SUPPLY CHAIN VISION LOGISTICS TERMS and GLOSSARY Updated October 2 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 itself over time, compared with a preset target or evaluated along with other measures Business Process Outsourcing(BPO): The practice of outsourcing 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 radical redesign of business processes to achieve dramatic organizational improvements 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 sector on the Web Business-to-Consumer(B2C): The hundreds of e-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 Unit: a division or segment of an organization generally treated as a separate profit and-loss center Buyer Behavior: The way individuals or organizations behave in a purchasing situation. The customer-oriented concept finds out the wants, needs, and desires of customers and adapts resources of the organization to deliver need-satisfying goods and services 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 &bit byte can represent numerous special characters, 26 uppercase and lowercase alphabetic characters, and 10 numeric 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. 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 itself over time, compared with a preset target or evaluated along with other measures. Business Process Outsourcing (BPO): The practice of outsourcing 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 radical redesign of business processes to achieve dramatic organizational improvements. 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 sector on the Web. Business-to-Consumer (B2C): The hundreds of e-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 Unit: A division or segment of an organization generally treated as a separate profitand-loss center. Buyer Behavior: The way individuals or organizations behave in a purchasing situation. The customer-oriented concept finds out the wants, needs, and desires of customers and adapts resources of the organization to deliver need-satisfying goods and services. 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
SUPPLY CHAIN VISION LOGISTICS TERMS and GLOSSARY Updated October 2 CAE: See Computer Aided Engineering 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 4 days, multiply by 1.75 S, multiply by 1.4 6 days, multiply by 1.17 Call Center: A facility housing personnel who respond to customer phone queries. These personnel may provide customer service or technical support. Call center services may be in house or outsourced. Synonym: Customer Interaction Center Can-order Point: An ordering system used when multiple are ordered from one vendor The can-order point is a point higher than the original order When any one of the items triggers an order by reaching the must-order point, all items below their can-order point are also ordered. The can-order point is set by considering the additional holding cost that would be incurred should the item be ordered early Capable to Promise(CTP): a technique used to determine if product can be assembled and shipped by a specific date. Component availability throughout the supply chain, as well as available materials, is checked to determine if delivery of a particular product can be made. The process of committing orders against available capacity as well as inventory. This process may involve multiple manufacturing or distribution sites. Capable-to-promise is used to determine when a new or unscheduled customer order can be delivered. Capable-to-promise employs a finite-scheduling model of the manufacturing system to determine when an item can be delivered. It includes any constraints that might restrict the production, such as availability of resources, lead times for raw materials or purchased parts, and requirements for lower-level components or subassemblies. The resulting delivery date takes into consideration production capacity, the current manufacturing environment, and future order commitments. The objective is to reduce the time spent by production planners in expediting orders and adjusting plans because of inaccurate delivery-date promises 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. C CAE: See Computer Aided Engineering 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 = 4 days, multiply by 1.75 = 5 days, multiply by 1.4 = 6 days, multiply by 1.17 Call Center: A facility housing personnel who respond to customer phone queries. These personnel may provide customer service or technical support. Call center services may be inhouse or outsourced. Synonym: Customer Interaction Center. Can-order Point: An ordering system used when multiple items are ordered from one vendor. The can-order point is a point higher than the original order point. When any one of the items triggers an order by reaching the must-order point, all items below their can-order point are also ordered. The can-order point is set by considering the additional holding cost that would be incurred should the item be ordered early. Capable to Promise (CTP): A technique used to determine if product can be assembled and shipped by a specific date. Component availability throughout the supply chain, as well as available materials, is checked to determine if delivery of a particular product can be made. The process of committing orders against available capacity as well as inventory. This process may involve multiple manufacturing or distribution sites. Capable-to-promise is used to determine when a new or unscheduled customer order can be delivered. Capable-to-promise employs a finite-scheduling model of the manufacturing system to determine when an item can be delivered. It includes any constraints that might restrict the production, such as availability of resources, lead times for raw materials or purchased parts, and requirements for lower-level components or subassemblies. The resulting delivery date takes into consideration production capacity, the current manufacturing environment, and future order commitments. The objective is to reduce the time spent by production planners in expediting orders and adjusting plans because of inaccurate delivery-date promises
SUPPLY CHAIN VISION LOGISTICS TERMS and GLOSSARY Updated October 2003 Capacity: The physical facilities, personnel and process available to meet the product or service needs of customers. Capacity generally refers to the maximum output or producing ability of a machine, a person, a process, a factory, a product, or a service. Also see: Capacity management Capacity Management: The concept that capacity should be understood, defined, and measured for each level in the organization to include market segments, products, processes, activities, and resources. In each of these applications, capacity is defined in a hierarchy of idle,non- productive, and productive views Capacity Planning: Assuring that needed resources(e.g, manufacturing capacity, distribution center capacity, transportation vehicles, etc ) will be available at the right time and place to meet logistics and supply chain needs CAPEX: A term used to describe the monetary requirements(CAPital EXPenditure)of an initial investment in new machines or equipment Cargo: A product shipped in an aircraft, railroad car, ship, barge, or truck Carload Lot: A shipment that qualifies for a reduced freight rate because it is greater than a specified minimum weight. Since carload rates usually include minimum rates per unit of volume, the higher LCL (less than carload) rate may be less expensive for a heavy but relatively small shipment Carrier: a firm which transports goods or people via land, sea or air Cartel: A group of companies that agree to cooperate, rather than compete, in producing a product or service, thus limiting or regulating competitie Case Code: The UPC number for a case of product. The UPC case code is different from the UPC item code. This is sometimes referred to as the"Shipping Container Symbol"or ITF-14 Cash-to-Cash Cycle Time: The time it takes for cash to flow back into a company after it has been spent for raw materials. Synonym: Cash Conversion Cycle Calculation: Total Inventory Days of Supply Days of Sales Outstanding P Period for Material in d 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. Capacity: The physical facilities, personnel and process available to meet the product or service needs of customers. Capacity generally refers to the maximum output or producing ability of a machine, a person, a process, a factory, a product, or a service. Also see: Capacity Management Capacity Management: The concept that capacity should be understood, defined, and measured for each level in the organization to include market segments, products, processes, activities, and resources. In each of these applications, capacity is defined in a hierarchy of idle, nonproductive, and productive views. Capacity Planning: Assuring that needed resources (e.g., manufacturing capacity, distribution center capacity, transportation vehicles, etc.) will be available at the right time and place to meet logistics and supply chain needs. CAPEX: A term used to describe the monetary requirements (CAPital EXPenditure) of an initial investment in new machines or equipment. Cargo: A product shipped in an aircraft, railroad car, ship, barge, or truck. Carload Lot: A shipment that qualifies for a reduced freight rate because it is greater than a specified minimum weight. Since carload rates usually include minimum rates per unit of volume, the higher LCL (less than carload) rate may be less expensive for a heavy but relatively small shipment. Carrier: A firm which transports goods or people via land, sea or air. Cartel: A group of companies that agree to cooperate, rather than compete, in producing a product or service, thus limiting or regulating competition. Case Code: The UPC number for a case of product. The UPC case code is different from the UPC item code. This is sometimes referred to as the “Shipping Container Symbol” or ITF-14 code. Cash-to-Cash Cycle Time: The time it takes for cash to flow back into a company after it has been spent for raw materials. Synonym: Cash Conversion Cycle. Calculation: Total Inventory Days of Supply + Days of Sales Outstanding - Average Payment Period for Material in days
SUPPLY CHAIN VISION LOGISTICS TERMS and GLOSSARY Updated October 2003 Cash Conversion Cycle: 1)In retailing, the length of time between the sale of products and the cash payments for a companys resources. 2)In manufacturing, the length of time from the purchase of raw materials to the collection of accounts receivable from customers for the sale of products or services. Also see: Cash-to-Cash Cycle Time Catalog Channel: A call center or order processing facility that receives orders directly from the customer based on defined catalog offerings and ships directly to the customer Categorical Plan: A method of selecting and evaluating suppliers that considers input from many departments and functions within the buyer's organization and systematically categorizes that input. Engineering, production, quality assurance, and other functional areas evaluate al suppliers for critical factors within their scope of responsibility. For example, engineering would develop a category evaluating suppliers' design flexibility. Rankings are developed across categories, and performance ratings are obtained and supplier selections are made. also see:Weighted-Point Plan Category Management: The management of product categories as strategic business units. The practice empowers a category manager with full responsibility for the assortment decisions inventory levels, shelf-space allocation, promotions and buying. With this authority and responsibility, the category manager is able to judge more accurately the consumer buying patterns, product sales and market trends of that category Cause and Effect Diagram In quality management, a structured process used to organize ideas into logical groupings. Used in brainstorming and problem solving exercises. Also known as Ishikawa or fish bone diagram Causal Forecast: In forecasting, a type of forecasting that uses cause-and-effect associations to predict and explain relationships between the independent and dependent variables. An exampl on consumer base, interest rates, personal incomes, and land availability housing starts based of a causal model an econometric model used to explain the demand Center-of-Gravity Approach: A supply chain planning methodology for locating distribution centers at approximately the location representing the minimum transportation costs between the plants, the distribution centers, and the markets Centralized Dispatching: The organization of the dispatching function into one central location This structure often involves the use of data collection devices for communication between the centralized dispatching function, which usually reports to the production control department, and the shop manufacturing departments 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. Cash Conversion Cycle: 1) In retailing, the length of time between the sale of products and the cash payments for a company’s resources. 2) In manufacturing, the length of time from the purchase of raw materials to the collection of accounts receivable from customers for the sale of products or services. Also see: Cash-to-Cash Cycle Time Catalog Channel: A call center or order processing facility that receives orders directly from the customer based on defined catalog offerings and ships directly to the customer. Categorical Plan: A method of selecting and evaluating suppliers that considers input from many departments and functions within the buyer’s organization and systematically categorizes that input. Engineering, production, quality assurance, and other functional areas evaluate all suppliers for critical factors within their scope of responsibility. For example, engineering would develop a category evaluating suppliers’ design flexibility. Rankings are developed across categories, and performance ratings are obtained and supplier selections are made. Also see: Weighted-Point Plan Category Management: The management of product categories as strategic business units. The practice empowers a category manager with full responsibility for the assortment decisions, inventory levels, shelf-space allocation, promotions and buying. With this authority and responsibility, the category manager is able to judge more accurately the consumer buying patterns, product sales and market trends of that category. Cause and Effect Diagram: In quality management, a structured process used to organize ideas into logical groupings. Used in brainstorming and problem solving exercises. Also known as Ishikawa or fish bone diagram. Causal Forecast: In forecasting, a type of forecasting that uses cause-and-effect associations to predict and explain relationships between the independent and dependent variables. An example of a causal model is an econometric model used to explain the demand for housing starts based on consumer base, interest rates, personal incomes, and land availability. Center-of-Gravity Approach: A supply chain planning methodology for locating distribution centers at approximately the location representing the minimum transportation costs between the plants, the distribution centers, and the markets. Centralized Dispatching: The organization of the dispatching function into one central location. This structure often involves the use of data collection devices for communication between the centralized dispatching function, which usually reports to the production control department, and the shop manufacturing departments
SUPPLY CHAIN VISION LOGISTICS TERMS and GLOSSARY Updated October 2 Centralized Inventory Control: Inventory decision making(for all SKUs) exercised from on office or department for an entire company Certificate of Analysis (COA): A certification of conformance to quality standards or ecifications for products or materials. It may include a list or reference of analysis results and process information. It is often required for transfer of the custody/ownershiptitle of material Certificate of Compliance: A supplier's certification that the supplies or services in question meet specified-requirements Certified Supplier: A status awarded to a supplier who consistently meets predetermined quality, cost, delivery, financial, and count objectives. Incoming inspection may not be required CFD: See Continuous Flow Distribution Chain of Customers: The sequence of customers who in turn consume the output of each other, forming a chain. For example, individuals are customers of a department store, which in turn is the customer of a producer, who is the customer of a material supplier 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 system issues a different challenge each time. In effect, it requires a new password or each logon. Change Management: The business process that coordinates and monitors all changes to the business processes and applications operated by the business as well as to their internal equipment, resources, operating systems, and procedures. The change management discipline is carried out in a way that minimizes the risk of problems that will affect the operating environment and service delivery to the users Change Order: A formal notification that a purchase order or shop order must be modified in some way. This change can result from a revised quantity, date, or specification by the customer; an engineering change, a change in inventory requirement date; etc 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 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. Centralized Inventory Control: Inventory decision making (for all SKUs) exercised from one office or department for an entire company. Certificate of Analysis (COA): A certification of conformance to quality standards or specifications for products or materials. It may include a list or reference of analysis results and process information. It is often required for transfer of the custody/ownership/title of materials. Certificate of Compliance: A supplier’s certification that the supplies or services in question meet specified-requirements. Certified Supplier: A status awarded to a supplier who consistently meets predetermined quality, cost, delivery, financial, and count objectives. Incoming inspection may not be required. CFD: See Continuous Flow Distribution Chain of Customers: The sequence of customers who in turn consume the output of each other, forming a chain. For example, individuals are customers of a department store, which in turn is the customer of a producer, who is the customer of a material supplier. 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 system issues a different challenge each time. In effect, it requires a new password for each logon. Change Management: The business process that coordinates and monitors all changes to the business processes and applications operated by the business as well as to their internal equipment, resources, operating systems, and procedures. The change management discipline is carried out in a way that minimizes the risk of problems that will affect the operating environment and service delivery to the users. Change Order: A formal notification that a purchase order or shop order must be modified in some way. This change can result from a revised quantity, date, or specification by the customer; an engineering change; a change in inventory requirement date; etc. 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