SUPPLY CHAIN VISION LOGISTICS TERMS and GLOSSARY Updated October 2003 ABB: See Activity Based budgeting ABC: See Activity Based Costing ABC Classification: Classification of a group of items in decreasing order of annual dollar volume or other criteria. This array is then split into three classes called A, B, and C. The a group represents 10-20% by number of items and 50 -70% by projected dollar volume. The next grouping, B, represents about 20% of the items and about 20% of the dollar volume. The C class contains 60-70% of the items and represents about 10-30% of the dollar volum ABC Costing: See Activity Based Costing ABC Inventory Control: An inventory control approach based on the aBC classification ABC Model: In cost management, a representation of resource costs during a time period that re consumed through activities and traced to products, services, and customers or to any other bject 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 organizations resources, activities, drivers, objects and measures. ABC models are created and maintained within this system ABM: See Activity Based management Abnormal Demand: Demand in any period that is outside the limits established by management policy. This demand may come from a new customer or from existing customers whose own demand is increasing or decreasing. Care must be taken in evaluating the nature of the demand is it a volume change, is it a change in product mix, or is it related to the timing of the order? Also see Outlier ABP: See Activity Based Planning Definitions compiled by Kate vitasek Bellevue. Washington Please note: The Council of Logistics Management does not take responsibility for the content of these definitions, nor does the Council endorse these as official definitions except as noted
SUPPLY CHAIN VISIONS LOGISTICS TERMS and GLOSSARY Updated October 2003 Definitions compiled by: Kate Vitasek Supply Chain Visions Bellevue, Washington Please note: The Council of Logistics Management does not take responsibility for the content of these definitions, nor does the Council endorse these as official definitions except as noted. A ABB: See Activity Based Budgeting ABC: See Activity Based Costing ABC Classification: Classification of a group of items in decreasing order of annual dollar volume or other criteria. This array is then split into three classes called A, B, and C. The A group represents 10 – 20% by number of items and 50 –70% by projected dollar volume. The next grouping, B, represents about 20% of the items and about 20% of the dollar volume. The C class contains 60 – 70% of the items and represents about 10 – 30% of the dollar volume. ABC Costing: See Activity Based Costing ABC Inventory Control: An inventory control approach based on the ABC classification. ABC Model: In cost management, a representation of resource costs during a time period that are consumed through activities and traced to products, services, and customers or to any other object that creates a demand for the activity to be performed. 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 in any period that is outside the limits established by management policy. This demand may come from a new customer or from existing customers whose own demand is increasing or decreasing. Care must be taken in evaluating the nature of the demand: is it a volume change, is it a change in product mix, or is it related to the timing of the order? Also see: Outlier. ABP: See Activity Based Planning
SUPPLY CHAIN VISION LOGISTICS TERMS and GLOSSARY Updated October 2003 Absorption Costing: In cost management, an approach to inventory valuation in which variable costs and a portion of fixed costs are assigned to each unit of production. The fixed costs are usually allocated to units of output on the basis of direct labor hours, machine hours, or material costs. Synonym: Allocation Costing Acceptable Quality Level(AQL): In quality management, when a continuing series of lots is considered, AQL represents a quality level that, for the purposes of sampling inspection, is the limit of a satisfactory process average. Also see: Acceptance Sampling Acceptable Sampling Plan: In quality management, a specific plan that indicates the sampling sizes and the associated acceptance or non-acceptance criteria to be used. Also see: acceptance sampli Acceptance Number: In quality management, 1)A number used in acceptance sampling as a cutoff at which the lot will be accepted or rejected. For example, if x or more units are bad within the sample, the lot will be rejected. 2) The value of the test statistic that divides all possible values into acceptance and rejection regions. Also see: Acceptance Sampling Acceptance Sampling: 1)The process of sampling a portion of goods for inspection rather than examining the entire lot. The entire lot may be accepted or rejected based on the sample even though the specific units in the lot are better or worse than the sample. There are two types attributes sampling and variables sampling. In attributes sampling, the presence or absence of a characteristic is noted in each of the units inspected. In variables sampling, the numerical magnitude of a characteristic is measured and recorded for each inspected unit; this type of sampling involves reference to a continuous scale of some kind. 2 )A method of measuring random samples of lots or batches of products against predetermined standards Accessory: A choice or feature added to the good or service offered to the customer for customizing the end product. An accessory enhances the capabilities of the product but is not necessary for the basic function of the product. In many companies, an accessory means that the choice does not have to be specified before shipment but can be added at a later date. In other companies, this choice must be made before shipment Accountability: Being answerable for, but not necessarily personally charged with specific work. Accountability cannot be delegated, but it can be shared. For example, mana and executives are accountable for business performance even though they may not actually rm the work. Definitions compiled by Kate vitasek Bellevue. Washington Please note: The Council of Logistics Management does not take responsibility for the content of these definitions, nor does the Council endorse these as official definitions except as noted
SUPPLY CHAIN VISIONS LOGISTICS TERMS and GLOSSARY Updated October 2003 Definitions compiled by: Kate Vitasek Supply Chain Visions Bellevue, Washington Please note: The Council of Logistics Management does not take responsibility for the content of these definitions, nor does the Council endorse these as official definitions except as noted. Absorption Costing: In cost management, an approach to inventory valuation in which variable costs and a portion of fixed costs are assigned to each unit of production. The fixed costs are usually allocated to units of output on the basis of direct labor hours, machine hours, or material costs. Synonym: Allocation Costing. Acceptable Quality Level (AQL): In quality management, when a continuing series of lots is considered, AQL represents a quality level that, for the purposes of sampling inspection, is the limit of a satisfactory process average. Also see: Acceptance Sampling. Acceptable Sampling Plan: In quality management, a specific plan that indicates the sampling sizes and the associated acceptance or non-acceptance criteria to be used. Also see: Acceptance Sampling. Acceptance Number: In quality management, 1) A number used in acceptance sampling as a cutoff at which the lot will be accepted or rejected. For example, if x or more units are bad within the sample, the lot will be rejected. 2) The value of the test statistic that divides all possible values into acceptance and rejection regions. Also see: Acceptance Sampling. Acceptance Sampling: 1) The process of sampling a portion of goods for inspection rather than examining the entire lot. The entire lot may be accepted or rejected based on the sample even though the specific units in the lot are better or worse than the sample. There are two types: attributes sampling and variables sampling. In attributes sampling, the presence or absence of a characteristic is noted in each of the units inspected. In variables sampling, the numerical magnitude of a characteristic is measured and recorded for each inspected unit; this type of sampling involves reference to a continuous scale of some kind. 2) A method of measuring random samples of lots or batches of products against predetermined standards. Accessory: A choice or feature added to the good or service offered to the customer for customizing the end product. An accessory enhances the capabilities of the product but is not necessary for the basic function of the product. In many companies, an accessory means that the choice does not have to be specified before shipment but can be added at a later date. In other companies, this choice must be made before shipment. Accountability: Being answerable for, but not necessarily personally charged with, doing specific work. Accountability cannot be delegated, but it can be shared. For example, managers and executives are accountable for business performance even though they may not actually perform the work
SUPPLY CHAIN VISION LOGISTICS TERMS and GLOSSARY Updated October 2003 Accounts payable(A/P): The value of goods and services acquired for which payment has not ret been made Accounts receivable(A/R): The value of goods shipped or services rendered to a customer on whom payment has not yet been received. Usually includes an allowance for bad debts Accreditation: Certification by a recognized body of the facilities, capability, objectivity competence, and integrity of an agency, service, operational group, or individual to provide the specific service or operation needed For example, the Registrar Accreditation Board accredits those organizations that register companies to the ISo 9000 Series Standards Accredited Standards Committee(ASC): A committee of ANSI chartered in 1979 to develop uniform standards for the electronic interchange of business documents. The committee develops and maintains U.S. generic standards(X12)for Electronic Data Interchange Accumulation bin: A place, usually a physical location, used to accumulate all components that go into an assembly before the assembly is sent out to the assembly floor. Syn: assembly bin Accuracy: In quality management, the degree of freedom from error or the degree of conformity to a standard. Accuracy is different from precision. For example, four-Significant-digit numbers are less precise than six-significant-digit numbers, however, a properly computed four significant-digit number migl more accur ate than an improperly computed six-significant digit numb ACD: See automated Call Distribution ACH: See Automated clearinghouse Acknowledgment: A communication by a supplier to advise a purchaser that a purchase order has been received. It usually implies acceptance of the order by the supplier Acquisition Cost: In cost accounting, the cost required to obtain one or more units of an item. It order quantity times unit cost. Action Message: An output of a system that identifies the need for and the type of action to be taken to correct a current or potential problem. Examples of action messages in an MRP system include release order, reschedule in, reschedule out, and cancel. Synonym: exception message action report Action Report: See Action Message Definitions compiled by Kate vitasek Bellevue. Washington Please note: The Council of Logistics Management does not take responsibility for the content of these definitions, nor does the Council endorse these as official definitions except as noted
SUPPLY CHAIN VISIONS LOGISTICS TERMS and GLOSSARY Updated October 2003 Definitions compiled by: Kate Vitasek Supply Chain Visions Bellevue, Washington Please note: The Council of Logistics Management does not take responsibility for the content of these definitions, nor does the Council endorse these as official definitions except as noted. Accounts payable (A/P): The value of goods and services acquired for which payment has not yet been made. Accounts receivable (A/R): The value of goods shipped or services rendered to a customer on whom payment has not yet been received. Usually includes an allowance for bad debts. Accreditation: Certification by a recognized body of the facilities, capability, objectivity, competence, and integrity of an agency, service, operational group, or individual to provide the specific service or operation needed. For example, the Registrar Accreditation Board accredits those organizations that register companies to the ISO 9000 Series Standards. Accredited Standards Committee (ASC): A committee of ANSI chartered in 1979 to develop uniform standards for the electronic interchange of business documents. The committee develops and maintains U.S. generic standards (X12) for Electronic Data Interchange. Accumulation bin: A place, usually a physical location, used to accumulate all components that go into an assembly before the assembly is sent out to the assembly floor. Syn: assembly bin. Accuracy: In quality management, the degree of freedom from error or the degree of conformity to a standard. Accuracy is different from precision. For example, four-significant-digit numbers are less precise than six-significant-digit numbers; however, a properly computed foursignificant-digit number might be more accurate than an improperly computed six-significantdigit number. ACD: See Automated Call Distribution ACH: See Automated Clearinghouse Acknowledgment: A communication by a supplier to advise a purchaser that a purchase order has been received. It usually implies acceptance of the order by the supplier. Acquisition Cost: In cost accounting, the cost required to obtain one or more units of an item. It is order quantity times unit cost. Action Message: An output of a system that identifies the need for and the type of action to be taken to correct a current or potential problem. Examples of action messages in an MRP system include release order, reschedule in, reschedule out, and cancel. Synonym: exception message, action report. Action Report: See Action Message
SUPPLY CHAIN VISION LOGISTICS TERMS and GLOSSARY Updated October 2 Activation: In constraint management, the use of non-constraint resources to make parts or products above the level needed to support the system constraint(s). The result is excessive work-in-process inventories or finished goods inventories, or both. In contrast, the term utilization is used to describe the situation in which non-constraint resource(s) usage is synchronized to support the needs of the constraint Active Inventory: The raw materials, work in process, and finished goods that will be used or sold within a given period Activity: Work performed by people, equipment, technologies or facilities. Activities are usually described by the"action verb-adjective-noun'"grammar convention. Activities may occur in a linked sequence and activity-to-activity assignments may exist. 1) In activity-based cost accounting, a task or activity, performed by or at a resource, required in producing the organization's output of goods and services. A resource may be a person, machine, or facility Activities are grouped into pools by type of activity and allocated to products. 2) In project management, an element of work on a project. It usually has an anticipated duration, anticipated cost, and expected resource requirements. Sometimes "major activity"is used for larger bodies Activity Analysis: The process of identifying and cataloging activities for detailed understanding and documentation of their characteristics. An activity analysis is accomplished by means of interviews, group sessions, questionnaires, observations, and reviews of physical records of work Activity Based Budgeting(ABB): An approach to budgeting where a company uses an understanding of its activities and driver relationships to quantitatively estimate workload and resource requirements as part of an ongoing business plan. Budgets show the types, number of and cost of resources that activities are expected to consume based on forecasted workloads The budget is part of an organization's activity-based planning process and can be used in evaluating its success in setting and pursuing strategic goals Activity Based Costing(ABC): A methodology that measures the cost and performance of cost objects, activities and resources. Cost objects consume activities and activities consume resources. Resource costs are assigned to activities based on their use of those resources and activity costs are reassigned to cost objects(outputs)based on the cost objects proportional use of those activities. Activity-based costing incorporates causal relationships between cost objects and activities and between activities and resources Activity Based Costing Model: In activity-based cost accounting, a model, by time period, of resource costs created because of activities related to products or services or other items causing the activity to be carried out Definitions compiled by Kate vitasek Bellevue. Washington Please note: The Council of Logistics Management does not take responsibility for the content of these definitions, nor does the Council endorse these as official definitions except as noted
SUPPLY CHAIN VISIONS LOGISTICS TERMS and GLOSSARY Updated October 2003 Definitions compiled by: Kate Vitasek Supply Chain Visions Bellevue, Washington Please note: The Council of Logistics Management does not take responsibility for the content of these definitions, nor does the Council endorse these as official definitions except as noted. Activation: In constraint management, the use of non-constraint resources to make parts or products above the level needed to support the system constraint(s). The result is excessive work-in-process inventories or finished goods inventories, or both. In contrast, the term utilization is used to describe the situation in which non-constraint resource(s) usage is synchronized to support the needs of the constraint. Active Inventory: The raw materials, work in process, and finished goods that will be used or sold within a given period. Activity: Work performed by people, equipment, technologies or facilities. Activities are usually described by the “action-verb-adjective-noun” grammar convention. Activities may occur in a linked sequence and activity-to-activity assignments may exist. 1) In activity-based cost accounting, a task or activity, performed by or at a resource, required in producing the organization’s output of goods and services. A resource may be a person, machine, or facility. Activities are grouped into pools by type of activity and allocated to products. 2) In project management, an element of work on a project. It usually has an anticipated duration, anticipated cost, and expected resource requirements. Sometimes “major activity” is used for larger bodies of work. Activity Analysis: The process of identifying and cataloging activities for detailed understanding and documentation of their characteristics. An activity analysis is accomplished by means of interviews, group sessions, questionnaires, observations, and reviews of physical records of work. Activity Based Budgeting (ABB): An approach to budgeting where a company uses an understanding of its activities and driver relationships to quantitatively estimate workload and resource requirements as part of an ongoing business plan. Budgets show the types, number of and cost of resources that activities are expected to consume based on forecasted workloads. The budget is part of an organization’s activity-based planning process and can be used in evaluating its success in setting and pursuing strategic goals. Activity Based Costing (ABC): A methodology that measures the cost and performance of cost objects, activities and resources. Cost objects consume activities and activities consume resources. Resource costs are assigned to activities based on their use of those resources, and activity costs are reassigned to cost objects (outputs) based on the cost objects proportional use of those activities. Activity-based costing incorporates causal relationships between cost objects and activities and between activities and resources. Activity Based Costing Model: In activity-based cost accounting, a model, by time period, of resource costs created because of activities related to products or services or other items causing the activity to be carried out
SUPPLY CHAIN VISION LOGISTICS TERMS and GLOSSARY Updated October 2003 Activity Based Costing System: A set of activity- based cost accounting models that collectively define data on an organization's resources, activities, drivers, objects, and measurements Activity-Based Management(ABM): A discipline focusing on the management of activities within business processes as the route to continuously improve both the value received by customers and the profit earned in providing that value. ABM uses activity-based cost information and performance measurements to influence management action Activity Based Planning(ABP): Activity-based planning(ABP) is an ongoing process to determine activity and resource requirements(both financial and operational) based on the ongoing demand of products or services by specific customer needs. Resource requirements are compared to resources available and capacity issues are identified and managed. Activity-based budgeting(ABB)is based on the outputs of activity-based planning Activity Dictionary: A listing and description of activities that provides a common/standard definition of activities across the organization. An activity dictionary can include information about an activity ad/or its relationships, such as activity description, business process, function source,whether value-added, inputs, outputs, supplier, customer, output measures, cost drivers attributes tasks and other information as desired to describe the activity Activity Driver: The best single quantitative measure of the frequency and intensity of the demands placed on an activity by cost objects or other activities. It is used to assign activity costs to cost objects or to other activities Activity Level: A description of types of activities dependent on the functional area. Product related activity levels may include unit, batch, and product levels. Customer-related activity levels may include customer, market, channel, and project levels Activity Ratio: A financial ratio used to determine how an organization's resources perform elative to the revenue the resources produce. Activity ratios include inventory turnover, receivables conversion period, fixed-asset turnover, and return on assets Actual Cost System: A cost system that collects costs historically as they are applied to production and allocates indirect costs to products based on the specific costs and achieved volume of the products Actual Costs: The labor, material, and associated overhead costs that are charged against a job as it moves through the production process Definitions compiled by Kate vitasek Bellevue. Washington Please note: The Council of Logistics Management does not take responsibility for the content of these definitions, nor does the Council endorse these as official definitions except as noted
SUPPLY CHAIN VISIONS LOGISTICS TERMS and GLOSSARY Updated October 2003 Definitions compiled by: Kate Vitasek Supply Chain Visions Bellevue, Washington Please note: The Council of Logistics Management does not take responsibility for the content of these definitions, nor does the Council endorse these as official definitions except as noted. Activity Based Costing System: A set of activity-based cost accounting models that collectively define data on an organization’s resources, activities, drivers, objects, and measurements. Activity-Based Management (ABM): A discipline focusing on the management of activities within business processes as the route to continuously improve both the value received by customers and the profit earned in providing that value. ABM uses activity-based cost information and performance measurements to influence management action. Activity Based Planning (ABP): Activity-based planning (ABP) is an ongoing process to determine activity and resource requirements (both financial and operational) based on the ongoing demand of products or services by specific customer needs. Resource requirements are compared to resources available and capacity issues are identified and managed. Activity-based budgeting (ABB) is based on the outputs of activity-based planning. Activity Dictionary: A listing and description of activities that provides a common/standard definition of activities across the organization. An activity dictionary can include information about an activity and/or its relationships, such as activity description, business process, function source, whether value-added, inputs, outputs, supplier, customer, output measures, cost drivers, attributes, tasks, and other information as desired to describe the activity. Activity Driver: The best single quantitative measure of the frequency and intensity of the demands placed on an activity by cost objects or other activities. It is used to assign activity costs to cost objects or to other activities. Activity Level: A description of types of activities dependent on the functional area. Productrelated activity levels may include unit, batch, and product levels. Customer-related activity levels may include customer, market, channel, and project levels. Activity Ratio: A financial ratio used to determine how an organization’s resources perform relative to the revenue the resources produce. Activity ratios include inventory turnover, receivables conversion period, fixed-asset turnover, and return on assets. Actual Cost System: A cost system that collects costs historically as they are applied to production and allocates indirect costs to products based on the specific costs and achieved volume of the products. Actual Costs: The labor, material, and associated overhead costs that are charged against a job as it moves through the production process