SUPPLYCHAINMANAGEMENTTERMSandGLOSSARYUpdated: February 2010AA3Method:TheA3system isameansof describinga businessprocess ina compactform.It was originallycreatedby the Toyota Motor Corporation and was named for the paper size on which it was printed:A3(11"x17").Toyotaused the A3 methodology to help develop its famed Toyota Production System (TPS).Abandonment:1)Thedecisionofa carriertogiveup ortodiscontinue serviceoveraroute.Railroadsmust seekIcCpermissiontoabandon routes.2)Asinthephrase"call abandonment".Thisreferstopeoplewho,beingplacedon hold in an incoming call, elect to hang up ("abandon")the call. Call centers monitor closely the"abandonmentrate" as a measure of their inefficiency.ABB:SeeActivity Based BudgetingABC:SeeActivityBasedCostingABcClassification:Amethodof classifying inventoryitems relativetotheirimpactontotal control.ABCtypicallyuses movement and cost data to calculate the value of stock usage over the prior period, and uses the result as anelement in ranking items under an 8o/2o Pareto rule for cycle counting purposes.The group is divided into classescalledA,B,andC(andsometimesD)withTheAgrouprepresentsthehighestvaluewith10to20%bynumberofitems.TheB, C and D(if used)groups are each lower values but typicallyhigher populations.Items withhigherusage value are (the 20%) are counted more frequently.Specific bars to be used in setting ABc levels will vary byorganization as theywill impact the financial control applied to inventory and thelevel of effort spent counting.Alsosee:CycleCountingABcCosting:SeeActivityBasedCostingABcFrequencyof Access:Locationmethod where the determination ofaproduct's location within the warehouse,or distribution center, is based on 1) product's ABC Classification and 2) the number of times or rate of which theproduct is accessed.ABc InventoryControl:A method of inventory control which divides items into categories based on value ofusage, something likea Pareto division where the items which constitute the highest dollar value are tracked morecloselythan thosewithlowervaluemovement.Inthismethod anitem withhighvolumesofmovement,butlowcost, such as a small cheap fastener, would likely be counted less frequently than a slower mover which has a veryhigh cost. Items are typically divided by a company defined set of values into "A", "B"and "c" groups, andsometimes even a"D" group. The count frequencies are then applied to the groups. For example"A" class items maybe counted weekly,"B" monthly, "c" quarterly, etc. as a part of a cycle counting program.ABc Model:In cost management, a representation of resource costs during a time period that are consumedthrough activities and traced to products,services, and customers or to any other object that creates a demand forthe activity to be performed.Definitions compiled by:KateVitasekwww.scvisions.comCSCMP does not take responsibility for these definitions nor endorses theseasofficialdefinitionsexceptasnotedPage1of212
Also see: Cycle Counting ABC Frequency of Access: Location method where the determination of a product’s location within the warehouse, or distribution center, is based on 1) product’s ABC Classification and 2) the number of times or rate of which the product is accessed. 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 other object that creates a demand for the activity to be performed. Abandonment: 1) The decision of a 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 of their inefficiency. ABC Classification: A method of classifying inventory items relative to their impact on total control. ABC typically uses movement and cost data to calculate the value of stock usage over 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 of items. The B, C and D (if used) 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 the level of effort spent counting. ABC: See Activity Based Costing ABB: See Activity Based Budgeting ABC Inventory Control: A method of inventory control which divides items into categories based on value of usage, something like a Pareto division where the items which constitute the highest dollar value are tracked more closely than those with lower value movement. In this method an item with high volumes of movement, 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 of values into “A”, “B” and “C” groups, and sometimes even a “D” group. The count frequencies are then applied to the groups. For example “A” class items may be counted weekly, “B” monthly, “C” quarterly, etc. as a part of a cycle counting program. ABC Costing: See Activity Based Costing A Updated: February 2010 TERMS and GLOSSARY SUPPLY CHAIN MANAGEMENT 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). Definitions compiled by: Kate Vitasek www.scvisions.com CSCMP does not take responsibility for these definitions nor endorses these as official definitions except as noted. Page 1 of 212
SUPPLYCHAINMANAGEMENTTERMSandGLOSSARYUpdated: February 2010ABc System:In cost management, a system that maintains financial and operating data on an organization'sresources,activities, drivers, objects and measures.ABC models are created and maintained within this system.ABI:SeeAutomatedBrokerInterfaceABM:SeeActivityBasedManagementAbnormal Demand: Demand for a product which is either greater or lower than expected by a given percentagewhich is determined by the organization. When observed, it should be determined whether it may be a one-timespike, or if the effect is part of a trend which should be considered during future forecasts.ABP:SeeActivityBasedPlanningAbsorptionCosting:Acostaccountingapproachwhichcapturesoverheadand otherindirectcostsasseparatefromunit costs for a given period, and then applies (absorbs) those costs into unit costs at the period end based onvariousfactorssuchasmovementandCoGSelements.ACAT:SeeAcquisitionCategoriesAcceptableQualityLevel(AQL):Inqualityassessment,acceptablequalitylevel,alsoknownasassured qualitylevel, describes themaximumnumberofdefects acceptableduringtherandom sampling ofan inspection,AcceptableSamplingPlan:Aqualitymanagementprocedurewhichdefines thesamplesizesandacceptabledefectlevels for validating quality of products..AcceptanceNumber:SeeAcceptableQualityLevelAcceptanceSampling:A statisticalqualitycontrolmethodwhichtests samples of productsat defined pointsasopposed to testing each product.Accessibility:The ability of a carrier to provide service between an origin and a destination.Accessorial Charges: A carrier's charge for accessorial services such as loading, unloading, pickup, and delivery.Alsosee:UpchargesAccessorialFee:SeeAccessorialChargesAccessory: A choice or feature added to the good or service offered to the customer for customizing the endproduct. An accessory enhances the capabilities of the product but is not necessary for the basic function of theproduct.Inmanycompanies,anaccessorymeans thatthechoicedoes nothavetobespecified beforeshipment butcanbeaddedatalater date.In othercompanies,this choicemustbemadebeforeshipment.Delfinitions compiled by:Kate Vitasekwww.scvisions.comcSCMPdoesnottakeronsibilityforthefficialdefinitcept as notedoeonPage,2 of 212
Updated: February 2010 TERMS and GLOSSARY SUPPLY CHAIN MANAGEMENT ABI: See Automated Broker Interface Accessorial Fee: See Accessorial Charges 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. ABP: See Activity Based Planning 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. ABM: See Activity Based Management 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. Accessorial Charges: A carrier's charge for accessorial services such as loading, unloading, pickup, and delivery. Accessory: A choice or feature added to the good or service offered to the customer for customizing the end product. An accessory enhances the capabilities of the product but is not necessary for the basic function of the product. In many companies, an accessory means that the choice does not have to be specified before shipment but can be added at a later date. In other companies, this choice must be made before shipment. Accessibility: The ability of a carrier to provide service between an origin and a destination. Acceptance Sampling: A statistical quality control method which tests samples of products at defined points as opposed to testing each product. Acceptance Number: See Acceptable Quality Level Acceptable Sampling Plan: A quality management procedure which defines the sample sizes and acceptable defect levels for validating quality of products. Acceptable Quality Level (AQL): In quality assessment, acceptable quality level, also known as assured quality level, describes the maximum number of defects acceptable during the random sampling of an inspection. ACAT: See Acquisition Categories Also see: Upcharges Definitions compiled by: Kate Vitasek www.scvisions.com CSCMP does not take responsibility for these definitions nor endorses these as official definitions except as noted. Page 2 of 212
SUPPLYCHAINMANAGEMENTTERMSandGLOSSARYUpdated:February2010Accountability: The act of making a group or individual responsible for certain activities or outcomes. For example,managers and executives areaccountable forbusiness performanceeven thoughthey may notactuallyperform thework.Accounts Payable (A/p):1) a financial term referring to the amount of transactions which have been accrued butnotpaidtoavendor.2)AnaccountingfunctionAccounts Receivable (A/R): On a company's balance sheet, accounts receivable is the amount that customersowe to that company.Sometimes called trade receivables, they are classified as current assets assuming that theyare due within one year.Accreditation: The process in which certification of competency, authority, or credibility is presented. An exampleof accreditationistheaccreditationoftestinglaboratoriesandcertificationspecialiststhatarepermittedtoissueofficialcertificatesofcompliancewithestablishedstandards.Accredited Standards Committee(AsC):A committee of the ANSI chartered in 1979to develop uniformstandards for the electronic interchange of business documents.The committee develops and maintains U.S.genericstandards (X12)for Electronic Data Interchange.Accumulationbin:An area where item to be used in assembly ofa product arestaged priorto work being doneAlsosee:StagingAccuracy: A value, usually expressed as a percentage, which expresses the level of precision incurred duringtransactions. An example would be seen when comparing actual inventory levels to what was expected frombookkeeping records.ACD:See Automated Call DistributionAcE:SeeAutomatedCommercialEnvironmentACH:See Automated ClearinghouseAcknowledgment:Typically this is a response,either electronic or as a physical document,which confirms thereceipt of an order from the supplier to the buyer.Acquisition Categories (AcAT): U.S. DoD ACAT 1 programs are Milestone Decision Authority Programs orprogramsdesignatedACAT1bytheMilestoneDecisionAuthority.AcquisitionCost:The net priceplus other costs needed to purchase the item and get it to the point of use.Theseother costs can include:the item's purchasing costs (closing,research,accounting,commissions,legal fees),transportation,preparationand installationcosts.Definitions compiled byKateVitasekwww.scvisions.comcSCMPdoesnottakeonsibilityforthefficialdefiniept as notedoet00Page 3 of 212
Updated: February 2010 TERMS and GLOSSARY SUPPLY CHAIN MANAGEMENT Accounts Receivable (A/R): On a company's balance sheet, accounts receivable is the amount that customers owe to that company. Sometimes called trade receivables, they are classified as current assets assuming that they are due within one year. 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 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 perform the work. 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. Acknowledgment: Typically this is a response, either electronic or as a physical document, which confirms the receipt of an order from the supplier to the buyer. ACH: See Automated Clearinghouse ACE: See Automated Commercial Environment ACD: See Automated Call Distribution 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 from bookkeeping records. Accumulation bin: An area where item to be used in assembly of a product are staged prior to work being done. 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 of business documents. The committee develops and maintains U.S. generic standards (X12) for Electronic Data Interchange. Acquisition Categories (ACAT): U.S. DoD ACAT 1 programs are Milestone Decision Authority Programs or programs designated ACAT 1 by the Milestone Decision Authority. Also see: Staging Definitions compiled by: Kate Vitasek www.scvisions.com CSCMP does not take responsibility for these definitions nor endorses these as official definitions except as noted. Page 3 of 212
SUPPLYCHAINMANAGEMENTTERMSandGLOSSARYUpdated: February 2010AcSI:SeeAmericanCustomerSatisfactionIndexAction Message:A system message usually created during MRP calculations to call attention to a current orpotentialproblemandsuggestcorrectiveaction.Action Plan: A specific method or process to achieve the results called for by one or more objectives.An actionplanmaybeasimplerversionofaprojectplan.ActionReport:SeeActionMessageActivation: TOC recognizes that it is possible to produce without contributing to throughput. TOC defines productionthat contributes to throughput as utilization. Production that does not contribute to throughput is known asactivation. Activation is not desired because it not only fails to increase throughput,but it also increases inventoryand 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, orsold 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"grammarconvention.Activitiesmayoccurinalinkedsequenceandactivity-to-activityassignments may exist.ActivityAnalysis:Theprocess of identifying and cataloging activities for detailed understanding and documentationof their characteristics.An activityanalysis isaccomplished by means of interviews,group sessions,questionnaires,observations,andreviewsof physical recordsofworkActivity Based Budgeting (ABB): An approach to budgeting where a company uses an understanding of itsactivities and driver relationships to quantitatively estimate workload and resource requirements as part of anongoingbusinessplan.Budgetsshowthetypes,numberofandcostofresourcesthatactivitiesareexpectedtoconsumebasedonforecastedworkloads.Thebudget ispart of anorganization'sactivity-basedplanningprocess andcanbeusedinevaluatingitssuccess insettingandpursuingstrategicgoals.Activity Based Costing (ABc): A methodology that measures the cost and performance of cost objects, activitiesand resources.Costobjects consume activities and activitiesconsume resources.Resource costs are assignedtoactivities basedontheiruse of those resources,and activitycosts are reassigned tocost objects (outputs)based onthecost objectsproportional useof thoseactivities.Activity-basedcosting incorporates causal relationshipsbetweencostobjectsandactivitiesandbetweenactivitiesandresources.Definitions compiled byKateVitasekwww.scvisions.comCSCMPdoesnottakeresponsibilityforthetofficial definitcept as notededehinitionsnorPage 4 of 212
Updated: February 2010 TERMS and GLOSSARY SUPPLY CHAIN MANAGEMENT Action Message: A system message usually created during MRP calculations to call attention to a current or potential problem and suggest corrective action. Active Stock: Goods in active pick locations and ready for order filling. Active Inventory: Materials held in a facility which are intended to be consumed in manufacturing / assembly, or sold in a specified period. 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. Action Report: See Action Message 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. ACSI: See American Customer Satisfaction Index 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 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 their use of those 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 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 be used in evaluating its success in setting and pursuing strategic goals. Activity Analysis: The process of identifying and cataloging activities for detailed understanding and documentation of their characteristics. An activity analysis is accomplished by means of interviews, group sessions, questionnaires, observations, and reviews of physical records of work. Definitions compiled by: Kate Vitasek www.scvisions.com CSCMP does not take responsibility for these definitions nor endorses these as official definitions except as noted. Page 4 of 212
SUPPLYCHAINMANAGEMENTTERMSandGLOSSARYUpdated: February 2010Activity-Based Management (ABM):A discipline focusing on the management of activities within businessprocesses as the routeto continuously improve both the value received by customers and the profit earned inproviding that value. ABM uses activity-based cost information and performance measurements to influencemanagement action.Seealso:Activity-Based CostingActivity Based Planning (ABP):Activity-based planning (ABP) is an ongoing process to determine activity andresource requirements (both financial and operational) based on the ongoing demand of products or services byspecific customer needs.Resource requirements are compared to resources available and capacity issues areidentified and managed.Activity-based budgeting (ABB) is based on the outputs of activity-based planning.ActivityDictionary:A listing and description of activities that provides a common/standard definition of activitiesacross the organization.An activity dictionary can include information about an activity and/or its relationships, suchas activitydescription,businessprocess,functionsource,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 anactivity by cost objects orotheractivities.It is used to assign activity costs to cost objects orto otheractivities.ActivityLevel:Adescription of types of activities dependent on thefunctional area.Product-related activity levelsmay include unit, batch, and product levels.Customer-related activity levels may include customer, market,channel, andproject levels.Activity Network Diagram: An arrow diagram used in planning and managing processes and projects.Actual Cost System: A managerial accounting system that records and measures all cost elements at their actualacquisitionvalue.Indirect costsarethenapplied as overhead using a costallocation technique.Actual Costs:Theactual labor,material, and allocated overhead costs incurred intheacquisition orproduction ofaproduct.Actual Demand: The known demand for a specific product based on customer orders and production orders whichare open.Oncean orderis shipped or production is completed, specific demand quantity will becomeusage.Actualdemand should be netted against any forecast for the same period, meaning that as orders are received the areconsidered to bepart of an earlierforecast and forecasts shouldbeconsidered as satisfied.ActualtoTargetGapAnalysis:SeeGapAnalysisActual to Theoretical Cycle Time:The ratio of the measured time required to produce a given output divided bythe sum of the time required to produce a given output based on the rated efficiency of the machinery and laboroperations.Delfinitions compiled by:Kate Vitasekwww.scvisions.comCSCMPdoesnottakeresponsibilityforthesedefilofficial definitioexcept as notedinitionsnorPage 5 of 212
Updated: February 2010 TERMS and GLOSSARY SUPPLY CHAIN MANAGEMENT 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. 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 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 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-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 also: Activity-Based Costing Actual Costs: The actual labor, material, and allocated overhead costs incurred in the acquisition or production of a product. Actual Cost System: A managerial accounting system that records and measures all cost elements at their actual acquisition value. Indirect costs are then applied as overhead using a cost allocation technique. Activity Network Diagram: An arrow diagram used in planning and managing processes and projects. 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 of the machinery and labor operations. 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 of an earlier forecast and forecasts should be considered as satisfied. Definitions compiled by: Kate Vitasek www.scvisions.com CSCMP does not take responsibility for these definitions nor endorses these as official definitions except as noted. Page 5 of 212
SUPPLYCHAINMANAGEMENTTERMSandGLOSSARYUpdated: February 2010Adaptive Smoothing: A special type of exponential smoothing that takes the success of previous forecasts intoaccount when setting a value of ALPHAforthe nextperiod.In thismanner,periods that experienced high error willcause ALPHA to be set high and, thus, adjust quickly. When error is low, AS assumes the technique is doing well andsets ALPHAata low level.Thismakes ESmuchmore responsiveto changes in thelevel of thedata and less reactiveto noise.Theadvantage to adaptive smoothing isthatthe decision of what valueof ALPHA to use in exponentialsmoothing is eliminated.Adisadvantage to adaptive smoothing is that trend and seasonality are ignored.ADR:SeeAlternateDispatchResolutionAdvance Material Request: A request for materials which is created in advance of formal need due to long leadtimesfor components,etc.Advanced Planning and Scheduling (ApS):Refers to a manufacturing management process by which rawmaterials and production capacity are optimally allocated to meet demand.ApS is especially well-suited toenvironments where simpler planning methods cannot adequately address complextrade-offs between competingpriorities.Advanced Shipping Notice (AsN):Detailed shipment information transmitted to a customer or consignee inadvance of delivery,designating the contents (individual products and quantities of each) and nature of theshipment. In EDI data standards this is referred to as an 856 transaction. May also include carrier and shipmentspecifics including time of shipment and expected time of arrival.See also:Assumed ReceiptAftermarket:A market for parts and accessories used in the repair or enhancement of a product.A secondarymarket created after the original market sales are finished.After-Sale Service:Services provided to the customer after products have been delivered. This can includerepairs,maintenanceand/ortelephonesupport.Synonym:Field ServiceAgency tariff:Apublication of a rate bureau that contains rates formany carriers.Agent: An enterprise authorized to transact business for, or in the name of, another enterprise.Agglomeration:AnetadvantagegainedbyacommonlocationwithothercompaniesAggregate Forecast: Forecasting of future demand for a family of products or for a single product across multipledimensionsofsource-includingplannedproductionandcustomerorders.Aggregate Inventory:The total inventory available for any given product across multiple locations and/or multiplestock-keeping units.AggregateInventoryManagement:Amethod ofmanaging inventorythroughtheuseof levels set againstoverallinventoryorclassvalueDelfinitions compiled by:KateVitasekwww.scvisions.comcSCMPdoesnottakeresonsibilityforthefficialdefinitcept as notedoensPage 6 of 212
Updated: February 2010 TERMS and GLOSSARY SUPPLY CHAIN MANAGEMENT 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. Agent: An enterprise authorized to transact business for, or in the name of, another enterprise. Advance Material Request: A request for materials which is created in advance of formal need due to long lead times for components, etc. Agency tariff: A publication of a rate bureau that contains rates for many carriers. Agglomeration: A net advantage gained by a common location with other companies. Aggregate Inventory Management: A method of managing inventory through the use of levels set against overall inventory or class value. Aggregate Inventory: The total inventory available for any given product across multiple locations and/or multiple stock-keeping units. 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. 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 simpler planning methods cannot adequately address complex trade-offs between competing priorities. After-Sale Service: Services provided to the customer after products have been delivered. This can include repairs, maintenance and/or telephone support. Advanced Shipping Notice (ASN): Detailed shipment information transmitted to a customer or consignee in advance of delivery, designating the contents (individual products and quantities of each) and nature of the shipment. In EDI data standards this is referred to as an 856 transaction. May also include carrier and shipment specifics including time of shipment and expected time of arrival. Synonym: Field Service See also: Assumed Receipt ADR: See Alternate Dispatch Resolution Adaptive Smoothing:Aspecial type of exponential smoothing that takes the success of previous forecasts into account when setting a value of ALPHA for the next period. In this manner, periods that experienced high error will 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 the level of the data and less reactive to noise. The advantage to adaptive smoothing is that the decision of what value of ALPHA to use in exponential smoothing is eliminated. A disadvantage to adaptive smoothing is that trend and seasonality are ignored. Definitions compiled by: Kate Vitasek www.scvisions.com CSCMP does not take responsibility for these definitions nor endorses these as official definitions except as noted. Page 6 of 212
SUPPLYCHAINMANAGEMENTTERMSandGLOSSARYUpdated: February 2010Aggregate Plan: A plan for the production process, 2 to 18 months in advance to give management an idea to ofwhat quantity of materials andother resources are tobeprocured and when,so that thetotal costof operations ofthe organization is kept to the minimum over that period.AggregatePlanning:Anoperationalactivitywhichcompilesanaggregateplanfortheproductionprocess.Aggregate Tender Rate:A reduced rate offered toa shipper whotenders two or more class-rated shipments atonetimeandoneplace.AgileManufacturing:Tools,techniques,and initiatives that enable a plant or company to thrive under conditionsof unpredictablechange.Agilemanufacturingnotonly enablesaplanttoachieverapid responsetocustomerneeds,but also includes the ability toquickly reconfigure operations-and strategic alliances-to respond rapidlyto unforeseenshifts in the marketplace.In some instances,it also incorporates"mass customization" concepts to satisfy uniquecustomer requirements. In broad terms, it includes the ability to react quickly to technical or environmentalsurprises.Agility: The ability to rapidly and cost effectively adapt to market changes with no significant negative impact onquality or dependability.AGvS:SeeAutomatedGuidedVehicleSystemAir Cargo: Freight that is moved by air transportation.Air Cargo Containers: Containers designed to conform to the inside of an aircraft. There are many shapes andsizes of containers. Air cargo containers fall into three categories: 1)air cargo pallets 2) lower deck containers 3)box type containers.AirForceMaterialCommand:SeeAMFCAirMobilityCommand:SeeAMCAir Taxi: An exempt for-hire air carrier that will fly anywhere on demand: air taxis are restricted to a maximumpayloadandpassengercapacityperplane.AirTransportAssociationofAmerica:AU.S.airlineindustryassociation.Air Waybill (AwB): A bill of lading for air transport that serves as a receipt for the shipper, indicates that thecarrier has accepted the goods listed, obligates the carrier to carry the consignment to the airport of destinationaccording to specified conditions.Airportand AirwayTrustFund:Afederal fund that collects passenger ticket taxes and disburses thosefundsforairportfacilitiesDefinitions compiled by:KateVitasekwww.scvisions.comcSCMPdoesnottakeronsibilityforthefficialdefinitcept as notedoePage 7 of 212
Updated: February 2010 TERMS and GLOSSARY SUPPLY CHAIN MANAGEMENT Air Mobility Command: See AMC Air Force Material Command: See AMFC 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. Agility: The ability to rapidly and cost effectively adapt to market changes with no significant negative impact on quality or dependability. Aggregate Tender Rate: A reduced rate offered to a shipper who tenders two or more class-rated shipments at one time and one place. Aggregate Planning: An operational activity which compiles an aggregate plan for the production process. Air Transport Association of America: A U.S. airline industry association. Air Taxi: An exempt for-hire air carrier that will fly anywhere on demand: air taxis are restricted to a maximum payload and passenger capacity per plane. Airport and Airway Trust Fund: A federal fund that collects passenger ticket taxes and disburses those funds for airport facilities. Air Cargo: Freight that is moved by air transportation. AGVS: See Automated Guided Vehicle System Air Cargo Containers: Containers designed to conform to the inside of an aircraft. There are many shapes and sizes of containers. Air cargo containers fall into three categories: 1) air cargo pallets 2) lower deck containers 3) box type containers. Air Waybill (AWB): A bill of lading 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 of destination according to specified conditions. Aggregate Plan: A plan for the production process, 2 to 18 months in advance to give management an idea to of what quantity of materials and other resources are to be procured and when, so that the total cost of operations of the organization is kept to the minimum over that period. Definitions compiled by: Kate Vitasek www.scvisions.com CSCMP does not take responsibility for these definitions nor endorses these as official definitions except as noted. Page 7 of 212
SUPPLYCHAINMANAGEMENTTERMSandGLOSSARYUpdated: February 2010Alaskan Carrier:Afor-hire air carrier that operates within the state of Alaska.Alert:SeeActionMessageAlgorithm: A clearly specified mathematical process for computation; a set of rules, which, if followed, give aprescribed result.All-cargo carrier: An air carrier that transports cargo onlyAllocated Item: A feature of an inventory control and order management system which allows for quantitiesavailable in inventory to be associated with a customer or production order so that the quantity cannot otherwise beused.Allocation: 1) In cost accounting, a distribution of costs using calculations that may be unrelated to physicalobservations 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 ordermanagement,allocation ofavailable inventoryto customerandproductionorders.Allocation Costing: A method of allocating indirect / overhead costs to inventory items and costs of sales.Seealso:AbsorptionCostingAlpha Release: A very early release of a product to get preliminary feedback about the feature set and usability.Alternate Dispute Resolution (ADR): Any of a number of methods (such as mediation, arbitration, mock trials,etc)usedtoresolvedisputes outside of litigation.Alternate Routing:In a production environment this is an optional process for manufacturing or assembly of aproduct, which may be employed due to unavailability of a primary work center, or choice of non-standardcomponents.May also refer to a transportation route which is different than what would normally betaken,perhapsdue to weather.American Customer Satisfaction Index (AcsI): Released for the first time in October 1994, an economicindicator and cross industry measure of the satisfaction of U.S. household customers with the quality of the goodsand services available to them-both those goods and services produced within the United States and those providedasimportsfromforeignfirmsthathavesubstantialmarketsharesordollarsales.TheAcSIisco-sponsoredbytheUniversity of Michigan Business School, ASQand the CFI Group.American National StandardsInstitute(ANsI):A non-profit organization chartered to develop,maintain,andpromulgate voluntary U.S.national standards in a number of areas,especially with regards to setting EDI standards.ANSIistheU.S.representativetotheInternational Standards Organization (ISO)Definitions compiled byKateVitasekwww.scvisions.comCSCMPdoesnottakeresponsibilityforthetfficialdefiniticept as notededehinitionsnorPage 8 of 212
Updated: February 2010 TERMS and GLOSSARY SUPPLY CHAIN MANAGEMENT Alaskan Carrier: A for-hire air carrier that operates within the state of Alaska. See also: Absorption Costing 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 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 of Michigan Business School, ASQ and the CFI Group. Alternate Routing: In a production environment this is an optional process for manufacturing or assembly of a 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 be taken, perhaps due to weather. Alpha Release: A very early release of a product to get preliminary feedback about the feature set and usability. Alternate Dispute Resolution (ADR): Any of a number of methods (such as mediation, arbitration, mock trials, etc) used to resolve disputes outside of litigation. Allocation Costing: A method of allocating indirect / overhead costs to inventory items and costs of sales. 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 of available inventory to customer and production orders. 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 order so that the quantity cannot otherwise be used. All-cargo carrier: An air carrier that transports cargo only. Algorithm: A clearly specified mathematical process for computation; a set of rules, which, if followed, give a prescribed result. Alert: See Action Message Definitions compiled by: Kate Vitasek www.scvisions.com CSCMP does not take responsibility for these definitions nor endorses these as official definitions except as noted. Page 8 of 212
SUPPLYCHAINMANAGEMENTTERMSandGLOSSARYUpdated: February 2010American Society for Quality (AsQ):A professional organization with more than 100,o00 members whichadvances learning,quality improvement,and knowledge exchangeto improvebusinessresuits,and to create betterworkplacesandcommunitiesworldwide.AmericanSocietyforTestingandMaterials(AsTM):Not-for-profit organizationthatprovides aforum forthedevelopmentand publication ofvoluntary consensus standardsfor materials,products,systems and services.American SocietyforTraining and Development (ASTD):Amembership organization providing materials,educationandsupportrelatedtoworkplacelearningandperformance.AmericanSocietyof Transportation&Logistics:Aprofessionalorganization in thefield of logisticsAmerican Standard Code for Information Interchange (AScII): ASCII format -simple text based data with noformatting. The standard code for information exchange among data processing systems. Uses a coded character setconsisting of 7-bit coded characters (8bits including parity check).AmericanTruckingAssociation,Inc.(ATA):A motorcarrier industry associationthatis madeup of subconferences representing various sectors ofthemotorcarrier industry.American WaterwayOperators:A domesticwatercarrier industryassociation representing bargeoperators ontheinland waterways.AMC:The US Air Force Air Mobility Command's mission is to provide global air mobility.The command also plays acrucial role in providing humanitarian support at home and around the world.AMC Airmen--active duty, Air NationalGuard,AirForceReserveand Civil ReserveAirFleet.AMFc:Air Force Material Command conducts research, development, testing and evaluation, and provides theacquisition management services and logistics support necessaryto keep Air Force weapon systems readyfor war.The command develops,acquiresand sustains the aerospace power neededto defendtheUnited States and itsinterestsfortodayandtomorrow.AMS: See Automated Manifest SystemAmtrak:The National Railroad Passenger Corporation, a federally created corporation that operates most of theUnited States'intercity passenger rail service.Analysis of Variance (ANovA):A statistical term that refers to a collection of statistical models whichtest themeansof severalgroupstodetermine ifthemeansareequal.Andon:A manufacturing term referring to a signboard incorporating signal lights,audio alarms,and text or otherdisplaysinstalledataworkstationtonotifymanagementandotherworkersofaqualityorprocessproblemDelfinitions compiled by:KateVitasekwww.scvisions.comCSCMPdoesnottakeresponsibilityforthefficialdefiniticept as notedoet山Page 9 of 212
Updated: February 2010 TERMS and GLOSSARY SUPPLY CHAIN MANAGEMENT AMC: The US Air Force 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. AMC Airmen-active duty, Air National Guard, Air Force Reserve and Civil Reserve Air Fleet. AMFC: Air Force Material 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 aerospace power needed to defend the United States and its interests for today and tomorrow. 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 if the means are equal. Amtrak: The National Railroad Passenger Corporation, a federally created corporation that operates most of the United States' intercity passenger rail service. 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 of a quality or process problem. American Waterway Operators: A domestic water carrier industry association representing barge operators on the inland waterways. American Trucking Association, Inc. (ATA): A motor carrier industry association that is made up of sub conferences representing various sectors of the motor carrier industry. American Standard Code for Information Interchange (ASCII): ASCII format - simple text based data with no formatting. The standard code for information exchange among data processing systems. Uses a coded character set consisting of 7-bit coded characters (8 bits including parity check). American Society of Transportation & Logistics: A professional organization in the field of logistics. American Society for Training and Development (ASTD): A membership organization providing materials, education and support related to workplace learning and performance. 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 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 better workplaces and communities worldwide. Definitions compiled by: Kate Vitasek www.scvisions.com CSCMP does not take responsibility for these definitions nor endorses these as official definitions except as noted. Page 9 of 212
SUPPLYCHAINMANAGEMENTTERMSandGLOSSARYUpdated:February2010Animated GIF:A file containing a series of GIF(Graphics InterchangeFormat) images that are displayed in rapidsequencebysomeWebbrowsers,givingananimatedeffect.See also:GIFANovA:SeeAnalysisofVarianceANsI:SeeAmericanNationalStandardsInstituteANsIAscx12:AmericanNationalStandardsInstituteAccreditedStandardsCommitteeX12.ThecommitteeofANSI that is charted with setting EDI standards.ANSI Standard:A published transaction set approved by ANSI.The standards are reviewed every six months.Anticipated DelayReport:A report,normallyhandwritten,which is created by the procurement and productionareastoadvisemanagementregardingorderswhicharenotexpectedtobecompletedontime.AnticipationInventories:Extra stocks of inventory which are being held above known requirement is order toaccommodatetrendsorpromotions.Mayalsobeusedtohedgeagainstriskof supplyproblems.Anticipation Order: An order placed in advance of the availability of a product for delivery at a future date.Anticipation orders are frequently used in the retail environment where suppliers are previewing new products attrade shows and want togeta commitmentfrom their retailcustomerspriortoproduction of seasonal items.Anti-Deficiency Act [Title 31, U.S. Code, Sec1341 & 1517]: Prohibits making or authorizing an obligation inexcess of the amount available; forbids obligation to pay money from the Us Treasury in advance of theappropriation;requiresagencytofixresponsibilityforviolationsoftheAct.Anti-Dumping Duty: An additional import duty imposed in instances where imported goods are priced at less thanthe normal price charged in the exporter's domestic market and cause material injury to domestic industry in theimporting country.Any-quantity Rate (AQ): The same rate applies to any size shipment tendered to a carrier; no discount rate isavailableforlargeshipments.A/P:SeeAccountsPayableApplicability Statement 2 (As2):A specification for Electronic Data Interchange between businesses using theInternet's Web pageprotocol,theHypertext TransferProtocol (HTTP).Thespecification isanextension of the earlierversion, Applicability Statement 1 (AS1). Both specifications were created by EDI over the Internet (EDINT), aworking group of the Internet Engineering Task Force (IETF) that develops secure and reliable businesscommunicationsstandards.Definitions compiled by:KateVitasekwww.scvisions.comCSCMPdoesnottakeresponsibilityforthefficialdefinitcept as notedoet山Page 10.of 212
Updated: February 2010 TERMS and GLOSSARY SUPPLY CHAIN MANAGEMENT ANOVA: See Analysis of Variance 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. Anti-Deficiency Act [Title 31, U.S. Code, Sec1341 & 1517]: Prohibits making or authorizing an obligation in excess of the amount available; forbids obligation to pay money from the US Treasury in advance of the appropriation; requires agency to fix responsibility for violations of the Act. Anticipation Order: An order placed in advance of the availability of a product for delivery at a future date. Anticipation orders are frequently used in the retail environment where suppliers are previewing new products at trade shows and want to get a commitment from their retail customers prior to production of seasonal items. ANSI Standard: A published transaction set approved by ANSI. The standards are reviewed every six months. ANSI ASC X12: American National Standards Institute Accredited Standards Committee X12. The committee of ANSI that is charted with setting EDI standards. ANSI: See American National Standards Institute Animated GIF: A file containing a series of GIF (Graphics Interchange Format) images that are displayed in rapid sequence by some Web browsers, giving an animated effect. See also: GIF Any-quantity Rate (AQ): The same rate applies to any size shipment tendered to a carrier; no discount rate is available for large shipments. Applicability Statement 2 (AS2): Aspecification for Electronic Data Interchange between businesses using the Internet's Web page protocol, the Hypertext Transfer Protocol (HTTP). The specification is an extension of the earlier version, Applicability Statement 1 (AS1). Both specifications were created by EDI over the Internet (EDIINT), a working group of the Internet Engineering Task Force (IETF) that develops secure and reliable business communications standards. A/P: See Accounts Payable 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 of supply problems. 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. Definitions compiled by: Kate Vitasek www.scvisions.com CSCMP does not take responsibility for these definitions nor endorses these as official definitions except as noted. Page 10 of 212