Cost Management and Quality Assurance Terms and Concepts, Apuntes de Inglés

¡Descarga Cost Management and Quality Assurance Terms and Concepts y más Apuntes en PDF de Inglés solo en Docsity! SUPPLY CHAIN and LOGISTICS TERMS and GLOSSARY Updated February, 2010 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 136 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 of their inefficiency. ABB:See: Activity Based Budgeting ABC: See:Activity Based Costing ABC Classif ication: 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 of items. 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 the level 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 of times or rate ofwhich theproduct is accessed. ABC Inventory Control: A method of inventory control which divides items into categories based on valueofusage, something like aPareto division where the items which constitute the 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. SUPPLY CHAIN and LOGISTICS TERMS and GLOSSARY Updated February, 2010 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 136 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. SUPPLY CHAIN and LOGISTICS TERMS and GLOSSARY Updated February, 2010 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 136 Aggregate Inventory: The total inventory available for any given product across multiple locations and/or multiple stock-keeping units. Aggregate Inventory Management: A method ofmanaging inventory through the use of levels set against overall inventory or class value. Aggregate Plan: A plan for theproduction process, 2 to 18 months in advance to give management an idea to ofwhat quantity ofmaterials and other resources are to be procured and when, so that the total cost ofoperations of the 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 passenger ticket taxes and disburses those funds for airport facilities. Air Taxi:An exempt for-hire air carrier that will fly anywhere on demand: air taxis 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 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 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 of rules, which, if followed, 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 be taken, 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 of litigation. SUPPLY CHAIN and LOGISTICS TERMS and GLOSSARY Updated February, 2010 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 136 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 of logistics. 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 carrier industry 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. AMCAirmen--active 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 if the 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. SUPPLY CHAIN and LOGISTICS TERMS and GLOSSARY Updated February, 2010 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 136 ANSI Standard: A published transaction set approved by ANSI. The standards are reviewed every six months. Anti-Def iciency 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 of the appropriation; requires agency to fix responsibility for violations of the 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 advanceof the 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 rate is 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 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. 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. SUPPLY CHAIN and LOGISTICS TERMS and GLOSSARY Updated February, 2010 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 136 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 average inventory level over a period of time. Implicit in this definition is a“sampling period”which is the amount of time between inventory measurements. For example, daily inventory levels over a two-week period of time, hourly inventory levels over oneday,etc. The average inventory for thesame total period of time 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 of the 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, if the 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. SUPPLY CHAIN and LOGISTICS TERMS and GLOSSARY Updated February, 2010 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 136 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 order line. Also See:Balance to 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 data to 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 of the 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. SUPPLY CHAIN and LOGISTICS TERMS and GLOSSARY Updated February, 2010 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 136 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 where transactions 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 of total 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 of the 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. SUPPLY CHAIN and LOGISTICS TERMS and GLOSSARY Updated February, 2010 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 136 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 of rules 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 order to reduce cost. Break-Even Chart: A graphical tool used to chart the“break-even point” – the point where the 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 of the next pick. When the last worker finishes his pick at the end of the pick line, he or she walks back upstreamto take over thework of their 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. SUPPLY CHAIN and LOGISTICS TERMS and GLOSSARY Updated February, 2010 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 136 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 where two or more products are combined into one transaction 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 of the 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 of the 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 of the IT functions of the 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 of the commercial context ofa business—its mission statement, goals, and strategic plan. Reviews are typically held each quarter and are attended by senior managers of functional areas fromboth supplier and customer organizations. SUPPLY CHAIN and LOGISTICS TERMS and GLOSSARY Updated February, 2010 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 136 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 of the 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 SUPPLY CHAIN and LOGISTICS TERMS and GLOSSARY Updated February, 2010 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 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 the traditional 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 of the certification may be a chemist or any other authorized body such as an inspection firmretained by the exporter or importer. Certificate of Origin: An international business document that certifies the country oforigin of the 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 carrier that 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 of the change effort. SUPPLY CHAIN and LOGISTICS TERMS and GLOSSARY Updated February, 2010 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 21 of 136 Change Management: The process of managing and monitoring all changes to products and processes. Change management is typically instituted to avoid risks associated with ad-hoc change, and to ensure a consistent process. Change Order:A document or digital record which authorizes and provides notification ofa modification to a product or order. Changeover: Process of making necessary adjustments to change or switchover the type of products produced on a manufacturing line. Changeovers usually lead to downtime and for the most part companies try to minimize changeover time to help reduce costs. Channel: 1) A method whereby a business dispenses its product via channels such as a retail or distribution channel, call center, or web-based electronic storefront, and 2) A push technology that allows users to subscribe to a website to browse offline, automatically display updated pages on their desktops, and download or receive notifications when website pages are modified. Channels are available only in browsers that support channel definitions—such as Microsoft Internet Explorer version 4.0 and above. Channel Conflict: This occurs when various sales channels within a company's supply chain compete with each other for the same business. An example is where a retail channel is in competition with a web based channel set up by the company. Channel Partners: Members of a supply chain (i.e. suppliers, manufacturers, distributors, retailers, etc.) who work in conjunction with one another to manufacture, distribute, and sell a specific product. Channels of Distribution: The downstream flow of products through various outlets or ‘channels’ which may consist of distributors, retail stores, on-line fulfillment, etc. Also See: Distribution Channel Chargeback Provisions: Terms within a contract which govern how a company can charge a supplier for failure to perform agreed upon required activities. Charging Area: A warehouse area where a company maintains battery chargers and extra batteries to support a fleet of electrically powered materials handling equipment. The company must maintain this area in accordancewith government safety regulations. Chock: A wedge, usually made ofhard rubber or steel, that is firmly placed under thewheel ofa trailer, truck, or boxcar to stop it fromrolling. Churning The practice of customers switching to another supplier based on special discount offers. Particularly used in the cellular telephone or credit card industries. Sometimes this term is applied to supplier management where a practice of choosing the low price vendor is emphasized over maintaining strategic relationships. CI: See: Continuous Improvement, Catalog Item CIF: See: Cost, Insurance,Freight. City Driver: A motor carrier driver who drives a local route as opposed to a long-distance, intercity route. Civil Aeronautics Board: A federal regulatory agency that implemented economic regulatory controls over air carriers. CL: Carload rail service requiring shipper to meet minimum weight. Claim: A charge made against a carrier for loss, damage, delay, or overcharge. Class I carrier:A classification of regulated carriers based upon annual operating revenues—motor carriers ofproperty: > or = $5 million; railroads: > or =$50 million; motor carriers ofpassengers: > or =$3 million. Class II carrier: A classification of regulated carriers based upon annual operating revenues—motor carriers of property: $1-$5 million; railroads: $10-$50 million; motor carriers ofpassengers: < or = $3 million. Class III carrier: A classification of regulated carriers based upon annual operating revenues—motor carriers of property: < or = $1 million; railroads: < or = $10 million. SUPPLY CHAIN and LOGISTICS TERMS and GLOSSARY Updated February, 2010 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 22 of 136 Classif ication: An alphabetical listing \of commodities, the class or rating into which the commodity is placed, and the minimum weight necessary for the rate discount; used in the class rate structure. Classif ication Yard: A railroad terminal area where rail cars are grouped together to formtrain units. Class Rate: A rate constructed froma classification and a uniformdistance system. A class rate is available for any product between any two points. Clearinghouse: A conventional or limited purpose entity generally restricted to providing specialized services, such as clearing funds or settling accounts. Click-and-Mortar: With reference to a traditional brick-and-mortar company that has expanded its presence online. Many brick-and-mortar stores are now trying to establish an online presence but often have a difficult time doing so for many reasons. Click-and-mortar is "the successful combination ofonline and real world experience." CLIN (Contract Line Items Number): Specific items or services separately priced under a contract. Clip Art: A collection of icons, buttons, and other useful image files, along with sound and video files that can be inserted into documents/web pages. Clipboard:A temporary storage area on a computer for cut or copied items. CLCA: See: Closed-loop corrective action. CLM: See: Council of Supply Chain Management Professionals. Closed-Loop Corrective Action (CLCA): A sophisticated engineering system designed to document, verify and diagnose failures, recommend and initiate corrective action, provide follow-up and maintain comprehensive statistical records. Closed-Loop MRP: A production and operations environment which manages materials and production processes through a full closed loop cycle beginning with planning, proceeding through the execution process, and providing any resulting feedback and corrective actions back to the planning function to validate and improve future processes. Cloud Computing: An emerging computing paradigm where data and services reside in massively scalable data centers and can be ubiquitously accesses from any connected devices over the internet. Similar to the“on demand” concept ofSaaS or ASP computing services with the exception of the broad nature of the network ofcomputers. CLS (Contractor Logistics Support): A term in performance based logistics which refers to support in which maintenance operations for a particular military systemare performed exclusively by contract support personnel. CLS (Cost Plus): used for transitional support while cost and resourcebaselines are being tracked and defined. CLS (Fixed Price): Used when cost and resource baselines are well-documented, cost and pricing risk are minimal, and both DoD and contractor can define price, incentives and performance outcomes with a high degree ofconfidence. Cluster Picking: Cluster picking is a methodology of picking into multiple order containers at one time. The containers could be totes containing order batches, discreteorder shippers, or discrete order totes. CM: See: Credit memo CMI: See: Co-managed Inventory CMM: See: Capability Maturity Model CMMS: See: Computerized Maintenance Management System SUPPLY CHAIN and LOGISTICS TERMS and GLOSSARY Updated February, 2010 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 25 of 136 Component: Material that will contribute to a finished product but is not the finished product itself. Examples would include tires for an automobile, power supply for a personal computer, or a zipper for a ski parka. Note that what is a component to the manufacturer may be considered thefinished product of their supplier. Computer-Aided Design (CAD)—Computer-based systems for product design that may incorporate analytical and “what if” capabilities to optimize product designs. Many CAD systems capture geometric and other product characteristics for engineering-data-management systems, producibility and cost analysis, and performance analysis. In many cases, CAD-generated data Computer Aided Engineering (CAE): The useofcomputers to model design options to stimulate their performance. Computer-Aided Manufacturing (CAM): Computerized systems in which manufacturing instructions are downloaded to automated equipment or to operator workstations. Computer-Aided Process Planning (CAPP): Software-based systems that aid manufacturing engineers in creating a process plan to manufacture a product whose geometric, electronic, and other characteristics have been captured in a CAD database. CAPP systems address such manufacturing criteria as target costs, target lead times, anticipated production volumes, availability of Computer-Based Training (CBT): Training that is delivered via computer workstation and includes all training and testing materials. Computer-Integrated Manufacturing (CIM): A variety of approaches in which computer systems communicate or interoperate over a local-area network. Typically, CIM systems link management functions with engineering, manufacturing, and support operations. In the factory, CIMsystems may control the sequencing of production operations, control operation of automated equipment and conveyor systems, transmit manufacturing instructions, capture data at various stages of the manufacturing or assembly process, facilitate tracking and analysis of test results and operating parameters, or a combination of these. Computerized Maintenance Management Systems (CMMS): Software-based systems that analyze operating conditions ofproduction equipment - - vibration, oil analysis, heat, etc. -- and equipment-failure data, and apply that data to the scheduling of maintenance and repair inventory orders and routine maintenance functions. A CMMS prevents unscheduled machine downtime and optimizes a plant's ability to process product at optimum volumes and quality levels. Computerized Process Simulation: Use ofcomputer simulation to facilitatesequencing ofproduction operations, analysis ofproduction flows, and layout ofmanufacturing facilities. Computerized SPC: See: Statistical process control Concurrent Engineering: A cross-functional, team-based approach in which the product and the manufacturing process are designed and configured within the same time frame, rather than sequentially. Ease and cost of manufacturability, as well as customer needs, quality issues, and product-life- cycle costs are taken into account earlier in the development cycle. Fully configured concurrent engineering teams include representation from marketing, design engineering, manufacturing engineering, and purchasing, as well as supplier––and even customer––companies. Conf iguration: Theselection and grouping ofcomponents and assemblies into a finished product. Conf iguration Excellence: Focuses on establishing and maintaining consistency ofa product orservice’s performance. It also looks at the functional and physical attributes ofa product with its requirements, design, and operational information throughout the product’s life. Conf igure/Package-to-Order: A process where the trigger to begin manufacture, final assembly or packaging of a product is an actual customer order or release, rather than a market forecast. In order to be considered a Configure-to-Order environment, less than 20% of the value-added takes place after the receipt of the order or release, and virtually all necessary design and process documentation is available at time oforder receipt. Conf irmation: With regards to EDI, a formal notice (by messageor code) froma electronic mailbox systemor EDI server indicating that a message sent to a trading partner has reached its intended mailbox or been retrieved by the addressee. Conf irming Order: A document similar to, or same as a purchase order, which is provided to a supplier as confirmation of a previous verbal purchase request. SUPPLY CHAIN and LOGISTICS TERMS and GLOSSARY Updated February, 2010 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 26 of 136 Conformance: A termused in quality management to confirmthe adherence to specification ofa product or service. Synonym: Compliance. CONOPS: Concept ofOperations. There are various uses and users for CONOPS. The primary purposeof the CONOPS is to provide a vision for an initiativeor desired capability. In general, the CONOPS provides guidance to those users requiring direction and/or information on developing their own documents, schedules, milestones, and plans. Conrail: The Consolidated Rail Corporation established by the Regional Reorganization Act of 1973 to operate the bankrupt Penn Central Railroad and otherbankrupt railroads in the Northeast; funding was provided by the 4-R Act of1976. Consensus:A state in which all the members ofa group support an action or decision, even ifsome of themdon't fully agree with it. Consignee: The party to whomgoods are shipped and delivered. The receiver ofa freight shipment. Consignment: The act of consigning—placing a person or thing in the possession of another, but retaining ownership until the goods are sold. This may apply to shipping or sale in a store (i.e., a consignment shop).Also See: Consignment Inventory Consignment Inventory: 1) Goods or product that are paid for when they are sold by the reseller, not at the time they are shipped to the reseller. 2) Goods or products which are owned by thevendor until they are sold to the consumer. Consignor: The party who originates a shipment ofgoods (shipper). The sender ofa freight shipment, usually theseller. Consolidation: Combining two or more shipments in order to realize lower transportation rates. Inbound consolidation fromvendors is called make- bulk consolidation; outbound consolidation to customers is called break-bulk consolidation. Consolidator: An enterprise that provides services to group shipments, orders, and/or goods to facilitate movement. Consortium: An association of two or more individuals, companies, organizations or governments (or any combination of these entities) with the objective ofparticipating in a common activity orpooling their resources for achieving a common goal. Constraint: A bottleneck, obstacle orplanned control that limits throughput or the utilization ofcapacity. Consul: A government official residing in a foreign country, charged with representing the interests ofhis orher country and its nationals. Consular Declaration: A formal statement made to the consul ofa country describing merchandise to be shipped to that consul's country. Approval must be obtained prior to shipment. Consular Documents: Special forms signed by the consul ofa country to which cargo is destined. ConsularInvoice: A document, required by some foreign countries, describing a shipment ofgoods and showing information such as the consignor, consignee, and value of the shipment. Certified by a consular official of the foreign country, it is used by the country's custom. Consultative Sales: A method ofselling that emphasizes customer needs and meeting those needs with solutions combining products and/orservices depending on customer profile. Consumer-Centric Database:Database with information about a retailer’ s individual consumers, used primarily for marketing and promotion. Consumer Packaged Goods (CPG): Consumable goods such as food and beverages, footwear and apparel, tobacco, and cleaning products. In general, CPGs are things that get used up and have to be replaced frequently, in contrast to items that people usually keep for a long time, such as cars and furniture. Consuming the Forecast: The practice of allowing forecast requirements to be reduced by actual orders received. This allows a planning system to avoid duplication ofdemand when actual customer orders for a period are received. Consumption Entry: An official Customs formused for declaration of reported goods, also showing the total duty due on such transaction. SUPPLY CHAIN and LOGISTICS TERMS and GLOSSARY Updated February, 2010 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 27 of 136 Contactless: Refers to the practice ofusing RFID, Smart Card or other forms of Near Field Communications technology to gather data electronically without theneed to actually make contact physically with the item.. Container: 1)A “box,” typically 10 to 40 feet long, which is primarily used for ocean freight shipments. For travel to and fromports, containers are loaded onto truck chassis or on railroad flatcars. 2) The packaging, such as a carton, case, box, bucket, drum, bin, bottle, bundle, or bag, that an item is packed and shipped in. Container Security Initiative (CSI): U.S. Customs program to prevent global containerized cargo from being exploited by terrorists. Designed to enhance security ofsea cargo container. Containerization: A system of intermodal freight transport using standard intermodal containers that are standardized by the International Organization for Standardization (ISO). These can be loaded and sealed intact onto container ships, railroad cars, planes, and trucks. Contingency Planning: Preparing to deal with risks such as environmental emergencies (e.g., floods) and non-emergency but still disruptive situations (e.g., strikes)before they occur. Continuous Flow Distribution (CFD): The streamlined pull of products in response to customer requirements while minimizing the total costs of distribution. Continuous Flow Manufacturing: A production system organized and sequenced according to the steps involved in the manufacturing process where the product moves seamlessly and continuously through the entire manufacturing process. Continuous-Flow, Fixed-Path Equipment: Materials handling devices that include conveyors and drag lines. Continuous Improvement (CI):A structured measurement driven process that continually reviews and improves processes and performance. Continuous Move: A practice used by some large shippers to ensure lower shipping rates and guaranteed capacity. The shipper works with a few core carriers to groups a series ofone-way hauls between suppliers, manufacturing plants, distribution centers and sometimes customers into a round trip. The carriers benefit from fewer empty miles, less idle time, better asset utilization and more regular routes. Continuous Order Release: A process for releasing orders as soon an order is available, versus releasing all orders in batches at specific times. Continuous Process Improvement (CPI): Continuous Process Improvement is a strategic approach for developing a culture of continuous improvement in the areas of reliability, process cycle times, costs in terms of less total resource consumption, quality, and productivity. Also See: Kaizen Continuous Replenishment: Continuous Replenishment is the practice of partnering between distribution channel members that changes the traditional replenishment process from distributor-generated purchase orders, based on economic order quantities, to the replenishment of products based on actual and forecasted product demand. Continuous Replenishment Planning (CRP): A program that triggers the manufacturing and movement of product through the supply chain when the identical product is purchased by an end user. Contract: A legally binding agreement between two or more parties to provide specific products or services. Contract Administration: The activities associated with managing contract compliance. Contract Carrier: Carrier engaged in interstate transportation ofpersons/property by motor vehicleon a for-hire basis, but under continuing contract with one or a limited number ofcustomers to meet specific needs. Contract Manufacturing: A relationship where a third party manufactures products that are packaged under another company's label. SUPPLY CHAIN and LOGISTICS TERMS and GLOSSARY Updated February, 2010 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 30 of 136 Cost-to-Serve: A chain of activities required to get a company’s products or services into their customers’ stores and onto their shelves. This includes order taking, picking and freighting theorder, arranging promotions by sales reps, processing credits, and merchandising theproduct. Cost Trade-off : The interrelationship among system variables indicates that a change in one variable has cost impact upon other variables. A cost reduction in one variable may be at the expense of increased cost for othervariables, and vice versa. Cost Variance: In termused in cost accounting to describe the difference between actual cost and what was budgeted or expected. COTD: See: Complete and On-Time Delivery COTS: See: Commercial off-the-shelf Courier Service: A fast, door-to-door service for high-valued goods and documents; firms usually limit service to shipments of50 pounds or less. Council of Logistics Management (CLM): See: Council of Supply Chain Management Professionals. Council of Supply Chain Management Professionals (CSCMP): The CSCMP is a not-for-profit professional business organization consisting of individuals throughout the world who have interests and/or responsibilities in logistics and supply chain management, and the related functions that make up these professions. Its purpose is to enhance the development of the logistics and supply chain management professions by providing these individuals with educational opportunities and relevant information through a variety ofprograms, services, and activities. CountBack: A process in which order pickers selecting full cases from pallet rack locations performan immediate cycle count at the completion of the pick for that location, using a Radio Frequency orvoice terminal. The use of the count-back programis just one component ofbeing able to prove perfect order picking and the highest degree of inventory accuracy Country of Origin (COO): The country of manufacture, production or growth fromwhere a product comes. CPAF (Cost Plus Award-Fee): A type ofPBL contract pricing that combines a cost basis with an award fee feature. The incentive feature allows a base fee to be adjusted based on success in meeting target performance goals. CPFR®: See: CollaborativePlanning Forecasting and Replenishment CPIF (Cost Plus Incentive-Fee): A type of PBL contract pricing that combines a cost basis with an incentive fee feature. The incentive feature allows a base fee to be adjusted based on the relationship ofactual costs to target costs. CPG: See: Consumer Packaged Goods CPI: See: Continuous Process Improvement Cradle to Grave: See: Lifecycle Credit Level: The amount ofpurchasing credit a customer has available. Usually defined by the internal credit department and reduced by any existing unpaid bills oropen orders. Credit Memo (CM): A document issued to provide authorization for a customer account credit, typically due to product returns, billing errors or other adjustments. Critical Differentiators: This is what makes an idea, product, service or business model unique. Critical Success Factor (CSF): Necessary conditions for success that can be measured quantitatively for effectiveness, economy, and efficiency; those few areas where satisfactory performance is essential in order for a business to succeed; characteristics, conditions, or variables that have a direct influence on a customer's satisfaction with a specific business process; and the set of activities that must be done correctly if a vision is to be achieved. Critical Value Analysis: A modified ABC analysis in which a subjective valueofcriticalness is assigned to each itemin the inventory. SUPPLY CHAIN and LOGISTICS TERMS and GLOSSARY Updated February, 2010 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 31 of 136 Cross Functional: A term used to describe a process or an activity that crosses the boundary between functions. A cross functional team consists of individuals from more than one organizational unit or function. Cross Functional “Process” Metric: A number resulting froman equation, showing the output ofa process that spans departments. These types of measures are also known as a process measures because they span across the breadth ofa process, regardless for functional/departmental segregation within the process. Example: Perfect Order Index. Cross Sell: The practice of attempt¬ing to sell additional products to a customer during a sales call. For example, when the customer service representative (CSR) presents a camera case and accessories to a customer that is ordering a camera. Cross-Shipment: A term used widely in the electronics industry when shipment of a replacement part or device is made in advance of physical return of the defectivepart. Cross-Subsidy: In cost accounting, the inequitable assignment of costs to cost objects, which leads to over costing or under costing them relative to the amount of activities and resources actually consumed. This may result in poor management decisions that are inconsistent with the economic goals of the organization. Crossdock / Cross Docking (XDK): A distribution system in which merchandise received at the warehouse or distribution center is not put away, but instead is readied for shipment to retail stores. Cross docking requires close synchronization of all inbound and outbound shipment movements. By eliminating the put-away, storage and selection operations, it can significantly reduce distribution costs. CRP: See: Continuous Replenishment Program Critical Success Factor (CSF): Those activities and/or processes that must be completed and/or controlled to enable a company to reach its goals. CRM: See: Customer Relationship Management CRR: See: Cost Recovery Rate CSCMP: See: Council of SupplyChainManagement Professionals. CSF: See: Critical Success Factor CSI: See: Container Security Initiative CSR: See: Customer ServiceRepresentative CTP: See: Capacity to Promise C-TPAT: See: Customs-Trade Partnership against Terrorism Cube: The volume of the shipment or package (the product of the length x width x depth). Cubage: Cubic volume ofspace being used or available for shipping orstorage. Cube Utilization: The use of space within a storage area, trailer, or container. Cube utilization is generally calculated as a percentage of total space or of total "usable" space. Note that there is a point at which too high percent utilization can create inefficiency. Cubic Space: The measurement of total space or volume available or required in transportation and warehousing. The floor space multiplied by the height. Cumulative Available-to-Promise: A calculation which yields future availability based on planned production or purchases and consumption across multiple futureperiods. Also See:Available-to-Promise SUPPLY CHAIN and LOGISTICS TERMS and GLOSSARY Updated February, 2010 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 32 of 136 Cumulative Lead Time: The total time required to source components, build and ship a product. Cumulative Source/Make Cycle Time: The cumulative internal and external lead time to manufacture shippable product, assuming that there is no inventory on-hand, no materials orparts on order, and no prior forecasts existing with suppliers. (An element ofTotal Supply Chain ResponseTime) Calculation: The critical path along the following elements: Total Sourcing Lead Time, Manufacturing Order Release to Start Manufacturing, Total Manufacture Cycle Time (Make-to-Order, Engineer-to-Order, Configure/Package-to-Order) or Manufacture Cycle Time (Make-to-Stock), Complete Manufacture to Ship Time Note: Determined separately for Make-to-Order, Configure/Package-to-Order, Engineer-to-Order, and Make-to-Stock products Currency Adjustment Factor (CAF): An added charge assessed by water carriers for currency value changes. Current Good Manufacturing Practices (CGMP): Regulations enforced by the U.S. Food and Drug Administration for food and chemical manufacturers and packagers. Customer: 1) In distribution, the trading partner or reseller (i.e., Wal-Mart, Safeway, or CVS), and 2) In direct-to-consumer, the end customer or user. Customer Acquisition or Retention: The rate by which new customers are acquired, or existing customers are retained. A key selling point to potential marquis partners. Also See: Marquis Partner Customer Driven: The end user, or customer, motivates what is produced orhow it is delivered. Customer Facing: Those personnel or activities whose jobs entail actual contact with the customer. Customer Interaction Center: See: Call Center Customer Operations Performance Center (COPC): Call center consulting, certification, trainingandbenchmarking company Customer Order: An actual order, not a forecast or planned order, froma customer for specific products orservices. Customer/Order Fulfillment Process: The typical business process which includes receipt and processing ofa customer order through delivery. Customer Prof itability: The practice ofplacing a valueon the profit generated by business done with a particular customer. Customer Receipt of Order to Installation Complete: Average lead-time fro m receipt of goods at the customer to the time when installation (if applicable) is complete, including the following sub-elements: time to get product up and running, and product acceptance by customer. (An element ofOrder Fulfillment Lead Time) Note: Determined separately for Make-to-Order, Configure/Package-to-Order, Engineer-to-Order, and Make-to-Stock products. Customer Relationship Management (CRM): This refers to information systems that help sales and marketing functions, as opposed to the Enterprise ResourcePlanning (ERP), which is for back-end integration. Customer Segmentation:Dividing customers into groups based on specific criteria, such as products purchased, customer geographic location, etc. Customer Service: Activities between the buyer and seller that enhance or facilitate the sale or use of the seller’s products or services. Customer Service Ratio: See: Percent of Fill Customer Service Representative (CSR): An individual who provides customer support via telephone in a call center environment. Customer Signature/Authorization to Order Receipt: : Average lead time from customer authorization of an order to the time that that order is received and order entry commences. This is an element oforder fulfillment lead time. SUPPLY CHAIN and LOGISTICS TERMS and GLOSSARY Updated February, 2010 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 35 of 136 Days of Supply: Measure of quantity of inventory-on-hand, in relation to number of days for which usage which will be covered. For example, if a component is consumed in sales or manufacturing at the rate of 100 per day, and there are 1,585 units available on-hand, this represents 15.85 days supply. The goal, in most cases, is to demonstrate efficiency through having a high turnover rate and therefore a low days’ inventory. However, realize that this ratio can be unfavorable if either too high or too low. A company must balance the cost of carrying inventory with its unit and acquisition costs, with the potential of lost business and ultimately lost customers if shortages are pervasive. Days' Inventory: See:“Days ofSupply”. Days Payable Outstanding (DPO) is an estimate of the length of time the company takes to pay its vendors after receiving inventory. If the firm receives favorable terms fromsuppliers, it has the net effect ofproviding the firmwith free financing. If terms are reduced and the company is forced to pay at the time of receipt of goods, it reduces financing by the trade and increases the firm's working capital requirements. It is calculated: Days Payable Outstanding = 365 / Payables Turnover (Payables Turnover =Purchases / Payables). Days Sales Outstanding (DSO): also known as Collection Period (period average), is a financial indicator that shows both the age, in terms ofdays, of a company's accounts receivable and the average time it takes to turn the receivables into cash. It is compared to company and industry averages, as well as company selling terms (e.g., Net 30) for determination of acceptability by the company. DSO is calculated: DSO = (Total Receivables/Total Credit Sales in the Period Analyzed) x Number of Days in the Period Analyzed. Note: Only credit sales are to be used. Cash sales are excluded. DBR: See:Drum-Buffer-Rope DC: See: Distribution Center DC Bypass: Also known as "Direct to Store" is a practice that occurs when vendors ship goods directly to the retail store instead of to the retailer's distribution center (DC). Dead on Arrival (DOA): A termused to describe products which are not functional when delivered. Synonym: Defective. Deadhead: The return ofan empty transportation containerback to a transportation facility. Commonly used description ofan empty backhaul. . See: backhauling. Deadweight: The total lifting capacity of a ship expressed in tons of 2240 lbs. It is the difference between the displacement light (without cargo, passengers, fuel, etc.) and the displacement loaded. Decentralized Authority: A situation in which management decision-making authority is given to managers at many levels in the organizational hierarchy. Decision Support System (DSS): Software that speeds access and simplifies data analysis, queries, etc. within a database management system. Declaration of Dangerous Goods: To comply with the U.S. regulations, exporters are required to provide special notices to inland and ocean transport companies when goods are hazardous. Declared Value: The value of the goods, declared by the shipper on a bill of lading, for the purpose of determining a freight rate or the limit of the carrier's liability. Also used by customs as the basis for calculation ofduties, etc. Decomposition: A forecasting practice which separates time series data are separated into two or more component series which are each forecasted individually and themre-composited to product a final forecast. Useful where the individual components are subject to varying trends. Dedicated Contract Carriage: A third-party service that dedicates equipment (vehicles) and drivers to a single customer for its exclusive use on a contractual basis. Defect Analysis: A combination of flaw detection—so they may be removed from the product or process—and analysis of defects and errors received—to prevent future defects in theproduct or process. SUPPLY CHAIN and LOGISTICS TERMS and GLOSSARY Updated February, 2010 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 36 of 136 Defective Goods Inventory (DGI): Those items that have been returned, have been delivered damaged and have a freight claimoutstanding,or have been damaged in some way during warehouse handling. Defense Acquisition Executive: DAE Defense AutomaticAddressing System: DAAS Defense Federal Acquisition Regulation Supplement: DFARS Defense Financeand Accounting Service: DFAS Defense Logistics Agency (DLA): A possible sourceofsupply. Defense Working Capital Fund (DWCF): funding for PBL programs. Delimiters: 1) ASCII, characters which are used to separate data elements within a data stream. 2) EDI, two levels ofseparators and a terminator that are integrals part of a transferred data stream. Delimiters are specified in the interchange header. From highest to lowest level, the separators and terminator are segment terminator, data element separator, and component element separator (used only in EDIFACT). Delivery Appointment: The time agreed upon between two enterprises for goods or transportation equipment to arrive at a selected location. Typically used to help plan warehouse and receiving / inspection operations and to manage backup ofcarriers at loading docks. Delivery-Duty-Paid: Supplier/manufacturer arrangement in which suppliers are responsible for the transport of the goods they haveproduced, which is being sent to a manufacturer. This responsibility includes tasks such as ensuring products get through Customs. Delivery Performance to Commit Date: The percentage of orders that are fulfilled on or before the internal Commit date, used as a measure of internal scheduling systems effectiveness. Delivery measurements are based on thedate a complete order is shipped or the ship-to date ofa complete order. A complete order has all items on the order delivered in the quantities requested. An order must be complete to be considered fulfilled. Multiple line items on a single order with different planned delivery dates constitute multiple orders, and multiple planned delivery dates on a single line itemalso constitute multiple orders. Calculation: [Total number oforders delivered in full and on time to the scheduled commit date] / [Total number oforders delivered] Delivery Performance to Request Date: The percentage of orders that are fulfilled on or before the customer's requested date used as a measure of responsiveness to market demand. Delivery measurements are based on the date a complete order is shipped or the ship-to date of a complete order. A complete order has all items on the order delivered in the quantities requested. An order must be complete to be considered fulfilled. Multiple line items on a single order with different planned delivery dates constitute multiple orders, and multiple planned delivery dates on a single line itemalso constitute multiple orders. Calculation: [Total number oforders delivered in full and on time to the customer's request date] / [Total number oforders delivered] Delphi Method: A systematic forecasting method which relies on a panel of independent experts providing answers to questionnaires in two or more rounds in an effort to gain a consensus opinion. Delta Nu Alpha: A professional association of transportation and traffic practitioners. Demand: What customers or users actually want. Typically associated with the consumption of products or services as opposed to a prediction or forecast. Demand Based Production: When inventory is “pulled” through production a work center only when needed to satisfy customer a customer requirement. Demand Chain: Another name for the supply chain, but emphasizing customer or end-userdemand pulling materials and product through the chain. Demand Chain Management: Same as supply chain management, but emphasizing consumer pull versus supplier push. SUPPLY CHAIN and LOGISTICS TERMS and GLOSSARY Updated February, 2010 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 37 of 136 Demand-Driven Supply Network (DDSN): A system of technologies and processes that sense and react to real-time demand across a network of customers, suppliers and employees. In other words, a consumer purchase triggers real-time information movement throughout the supply network, which then initiates movement ofproduct through thenetwork. Demand Management: The proactive compilation of requirements information regarding demand (i.e., customers, sales, marketing, finance)and the firm's capabilities from the supply side (i.e., supply, operations and logistics management); the development of a consensus regarding the ability to match the requirements and capabilities; and the agreement upon a synthesized plan that can most effectively meet the customer requirements within the constraints imposed by supply chain capabilities. Demand Planning: The process of identifying, aggregating, and prioritizing, all sources of demand for the integrated supply chain of a product or service at the appropriate level, horizon, and interval. The sales forecast is comprised of the following concepts: 1. The sales forecasting level is the focal point in the corporate hierarchy where the forecast is needed at the most generic level (i.e., corporate forecast, divisional forecast, product line forecast, SKU, and SKU by location). 2. The sales forecasting time horizon generally coincides with the time frame o f the plan for which it was developed (i.e., annual, 1-5 years, 1- 6 months, daily, weekly, and monthly). 3. The sales forecasting time interval generally coincides with how often the plan is updated (i.e., daily, weekly, monthly, and quarterly). Demand Planning Systems: The systems that assist in the process of identifying, aggregating, and prioritizing, all sources of demand for the integrated supply chain ofa product or service at the appropriate level, horizon and interval. Demand Pull: The concept defined in lean theory which triggers production ofmaterials only upon receipt ofan actual customer order and aligns the production capacity of the supply chain to external customer demand patterns. Demand Shaping--Using programs, including price, new product launch, trade and sales incentives, promotions, and marketing programs, to increase what customers want to buy. Demand Sensing--Using channel data to reduce latency in sensing customer buying trends. Demand Signal: A signal from a consumer, customer or using operation that triggers the issue of product or raw material. The demand signal is most efficiently an electronic data transmission, but could be a physical document, kanban or telephone call. Demand-Side Analysis: A system based on economic, geographic and demographic trends, offering planners an opportunity to gain accurate perspective on future demand for products or services Demand Supply Balancing: The process of identifying and measuring the gaps and imbalances between demand and resources in order to determine how to best resolve the variances through marketing, pricing, packaging, warehousing, outsource plans or some other action that will optimize service, flexibility, costs, assets (or other supply chain inconsistencies) in an iterative and collaborative environment. Demand Time Fence (DTF): A feature of MRP type systems which allows for defining the point in time from the current date where all forecasted orders should be discarded in favor of actual customer orders. There may be a blend of actual and forecast orders beyond the time fence. See: consuming the forecast, planning time fence, time fence. Deming Circle: An iterative four-step problem-solving process typically used in business process improvement. It is also known as the Shewhart cycle, Deming Wheel, orPlan-Do-Study-Act.. Also See: Plan-Do-Check-Action Demographic Segmentation: A market segmentation strategy where the intended audience for a given product is divided according to geographic units, such as nations, states, regions, counties, cities, or neighborhoods. De-manufacturing: Refers to the process of going in and taking back assets and harvesting the components and parts. After the components are tested, they may be sold into the secondary market or may be upgraded to "as new" and used in production again. Demurrage: The carrier charges and fees applied when rail freight cars and ships are retained beyond a specific loading or unloading time. Also See: Detention SUPPLY CHAIN and LOGISTICS TERMS and GLOSSARY Updated February, 2010 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 40 of 136 Dispatching: The carrier activities involved with controlling equipment; involves arranging for fuel, drivers, crews, equipment, and terminal space. Distributed Inventory: Inventory that is geographically dispersed. For example, where a company maintains inventory in multiple distribution centers to provide a higher level ofcustomer service. Distribution: The activities associated with moving materials from source to destination. Can be associated with movement from a manufacturer or distributor to customers, retailers orother secondary warehousing / distribution points. Distribution Center (DC): The warehouse facility which holds inventory from manufacturing pending distribution to the appropriatestores. Distribution Channel: One or more companies or individuals who participate in the flow of goods and services from the manufacturer to the final user or consumer. Distribution Channel Management: The organizational and pipeline strategy for getting products to customers. Direct channels involve company sales forces, facilities, and/or direct shipments to customers. Indirect channels involve the use of wholesalers, distributors, and/or other parties to supply the products to customers. Many companies use both strategies, depending on markets and effectiveness. Distribution On Demand (DOD): The order fulfillment state a distribution operation achieves when it can respond, closest to real time, to changes in demand while shipping 100 percent customer compliant orders at the least cost. Distribution Planning: The process involved in planning for distribution activities. Activities may include inbound / outbound transportation, warehouse management, setting inventory levels, putaway and picking, packaging and loading, and various administrative functions. Distribution Requirements Planning (DRP): A system of determining demands for inventory at distribution centers and consolidating demand information in reverse as input to the production and materials system. Distribution Resource Planning (DRP II): A computerized system that integrates distribution with manufacturing by identifying requirements for finished goods and producing schedules for inventory and its movement within the distribution process. Distribution resource planning systems receive data on sales forecasts, customer order and delivery requirements, available inventory, logistics, and manufacturing and purchasing lead times. This data is analyzed to produce a time-phased schedule of resource requirements that is matched against existing supply sources and production schedules to identify the actions that must be taken to synchronizesupply and demand. Distribution Warehouse: A warehouse that stores finished goods and fromwhich customer orders are assembled. Distributor: A business and industry which acts as a third party local representative and distribution point for a manufacturing firm. These firms may performsome light assembly or kitting ofgoods, but generally provide a buffer for finished goods. Distributors typically purchase thegoods in quantity fromthe manufacturer and ship to customers in smaller quantities. Synonym: Wholesaler. Diversion: The practice of selling goods to a competitor that the vendor assumes would be used to service that Customer's store. Example; Grocery Store Chain A buys orange juice fromMinute Maid. Grocery Store Chain A, because of their sales volume or because ofpromotion, can buy product for $12.50 per case. Grocery Store Chain B, because ofa lower sales volume, buys the same orange juice for $14.50 per case. Grocery Store Chain A and Grocery Store Chain B get together and make a deal. Grocery Store Chain A resells that product to Grocery Store Chain B for $13.50 per case. Grocery Store Chain A makes $1.00 per case and Grocery Store Chain B gets product for $1.00 less per case than it can buy fromMinute Maid. Diversity: An aspect ofa company's social responsibility programrelated to the use ofall people in the workplace, regardless ofethnicity, gender, age, religion, disability, national origin and sexual orientation. DMAIC: An acronymused by Six Sigma practioners to remind themof the steps in a Six Sigma improvement project - Define, Measure, Analyze, Improve, Control. DMZSeparation: Demilitarized zones (DMZ) act as buffers between a trusted network (Supervisory Control and Data Acquisition or SCADA network) and the corporate network or Internet—separated through additional firewalls and routers—which provide an extra layer of security against cyber attacks. Utilizing DMZ buffers is becoming an increasingly common method to segregatebusiness applications from the SCADA network and is a highly recommended additional security measure. A DMZ is sometimes called a“Perimeter network” or a SUPPLY CHAIN and LOGISTICS TERMS and GLOSSARY Updated February, 2010 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 41 of 136 “Three-homed perimeter network.” SI Security, a leading intelligence security company, defines a DMZ as: “ anetwork added between a protected network and an external network in order to provide an additional layer ofsecurity.” Dock-to-Stock: A practice where pre-qualified product is received into inventory, eliminating the normal receiving and inspection handling involved. Also, a warehouse metric used to benchmark the amount of time required to perform the processes associated with getting received items into storage.. Dock-to-Stock Cycle Time: The elapsed time beginning with the delivery ofgoods fromthe supplier and ends when those goods are put away in the warehouse and recorded into the inventory management system Document: In EDI, a form, such as an invoice or a purchase order, that trading partners have agreed to exchange and that the EDI software handles within its compliance-checking logic. DOA: See: Dead on Arrival. Dock receipt: A receipt that indicates an export shipment has been delivered to a steamship company by a domestic carrier. Documentation: The papers attached or pertaining to goods requiring transportation and/or transfer of ownership. These may include the packing list, hazardous materials declarations, export / customs documents, etc. DOD: See: Distribution on Demand. DoDD: Department ofDefense Directive: DoDI: Department ofDefense Instruction DOE: See: Design of Experiments, Department of Energy Domain: A computer term for the following: 1) Highest subdivision of the Internet, for the most part by country (except in the U.S., where it's by type of organization, such as educational, commercial, and government). Usually the last part of a host name; for example, the domain part of ibm.com is .com, which represents the domain of commercial sites in the U.S. 2) In corporate data networks, a group of client computers controlled by a server system. Domestic Trunk Line Carrier: An air carrier classification for carriers that operate between major population centers. These carriers are now classified as major carriers. Dormant Route: A routeover which a carrier failed to provide service5 days a week for 13 weeks out ofa 26-week period. Double Bottoms:A motor carrier operation involving two trailers being pulled by one tractor. Double Order Point System: An inventory management system that has two order points, one which includes the normal demand expected during the replenishment cycle, and the second being associated with demand expected during the manufacturing process. The goal is to enable facilities in a distribution network to alert a central warehouse or manufacturing of future replenishment orders. Double-Pallet Jack:A mechanized device for transporting two standard pallets simultaneously. Double Stack: Two containers, oneon top of the other, loaded on a railroad flatcar; an intermodal service. Download: To merge temporary files containing a day’s or week’s worth of information with the main data base in order to update it. Downside Flex Agreement: This is a flexibility agreement with a supplier where the upside and down side are negotiated in advance for lead-time, cost, etc. Downstream: Referring to the demand side of the supply chain. One or more companies or individuals who participate in the flow of goods and services moving fromthe manufacturer to the final user or consumer. Opposite ofUpstream. SUPPLY CHAIN and LOGISTICS TERMS and GLOSSARY Updated February, 2010 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 42 of 136 DPC: See: Dynamic Process Control DPL: See: Denied Party List DPO: See: Days Payable Outstanding DPP: See: Direct product profitability Drayage: Transportation of materials and freight on a local basis, but intermodal freight carriage may also be referred to as drayage. Driving Time Regulations: Rules administered by the U.S. Department of Transportation that limit the maximu m time a driver may drive in interstate commerce; both daily and weekly maximu ms are prescribed. Drop: A situation in which an equipment operatordeposits a trailer or boxcar at a facility at which it is to be loaded or unloaded. Drop and Hook: An arrangement among shipper, carrier and consignee whereby the carrier leaves a trailer filled with freight at a destination and hooks up and hauls away an empty trailer. Drop Trailers: Trailers that are unhooked froma tractor when the truck reaches its destinations Drop Yard: temporary “parking lots” for containers or cargo, located off the wharves and sometimes next to rail yards or import warehouses. Drop Ship: A customer fulfillment strategy where products are shipped directly from the manufacturer or distributor to a customer bypassing the retail or secondary distribution location. Intended to expedite delivery and reduce handling costs. Billing transactions occur in the normal manner, only the material flow is altered. DRP: See: Disaster RecoveryPlanning DRP: See: Distribution Requirements Planning DRPII: See: Distribution Resources Planning Drum-Buffer-Rope (DBR): A manufacturing execution methodology, named for its three components. The drum is the physical constraint of the plant: the work center or machineor operation that limits the ability of the entire systemto produce more. The rest of the plant follows thebeat of the drum. They make sure the drumhas work and that anything the drumhas processed does not get wasted. DSD: See: Direct Store Delivery DSO: See: Days Sales Outstanding DSS: See: Decision Support System DTF: See: Demand TimeFence DTS: See: Direct StoreDelivery Dual Operation: A motor carrier that has both common and contract carrier operating authority. Dual Rate System: An international water carrier pricing system where a shipper signing an exclusive use agreement with the conference pays a lower rate (10% to %15) than non-signing shippers for an identical shipment. Dumping: The act ofselling goods below costs in selected markets in an effort to gain market share or eliminate competition. Dunnage: The materials used in packaging, holds and containers to protect goods fromdamage. SUPPLY CHAIN and LOGISTICS TERMS and GLOSSARY Updated February, 2010 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 45 of 136 Electronic Signature: A form of authentication that provides identification and validation of a transaction by means of an authorization code identifying the individual or organization Elkins Act: An amendment to the Interstate Commerce Act that prohibits giving rebates. E-mail: See:Electronic Mail eMarketplace: A web based service which allows individuals or companies to offer products and services or make bids to buy products or services. For example Covisint is the consortiumand thename of the automotive eMarketplace. Embargo: A prohibition upon exports or imports, either with specific products or specific countries. Empirical: Denotes information gained by means of observation, experience, or experiment. A central concept in science and the scientific method is that all evidence must be empirical, or empirically based, that is, dependent on evidence or consequences that are observable by the senses. Employee Performance Management (EPM): A systemto develop, monitor, provide feedback and train employees using performance measures to assess theiroverall development and understanding of tasks. Empowerment: The process of increasing the capacity of individuals or groups to make choices and to transform those choices into desired actions and outcomes. In the workplace empowered employees have the authority to make decisions and take action in their work areas without prior approval. Encryption: The transformation of readable text into coded text for security purposes. End Item: The top level item in a bill of materials. Typically a finished product which can be sold as a completed item or repair part. Synonym: Finished Goods Inventory. End-of -Life: Planning and execution at the end of the life of a product. The challenge is making just the right amount to avoid: 1) ending up with excess, which has to be sold at great discounts or scrapped, or2) ending up with shortages before the next generation is available. End-of -Life Inventory: Inventory on hand that will satisfy future demand for products that are no longer in production at your entity. This differs from obsolete inventory because there is an expected future requirement for theseproducts. Engineering Change: The formal revision process for engineering drawings/designs in order to modify or correct a part. This can also be called an engineering change order. Engineering Change Order (ECO):A documented and approved revision to a product or process specification. Engineering Change Proposal (ECP): A proposal submitted by the seller in response to a buyer request for an ECP to change the existing contract. It is an exploratory activity. Only the buyer can initiate the request for an ECP. This activity is usually preceded by a request for change. The user, buyer, or theseller can initiate a request for change to the contract. Engineer-to-Order: A process in which the manufacturing organization must first prepare (engineer) significant product or process documentation before manufacture may begin. Enroute: A termused for goods in transit or on the way to a destination. Enterprise Application Integration (EAI): A computer termfor the tools and techniques used in linking ERP and other enterprise systems together. Linking systems is key for e-business. Gartner say 'firms implementing enterprise applications spend at least 30% on point-to-point interfaces'. Also sometimes referred to as “ middleware”. Enterprise-Wide ABM: A management information system that uses activity-based information to facilitate decision making across an organization. SUPPLY CHAIN and LOGISTICS TERMS and GLOSSARY Updated February, 2010 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 46 of 136 Enterprise Resource Planning (ERP) System: A class of software for planning and managing “enterprise-wide” the resources needed to take customer orders, ship them, account for them and replenish all needed goods according to customer orders and forecasts. Often includes electronic commerce with suppliers. Examples ofERP systems are the application suites fromSAP, Oracle, and other suppliers. Enveloping: An EDI management software function that groups all documents of the same type, or functional group, and bound for the same destination into an electronic envelope. Enveloping is useful where there are multiple documents such as orders or invoices issued to a single trading partner that need to be sent as a packet. Environmental Health and Safety (EH&S): The category of processes, procedures and regulations related to addressing the needs of mai ntaining environmental quality standards for health and safety. Includes the RoHS (Restriction of Hazardous Substances) and WEEE (Waste Electrical and Electronic) standards. Frequently referred to as a part of“ corporate citizenship”. Environmental Protection Agency (EPA): A federal agency in the United States Government that is tasked with regulating chemicals and protecting human health by safeguarding thenatural environment (air, water, and land). Environmentally Sensitive Engineering: A design process where issues related to disposal or recycling of packaging and used products is considered. May be part of a regulatory requirement associated with programs such as RoHS or WEEE to address compounds that are hazardous to the environment. EOL: See: End-of-Life. EOQ: See:Economic Order Quantity EPC or ePC: See: ElectronicProduct Code. EPM: See: Employee Performance Management ePedigree: An electronic document which satisfies a pedigree requirement. The primary purpose of an epedigree is to protect consumers from contaminated medicineor counterfeit drugs. EPS: A computer term. Encapsulated Postscript. An extension of the PostScript graphics file format developed by Adobe Systems. EPS lets PostScript graphics files be incorporated into other documents. EPZ: Export Processing Zone– See: Free Trade Zone Equipment: The rolling stock carriers use to facilitate the transportation services that they provide, including containers, trucks, chassis, vessels, and airplanes, among others. Equipment I.D.: An identifier assigned by the carrier to a piece ofequipment. Also See: Container ID. Equipment Positioning: The process ofplacing equipment at a selected location. Ergonomic: The science ofcreating workspaces and products which are human friendly to use. ERP: See: Enterprise Resources Planning System ERS: See: Evaluated Receipts Settlement ESI: See: Early Supplier Involvement ETA: The Estimated Timeof Arrival ETD: The Estimated Timeof Departure. SUPPLY CHAIN and LOGISTICS TERMS and GLOSSARY Updated February, 2010 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 47 of 136 Ethernet: A computer term for the most commonly used type of local area network (LAN) communication protocol using coaxial or twisted pair wiring. Ethical Standards: Principals, which when followed, promote values such as trust, good behavior, fairness, and/orkindness. European Article Number (EAN):A defined numbering mechanismused in Europe to uniquely identify every retail product and packaging option. The EAN is similar in concept and design to the UPC code and is usually what the barcode represents on goods. Also See:UniformProduct Code. EVA: See: Economic Value Added Evaluated Receipts Settlement (ERS): A process for authorizing payment for goods based on actual receipts with purchase order data, when price has already been negotiated. The basic premise behind ERS is that all of the information in the invoice is already transmitted in the shipping documentation. Therefore, the invoice is eliminated and theshipping documentation is used to pay the vendor. Exception-Based Processing: A computer term for applications that automatically highlight particular events or results which fall outside pre- determined parameters. This saves considerable effort by automatically finding problems and alerting the right persons. An example would be where a shortageofan itemon a purchase order receipt would create an automatic notification of the purchasing agent for follow-up. Exception Message: See: Action Message Exception Rate:A deviation fromthe class rate; changes (exceptions) made to the classification. Excess and Obsolescence (E&O): The accounting value assigned to the cost associated with inventory that is disposed of as being excess or obsolete. Exclusive Patronage Agreements: A shipper agrees to useonly member liner firms of a conference in return for a 10% to 15% rate reduction. Exclusive Use: Carriervehicles that are assigned to a specific shipper for its exclusive use. Executive Dashboard: A series of cross-functional metrics that span the performance of the entire company and indicate the overall health of the company. Usually an Executive Dashboard includes the top KPIs for the company – and when possible is limited to the ‘vital few’ that fit on a one page summary. Exemplar: Refers to a model orpractice that should be imitated. Exempt Carrier: A for-hire carrier that is free fro meconomic regulation. Trucks hauling certain commodities are exempt from Interstate Commerce Commission economic regulation. By far the largest portion ofexempt carrier transports agricultural commodities orseafood. Expediting: 1) Moving shipments through regular channels at an accelerated rate. 2) To take extraordinary action because of an increase in relative priority, perhaps due to a sudden increase in demand. Synonym: Stockchase. Expert System: A computer programthat mimics a human expert. Explode-to-Deduct: See: Backflush Exponential Smoothing Forecast: A statistical analysis technique that can be applied to time series data, either to produce smoothed data for presentation, or to make forecasts. The time series data themselves are a sequence of observations. The observed phenomenon may be an essentially randomprocess, or it may be an orderly, but noisy, process. Export: 1) In logistics, the movement of products from one country to another. For example, significant volumes of cut flowers are exported from The Netherlands to other countries of the world. 2) A computer term referring to the transfer of information from a source (system or database) to a target. Export Broker:An enterprise that brings together buyer and seller for a fee, then eventually withdraws fromthe transaction. SUPPLY CHAIN and LOGISTICS TERMS and GLOSSARY Updated February, 2010 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 50 of 136 Federal Acquisition Regulation (FAR): A U.S. DoD document which describes rules and processes for acquiring products and / or services from suppliers. Federal Acquisition Regulation Supplement (FARS): A U.S. DoD document which provides various definitions of commerciality of which any one of these or combination of these can be used to justify commerciality. Federal AviationAdministration: The federal agency charged with administering federal safety regulations governing air transportation. Federal Drug Administration (FDA): An agency of the United States Department of Health and Human Services that is responsible for the regulation of and supervision of the safety of foods, dietary supplements, drugs, vaccines, biological medical products, blood products, medical devices, radiation-emitting devices, veterinary products, and cosmetics. Federal Emergency Management Agency (FEMA): An agency that is part of the United States Department of Homeland Security. It is responsible for coordinating a response to any disaster within the United States, in the case that the event possibly overwhelms the resources of local and state authorities. Federal Maritime Commission: A regulatory agency that controls services, practices, and agreements of international water common carriers and noncontiguous domesticwater carriers. Feeder Railroad Development Program: A Federal program which allows any financially responsible person (except Class I and Class II carriers) with ICC approval to acquire a rail line having a density of less than 3 million gross ton-miles per year, in order to avert the line being abandoned. FEFO: See: First Expired, First Out FEMA: See: Federal EmergencyManagement Agency FEU: See: Forty-foot equivalent unit FG: See: Finished Goods Inventory FGI: See:Finished Goods Inventory Field FinishedGoods: Inventory which is kept at locations outside the four walls of the manufacturing plant (i.e., distribution center orwarehouse). Field Service: See: After-Sale Service Field Service Parts: Parts inventory kept at locations outside the four walls of the manufacturing plant (i.e., distribution center or warehouse, service vehicle stock, etc.). Field Warehouse: A warehouse on the property of the owner of the goods that stores goods that are under the custody of a bona fide public warehouse manager. The public warehouse receipt is used as collateral for a loan. FIFO: See: First In, First Out File Transfer Protocol (FTP): The Internet service that transfers files from one computer to another, over standard phone lines. Filed rate doctrine: The legal rate the common carrier may charge; is the ratepublished in the carrier’ s tariffon file with the ICC. Fill Rate: The percentageoforder items that the picking operation actually fills within a given period of time. Fill Rates by Order: Whether orders are received and released consistently, or released from a blanket purchase order, this metric measures the percentage ofship-from-stock orders shipped within 24 hours oforder "release”. Make-to-Stock schedules attempt to time the availability of finished goods to match forecasted customer orders or releases. Orders that were not shipped within 24 hours due to consolidation but were available for shipment within 24 hours are reported separately. In calculating elapsed time for order fill rates, the interval begins at ship release and ends when material is consigned for shipment. SUPPLY CHAIN and LOGISTICS TERMS and GLOSSARY Updated February, 2010 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 51 of 136 Calculation: [Number oforders filled fromstock shipped within 24 hours oforder release] / [Total number ofstock orders] Note: The same concept of fill rates can be applied to order lines and individual products to provide statistics on percentage of lines shipped completely and percentage ofproducts shipped completely. Final Assembly: The highest level assembled product, as it is shipped to customers. This terminology is typically used when products consist of many possible features and options that may only be combined when an actual order is received. Also See: End Item, Assemble to Order Final Assembly Schedule (FAS): A list of scheduled operations required to produce completed products in a make-to-order or assemble-to-order manufacturing process. It may involve secondary operations beyond the final assembly which are required to complete sub-assemblies of components needed to assemble the finished product. Finance Lease: An equipment-leasing arrangement that provides the lessee with a means of financing for the leased equipment; a common method for leasing motor carrier trailers. Financial Responsibility: Motor carriers are required to have body injury and property damage (not cargo) insurance or not less than $500,000 per incident pervehicle; higher financial responsibility limits apply for motor carriers transporting oil orhazardous materials. FinishedGoods Inventory (FG or FGI):Products completely manufactured, packaged, stored, and ready for distribution. Also See: End Item Finite Forward Scheduling: A capacity constrained scheduling technique that creates a production schedule using forecast demand by proceeding sequentially through incremental future periods while not exceeding the available capacity during each period. Also See: FiniteScheduling Finite Scheduling: A method ofcreating production schedules which takes resource availability into account. Schedule dates are adjusted forward or backward in time as necessary in order to maintain capacity constraints. Firewall: A computer term for a method of protecting the files and programs on one network from users on another network. A firewall blocks unwanted access to a protected network while giving the protected network access to networks outside of the firewall. A company will typically install a firewall to give users access to the Internet while protecting their internal information. Firm Planned Order: A planned order which has been committed to production. Also See: Planned Order First Expired, First Out (FEFO): A stock control rule allowing the management ofproducts having an eat-by date or short shelf life. FEFO can be used for any product but is most frequently used for food or cold storage. First In, First Out (FIFO): Warehousing term meaning that the first items stored are the first used. In accounting this tem is associated with the valuing of inventory such that the latest purchases are reflected in book inventory. While generally considered an accounting notion, FIFO usage is common where products may have a shelf life. Also See: Book Inventory First Mover Advantage: Market innovator, putting the company in the leadership position. First Pass Yield: The ratio ofusable, specification conforming output froma process to its input, achieved without rework or reprocessing. Fixed Costs: Costs, which do not fluctuate with business volume in the short run. Fixed costs include items such as depreciation on buildings and fixtures. Fixed Interval Inventory Model: A setup wherein each time an order is placed for an item, the same (fixed) quantity is ordered. Fixed Interval Order System: See: Fixed Reorder Cycle Inventory Model Fixed Order Quantity: An inventory reorder method which causes all replenishment orders to be a pre-determined size or a multiple thereof. This is typically introduced to accommodate price breaks, packaging or shipping requirements. Fixed Order Quantity System: See: Fixed Reorder Cycle Inventory Model SUPPLY CHAIN and LOGISTICS TERMS and GLOSSARY Updated February, 2010 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 52 of 136 Fixed Overhead: Cost elements such as depreciation, rent, insurance, office expense, etc., which do not vary as a result of output volume or sales revenue.. Also See: Indirect Cost Fixed Quantity Inventory Model: A setup wherein a company orders the same (fixed) quantity each time it places an order for an item. Fixed-Period Requirements: A re-order technique where the quantity to be ordered should be enough to cover forecast requirements for a fixed number ofperiods. Also See: Discrete Order Quantity Fixed Price (FP): A type of contract where a specified price is paid for a specific product, service, or goal. Also referred to as FFP or Firm Fixed Price. Fixed Reorder Cycle Inventory Model: A re-ordering strategy where orders are placed on a fixed order schedule and the order quantity is adjusted from order to order to accommodate actual consumption or forecast requirements. Also See: Fixed Reorder Quantity Inventory Model Fixed Reorder Quantity Inventory Model: A re-ordering strategy where orders are placed for a fixed order quantity whenever the quantity on hand plus on order reaches a pre-defined order point. Also See: Fixed Reorder Cycle Inventory Model, Order Point – Order Management System Fixed-Location Storage: A stocking strategy which uses set warehouse locations assigned to each SKU. If additional storage is required the excess stock will be placed in an “overflow” area with appropriate cross references in systems or on bin labels. Locations are typically reviewed periodically as a part ofa slotting strategy. Also See: Random-Location Storage Flag of Convenience: A ship owner registers a ship in a nation that offers conveniences in the areas of taxes, manning, and safety requirements; Liberia and Panama are two nations known for flags ofconvenience. Flat: A loadable platform having no superstructure whatever but having the same length and width as the base of a container and equipped with top and bottomcorner fittings. This is an alternative termused for certain types ofspecific purpose containers - namely platformcontainers and platform- based containers with incomplete structures Flatbed: A flatbed is a type of truck trailer that consists of a floor and no enclosure. A flatbed may be used with “sideboards” or“ tie downs” which keep loose cargo from falling off. Flatcar: A rail car without sides; used for hauling machinery. Flat File: A computer term which refers to any file having fixed-record length, or in EDI, the file produced by EDI translation software to serve as input to the interface. Usually includes the same fields as the original file, but each field is expanded to its maximu m length. Does not have delimiters. Flexibility: Ability to respond quickly and efficiently to changing customer and consumer demands. Flexible-Path Equipment: Materials handling devices that include hand trucks and forklifts. Flexible Specialization: a strategy based on multi-use equipment, skilled workers and innovative senior management to accommodate the continuous change that occurs in the marketplace. Float: The time required for documents, payments, etc. to get fromone trading partner to another. Floor loading: containerized freight is usually not palletized. Instead, the bottomlayer ofboxes is loaded onto the floor of the container. As aresult, more boxes can be loaded into a container, but the containers take much longer to unload. Floor-Ready Merchandise (FRM): Goods shipped by suppliers to retailers with all necessary tags, prices, security devices, etc. already attached, so goods can be cross docked rapidly through retail DCs, or received directly at stores. Flow Rack: Storage rack that utilizes shelves (metal) that are equipped with rollers or wheels. Such an arrangement allows product and materials to "flow" fro mthe back of the rack to the front and therein making the product more accessible for small-quantity order-picking. SUPPLY CHAIN and LOGISTICS TERMS and GLOSSARY Updated February, 2010 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 55 of 136 FRM: See: Floor Ready Merchandise Fronthaul: The first leg of the truck trip that involves hauling a load or several loads to targeted destinations. Frozen Zone: In forecasting, this is the period in which no changes can be made to scheduled work orders based on changes in demand. Use of a frozen zone provides stability in the manufacturing schedule. FTE: See: Full TimeEquivalents FTL: See: Full Truckload FTP: See: File Transfer Protocol FTZ: See: Free Trade Zone Fulf illment: The act of fulfilling a customer order. Fulfillment includes order management, picking, packaging, and shipping. Full Container load (FCL):A termused when goods occupy a whole container. Full Mission-Capable (FMC): Used in DoD PBL to describe the material condition of any piece of military equipment, aircraft, or training device indicating that it can perform all of its missions. Also called FMC. See: also deadline; mission-capable; partial mission-capable; partial mission- capable, maintenance; partial mission-capable, supply. Full-Service Leasing:An equipment-leasing arrangement that includes a variety ofservices to support leased equipment (i.e., motor carrier tractors). Full-time Equivalents (FTE): Frequently organizations make use of contract and temporary employees; please convert contract, part-time, and temporary employees to full-time equivalents. For example, two contract employees who worked for six months full-time and a half-time regular employee would constitute 1.5 full-time equivalents. 1FTE = 2000 hours per year. Full Truckload (FTL): A termwhich defines a shipment which occupies at least one complete truck trailer, or allows for no other shippers goods to be carried at thesame time. Fulf illment Agent: May be designated as an agent to plan, schedule, or control the process ofexecuting the logistics chain. Fully AllocatedCost: The variable cost associated with a particular unit ofoutput plus an allocation ofcommon cost. Functional Acknowledgment (FA): A specific EDI Transaction Set (997) sent by the recipient ofan EDI message to confirmthe receipt ofdata but with no indication as to the recipient application’s response to the message. The FA will confirm that the message contained the correct number of lines, etc. via control summaries, but does not report on the validity of the data. Functional Group: Part of the hierarchical structure of EDI transmissions, a Functional Group contains one or more related Transaction Sets preceded by a Functional Group header and followed by a Functional Group trailer Functional Metric: A number resulting froman equation, showing the impact ofone or more parts ofa functional/department process. This is also known as a results measure as the metric measures the results ofone aspect of the business. Example: Distribution Center Fill Rate. Functional Silo: A view of an organization where each department or functional group is operated independent of other groups within the organization. Each group is referred to as a“Silo”. This is theopposite ofan integrated structure. Fungible: A fungible itemis onewhich could be exchanged with another equal part or quantity with no significant difference, and still satisfies the obligation, a commodity is a fungible item. Future Order: A purchase or customer order which is placed for delivery at a time beyond the normal order cycle. The purpose may be to queue orders against future availability ofnew products, or as a means to advisesuppliers of future requirements. SUPPLY CHAIN and LOGISTICS TERMS and GLOSSARY Updated February, 2010 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 56 of 136 G Game Theory: A branch of applied mathematics that is used in the social sciences, most notably in economics, as well as in biology, engineering, political science, international relations, computer science, and philosophy. Game theory attempts to mathematically capture behavior in strategic situations, in which an individual's success in making choices depends on the choices ofothers, a sort of“ Win-Win” stragegy. Gaming the System: Using rules, policies and procedures ofa systemagainst itself for purposes outside what of those rules, policies and procedures were initially intended. Gain Sharing: A method of incentive compensation where supply chain partners share collectively in savings fromproductivity improvements. The concept provides an incentive to both the buying and supplier organizations to focus on continually re-evaluating, re-energizing, and enhancing their business relationship. All aspects ofvalue delivery are scrutinized including specification design, order processing, inbound transportation, inventory management, obsolescence programs, material yield, forecasting and inventory planning, product performance, and reverse logistics. The focus is on driving out limited value cost while protecting profit margins. Also see: Performance Based Logistics. GapAnalysis: The process ofdetermining and documenting the variance (gap) between goals and current performance. Gateway: The connection that permits messages to flow freely between two networks. Gathering Lines: Oil pipelines that bring oil fromthe oil well to storage areas. GATT: See: General Agreement on Tariffs and Trade GCI: See: Global Commerce Initiative GDSN: See: Global Date Synchronization Network Gemba Kanri: A Lean management termwhich refers to the control and improvement of the value creating processes. Genchi Genbutsu: A Japanese phrase used in Lean management which means "Go and see for yourself" Rather than simply hear or read about a problemand make a suggestion for improvement, one should actually go to its direct location and experience the situation first hand. General Agreement on Tariffs and Trade (GATT): The General Agreement on Tariffs and Trade started as an international trade organization in 1947, and has been superseded by the World Trade Organization (WTO). GATT (the agreement) covers international trade in goods. An updated General Agreement is now the WTO agreement governing trade in goods. The 1986-1994 “Uruguay Round” of GATT member discussions gave birth to the WTO and also created new rules for dealing with trade in services, relevant aspects of intellectual property, dispute settlement, and trade policy reviews. GATT 1947: The official legal term for the old (pre-1994) version of the GATT. GATT 1994: The official legal termfor new version of the General Agreement, incorporated into the WTO, and including GATT 1947. General Commodities Carrier: A common motor carrier that has operating authority to transport general commodities, or all commodities not listed as special commodities. General-Merchandise Warehouse: A warehouse that is used to store goods that are readily handled, are packaged, and do not require a controlled environment. General Order (GO): A customs termreferring to a warehouse where merchandise not entered within five working days after the carrier's arrival is stored at the risk and expense of the importer. GIF: See:Graphics Interchange Format. SUPPLY CHAIN and LOGISTICS TERMS and GLOSSARY Updated February, 2010 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 57 of 136 Global Commerce Initiative (GCI): A business requirements group that brings manufacturers and retailers together on a worldwide basis to simplify and enhance global commerce and improve consumer value in the overall retail supply chain. It is a global user group, and its charter is to drive the implementation ofEAN.UCCstandards and best practices. Global Data Synchronization Network (GDSN): The GDSN is an Internet-based, interconnected network of interoperable datapools and a Global Registry, the GS1 Global Registry that enables companies around the world to exchange standardized and synchronized supply chain data with their trading partners. Global Location Number (GLN): Unique location number mandatory within the Global Data Synchronization process to identify data owners/info providers, etc such as Distributors, brokers, manufacturers. Global Positioning System (GPS): A systemwhich uses satellites to precisely locate an object on earth. Used by trucking companies to locate over- the-road equipment. Global Standards Management Process (GSMP): The Global Standards Management Process (GSMP) is the Global Process established in January 2002 by EAN International and the Uniform Code Council, Inc. (UCC) for the development and maintenance of Global Standards and Global Implementation Guidelines that are part of the EAN.UCCsystem. Global Strategy: An organization's strategic guide to globalization. A global strategy may be appropriate in industries where firms are faced with strong pressures for cost reduction but with weak pressures for local responsiveness. Therefore, the strategy allows these firms to sell a standardized product worldwide. However, fixed costs (capital equipment) are substantial. Nevertheless, these firms are able to take advantage ofscale economies and experience curve effects, because of the ability to mass-produce a standard product which can be exported—providing that demand is greater than the costs involved. Global Trade Item Number (GTIN): A unique number that comprises up to 14 digits and is used to identify an item(product or service) for which there is a need to retrieve pre-defined information that may be priced, ordered or invoiced at any point in the supply chain. The definition covers raw materials through end user products and includes services, all of which have pre-defined characteristics. GTIN is the globally-unique EAN.UCC System identification number, or key, used for trade items (products and services). It’s used for uniquely identifying trade items (products and services) sold, delivered, warehoused, and billed throughout the retail and commercial distribution channels. Unlike a UPC number, which only provides information specific to a group of products, the GTIN gives each product its own specific identifying number, providing greater trcking accuracy. See:EPC Globalization: The process ofmaking something worldwide in scope or application. GLN:See: Global Location Number Going-concern value: The value that a firm has as an entity, as opposed to the sum of the values of each of its parts taken separately; particularly important in determining what constitutes a reasonable railroad rate. Gondola: A rail car with a flat platformand sides three to five feet high; used for top loading of items that are long and heavy. Good Distribution Practices: Quality warranty systemthat provides guidelines for the proper distribution ofmedicinal products for human use. The guidelines cover such areas as requirements for purchase, receiving, storage, and export ofdrugs intended for human consumption. Good Distribution Practices are based on the Code ofFederal Regulations 21 CFR, parts 210 and 211, and USP 1079. Good Manufacturing Practices (GMP): Requirements governing the quality procedures of medical device manufacturers. Good Manufacturing Practices are based on the Code ofFederal Regulations 21 CFR, parts 808, 812, and 820. Goods Received Note (GRN):Documentation raised by the recipient ofmaterials or products. GMP: See: Good manufacturing practices. GNP: See:Gross National Product. GO: See:General Order. SUPPLY CHAIN and LOGISTICS TERMS and GLOSSARY Updated February, 2010 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 60 of 136 Hi-low: Usually refers to a forklift truck on which theoperator must stand rather than sit. Home Page: The starting point for a website. It is the page that is retrieved and displayed by default when a user visits the website. The default home-page name for a server depends on the server's configuration. On many web servers, it is index.html or default.htm. Some web servers support multiple home pages. Honeycombing: 1. The practice of removing merchandise in pallet load quantities where the space is not exhausted in an orderly fashion. This results in inefficiencies due to the fact that the received merchandise may not be efficiently stored in the space which is created by the honey- combing. 2. The storing or withdrawal or supplies in a manner that results in vacant space that is not usable for storage ofother items. 3. Creation of unoccupied space resulting fromwithdrawal ofunit loads. This is one of the major hidden costs ofwarehousing. Honeycomb Loss: When storing multiple SKUs in a single region, full utilization ofall of the available space is not desirable because it could result in some items not being accessible. Honeycomb loss, the price paid for accessibility, is theunusable empty storage space in a lane or stack due to the storage ofonly a single SKU in each lane or stack sincestoring items from different SKUs would block access. Hopper Cars: Rail cars that permit top loading and bottom unloading of bulk commodities; some hopper cars have permanent tops with hatches to provide protection against the elements. Horizontal Play/Horizontal Hub: This is a term for a function that cuts across many industries, usually defines a facility or organization that is providing a common service. Hoshin Planning: Also “Hosin Kanri” Hoshin Kanri is a step-by-step strategic planning process that assesses breakthrough strategic objectives against daily management tasks and activities. It provides a visual map at all levels of the organization provides clear strategic direction. a company develops up to four vision statements that indicate where the company should be in the next five years. Company goals and work plans are developed based on the vision statements. Periodic audits are then conducted to monitor progress. Hostler: An individual employed to move trucks and trailers within a terminal or warehouseyard area. HouseholdGoods Warehouse:A warehouse that is used to storehousehold goods. HR: See: Human Resources HTML: See: HyperText Markup Language HTTP: See: HyperText Transport Protocol Hub: 1) A large retailer or manufacturer having many trading partners. 2) A reference for a transportation network as in “hub and spoke” which is common in the airline and trucking industry. For example, a hub airport serves as the focal point for the origin and termination of long-distance flights where flights fromoutlying areas are fed into the hub airport for connecting flights. 3) A common connection point for devices in a network. 4) A Web "hub" is one of the initial names for what is now known as a "portal". It came fro mthe creative idea ofproducing a website, which would contain many different "portal spots" (small boxes that looked like ads, with links to different yet related content). This content, combined with Internet technology, made this idea a milestone in the development and appearance of websites, primarily due to the ability to display a lot of useful content and store one's preferred information on a secured server. The web term"hub" was replaced with portal. Hub Airport: An airport that serves as the focal point for the origin and termination of long-distance flights; flights from outlying areas are fed into the hub airport for connecting flights. Human Factor Design: Incorporating scientific dataon human physical capabilities into thedesign ofequipment, products and systems. Human-Machine Interface: Any point where data is communicated from a worker to a computer or from a computer to a worker. Data entry programs, inquire programs, reports, documents, LED displays, and voice commands are all examples ofhuman-machine interfaces. Human Resources (HR): The function broadly responsible for personnel policies and practices within an organization. Hundredweight (cwt): A pricing unit used in transportation (equal to 100 pounds). SUPPLY CHAIN and LOGISTICS TERMS and GLOSSARY Updated February, 2010 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 61 of 136 Hurdle Rate: The required rate of return in a discounted cash flow analysis, above which an investment makes sense and below which it does not. Hybrid Inventory System: An inventory system combining features multiple methodologies such as push and pull, fixed and variable / dynamic, etc. Also See:Fixed Reorder Cycle InventoryModel, Fixed Reorder Quantity Inventory Model, Optional Replenishment Model Hyperinflation: Inflation that is out ofcontrol to the point that prices rise rapidly as currency loses its value. Hyperlink: A computer term. Also referred to as “ link”. The text you find on a website which can be "clicked on" with a mouse which, in turn, will take you to another web pageor a different area of the same web page. Hyperlinks are created or "coded" in HTML HyperText Markup Language (HTML): The standard language for describing the contents and appearance ofpages on the World Wide Web. HyperText Transport Protocol (HTTP): The Internet protocol that allows World Wide Web browsers to retrieve information fromservers. I IATA:See: International Air Transport Association ICC: See: Interstate Commerce Commission Igloos:Pallets and containers used in air transportation; the igloo shape is designed to fit the internal wall contours ofa narrow-body airplane. Image Processing: allows a company to take electronicphotographs ofdocuments. The electronic photograph then can be stored in a computer and retrieved from computer storage to replicate the document on a printer. The thousands of bytes of data composing a single document are encoded in an optical disk. Many carriers now use image processing to provide proof-of-delivery documents to a shipper. The consignee signs an electronic pad that automatically digitizes a consignee's signature for downloading into a computer. A copy of that signature then can be produced to demonstrate that a delivery took place. IMB: See: International Maritime Bureau. IMC: See: Intermodal marketing company IMO: See: International Maritime Organization. Import: Movement ofproducts fromone country into another. The import ofautomobiles fromGermany to theU.S. is an example. Importation Point: The location (port, airport or border crossing) where goods will be cleared for importation into a country. SUPPLY CHAIN and LOGISTICS TERMS and GLOSSARY Updated February, 2010 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 62 of 136 Import/Export License: Official authorization issued by a government agency which allows for the transport of goods across their national boundaries. Licenses may be required for all, or only specific classes ofcommodities. Impressions: With regard to online advertising, it is the number of times an ad banner is downloaded and presumably seen by users. Guaranteed impressions refer to the minimumnumber of times an ad banner will be seen by users. In Bond: Goods are held or transported In-Bond under customs control either until import duties or other charges are paid, or to avoid paying the duties or charges until a later date. In-store Implementation (ISI): Refers to the collectivephysical and informational actions performed at retail to actualize merchandising, marketing and media plans in the store. ISI encompasses compliance, measurement and communications activities, and is defined by a Plan-Do-Measure process cycle that controls implementation plans and work and communicates implementation signals. Inbound Logistics: The movement of materials fromsuppliers and vendors into production processes or storage facilities. Incentive Fee: A premium fee which is based upon the control ofcosts in a cost-plus-incentive-fee contract. Incentive Rate:A rate designed to induce the shipper to ship heavier volumes per shipment. INCOTERMS: International terms ofsale developed by the International Chamber ofCommerce to define sellers' and buyers' responsibilities. Independent Action: A carrier that is a member of a rate bureau has the right to publish a rate that differs fromthe rate published by the ratebureau. Independent Demand: In a requirements planning system the independent demand is that which is not related to a parent product in a product structure bill of materials or planning bill. Independent demand is typically end customer demand which must be separately forecast. Independent Trading Exchange (ITE): Often used synonymously with B2B, e-marketplace or Virtual Commerce Network (VCN) ). ITE is a more precise term, connoting many-to-many transactions, whereas the others do not specify the transactions. Indirect Cost: A resource or activity cost such as operation costs and overhead that cannot be directly traced to a final cost object since no direct or repeatable cause-and-effect relationship exists. An indirect cost uses an assignment or allocation to transfer cost. Also See: Direct Cost, Support Costs Indirect/Distributor Channel: Your company sells and ships to the distributor. The distributor sells and ships to the end user. This may occur in multiple stages. Ultimately your products may pass through the Indirect/Distributor Channel and arrive at a retail outlet. Order information in this channel may be transmitted by electronic means. These means may include EDI, brokered systems, or linked electronic systems. Indirect Retail Locations: A retail location that ultimately sells your product to consumers, but who purchases your products from an intermediary, like a distributor or wholesaler. Infinite Loading: A method used in calculating work center activity loading where there are no constraints placed on the capacity of the work centers. In other words, the calculation assumes an infinite amount ofcapacity is available. Information Systems (IS): Managing the flow of data in an organization in a systematic, structured way to assist in planning, implementing, and controlling. Inherent Advantage: The cost and service benefits ofone mode compared with other modes. Initial Contact Personnel: The first point ofcontact that a customer has with a company. Inland Bill of Lading: The carriage contract used in transport from a shipping point overland to the exporter's international carrier location. InlandCarrier: An enterprise that offers overland service to or froma point of import or export. SUPPLY CHAIN and LOGISTICS TERMS and GLOSSARY Updated February, 2010 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 65 of 136 Interstate System: The National System of Interstate and Defense Highways, 42,000 miles of four-lane, limited-access roads connecting major population centers. Intra-Manufacturing Re-plan Cycle: Average elapsed time, in calendar days, between the time a regenerated forecast is accepted by the end- product manufacturing/assembly location, and the time that the revised plan is reflected in the MasterProduction Schedule ofall the affected internal sub-assembly/component producing plant(s). (An element ofTotal Supply Chain Response Time) Intrastate Commerce: The transportation ofpersons or property between points within a state. A shipment between two points within a statemay be interstate if the shipment had a prior or subsequent move outside of the state and the intent of the shipper was an interstate shipment at the time of shipment. In-transit Inventory: Material moving between two or more locations, usually separated geographically; for example, finished goods being shipped from a plant to a distribution center. In-transit inventory is an easily overlooked component of total supply chain availability. Intrinsic Forecasting: A method of forecasting which looks at known available internal data (sales, usage, etc) as opposed to the factors external to the business (demographics, weather, etc.). Inventory: Components, raw materials, work in process, finished goods and supplies required for the creation ofgoods and services; It can also refer tp the number ofunits and/orvalue of the stock ofgoods held by a company. Inventory Accuracy: This is when the on-hand quantity is equivalent to the perpetual balance (plus or minus the designated count tolerances). It can often be referred to as a percentage showing the variance between book inventory and actual count. This is a major performance metric for any organization which manages large inventories. Typical minimumand best practice averages would be95% and 99%. Inventory Balance Location Accuracy: When the on-hand quantity in the specified locations is equivalent to the perpetual balance (plus or minus the designated count tolerances). Inventory Buffers: The products or supplies of an organization maintained on hand or in transit to stabilize variations in supply, demand, production, or lead time Inventory Carrying Cost : One of the elements comprising a company's total supply-chain management costs. These costs consist of the following: 1. Opportunity Cost: The opportunity cost ofholding inventory. This should be based on your company's own cost ofcapital standards using the following formula. Calculation: Cost ofCapital x Average Net Value of Inventory 2. Shrinkage: The costs associated with breakage, pilferage, and deterioration of inventories. Usually pertains to the loss of material through handling damage, theft, or neglect. 3. Insurance and Taxes: The cost of insuring inventories and taxes associated with the holding of inventory. 4. Total Obsolescence for Raw Material, WIP, and Finished Goods Inventory: Inventory reserves taken due to obsolescence and scrap and includes products exceeding the shelf life, i.e. spoils and is no good for use in its original purpose (do not include reserves taken for Field ServiceParts). 5. Channel Obsolescence: Aging allowances paid to channel partners, provisions for buy-back agreements, etc. Includes all material that goes obsolete while in a distribution channel. Usually, a distributor will demand a refund on material that goes bad (shelf life) or is no longer needed because ofchanging needs. 6. Field Service Parts Obsolescence: Reserves taken due to obsolescence and scrap. Field Service Parts are those inventory kept at locations outside the four walls of the manufacturing plant i.e., distribution center or warehouse. Inventory Cycle Counting: See: Cycle Counting Inventory Days of Supply (for RM, WIP, PFG, and FFG): Total gross value of inventory for the category (raw materials, work in process, partially finished goods, or fully-finished goods) at standard cost before reserves for excess and obsolescence, divided by the average daily usage. It includes only inventory that is on the books and currently owned by thebusiness entity. Future liabilities such as consignments fromsuppliers are not included. Calculation: [5 Point Annual Average Gross Inventory] / [Calendar Year Value ofTransfers / 365] SUPPLY CHAIN and LOGISTICS TERMS and GLOSSARY Updated February, 2010 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 66 of 136 Inventory Deployment: A technique for strategically positioning inventory to meet customer service levels while minimizing inventory and storage levels. Excess inventory is replaced using information derived through monitoring supply, demand, and inventory at rest and in motion. Inventory Management: The process ofensuring the availability ofproducts through inventory administration. Inventory Planning Systems: The systems that help in strategically balancing the inventory policy and customer service levels throughout the supply chain. These systems calculate time-phased order quantities and safety stock using selected inventory strategies. Some inventory planning systems conduct a“ what if” analysis and compare the current inventory policy with simulated inventory scenarios to improve the inventory return on investment (ROI). Inventory Turns: This ratio measures how many times a company's inventory has been sold (turned over)during a period of time. The cost ofgoods sold divided by the average level of inventory on hand. Operationally, inventory turns are measured as total throughput divided by the average level of inventory for a given period - how many times a year the average inventory for a firmchanges over, or is sold. Inventory Turnover: See: Inventory Turns Inventory Velocity: The speed with which inventory moves through a defined cycle (i.e., fro mreceiving to shipping). Invoice: A detailed statement showing goods sold and amounts for each. The invoice is prepared by the seller and acts as thedocument that the buyer will use to make payment. IP: See: Intellectual Property IPT: See: Integrated Product Team IRR: See: Internal Rate of Return Irregular Route Carrier: A motor carrier that is permitted to provide serviceutilizing any route. IS: See: Information Systems ISDN: See: Integrated services digital network ISO: See: International Standards Organization ISO 9000: A series of quality assurance standards compiled by the Geneva, Switzerland-based International Standardization Organization. In the United States, ISO is represented by theAmerican National Standards Institute based in Washington, D.C. ISO 14000 Series Standards: A standard for environmental management systems to be implemented in any business, regardless of size, location or income. The ai mof the standard is to reduce the environmental footprint ofa business and to decrease the pollution and waste a business produces. ISPS: See: International Ship and Port Facility Security Code ISI: See: In Store Implementation IT: Information Technology. ITL: International Trade Logistics ITE: See: Independent Trading Exchange ITU: See: Intermodal Transport Unit SUPPLY CHAIN and LOGISTICS TERMS and GLOSSARY Updated February, 2010 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 67 of 136 Item: A uniquely identifiable piece of inventory. Also known as a part number or SKU, an item can be raw materials, fluids, component parts, subassemblies, finished assemblies, packaging, etc. Usually differentiated by form, fit or function. Items which are painted different colors are generally viewed as different items. IWLA: See: International W arehouse Logistics Association J Java: A computer term for a general-purpose programming language created by Sun Microsystems. Java can be used to create Java applets. A Java programis downloaded fromthe web server and interpreted by a programrunning on the computer running theWeb browser. Java Applet: A computer term for a short program written in Java that is attached to a web page and executed by the computer on which the Web browser is installed. Java Script: A computer term for a cross-platform, World Wide Web scripting language developed by Netscape Communications. JavaScript code is inserted directly into an HTML page. Jidoka: The concept ofadding an element ofhuman judgment to automated equipment. In doing this, the equipment becomes capableof discriminating against unacceptable quality, and the automated process becomes more reliable. This concept, also known as autonomation, was pioneered by Sakichi Toyoda at the turn of the twentieth century when he invented automatic looms that stopped instantly when any thread broke. This permitted one operator to oversee many machines with no risk ofproducing large amounts ofdefective cloth. The termhas since been extended beyond its original meaning to include any means ofstopping production to prevent scrap (for example the andon cord which allows assembly-plant workers to stop the line), even where this capability is not built-in to the production machine itself JIT: See: Just-In-Time JIT II: See: Just-In-Time II JIT/QC: Just-In-Time/Quality Control. Joint cost: A type ofcommon cost where products are produced in fixed proportions, and the cost incurred to produce on product necessarily entails the production ofanother; the backhaul is an example. Joint Depot Maintenance Activities Group (JDMAG): A U.S. DoD group that provides advice and support to the JG-DM. Maintains a web-site (www.jdmag.wpafb.af.mil/ ) that shows the Depot Maintenance Source ofRepair decisions. JointGroup on Depot Maintenance (JG-DM): The U.S. DoD flag level officers and civilians from each service that are responsible for depot maintenance. This group is responsible to review the depot maintenance function to achieve effective and affordable support for the nation’s weapon systems. Joint Photographic Expert Group (JPEG): A computer term which is an abbreviation for the Joint Photographic Expert Group. A graphical file format used to display high-resolution color images on the World Wide Web. JPEG images apply a user-specified compression scheme that can significantly reduce the large file size usually associated with photo-realistic color images. A higher level of compression results in lower image quality, whereas a lower level ofcompression results in higher image quality. Joint rate: A rate over a route that involves two or more carriers to transport the shipment. SUPPLY CHAIN and LOGISTICS TERMS and GLOSSARY Updated February, 2010 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 70 of 136 Lean: A business management philosophy that considers the expenditure of resources for any goal other than the creation of value for the end customer to be wasteful, and thus a target for elimination. Learning Management System: A software packaging for delivering, tracking and managing training and education within an company or organization. Least Total Cost: Similar to the Economic Order Quantity method of lot sizing, LTC is based on the idea that total cost will be least when the carrying cost and ordering cost are essentially equal. Also See: DiscreteOrder Quantity, Dynamic Lot Sizing Least Unit Cost: A lot-sizing method where a specified number of future periods requirements are consolidated in an effort to find a quantity where the total ofordering and carrying costs per unit ordered is at its lowest. Also See: DiscreteOrder Quantity, Dynamic Lot Sizing LEED: See: Leadership in Energy and Environmental Design Leg: A portion of a complete trip which has an origin, destination, and carrier and is composed of all consecutive segments of a route booked through the same carrier. Also called BookableLeg. Legacy: A computer term that describes an old computer system or application program that continues to be used because it still meets the user’s needs. Less-Than-Carload (LCL): Shipment that is less than a complete rail car load (lot shipment). Less-Than-Truckload (LTL) Carriers: Trucking companies that consolidate and transport smaller (less than truckload) shipments of freight by utilizing a network of terminals and relay points. Lessee: A person or firmto whoma lease is granted. Lessor: A person or firmthat grants a lease. Letter of Credit (LOC): An international business document that assures the seller that payment will be made by thebank issuing the letter ofcredit upon fulfillment of the sales agreement. Leverage: Taking something small and exploding it. Can be financial or technological. License Plate: A pallet tag. Refers to a uniquely numbered bar code sticker placed on a pallet of product. Typically contains information about product on the pallet. Lifecycle (Cradle-to-Grave): See: Product Lifecycle. Life Cycle Cost (LCC): In cost accounting, a product’s life cycle is theperiod that starts with the initial product conceptualization and ends with the withdrawal of the product from the marketplace and final disposition. A product life cycle is characterized by certain defined stages, including research, development, introduction, maturity, decline, and abandonment. Life cycle cost is the accumulated costs incurred by a product during these stages. Lighter: A flat-bottomed boat designed for cross-harbor or inland waterway freight transfer. While the terms barge and lighter are used interchangeably, a barge usually refers to a vessel used for a long haul, while a lighter is used for a short haul. LIFO: See: Last In, First Out Lift-On Lif t-Off : Vessel ofwhich the loading and discharging operations are carried out by cranes and derricks. Lift Truck: Vehicles used to lift, move, stack, rack, or otherwise manipulate loads. Material handling people use a lot of terms to describe lift trucks, some terms describe specific types of vehicles, others are slang terms or trade names that people often mistakenly use to describe trucks. Terms SUPPLY CHAIN and LOGISTICS TERMS and GLOSSARY Updated February, 2010 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 71 of 136 include industrial truck, forklift, reach truck, motorized pallet trucks, turret trucks, counterbalanced forklift, walkie, rider, walkie rider, walkie stacker, straddle lift, side loader, order pickers, high lift, cherry picker, Jeep, Towmotor, Yale, Crown, Hyster, Raymond, Clark, Drexel. Line: 1) An area within a production or assembly facility where manufacturing occurs in a linear fashion, passing products through one level of completion on to the next process. 2) a unique itemorder line on a customer or purchase order. Also See:Assembly Line, Order line Line Functions: The decision-making areas associated with daily operations. Logistics line functions include traffic management, inventory control, order processing, warehousing, and packaging. Line-Haul Shipment: A shipment that moves between cities and distances over 100 to 150 miles. Line Scrap: Value of raw materials and work-in-process inventory scrapped as a result of improper processing or assembly, as a percentage of total value ofproduction at standard cost. Liner Service: International water carriers that ply fixed routes on published schedules. Link: The transportation method used to connect thenodes (plants, warehouses) in a logistics system. Linked Distributed Systems: Independent computer systems, owned by independent organizations, linked in a manner to allow direct updates to be made to one system by another. For example, a customer's computer system is linked to a supplier's system, and the customer can create orders or releases directly in thesupplier's system. Little Inch:A federally built pipeline constructed during World War II that connected Corpus Christi and Houston, Texas. Live: A situation in which the equipment operator stays with the traileror boxcar while it is being loaded or unloaded. LLP: See: Lead Logistics Partner LMS: See: Labor Management System Load Factor: A measure of operating efficiency used by air carriers to determine the percentage of a plane’s capacity that is utilized, or the number ofpassengers divided by the total number ofseats. Load Tender (Pick-Up Request): An offer o fcargo for transport by a shipper. Load tender terminology is primarily used in the motor industry. Load Tendering: The practice ofproviding a carrier with detailed information and negotiated pricing (the tender)prior to scheduling pickup.This practice can help assure contract compliance and facilitate automated payments (selfbilling). Loading Allowance: A reduced rate offered to shippers and/or consignees who load and/or unload LTL or AQ shipments. Loading Port: The port where the cargo is loaded onto the exporting vessel. This port must be reported on the Shipper's Export Declaration, Schedule D and is used by U.S. companies to determinewhich tariff is used to freight rate the cargo for carriers with more than one tariff. LOC: See: Letter of Credit Local Area Network (LAN): A data communications network spanning a limited geographical area, usually a few miles at most, providing communications between computers and peripheral devices. Local Rate:A rate published between two points served by one carrier. Local Service Carriers: An air carrier classification ofcarriers that operate between areas of lesser and major population centers. These carriers feed passengers into the major cities to Location Grid: A layout of the warehouse or storage yard used to enhance the management of efficient put away, pick, and inventory cycle counting. A high level view ofwarehouse locations or a general template used to map out a storage yard. SUPPLY CHAIN and LOGISTICS TERMS and GLOSSARY Updated February, 2010 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 72 of 136 Location Tag: A bar coded sign that hangs above or on a warehouse location. The location number can be read from the tag or scanned with an RF gun. Locational Determinant: The factors that determine the location ofa facility. For industrial facilities, the determinants include logistics. Locator System: Locator systems are inventory-tracking systems that allow you to assign specific physical locations to your inventory to facilitate greater tracking and the ability to store product randomly. Location functionality in software can range from a simple text field attached to an item that notes a single location, to systems that allow multiple locations per item and track inventory quantities by location. Warehouse management systems (WMS) take locatorsystems to the next level by adding functionality to direct the movement between locations. Lockbox: A method for receiving payments where customers make their remittance directly to a bank or other financial institution rather than to the invoicing company. The bank then applies the funds received directly to the company’s account, and provides the company with a listing (printed or electronic) ofall thepayments received. Logbook: A daily record of the hours an interstate driver spends driving, off, duty, sleeping in theberth, or on duty but not driving. Logistics: The process of planning, implementing, and controlling procedures for the efficient and effective transportation and storage of goods including services, and related information from the point of origin to the point of consumption for the purpose of conforming to customer requirements. This definition includes inbound, outbound, internal, and external movements. Logistics Channel: The network of supply chain participants engaged in the storage, handling, transfer, transportation, and commu nications functions that contribute to the efficient flow ofgoods. Logistics Chain Manager:Plans the appropriation of logistics chain resources to meet logistics chain requirements. Logistics Data Interchange (LDI): A computerized systemto electronically transmit logistics information. Logistics Management:As defined by the Council ofSupply Chain Management Professionals (CSCMP): Logistics management is that part of supply chain management that plans, implements, and controls the efficient, effective forward and reverse flow and storage ofgoods, services, and related information between thepoint oforigin and the point ofconsumption in order to meet customers’ requirements. Logistics management activities typically include inbound and outbound transportation management, fleet management, warehousing, materials handling, order fulfillment, logistics network design, inventory management, supply/demand planning, and management of third party logistics services providers. To varying degrees, the logistics function also includes sourcing and procurement, production planning and scheduling, packaging and assembly, and customer service. It is involved in all levels ofplanning and execution—strategic, operational, and tactical. Logistics management is an integrating function which coordinates and optimizes all logistics activities, as well as integrates logistics activities with other functions, including marketing, sales, manufacturing, finance, and information technology. Logistics Service Provider (LSP): Any business which provides logistics services. Includes those businesses typically referred to as 3PL, 4PL, LLP, etc. Services may include provisioning, transport, warehousing, packaging, etc. LO-LO: See: Lift On / Lift Off Long Ton:Equals 2,240 pounds. Lost Sale: The simple definition is apotential sale (usually a customer order) which was not completed (usually due to availability). However this is a grey area and very dependent on how the individual enterprise defines it. Many refer to abandoned website shopping cart quantities as lost sales, even though the customer may only have been browsing. This highlights the difficulty in defining the term– if the customer shows a desire for a product but does not purchase it immediately, was the sale really “ lost”. Did the customer satisfy their desire elsewhere or with a different product from your own store, ordid they simply postpone a decision? Were they perhaps simply “kicking tires”? The answer is quite elusive. In an ideal world we would like to see more regarding the reason for the lost sale – product did not meet requirement, price too high, not available when needed, etc. – but this information is generally not available. A lost sale is not a backorder because the backorder will ship when available – unless ofcourse the customer does not accept backorders, or cancels the order before it ships. SUPPLY CHAIN and LOGISTICS TERMS and GLOSSARY Updated February, 2010 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 75 of 136 Marine insurance: Insurance to protect against cargo loss and damage when shipping by water transportation. Maritime Administration: A federal agency that promotes the merchant marine, determines ocean ship routes and services, and awards maritime subsidies. Maritime Transportation Security Act (MTSA): Law passed in 2002 to create a comprehensive national system of transportation security enhancements. The MTSA designated the U.S. Coast Guard as the lead federal agency for maritime homeland security and requires federal agencies, ports, and vessel owners to take numerous steps to upgrade security. The MTSA requires the Coast Guard to develop national and regional area maritime transportation security plans and requires seaports, waterfront terminals, and vessels to submit security and incident response plans to the Coast Guard for approval. The MTSA also requires the Coast Guard to conduct antiterrorismassessments ofcertain foreign ports. Market Demand: In Estimated demand for a product or servicewithin a given market demographic and time period Market Discovery Process: An evaluation and determination ofattractive markets (by size and entry requirements). Market Dominance: In transportation rating this refers to the absence of effective competition for railroads from other carriers and modes for the traffic to which the rate applies. The Staggers Act of 1980 stated that market dominance does not exist if the rate is below the revenue-to-variable- cost ratio of160% in 1981 and 170% in 1983 Market Intelligence: The process of gathering and analyzing information about a company’s market to better understand customer’s wants and needs and to identify possible threats and opportunities to the company. Market Segment: Market Segment: a group of people or organizations sharing one or more characteristics causing them to have similar product and/or service needs. A true market segment meets all of the following criteria: it is distinct from other segments (different segments have different needs), it is homogeneous within the segment (exhibits common needs); it responds similarly to a market stimulus, and it can be reached by a market intervention. The term is also used when consumers with identical product and/or service needs are divided up into groups so they can be charged different amounts. These can broadly be viewed as 'positive' and 'negative' applications of the same idea, splitting up the market into smallergroups. Market Share: The portion of the overall market demand for a specific product or service which is provided by any single provider. Market Strategy: A guide developed for an organization that details how to concentrate its limited resources on the greatest opportunities to increase sales and achieve a sustainable competitive advantage. Market-Positioned Warehouse: A Warehouse located in a geographic area containing a high population of customers, used to provide a ready source ofproducts available the same day or next day to ordering customers in a manner more economical than overnight package shipments. Marks and Numbers: Identifying marks and numbers affixed to or placed on goods used to identify a shipment or parts ofa shipment. Marquis Partners: Key strategic relationships. This has emerged as perhaps the key competitive advantage and barrier to entry of e-marketplaces. Get the big players in the fold first, offering equity ifnecessary. Marshaller or Marshalling Agent: This is a service unique to international trade and relates to an individual or firm that specializes in one or more of the activities preceding Main Carriage, such as consolidation, packing, marking, sorting of merchandise, inspection, storage, etc. References state that Marshaling Agent, Consolidation Agent and Freight Forwarder all have the same meaning. Mass Customization: A phrase used in marketing, manufacturing, call centers and management referring to the use of flexible computer-aided manufacturing systems to produce custom output. Those systems combine the low unit costs of mass production processes with the flexibility of individual customization. At its core is a tremendous increase in variety and customization without a corresponding increase in costs. Master Pack: A large box that is used to pack a number of s maller boxes or containers. Aids in protecting the smaller cartons or packages and reduces thenumber ofcartons to be handled during the material handling process. Master Production Schedule (MPS): The master level or top level schedule used to set the production plan in a manufacturing facility. SUPPLY CHAIN and LOGISTICS TERMS and GLOSSARY Updated February, 2010 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 76 of 136 Material Acquisition Costs: One of the elements comprising a company's total supply-chain management costs. These costs consist of the following: 1. Materials (Commodity) Management and Planning: All costs associated with suppliersourcing, contract negotiation and qualification, and the preparation, placement, and tracking ofa purchase order, including all costs related to buyer/planners. 2. Supplier Quality Engineering: The costs associated with the determination, development/certification, and monitoring of suppliers' capabilities to fully satisfy the applicablequality and regulatory requirements. 3. Inbound Freight and Duties: Freight costs associated with the movement of material fro m a vendor to the buyer and the associated administrative tasks. Duties are those fees and taxes levied by government for moving purchased material across international borders. Customs broker fees should also be considered in this category. 4. Receiving and Put Away: All costs associated with taking possession of material and storing it. Note that carrying costs are not a part of acquisition, and inspection is handled separately. 5. Incoming Inspection: All costs associated with the inspection and testing of received materials to verify compliancewith specifications. 6. Material Process and Component Engineering: Those tasks required to document and communicate component specifications, as well as reviews to improve the manufacturability of the purchased item. 7. Tooling: Those costs associated with the design, development, and depreciation of the tooling required to produce a purchased item. A tooling cost would be incurred by a company if they actually paid for equipment and/or maintenance for a contract manufacturer that makes their product. Sometimes, there aren't enough incentive for a contract manufacturer to upgrade plant equipment to a level of quality that a company requires, so the company will pay for the upgrades and maintenance to ensure high quality. May not be common in some industries such as the Chemicals Material Index: The ratio of the sumof the localized raw material weights to the weight of the finished product. Material Safety Data Sheet (MSDS): A formcontaining data regarding theproperties ofa particular substance. An important component ofproduct stewardship and workplace safety, it is intended to provide workers and emergency personnel with procedures for handling or working with that substance in a safe manner, and includes information such as physical data (melting point, boiling point, flash point, etc.), toxicity, health effects, first aid, reactivity, storage, disposal, protective equipment, and spill handling procedures. The exact format of an MSDS can vary from source to source within a country depending on how specific is the national requirement.. Also See: Hazardous Materials Materials Handling: The physical handling ofproducts and materials between procurement and shipping. Materials Management: Inbound logistics from suppliers through the production process. The movement and management of materials and products fromprocurement through production. Materials Planning: The materials management function that attempts to coordinate the supply ofmaterials with thedemand for materials. Materials Requirements Planning (MRP): A decision-making methodology used to determine the timing and quantities ofmaterials to purchase. Maturity Level: An identifiable stage, defined in terms of process features, towards achieving a mature process. Maturity levels are commonly represented in 5 stages, for example the SEI Capability Maturity Model defines the following levels – Ad Hoc, Repeatable, Definable, Managed, and Optimized. Measure: A number used to quantify a metric, showing the result ofpart ofa process often resulting froma simple count. Example: Number of units shipped. Metrics:See: PerformanceMeasures. Matrix Organizational Structure: A type of organizational management in which people with similar skills are pooled for work assignments. For example, all engineers may be in one engineering department and report to an engineering manager, but these same engineers may be assigned to different projects and report to a project manager while working on that project. Therefore, each engineer may have to work under several managers to get their job done.. MAX: The lowest inventory quantity that is desired at a ship to location or selling location. This quantity will over-ride the forecast number if the forecast climbs above the MAX. Maximu mstock SUPPLY CHAIN and LOGISTICS TERMS and GLOSSARY Updated February, 2010 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 77 of 136 Maximum Competitive Tension: Market analysis and intelligence development that describes the different pressures that can be exerted on competitors. Maximum Inventory: The prescribed maximu m level of inventory allowed for a specific item. Set into the item database, it is used in min/max calculations. Maximum Order Quantity: The maximum quantity allowed when ordering a specific item. Typically a value which is calculated and set into the systemfor a period of time. m-Commerce: Mobile commerce applications involve using a mobile phone to carry out financial transactions. This usually means making a payment for goods or transferring funds electronically. Transferring money between accounts and paying for purchases are electronic commerce applications. An emerging application, electronic commerce has been facilitated by developments in other areas in the mobile world, such as dual slot phones and other smarter terminals and more standardized protocols, which allow greater interactivity and therefore more sophisticate services. M-Day Calendar: See: Manufacturing Calendar Mean: For a data set, the mean is the sumof the observations divided by the number ofobservations. Mean TimeBetween Failures (MTBF): The average time between failures in a system. Measure: A number used to quantify a metric, showing the result ofpart ofa process often resulting froma simple count. An example can be the number ofunits shipped. Measurement Plans: A tool through which can evaluate the success ofa programon an ongoing basis. Measurement Ton:Equals 40 cubic feet; used in water transportation rate making. Median: A median is described as the number separating the higher halfofa sample, a population, or a probability distribution, fromthe lower half. It is the mid-point of the list ofnumbers as opposed to the average. MES: See: Manufacturing Execution Systems Merge In Transit: The process of combining or "merging" shipments from multiple suppliers which are going directly to the buyer or to the store, bypassing the seller. Effectively this is a "drop shipment" from several vendors to one buyer, which is being combined at an intermediary point prior to delivery. Merger: The combination of two or more carriers into one company for the ownership, management, and operation of the properties previously operated on a separate basis. Message: The EDIFACT term for a transaction set. A message is the collection of data, organized in segments, exchanged by trading partners engaged in EDI. Typically, a message is an electronic version of a document associated with a common business transaction, such as a purchase order or shipping notice. A message begins with a message header segment, which identifies the start of the message (e.g., the series of characters representing one purchase order). The message header segment also carries the message type code, which identifies the business transaction type. EDIFACT's message header segment is called UNH; in ANSI X12 protocol, the messageheader is called ST. A message ends with a message trailer segment, which signals the end of the message (e.g., the end of one purchase order). EDIFACT's message trailer is labeled UNT; the ANSI X12 message trailer is referred to as SE. Meta Tag: An optional HTML tag that is used to specify information about a web document. Some search engines use "spiders" to index web pages. These spiders read the information contained within a page's META tag. So in theory, an HTML or web page author has the ability to control how their site is indexed by search engines and how and when it will "come up" on a user's search. The META tag can also be used to specify an HTTP or URL address for the page to "jump" to after a certain amount of time. This is known as Client-Pull. What this means, is a web page author can control the amount of time a web page is up on thescreen as well as where thebrowser will go next. Metrics: Specific areas of measurement. A metric must be quantitative, must support benchmarking, and must be based on broad, statistically valid data. Therefore, it must exist in a format for which published data exists within the enterpriseor industry. See: Performance Measures SUPPLY CHAIN and LOGISTICS TERMS and GLOSSARY Updated February, 2010 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 80 of 136 National Institute of Standards and Technology (NIST): A federal technology agency that develops and promotes measurement, standards, and technology within the United States. National Motor Bus Operators Organization: An industry association representing common and charter bus firms; now known as the American Bus Association. National Motor Freight Classif ication (NMFC): A tariff, which contains descriptions and classifications of commodities and rules for domestic movement by motor carriers in theU.S. National Railroad Corporation: Also known as Amtrak, the corporation established by the Rail Passenger Service Act of 1970 to operate most of the United States’ rail passenger service. National Stock Number (NSN): A 13-digit numeric code, identifying all the 'standardized material items ofsupply' as they havebeen recognized by the United States Department ofDefense. Pursuant to the NATO Standardization Agreements (STANAGs), theNSN has come to be used in all treaty countries, where it is also known as a NATO Stock Number. Many countries that use the NSN program are not members of NATO i.e . Japan, Australia and New Zealand. A two-digit Material Management Aggregation Code (MMAC) suffix may also be appended, to denote asset end use but it is not considered part of the NSN. An itemhaving an NSN is said to be "stock-listed". Net Asset Turns: The number of times you replenish your net assets in your annual sales cycle. A measure of how quickly assets are used to generate sales. Calculation: Total Product Revenue / Total Net Assets Net Assets: Total Net assets are calculated as Total Assets - Total Liabilities; where: The total assets are made up of fixed assets (plant, machinery and equipment) and current assets which is the total of stock, debtors and cash (also includes A/R, inventory, prepaid assets, deferred assets, intangibles and goodwill). The total liabilities are made up in much the same way of long-termliabilities and current liabilities (includes A/P, accrued expenses, deferred liabilities). Net Change MRP: An MRP or other planning system generation that recalculates requirements only for items that have changed since the last generation, due to the addition or changes in order quantities and dates, inventory levels, bill of material or routings, lead times or other parameters. A flag is usually set by programs that initiate changes for those items, which is used by MRP as the basis to regenerate them. It typically reduces generation time and is most useful for companies that have many part numbers, a small percentage of which are active in a given week. Antonym: Regeneration MRP.. Net Landed Costs: The cost of the product in addition to the relevant logistics cost such as transportationandhandling Net Requirements: The requirements for an item based on its gross requirements (from forecasts, customer orders or upper level demand), minus stock already on-hand and scheduled receipts. Net Weight: The weight of the merchandise, unpacked, exclusive ofany containers. Net Present Value (NPV): A financial measure of performance for long term projects. The net present value is a calculation of a time series of future cash flows in today’s (current year) dollars. Network Model: A database model created to represent objects and their relationships in a flexible way. Network Optimization: A process or methodology to make a network as fully perfect, functional, effective or efficient as possible. The use of mathematics may be involved to find the best solution. Network Planning: An inventory distribution or transportation planning strategy which attempts to optimize the time/cost of travel or cost of holding inventory across multiple sites. New Product Introduction (NPI): A process that introduces a new product to the market fromthe idea stage to mass production sign-offo f the final product. SUPPLY CHAIN and LOGISTICS TERMS and GLOSSARY Updated February, 2010 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 81 of 136 NII:See: Non Intrusive Inspection Technology NIST: See: National Institute of Standards and Technology Nixie: A direct mail letterwhich has been returned to the sender because the address was wrong. Also, any undelivered piece ofmail. Nixies are used to correct a list. NES: See: Not otherwisespecified/Not elsewherespecified NITL: See: National Industrial Transportation League NMFC: See: National Motor Freight Classification Node: A fixed point in a firm’s logistics systemwhere goods come to rest; includes plants, warehouses, supply sources, and markets. No Location (No Loc): A received itemfor which the warehouse has no previously established storage slot. Non-Certified Carrier: A for-hire air carrier that is exempt fro meconomic regulation. Non-Compliance: Failure or refusal to do as requested by higher authority or as prescribed by a set of rules that describe correct procedure to follow (i.e., rules on hazardous wastedisposal). Nonconformity: A quality management event that captures the failure to meet specified inspection or testing requirements. Non-Conveyable: Materials which cannot be moved on a conveyor belt. Non-Durablegoods: Goods whose service life is considered to be less than three years. Also See: DurableGoods Non-Intrusive Inspection technology (NII): Originally developed to address the threat of smugglers using increasingly sophisticated techniques to conceal narcotics deep in commercial cargo and conveyances, NII systems, in many cases, give Customs inspectors the capability to perform thorough examinations of cargo without having to resort to the costly, time consuming process of unloading cargo for manual searches, or intrusive examinations ofconveyances by methods such as drilling and dismantling. Non-Vessel-Owning Common Carrier (NVOCC): A firm that offers the same services as an ocean carrier, but which does not own or operate a vessel. NVOCCs usually act as consolidators, accepting small shipments (LCL) and consolidating them into full container loads. They also consolidate and disperse international containers that originate at or are bound for inland ports. They then act as a shipper, tendering the containers to ocean common carriers. They are required to file tariffs with the Federal Maritime Commission and are subject to the same laws and statutes that apply to primary common carriers. North American Container System (NACS): An Intermodal equipment programdesigned to facilitate the free interchange ofdomestic 48’ and 53’ containers between member railroads. North American Free Trade Agreement (NAFTA): A free trade agreement, implemented January 1, 1994, between Canada, the United States and Mexico. It includes measures for the elimination of tariffs and non-tariff barriers to trade, as well as many more specific provisions concerning the conduct of trade and investment that reduce thescope for government intervention in managing trade. NOS: See: Not otherwisespecified/Not elsewherespecified Not Otherwise Specified / Not Elsewhere Specified (NOS/NES): This term often appears in ocean or airfreight tariffs respectively. If no rate for the specific commodity shipped appears in the tariff, then a general class rate (for example: printed matter NES) will apply. Such rates usually are higher than rates for specific commodities. NPI: See: New Product Introduction NPV: See: Net Present Value SUPPLY CHAIN and LOGISTICS TERMS and GLOSSARY Updated February, 2010 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 82 of 136 NSN: See: National Stock Number NVOCC: See: Non-vessel owning common carrier O Obeya: Japanese word for "big room", similar in concept to a traditional “war room,” and containing charts and graphs which show milestones and progress to date, problemresolution activities, etc. A command center type atmosphere. Object Linking and Embedding (OLE): An object systemcreated by Microsoft. OLE lets an author invoke different editor components to create a compound document. Obsolete Inventory: Inventory for which there is no forecast demand expected. A condition ofbeing out ofdate. A loss ofvalue occasioned by new developments that place the older property at a competitive disadvantage. Obsolescence: A loss in the utility or value of property that results over time from intrinsic limitations (as outmoded facilities) or external circumstances. Occupational Safety and Health Administration (OSHA): A United States Department ofLabor Agency whose mission is theprevention ofwork- related injuries, illnesses, and death. Ocean Bill of Lading: The bill of lading issued by the ocean carrier to its customer. OE: See: Order ExchangeSystem OEE: See: Overall Equipment Effectiveness OEM: See: Original Equipment Manufacturer Offshoring: The practice ofmoving domestic operations such as manufacturing to another country. Offer: See: Tender. Offline: A computer term which describes work done outside of the computer system or outside of a main process within the corporate system. In general usage this termdescribes any situation where equipment is not available for use, or individuals cannot be contacted. Offshore: Utilizing an outsourcing service provider (manufacturer or business process) located in a country other than where the purchasing enterprise is located. OLE: See: Object Linking and Embedding On-Demand: Pertaining to work performed when demand is present. Typically used to describeproducts which are manufactured or assembled only when a customer order is placed. May also refer to computer applications which are accessed remotely via a subscription service where charges for use are incurred as opposed to paying a set period fee. On-Hand Balance: 1) The ‘book’ quantity recorded in the inventory records. 2) The ‘physical’ quantity as can be actually counted in the storage location(s). On-Line Receiving: A system in which computer terminals are available at each receiving bay and operators enter items into the system as they are unloaded. SUPPLY CHAIN and LOGISTICS TERMS and GLOSSARY Updated February, 2010 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 85 of 136 3. Order Entry and Maintenance: This includes costs associated with maintaining the customer database, credit check, accepting new orders, and adding themto the order systemas well as later order modifications. 4. Contract/Program and Channel Management: This includes costs related to contract negotiation, monitoring progress, and reporting against the customer's contract, including administration ofperformance or warranty related issues. 5. Installation Planning: This includes costs associated with installation engineering, scheduling and modification, handling cancellations, and planning the installation. 6. Order Fulfillment: This includes costs associated with order processing, inventory allocation, ordering from internal or external suppliers, shipment scheduling, orderstatus reporting, and shipment initiation. 7. Distribution: This includes costs associated with warehouse space and management, finished goods receiving and stocking, processing shipments, picking and consolidating, selecting carrier, and staging products/systems. 8. Transportation, Outbound Freight and Duties: This includes costs associated with all company paid freight duties from point-of-manufact ure to end-customer or channel. 9. Installation: This includes costs associated with verification ofsite preparation, installation, certification, and authorization ofbilling. 10. Customer Invoicing/Accounting: This includes costs associated with invoicing, processing customer payments, and verification of customer receipt. Order Picking: The function of gathering the items associated with an order from their storage locations in order to make them available to be included in production processes or to customers. Also See: Batch Picking, Discrete Order Picking, ZonePicking Order Point – Order Quantity System: The inventory method that places an order for a lot whenever the quantity on hand is reduced to a predetermined level known as the orderpoint. Also See:Fixed Reorder Quantity InventoryModel, Hybrid system Order Processing: Activities associated with accepting and filling customer orders. Order Promising: The act of agreeing to a customer’s stated requirements for delivery of products or services to be provided in a given quantity on a given date.. Also See: Available-to-Promise Order Receipt to Order Entry Complete: Average lead-time fro mreceipt ofa customer order to the time that order entry is complete, including the following sub-elements: order revalidation, product configuration check, credit check, and orderscheduling. Note: Determined separately for Make-to-Order, Configure/Package-to-Order, Engineer-to-Order, and Make-to-Stock products. Origin: The place where a shipment begins its movement. Open to Buy (OTB): A budgeting and procurement guide used by many retailers to establish appropriate procurement and inventory levels based on projected sales. Usually set at a category or higher level rather than at the individual SKU level. The formula for calculating theOpen-To-Buy is: OTB = Planned Sales +Planned Markdowns +Planned Inventory - Actual Inventory - On Order - Actual Sales Original Equipment Manufacturer (OEM): The rebranding ofequipment and selling it under another name, or as a component ofanotherproduct. OEM refers to the company that made the products (the "original" manufacturer), but with the growth ofoutsourcing, eventually became widely used to refer to the organization that buys the products and resells them. This termhas two generally acceptabledefinitions which are actually opposites of each other and may vary by industry: 1) The OEM reseller is often the designer of the equipment (which is made to order). An example would be a computer manufacturer OEMwhich includes components built by other manufacturers, and 2) Companies that make products for others to repackage and sell, or to incorporate into a final assembly. An example would be an OEM manufacturing tires for use on automobiles. OS&D: See: Over, Short and Damaged OSHA: See: Occupational Safetyand Health Administration OTB: See:Open to Buy OTIF: See: On Time In Full Out Of Stock: The state ofnot having inventory at a location and available for distribution or for sell to the consumer (zero inventory). SUPPLY CHAIN and LOGISTICS TERMS and GLOSSARY Updated February, 2010 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 86 of 136 Out of Stocks: See:Stock Outs Outbound Consolidation: Consolidation ofa number ofs mall shipments for various customers into a larger load. The large load is then shipped to a location near the customers where it is broken down and then the small shipments are distributed to the customers. This can reduce overall shipping charges where many small packet or parcel shipments are handled each day. Also See: Break Bulk Outbound Logistics: The process related to the movement and storage ofproducts fromthe end of the production line to the end user. Outbound Supply ChainNetwork Planning: See: NetworkPlanning Outgate: The process of checking a container or trailer out of an intermodal facility. The process includes inspection of the unit, input of data into a computer system. Outlier: In statistical analysis an outlier refers to a data point that is statistically different from the main body, either significantly high or low. y fro m other data for a similar phenomenon. An example would be where the average monthly usage of a item is 100 and one of the months in the average set is 500. Also See: Abnormal Demand Outpartnering: A variant of outsourcing seen primarily in the healthcare industry, outpartnering is characterized by close working relationships between buyers and suppliers as a source ofknowledge, expertise, and complementary core competencies. Also See: Customer-Supplier Partnership, Outsourcing Outsource: To utilize a third-party provider to perform services previously performed in-house. Examples include manufacturing of products and call center/customer support. Outsourced Cost of Goods Sold: Operations performed on raw material outside of the responding entity's organization that would typically be considered internal to the entity's manufacturing cycle. Outsourced cost of goods sold captures the value of all outsourced activities that roll up as cost of goods sold. Some examples of commonly outsourced areas are assembly by subcontract houses, test, metal finishing or painting, and specialized assembly process. Over, short and damaged (OS&D): This is typically a report issued at warehouse when goods received are more or less than indicated by the packing slip, or are damaged. Used to file claimwith carrier. Over-the-Road: A motor carrieroperation that reflects long-distance, intercity moves; the opposite of local operations. Overall Equipment Effectiveness (OEE): A measure of overall equipment effectiveness that takes into account machine availability and performance as well as output quality. Overpack: The practice of using a large box or carton to contain multiple smaller packages which are all going to the same destination in order to achieve a reduced overall shipping cost vs. the individual packages. Owner-Operator (OO): A trucking operation in which theowner of the truck is also the driver. P P&D: See: Pickup and delivery. P&P: See: Pick and Pass. P2P: See: Path to Profitability SUPPLY CHAIN and LOGISTICS TERMS and GLOSSARY Updated February, 2010 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 87 of 136 P2P: See: Peer to Peer Pack Out: In a fulfillment environment this refers to the operations involved in packaging and palletizing individual units ofproduct for introduction into the warehouse distribution environment. For example, a contract 3PL may received or assemble units of product which need to be placed into retail packaging, then over-packed with a carton and then palletized. Package to Order: A postponement strategy where products are received in bulk or manufactured without final packaging to allow for a variety of packaging options for a single product. An example is where a product is shipped to retailers with packaging designed specifically for the individual retailer. Packaging Indicator (PI): The first digit of the U.P .C. shipping container (EAN/UCC128) code that identifies the packaging level. Packing and Marking: Sometimes referred to as preservation, packaging and marking, these are the activities related to packing for shipping by placing goods into designated containers, and labeling (marking) the container with customer prescribed destination and other information. Packing List: List showing merchandise packed and all particulars. Normally prepared by shipper but not required by carriers. Copy is sent to consignee to help verify shipment received, it may be inside of the box or attached to the outside in a clear envelope. The physical equivalent of the electronic Advanced Ship Notice (ASN). Pallet: The platformwhich cartons are stacked on and then used for shipment or movement as a group.Pallets may be made ofwood or composite materials. Some pallets have electronic tracking tags (RFID) and most are recycled in some manner. Pallet Jack: Material handling equipment consisting of two broad parallel pallet forks on small wheels used in thewarehouse to move pallets of product, but not having the lifting capability ofa forklift. It may be a motorized unit guided by an operatorwho stands on a platform; or it may be a motorized or manual unit guided by an operator who is walking behind or beside it. Comes as a "single" (one pallet)or "double" (two pallets). Pallet Rack: A singleor multi-level structural storagesystemthat is utilized to support high stacking ofsingle items or palletized loads. Pallet Tag: Also known as “License Plate”, the bar coded sticker that is placed on a unit load or partial load, typically at receiving. The pallet tag can be scanned with an RF gun. Pallet Ticket:A document or label attached to a pallet, showing the description, part number, and quantity of the itemcontained on thepallet. Pallet Wrapping Machine: A machine that wraps a pallet’s contents in stretch-wrap to ensure safe shipment. Parcel Case Strapping: The act ofconsolidating two or more individual cartons or cases ofa shipment togetherwith strapping, to formone single unit in an effort to improve efficiency and reduce costs. Parcel Shipment:Parcels includesmall packages like those typically handled by providers such as UPS and FedEx. Pareto: A means of sorting data. For example, the number of quality faults by frequency of occurrence. This is an analysis comparing cumulative percentages of the rank ordering ofcosts, cost drivers, profits, or other attributes to determine whether a minority ofelements have a disproportionate impact. Another example is identifying that 20% ofa set of independent variables is responsible for 80% of the effect. Also see:80/20 Rule. Part Period Balancing (PPB): A lot size technique that uses look ahead and look back functions to consider additional periods in modifying an initial calculation based on least total cost. Also See:Discrete Order Quantity, Dynamic lot sizing. Part Standardization: A strategy designed to eliminate excessive SKU counts (part numbers) from inventory control systems though the use of common parts and components. Also knows as ‘ rationalizing’ . Passenger-Mile: A measure of output for passenger transportation; it reflects the number of passengers transported and the distance traveled; a multiplication ofpassengers hauled and distance traveled. Password: A private code required to gain access to a computer, an application program, or service. SUPPLY CHAIN and LOGISTICS TERMS and GLOSSARY Updated February, 2010 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 90 of 136 Personal Digital Assistant (PDA): A computer term for a handheld device that combines computing, telephone/fax, and networking features. PDA examples include the Palm and Pocket PC devices. A typical PDA can function as a cellular phone, fax sender, and personal organizer. Unlike portable computers, most PDAs are pen-based, using a stylus rather than a keyboard for input. This means that they also incorporate handwriting recognition features. Some PDAs can also react to voice input by using voice recognition technologies. Some PDAs and networking software allow companies to usePDAs in theirwarehouses to support wireless transaction processing and inquiries. Personal Discrimination: Charging different rates to shippers with similar transportation characteristics, or viceversa. Phantom Bill of Material: A BOM for a product or group of parts that is not normally built and stocked, but is immediately used in production. MRP processors ignore the phantom and instead include the component parts in production orders and for planning purposes. A phantom BOM is often used for convenience where a set of parts has identical usage across many bills of material. Synonym: Pseudo Bill of Material. Also See: blowthrough Physical Distribution: The movement and storage functions associated with finished goods from manufacturing plants to warehouses and to customers; also, used synonymously with business logistics. Physical Supply: The movement and storage functions associated with raw materials fromsupply sources to the manufacturing facility. PI: See: Packaging Indicator Pick and Pass: Pick and pass involves segregating your DC pick area into pick zones where the operators perform picks only in the zones assigned to them and the order picking container travels (is passed) from one zone to another using conveyors or pick carts reducing the travel time for pickers. Pick-by-Light: A laser identifies the bin for the next item in the rack; when the picker completes the pick, the bar code is scanned and the system then points the laser at the next bin. Pick/Pack: Picking ofproduct frominventory and packing into shipment containers. Pick List: A list of items to bepicked fromstock in order to fill an order; the pick list generation and the picking method can be quite sophisticated. Pick Module: A dedicated area specifically designed to enhance pick operations, usually supported by a belt conveyor belt or roller assembly to move picked products to a packaging / shipping area. Pick modules are often multi-level rack structures using pallet or case flow storage and pick-to- light systems. Pick on Receipt: Product is receipted and picked in one operation (movement); therefore the product never actually touches the ground within the warehouse. It is unloaded fromone vehicle and re-loaded on an outbound vehicle. Related to Cross Docking. Pick-to-Clear: A method often used in warehouse management systems that directs picking to the locations with the smallest quantities on hand. Pick-to-Carton:Pick-to-carton logic uses itemdimensions/weights to select the shipping carton prior to the order picking process. Items are then picked directly into the shipping carton. Pick-to-Light: Pick-to light systems consist of lights and LED displays for each pick location. The systemuses software to light thenext pick and display the quantity to pick. Pick-to-Trailer: Order-picking method where the order picker transports the materials directly fromthe pick location to the trailer without any interimchecking or staging steps. Pick-Up Order: A document indicating the authority to pick up cargo or equipment froma specific location. Picking: The operations involved in pulling products fromstorage areas to complete a customer order. SUPPLY CHAIN and LOGISTICS TERMS and GLOSSARY Updated February, 2010 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 91 of 136 Picking by Aisle: A method by which pickers pick all needed items in an aisle regardless of the items’ ultimate destination; the items must besorted later. A component ofWavePicking. Picking by Source: A method in which pickers successively pick all items going to a particular destination regardless of the aisle in which each item is located. Pickup and Delivery: A type of transportation, usually local, where the carrier follows a regular route making deliveries and picking up shipment.. Piece Count: Number of individual cases, packages or bundles in an intermodal trailer or container. Piggyback: Terminology used to describe a truck trailer being transported on a railroad flatcar. Pin Lock: A hard piece of iron, formed to fit on a trailer’s pin, that locks in place with a key to prevent an unauthorized person from moving the trailer. Place Utility: A value created in a product by changing its location. Transportation creates placeutility. Plaintext: Databefore it has been encrypted or after it has been decrypted, e.g., an ASCII text file. Plan Deliver: The development and establishment ofcourses ofaction over specified time periods that represent a projected appropriation ofsupply resources to meet delivery requirements. Plan-Do-Check-Action (PDCA): A four step quality improvement cycle, based on a process described by Walter Shewhart, that involves continuous improvement based on analysis, design, execution and evaluation. Sometimes referred to as plan/do/study/act, it emphasizes the constant attention and reaction to factors that affect quality. Synonyms: Shewhart Cycle. Also See: Deming Circle Plan Make: The development and establishment of courses of action over specified time periods that represent a projected appropriation of production resources to meet production requirements. Plan Source: The development and establishment ofcourses ofaction over specified time periods that represent a projected appropriation of material resources to meet supply chain requirements. Plan Stability: The difference between planned production and actual production, as a percentage ofplanned production. Calculation: [(Sum of Monthly Production Plans) + (Sum of the absolute value of the difference between planned and actual)]/[Sum of Monthly Production Plans] Note: Base Production Plan is the three month removed plan Planned Date: The date an operation, such as a receipt, shipment, or delivery ofan order is planned to occur. Planned Order: An order proposed by an MRP system to cover forecast demand in a future period. P lanned orders will changes dynamically over time to accommodate changes in forecasts and actual usage until they become ‘firm planned orders’ either through manual intervention or by virtue of the associated period moving within a planning horizon. The next step in the process would be to create an actual purchase or production order.. Also See:Planning Time Fence, Firm Planned Order Planned Receipt:Any line itemon an open purchase or production orderwhich has been scheduled but not yet received into stock. Planning Bill: See: Planning Bill of Material Planning Bill of Material: A BOM which has been created facilitate the practiceof forecasting by family group rather than by individual product. It specifies the products as components and the expected percent of each in terms of overall family usage or sales. The MRP system will then use the family level forecast to derive individual product forecasts using the relative percentages. Also See: Hedge Inventory, Production Forecast, Pseudo Bill of Material SUPPLY CHAIN and LOGISTICS TERMS and GLOSSARY Updated February, 2010 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 92 of 136 Planning Calendar: See: Manufacturing Calendar Planning Fence: See: Planning Time Fence Planning Horizon: In an MRP system this is the length of time into the future (number of periods or days) for which the planning system will generate requirements. The horizon should be set long enough out to accommodate the longest cumulative lead time for any item in the population. .Also See: Cumulative Lead Time, Planning Time Fence Planning Time Fence: A point, usually a set length of time beyond the current date, used as a boundary for making changes in a planning system. It is used to stabilize the master production schedule by allowing various changes to planned orders only beyond the fence however changes under certain circumstances can be made within the fence. Also See: Cumulative Lead Time, Demand Time Fence, Firm Planned Order, Planned Order, Planning Horizon, Time Fence. Planogram: The end result of analyzing the sales data of an item or group of items to determine the best arrangement of products on a store shelf. The process determines which shelfyour top-selling product should be displayed on, the number of facings it gets, and what best to surround it with. It results in graphical picture or map of the allotted shelf space along with a specification of the facing and deep. Plant FinishedGoods: Finished goods inventory held at the end manufacturing location. PLU: See: Price Look-Up PLM: See: Product LifecycleManagement PM: See: Preventative Maintenance PO: See: Purchase Order POD: See: Proof of Delivery Point-of -Purchase (POP): A retail sales termreferring to the area where a saleoccurs, such as the checkout counter. POP is also used to refer to the displays and other sales promotion tools located at a checkout counter. Point of Sale (POS): 1) The time and place at which a sale occurs, such as a cash register in a retail operation, or the order confirmation screen in an on-line session. Supply chain partners are interested in capturing data at thePOS, because it is a true record of the sale rather than being derived from other information such as inventory movement. 2) Also a national network of merchant terminals, at which customers can use client cards and personal security codes to make purchases. Transactions are directed against client deposit accounts. POS terminals are sophisticated cryptographic devices, with complex key management processes. POS standards draw on activity-based management (ABM) network experiences and possess extremely stringent security requirements. Point of Sale Information:Price and quantity data fromretail locations as sales transactions occur. Point-of -Use delivery: This is when components are delivered directly to where they will be used instead of stored in inventory in a warehouse or distribution center. Point-of -use inventory: Material used in production processes that is physically stored where it is consumed. Poka Yoke (Mistake-Proof): The application ofsimple techniques that prevent process quality failure. A mechanismthat eitherprevents a mistake from being made or makes the mistake obvious at a glance. Police Powers: The United States constitutionally granted right or the states to establish regulations to protect the health and welfare of its citizens; truck weight, speed, length, and height laws are examples. Pooling: A shipping termfor the practice ofcombining shipment from multiple shippers into a truckload in order to reduce shipping charges. POP: See: Point-of-Purchase SUPPLY CHAIN and LOGISTICS TERMS and GLOSSARY Updated February, 2010 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 95 of 136 Process Manufacturing: The segment of the manufacturing industry which is associated with production of products using formulas and manufacturing recipes, and can be contrasted with discrete manufacturing, which is concerned with bills of material and routing. Process Optimization: The study of process adjustment in order to optimize some specified set of parameters without violating some constraint. Some of the most common goals ofprocess optimization are minimizing cost, and maximizing throughput and/or efficiency. Process Yield: The resulting output froma process. An example would be a quantity of finished product output from manufacturing processes. Procurement: The activities associated with acquiring products or services. The range ofactivities can vary widely between organizations to include all of parts of the functions of procurement planning, purchasing, inventory control, traffic, receiving, incoming inspection, and salvage operations. Synonym: Purchasing. Procurement Services Provider (PSP): A services firm that integrates procurement technologies with product, sourcing, and supply management expertise, to provide outsourced procurement solutions. A PSP serves as an extension of an organization's existing procurement infrastructure, managing the processes and spending categories and procurement processes that the organization feels it has opportunities for improvement but lacks the internal expertise to manage effectively. Product: Something that has been or is being produced. Product Characteristics:All of the elements that define a product’s character, such as size, shape, weight, etc. Product Configurator: A software tool which provides the capability of creating a specific end item version for products which have a number of optional components. Use in the design-to-order, engineer-to-order, or make-to-order environments. Product Conf iguration: The arrangement ofparts or components to satisfy a customer’s demand by creating a product. Product Data Management (PDM): A technology solution which provides for a single, centralized data repository that enables authorized users throughout a company to access and update current product information, while ensuring they follow specific procedures. These systems typically link and consolidate information from multiple enterprise areas which control various aspects ofproduct data such as engineering, manufacturing,finance and sales. Product ID: A method of identifying a product without using a full description. These can be different for each document type and must, therefore, be captured and related to the document in which they were used. They must then be related to each other in context (also known as SKU, ItemCode or Number, or other such name). Product Family: A set ofproducts which are considered as a singlegroup when creating forecasts for planning purposes. See: Planning Bill Product Incubator: The controlled environmental conditions that allow for the research, development, and testing ofa new or redefined product. Product Life Cycle: The life of a product in a market with respect to business sales and profits over time. There are five stages to the product life cycle: product development, introduction, growth, maturity and decline. Product Life Cycle Management (PLM): The process of managing the entire lifecycle of a product from its conception, design, development and manufacture, to management of its introduction, growth and decline. Product Planning: The ongoing process of identifying and articulating market requirements that define a product’s feature set. Product Support Integrator (PSI): An entity performing as a formally bound agent (e.g. contract, MOA, MOU) charged with integrating all source ofsupport, public and private, defined within the scope of thePBL agreements to achieve thedocumented outcome. Activities coordinated by support integrators can include, as appropriate, functions provided by organic organizations, private sector providers, or a partnership between organic and private sector providers. Product Support Manager (PSM): An overarching term characterizing the Various service function title, (i.e. Assistant PM for Logistics, System Support Manager, etc.) who leads the development and implementation of the product support and PBL strategies and ensure achievement ofdesired support outcomes during sustainment. ThePSM employs a PSI, or a number ofPSIs as appropriate, to achieve thoseoutcomes. SUPPLY CHAIN and LOGISTICS TERMS and GLOSSARY Updated February, 2010 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 96 of 136 Product Support Provider (PSP): Anyone who provides products or services in the sustainment ofand acquisition system. Product Velocity: The number ofunits per time period a company can sell. Production Calendar: See: Manufacturing Calendar Production Capacity: Measure ofhow much production volume may be experienced over a set period of time. Production Forecast: The forecasted level of production which will be required to meet anticipated demand above the current level of inventory availability. Also See:Assemble-to-Order, Planning Bill of Material, Two-Level Master Schedule Production Line: The area where production occurs, specifically the series of work centers or pieces of equipment used in the manufacture or assembly ofproducts. Production Planning and Scheduling: The systems that enable creation ofdetailed optimized plans and schedules taking into account the resource, material, and dependency constraints to meet thedeadlines. Production-Related Material:Production-related materials are those items classified as material purchases and included in Cost of Goods Sold as raw material purchases. Production Validation: The documented act ofdemonstrating that a procedure, process, and activity during the production process will consistently lead to the expected results. Productivity: A measure ofefficiency ofresource utilization; defined as the sumof the outputs divided by thesumof the inputs. Profit Management: The strategy and decision of how to deliver activities that support the delivery of value to the customer, the cost of channel engagement and product/customer profitability, and the assets required to deliver value. Profit ratio: The percentageofprofit to sales—that is, profit divided by sales. Profitability Analysis: The analysis ofprofit derived fromcost objects to improve or optimize profitability. Multiple views may be analyzed such as market segment, customer, distribution channel, product families, products, technologies, platforms, regions, manufacturing capacity, etc. Profit Before Interest and Tax (PBIT): The financial profit generated prior to the deduction of taxes and interest due on loans. Also called operating profit. Profitable to Promise: This is effectively a promise to deliver a certain order on agreed terms, including price and delivery. Profitable-to-Promise (PTP) is the logical evolution ofAvailable-to-Promise (ATP) and Capable-to-Promise (CTP). While the first two are necessary for profitability, they are not sufficient. For enterprises to survive in a competitive environment, profit optimization is a vital technology. Pro-Forma: A type ofquotation or offer that may be used when first negotiating the sales ofgoods or services. If the pro-forma is accepted,then the terms and conditions of the pro-forma may become the request. Pro Forma Invoice: An invoice, forwarded by the seller ofgoods prior to shipment, that advises the buyer of the particulars and value of the goods. Usually required by thebuyer in order to obtain an import permit or letter ofcredit. Promotion: The act ofselling a product at a reduced price, or a buy one - get one free offer, for the purpose of increasing sales. Promotion Planning: Supports sales promotions management and covers both forecasting and evaluation of results. Promotion Planning assesses the impact ofpromotions on sales volumes, turnover and margins, supporting planners in the selection ofproducts and markets to promote. Pro Number: Any progressive orserialized number applied for identification of freight bills, bills of lading, etc. SUPPLY CHAIN and LOGISTICS TERMS and GLOSSARY Updated February, 2010 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 97 of 136 Proof of Delivery (POD): Information supplied by the carrier containing the name of the person who signed for the shipment, the time and date of delivery, and other shipment delivery related information. POD is also sometimes used to refer to the process of printing materials just prior to shipment (Print on Demand). Proportional Rate:A rate lower than the regular rate for shipments that have prioror subsequent moves; used to overcome competitive disadvantages ofcombination rates. Protocol: Communication standards that determine message content and format, enabling uniformity of transmissions. Pseudo Bill of Materials: See: Phantom Bill of Materials PSP: See: Procurement Services Provider Public Private Partnering (PPP): An agreement between a government entity and one or more private industry, or other, entities to perform work or utilize facilities and equipment. The Public-Private Partnerships initiative is directed toward improving the output and performance of DoD organic activities through increased participation by the privatesector via industrial partnering. Public Warehouse: A business that provides short or long-term storage to a variety of businesses usually on a month-to-month basis. A public warehouse will generally use their own equipment and staffhowever agreements may be made where the client either buys or subsidizes equipment. Public warehouse fees are usually a combination of storage fees (per pallet or actual square footage) and transaction fees (inbound and outbound). Public warehouses are most often used to supplement space requirements ofa private warehouse. Aso see: Contract warehouse and 3PL. Public Warehouse Receipt: The basic document issued by a public warehouse manager that is the receipt for the goods given to the warehouse manager. The receipt can be either negotiable or nonnegotiable. Pull-BasedCustomer Replenishment Signals: A signal based on actual demand and consumption fromcustomers that trigger the issue ofa reorder ofproduct or materials. Pull Signal: See: Pull-Based Customer Replenishment Signals Pull or Pull-Through Distribution: Supply-chain action initiated by the customer. Traditionally, the supply chain was pushed; manufacturers produced goods and "pushed" them through the supply chain while and the customer had no control. In a pull environment, a customer's purchase sends replenishment information back through the supply chain from retailer to distributor to manufacturer, so goods are "pulled" through the supply chain. Pull Ordering System: A system in which each warehouse controls its own shipping requirements by placing individual orders for inventory with the central distribution center. This is a replenishment systemwhere inventory is "pulled" into the supply chain (or "demand chain" by POSsystems, or ECR programs), and is associated with "build to order" systems. Pup: A 28-foot trailer, used mostly in less than truckload business. Purchase Order (PO): The purchaser’s authorization used to formalize a purchase transaction with a supplier. The physical form or electronic transaction a buyer uses when placing order for merchandise. Purchase Price Variance: The difference between the actual vendor invoice price or manufacturing cost and the expected or standards cost.. Purchase Price Viscount: A pricing structure in which the selleroffers a lower price if the buyer purchases a larger quantity. Purchasing: The functions associated with buying the goods and services required by the firm. Pure raw material: A raw material that does not loseweight in processing Push Back Rack: Utilizing wheels in the rack structure, this rack system allows palletized goods and materials to be stored by being pushed up a gently graded ramp. Stored materials are allowed to flow down the ramp to the aisle. This rack configuration allows for deep storage a each rack level.