J Forrester's Industrial Dynamics (1961) and thus it is also known as the ForresterEffect. Bundle: A group ofproducts that are shipped together as an unassembled unit. Bundling:An occurrence wheretwo or more products are combined into onetransaction for a single price. Burn Rate: The rate of consumption of cash in a business. Burn rate is used to determine cash requirements on an on-going basis. A burn-rate of 50,000 would mean the company spends 50,000 a month above any incoming cash flow to sustain its business. Entrepreneurial companies will calculate theirburn-rate in order to understand how much time they havebefore they need to raise more money, or show a positive cash flow. Business Activity Monitoring (BAM): A term which refers to capturing operational data in real-time or close to it, making it possible for an enterprise to react more quickly to events. This is typically done through software and includes features to provide alerts / notifications when specific events occur. See also:Supply Chain Event Management Business Application: Any computer program, set ofprograms, or package ofprograms created to solve a particular business problemor function. Business Continuity Plan (BCP): A defined operational plan which is designed to be implemented in the event of disruption of normal operations. Disruptions may be the result of natural disasters, civil or labor unrest, etc. CSCMP provides suggestions for helping companies do continuity planning in their Securing the Supply Chain Research. A copy ofthe research is availableon the CSCMP website. Business Intelligence (BI): The set of skills, technologies, applications and practices used to help a business acquire a better understanding of its commercial context to make better business decisions. Business Logistics: The systematic and coordinated set ofactivities required to provide the physical movement and storage ofgoods (raw materials, parts, finished goods) from vendor/supply services through company facilities to the customer (market) and the associated activities—packaging, order processing, etc.—in an efficient manner necessary to enable theorganization to contribute to the explicit goals ofthe company. Business Plan: A formal statement of a set of business goals, the reasons why they are believed attainable, and the plan for reaching those goals. It may also contain background information about the organization or teamattempting to reach thosegoals. Business Performance Measurement (BPM): A technique which uses a system of goals and metrics to monitor performance. Analysis of these measurements can help businesses in periodically setting business goals, and then providing feedback to managers on progress towards those goals. A specific measure can be compared to itselfover time, compared with a preset target or evaluated along with other measures. Business Process Outsourcing (BPO): The practice ofoutsourcing non-core internal functions to third parties. Functions typically outsourced include logistics, accounts payable, accounts receivable, payroll and human resources. Other areas can include IT development or complete management ofthe IT functions ofthe enterprise. Business Process Reengineering (BPR): The fundamental rethinking and oftentimes, radical redesign of business processes to achieve dramatic organizational improvements. Business Reviews (BRs): A periodic assessment ofthe commercial context ofa business—its mission statement, goals, and strategic plan. Reviews are typically held each quarter and are attended by senior managers offunctional areas fromboth supplier and customer organizations. Please note: The International Warehouse Logistics Association (IWLA) does not take responsibility for the content of these definitions and does not endorse these as official definitions. Definitions compiled by: Supply Chain Visions www.scvisions.com Bellevue, Washington Page 16 of 136SUPPLY CHAIN and LOGISTICS TERMS and GLOSSARY Updated February, 2010 Business-to-Business (B2B): As opposed to business-to-consumer (B2C). Many companies are now focusing on this strategy, and their sites are aimed at businesses (think wholesale) and only other businesses can access or buy products on the site. Internet analysts predict this will be the biggest sectoron the Web. Business-to-Consumer (B2C): The hundreds ofe-commerce Web sites that sell goods directly to consumers are considered B2C. This distinction is important when comparing Websites that are B2B as the entire business model, strategy, execution, and fulfillment is different. Business Reviews (BRs): A periodic assessment ofthe commercial context ofa business, its mission statement, goals and strategicplan. Reviews are typically held each quarter of the calendar year and are attended by senior managers of functional areas from both supplier and customer organizations. Business Unit: A part of an organization which is managed like a separate business with its own profit and loss financial reporting. For example, in the General Motors group Chevrolet is a business unit. Buyer Behavior: The mannerisms inherent in how a business or individual acts during the purchasing process. Buying Cards (P-Cards): Basically these are a form of credit card used to make maintenance, repair, and operating (MRO) inventory type purchases verses using a purchase order (PO) that can cost more to process for small purchases. Companies using these cards typically work with card issuers to develop guidelines for use—sometimes by value limits and type of expense—which provide control over authorized purchases at the point ofsale Byte: A computer term used to define a string of 7 or 8 bits, or binary digits. The length of the string determines the amount of data that can be represented. The 8-bit byte can represent numerous special characters, 26 uppercase and lowercase alphabetic characters, and 10 numeric digits, totaling 256 possible combinations. C C & F: See: Cost and Freight CADEX: See: Customs Automated Data Exchange System Cabotage: A federal law that requires coastal and inter-coastal traffic to be carried in U.S.-built and –registered ships. CAE: See: Computer Aided Engineering Cage: (1) A secure enclosed area for storing highly valuable items, (2) a pallet-sized platformwith sides that can be secured to the tines ofa forklift and in which a person may ride to inventory items stored will above the warehouse floor. CAGE Code: The Commercial and Government Entity code is a 5 character (number and letters) code used to identify contractors doing business with the U.S. Government.. Caged: Referring to thepractice ofplacing high-valueor sensitive products in a fenced offarea within a warehouse. Calendar Days: The conversion of working days to calendar days is based on the number of regularly scheduled workdays per week in your manufacturing calendar. Calculation: To convert from working days to calendar days: if work week Please note: The International Warehouse Logistics Association (IWLA) does not take responsibility for the content of these definitions and does not endorse these as official definitions. Definitions compiled by: Supply Chain Visions www.scvisions.com Bellevue, Washington Page 17 of 136SUPPLY CHAIN and LOGISTICS TERMS and GLOSSARY Updated February, 2010 = 4 days, multiply by 1.75 = 5 days, multiply by 1.4 = 6 days, multiply by 1.17 Call Center: A call center is a centralized office used for the purpose of receiving and transmitting a large volume of requests by telephone. A call centre is operated by a company to administer incoming product support or information inquiries from consumers. Outgoing calls for telemarketing, clientele, product services, and debt collection are also made. In addition to a call centre, collective handling ofletters, faxes, live chat, and e-mails at one location is known as a contact center. Synonym: Customer Interaction Center. Call Volume: The number oftelephone calls made or received over a specific period oftime. Call-Off Orders:A strategy to delay delivery ofitems that are not needed immediately. Instead, you “call off” the items fro mthe purchase order you want as you need them. See: Blanket Purchase Order Can-Order Point: A supplier ordering method where multiple items from the same vendor are considered / reviewed if any one item from that vendor falls below a specific order point (eitherset or calculated). Once an itemtriggers an order, any otheritems which are near theirorderpoint are also considered. This is done to prevent multiple orders for a single vendor in a short time frame, allowing for possible price breaks and shipping discounts. Cantilever Rack: Racking system that support columns at the rear and arms which attach to the support columns to hold shelving or stock. Cantilevers racks allow for storage ofvery long items. Carousel: Automated equipment generally used for picking ofsmall, high-volume parts. Capable to Promise (CTP): A technique similar to Available-to-Promise, it uses the availability of individual components to determine if an end item can be configured and assembled by a customer-given request date and provides the ability of adjusting plans due to inaccurate delivery date promises. Capable to promise looks at both materials and labor/machine requirements. Capability Maturity Model (CMM): A framework that describes the key elements ofan effective software process. It's an evolutionary improvement path froman immature process to a mature, disciplined process. The CMM covers practices for planning, engineering and managing software development and maintenance. When followed, these key practices improvethe ability oforganizations to meet goals for cost, schedule, functionality and product quality. Capacity: The physical facilities, personnel and process available to meet the product or service needs ofcustomers. Capacity generally refers to the maxi mum output or producing ability ofa machine, a person, a process, a factory, a product, or a service. Also See: Capacity Management Capacity Management: The concept that capacity should be understood, defined, and measured for each level in the organization to include market segments, products, processes, activities, and resources. In each of these applications, capacity is defined in a hierarchy of idle, non-productive, and productive views. Capacity Planning: Assuring that needed resources (e.g., manufacturing capacity, distribution center capacity, transportation vehicles, etc.) will be available at the right time and place to meet logistics and supply chain needs. CAPEX: A termused to describethe monetary requirements (CAPital EXPenditure) ofan initial investment in new machines or equipment. Capital: The resources, or money, available for investing in assets that produce output. CAR: See: Corrective Action Car Supply Charge: A railroad charge for a shipper’s exclusiveuse ofspecial equipment. Carbon Footprint: A measure of the total carbon emissions for a given person, organization, building, operation etc. and the impact their carbon emissions have on the environment by relating the amount of greenhouse gases produced to such activities as burning fossil fuels for electricity, heating transportation, etc. Please note: The International Warehouse Logistics Association (IWLA) does not take responsibility for the content of these definitions and does not endorse these as official definitions. Definitions compiled by: Supply Chain Visions www.scvisions.com Bellevue, Washington Page 18 of 136SUPPLY CHAIN and LOGISTICS TERMS and GLOSSARY Updated February, 2010 Carbon Trade: The process of buying and selling credits to emit carbon. Companies and organizations are assigned emission permits that stand for the amount ofcarbon they are allowed to emit. If a company or organization emits less carbon, then it can sell its emissions permits. Ifemissions are more than its current permits, then it will need to buy emission permits fromother companies or organizations that produce less carbon Cargo: The subject ofa shipment. The materials being carried. Carload Lot: A shipment ofnot less than five tons ofone commodity Carmack Amendment: An Interstate Commerce Act amendment that delineates the liability ofcommon carriers and the bill oflading provision. Carousel: Carousels are a technology used to store items for eventual picking or retrieval in a series of motorized bins. There are two primary types of carousels (horizontal and vertical) and one related technology, all of which operate under some form o f computer control. Since the late 1990s, carousels havebeen placed under the more general category ofAS/RS. Carrier: A firmwhich transports goods or peoplevia land, seaor air. Cartel: A group of organizations which would normally be considered competitive, but who instead have an agreement to cooperate in an area of endeavor in an effort to improvethe position ofthe group. Cartonization: The process ofputting small box shipments into a lager carton, also called over packing orstrapping cases together. Cascade Tendering: Loads are electronically submitted to the carrier who submitted the lowest rate on that shipping lane (origin zip code to destination zip code) Case Code: The UPC number for a case of product. The UPC case code is different fro mthe UPC itemcode because it uses the case identifier as an extended part ofthe number. This is sometimes referred to as the“Shipping Container Symbol”or ITF-14 code. Cash-to-Cash Cycle Time: The time it takes for cash to flow back into a company after it has been spent for raw materials. Note that this is a measure of when the financial transaction occurs, not when stock movement happens. There are occasions where C2C is negative, indicating that payment is received fromsales ofthe product before thesupplier is paid. Synonym: Cash Conversion Cycle. Calculation: Total Inventory Days ofSupply + Days ofSales Outstanding - AveragePayment Period for Material in days Cash Conversion Cycle: Typically the length of time from the purchase of raw materials to the collection of payment from customers. In retail settings it may refer to the length oftime fro msales to payment receipt. Also See: Cash-to-Cash Cycle Time, DayOutstanding A/ Catalog Item (CI): The item as it is stored in a catalog or data pool. In the Global Data Synchronisation Network the catalog item is uniquely identified by (GTIN + GLN + Target Market). Catalog Channel: A call center ororder processing facility that receives orders directly fromthe customer based on defined catalog offerings and ships directly to the customer. Categorical Plan: A method of categorizing purchased materials and suppliers based on product type, using departments or functional area. Plans are used to evaluate suppliers in groups.. Also See:W eighted-Point Plan Category Management: The management of product categories as strategic business units. The practice empowers a category manager with full responsibility for the assortment decisions, inventory levels, shelf-space allocation, promotions and buying. With this authority and responsibility, the category manager is ableto judge more accurately the consumer buying patterns, product sales and market trends ofthat category. Cause and Effect Diagram: In quality management, a structured process used to organize ideas into logical groupings. Used in brainstorming and problemsolving exercises. Also known as Ishikawaor fish bone diagram. CBP: See: Customs and Border Protection. CBT:See: Computer-Based Training. Please note: The International Warehouse Logistics Association (IWLA) does not take responsibility for the content of these definitions and does not endorse these as official definitions. Definitions compiled by: Supply Chain Visions www.scvisions.com Bellevue, Washington Page 19 of 136SUPPLY CHAIN and LOGISTICS TERMS and GLOSSARY Updated February, 2010 Cell: An area ofmanufacturing or assembly which consists ofa series ofwork units devoted to the manufacture ofa specific product. Cellular manufacture is an alternative to thetraditional production line. Cellular Manufacturing: A manufacturing approach in which equipment and workstations are arranged to facilitate small-lot, continuous-flow production. In a manufacturing "cell," all operations necessary to produce a component or subassembly are performed in close proximity, thus allowing for quick feedback between operators when quality problems and other issues arise. Workers in a manufacturing cell typically are cross- trained and able to perform multiple tasks as needed. Center-of-Gravity Approach: A supply chain planning methodology for locating distribution centers at approximately the location representing the minimumtransportation costs between the plants, the distribution centers, and the markets. Centralized Authority: Management authority to make decisions is restricted to few managers. Centralized Dispatching: An organizational strategy and structure where all workflow is controlled froma single location or group. Dispatching can consist ofproduction orders as well as inbound /outbound shipments ofgoods. Centralized Inventory Control: An organizational strategy and structure where all inventoried items are controlled froma single location orgroup. Certificate of Analysis (COA): A document, often required by an importer or governmental authorities, attesting to the quality or purity of commodities. Certificate of Compliance: A document, often required by an importer or governmental authorities, attesting to the quality or purity ofcommodities. The origin ofthe certification may be a chemist or any other authorized body such as an inspection firmretained by the exporter orimporter. Certificate of Origin: An international business document that certifies the country oforigin ofthe shipment. Certificate of Public Convenience and Necessity: The grant of operating authority that is given to common carriers. A carrier must prove that a public need exists and that the carrier is fit, willing, and able to provide the needed service. The certificate may specify the commodities to behauled, the area to be served, and the routes to be used. Certified Supplier: A supplier who has demonstrated the ability to consistently meet established quality, cost, delivery, financial, and count objectives, and has therefore been awarded the“certified” designation. Suppliers in this group may be able to bypass incoming quality inspection. Certificated Carrier:A for-hire air carrierthat is subject to economic regulation and requires an operating certification to provide service. CFD: See: Continuous FlowDistribution CGMP: See: Current Good Manufacturing Practice. Chainof Customers: The downstreamsupply chain in situations where multiple echelons exist such as manufacturer to distributor to retailer to end user. Chain Reaction: A chain of events described by W. Edwards Deming: improve quality, decrease costs, improve productivity, increase market with better quality and lowerprice, stay in business, provide jobs and provide more jobs. Challenge and Response: A method of user authentication. The user enters an ID and password and, in return, is issued a challenge by the system. The system compares the user's response to the challenge to a computed response. If the responses match, the user is allowed access to the system. The systemissues a different challenge each time. In effect, it requires a new password for each logon. Champion: A business leader or senior manager who ensures that resources are available for training and projects, and who is involved in project tollgate reviews; also an executive who supports and addresses Six Sigma organizational issues. ChangeAgent: An individual from within oroutside an organization who facilitates changewithin the organization. May or may not be the initiator ofthe change effort. Please note: The International Warehouse Logistics Association (IWLA) does not take responsibility for the content of these definitions and does not endorse these as official definitions. Definitions compiled by: Supply Chain Visions www.scvisions.com Bellevue, Washington Page 20 of 136