AGVS: See: Automated Guided Vehicle System.

Algorithm: A clearly specified mathematical process for computation; a set of rules, which, if followed, give a prescribed result.

Allocated item: In an MRP system, an item for which a picking order has been released to the stockroom but not yet sent from the stockroom.

Allocation: 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. (Contrast with Tracing and Assignment.)

Allocation Costing: See Absorption Costing

Alternate Routing: A routing, usually less preferred than the primary routing, but resulting in an identical item. Alternate routings may be maintained in the computer or off-line via manual methods, but the computer software must be able to accept alternate routings for specific jobs.

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): Founded in 1946, a not-for-profit educational organization with 144,000 members who are interested in quality improvement.

American Standard Code for Information Interchange (ASCII): ASCII format -simple text based data with no formatting. The standard code for information exchange among data processing systems. Uses a coded character set consisting of 7-bit coded characters (8 bits including parity check).

Animated GIF: A file containing a series of GIF (Graphics Interchange Format) images that are displayed in rapid sequence by some Web browsers, giving an animated effect. Also see: GIF.

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.

ANSI Standard: A published transaction set approved by ANSI. The standards are reviewed every six months.

Anticipated Delay Report: A report, normally issued by both manufacturing and purchasing to the material planning function, regarding jobs or purchase orders that will not be completed on time and explaining why the jobs or purchases are delayed and when they will be completed. This report is an essential ingredient of the closed-loop MRP system. It is normally a handwritten report. Synonym: delay report.

Anticipation Inventories: Additional inventory above basic pipeline stock to cover projected trends of increasing sales, planned sales promotion programs, seasonal fluctuations, plant shutdowns, and vacations.

A/P: See Accounts Payable

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 & quot;apps-ontap", 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: The direct interchange of data between computers, without re-keying.

Appraisal Costs: Those costs associated with the formal evaluation and audit of quality in the firm. Typical costs include inspection, quality audits, testing, calibration, and checking time.

APS: See Advanced Planning and Scheduling AQL: See Acceptable Quality Level A/R: See Accounts Receivable ASC: See Accredited Standards Committee of ANSI. ASC X12: Accredited Standards Committee X12. A committee of ANSI chartered in 1979 to

develop uniform standards for the electronic interchange of business documents.

ASCII: See American Standard Code for Information Interchange ASN: See Advanced Shipping Notice. ASP: See Application Service Provider ASQ: See American Society for Quality

AS/RS: See Automated Storage and Retrieval System

Assemble-to-order: A production environment where a good or service can be assembled after receipt of a customer's order. The key components (bulk, semi-finished, intermediate, subassembly, fabricated, purchased, packing, and so on) used in the assembly or finishing process are planned and usually stocked in anticipation of a customer order. Receipt of an order initiates assembly of the customized product. This strategy is useful where a large number of end products (based on the selection of options and accessories) can be assembled from common components. Synonym: finish-to-order. Also see: Make-to-Order, Make-to-Stock.

Assembly: A group of subassemblies and/or parts that are put together and that constitute a major subdivision for the final product. An assembly may be an end item or a component of a higher level assembly.

Assembly Line: An assembly process in which equipment and work centers are laid out to follow the sequence in which raw materials and parts are assembled.

Assignment: A distribution of costs using causal relationships. Because cost causal relationships are viewed as more relevant for management decision-making, assignment of costs is generally preferable to allocation techniques. (Synonymous with Tracing. Contrast with Allocation.)

Assumed Receipt: The principle of assuming that the contents of a shipping or delivery note are correct. Shipping and receiving personnel do not check the delivery quantity. Used in conjunction with bar codes and an EDI-delivered ASN to eliminate invoices.

ATP: See Available to Promise

ATS: See Available to Sell

Attachment: An accessory that has to be physically attached to the product.

Attributes: A label used to provide additional classification or information about a resource, activity, or cost object. Used for focusing attention and may be subjective. Examples are a characteristic, a score or grade of product or activity, or groupings of these items, and performance measures.

Audit Trail: Manual or computerized tracing of the transactions affecting the contents or origin of a record.

Auditability: A characteristic of modern information systems, gauged by the ease with which data can be substantiated by trading it to source documents and the extent to which auditors can rely on pre-verified and monitored control processes.

Authentication: 1) The process of verifying the eligibility of a device, originator, or individual to access specific categories of information or to enter specific areas of a facility. This process involves matching machine-readable code with a predetermined list of authorized end users. 2) A practice of establishing the validity of a transmission, message, device, or originator, which was designed to provide protection against fraudulent transmissions.

Authentication Key: A short string of characters used to authenticate transactions between trading partners.

Automated Call Distribution (ACD): A feature of large call center or “Customer Interaction Center” telephone switches that routes calls by rules such as next available employee, skill-set etc.

Automated Clearinghouse (ACH): Automated Clearinghouse. A nationwide electronic payments system, which more than 15,000 financial institutions use, on behalf of 100,000 corporations and millions of consumer in the U.S. The funds transfer system of choice among businesses that make electronic payments to vendors, it is economical and can carry remittance information in standardized, computer processable data formats.

Automated Guided Vehicle System (AGVS): A transportation network that automatically routes one or more material handling devices, such as carts or pallet trucks, and positions them at predetermined destinations without operator intervention.

Automated Storage/Retrieval System (AS/RS): A high-density rack inventory storage system with un-manned vehicles automatically loading and unloading products to/from the racks.

Automatic Relief: A set of inventory bookkeeping methods that automatically adjusts computerized inventory records based on a production transaction. Examples of automatic relief methods are backflushing, direct-deduct, pre-deduct, and post-deduct processing.

Automatic Rescheduling: Rescheduling done by the computer to automatically change due dates on scheduled receipts when it detects that due dates and need dates are out of phase. Ant: manual rescheduling.

Available Inventory: The on-hand inventory balance minus allocations, reservations, backorders, and (usually) quantities held for quality problems. Often called beginning available balance. Synonym: beginning available balance, net inventory.

Available to Promise (ATP): The uncommitted portion of a company’s inventory and planned production maintained in the master schedule to support customer-order promising. The ATP quantity is the uncommitted inventory balance in the first period and is normally calculated for each period in which an MPS receipt is scheduled. In the first period, ATP includes on-hand inventory less customer orders that are due and overdue. Three methods of calculation are used: discrete ATP, cumulative ATP with lookahead, and cumulative ATP without lookahead.

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 of Goods Sold (COGS) as raw material purchases. Calculate using the 5-Point Annual Average.

Average Cost per Unit: The estimated total cost, including allocated overhead, to produce a batch of goods divided by the total number of units produced.

Average Inventory : The average inventory level over a period of time.

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 of Cash-to-Cash Cycle Time)

Calculation: [Five point annual average production-related material accounts payable] / [Annual production-related material receipts/365]

Avoidable Cost: A cost associated with an activity that would not be incurred if the activity was not performed (e.g., telephone cost associated with vendor support).

B

B2B: See Business to Business

B2C: See Business to Consumer

Back Order: Product ordered but out of stock and promised to ship when the product becomes available.

Back Sscheduling: A technique for calculating operation start dates and due dates. The schedule is computed starting with the due date for the order and working backward to determine the required start date and/or due dates for each operation.

Backflush: A method of inventory bookkeeping where the book (computer) inventory of components is automatically reduced by the computer after completion of activity on the component’s upper-level parent item based on what should have been used as specified on the bill of material and allocation records. This approach has the disadvantage of a built-in differential between the book record and what is physically in stock. Synonym: explode-todeduct. Also see: Pre-deduct Inventory Transaction Processing

Backhaul: The process of a transportation vehicle returning from the original destination point to the point of origin. The 1980 Motor Carrier Act deregulated interstate commercial trucking and thereby allowed carriers to contract for the return trip. The backhaul can be with a full, partial, or empty load. An empty backhaul is called deadheading. Also see: Deadhead

Backlog Customer: Customer orders received but not yet shipped; also includes backorders and future orders.

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 order or order line. Also see: Balance to Ship

Backsourcing: Pulling a function back in-house as an outsourcing contract expires

Back Order: Product ordered but out of stock and promised to ship when the product becomes available.

Balance-of-Stores Record: A double-entry record system that shows the balance of inventory items on hand and the balances of items on order and available for future orders. Where a reserve system of materials control is used, the balance of material on reserve is also shown.

Balance to Ship (BTS): Balance or remaining quantity of a promotion or order that has yet to ship. Also see: Backorder

Balanced Scorecard: A structured measurement system based on a mix of financial and non financial measures of business performance. A list of financial and operational measurements used to evaluate organizational or supply chain performance. The dimensions of the balanced scorecard might include customer perspective, business process perspective, financial perspective, and innovation and learning perspectives. It formally connects overall objectives, strategies, and measurements. Each dimension has goals and measurements. Also see: Scorecard

Bar Code: A symbol consisting of a series of printed bars representing values. A system of optical character reading, scanning, and tracking of units 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.

Barrier to Entry: Factors that prevent companies from entering into a particular market, such as high initial investment in equipment.

Base Demand: The percentage of a company’s demand that derives from continuing contracts and/or existing customers. Because this demand is well known and recurring, it becomes the basis of management’s plans. Synonym: Baseload Demand.

Base Index: See Base Series

Base Inventory Level: The inventory level made up of aggregate lot-size inventory plus the aggregate safety stock inventory. It does not take into account the anticipation inventory that will result from the production plan. The base inventory level should be known before the production plan is made. Also see: Aggregate Inventory.

Base Series: A standard succession of values of demand-over-time data used in forecasting seasonal items. This series of factors is usually based on the relative level of demand during the corresponding period of previous years. The average value of the base series over a seasonal cycle will be 1.0. A figure higher than 1.0 indicates that the demand for that period is more than the average; a figure less than 1.0 indicates less than the average. For forecasting purposes, the base series is superimposed upon the average demand and trend in demand for the item in question. Synonym: Base Index. Also see: Seasonality

Base Stock System: A method of inventory control that includes as special cases most of the systems in practice. In this system, when an order is received for any item, it is used as a picking ticket, and duplicate copies, called replenishment orders, are sent back to all stages of production to initiate replenishment of stocks. Positive or negative orders, called base stock orders, are also used from time to time to adjust the level of the base stock of each item. In actual practice, replenishment orders are usually accumulated when they are issued and are released at regular intervals.

Basic Producer: A manufacturer that uses natural resources to produce materials for other manufacturing. A typical example is a steel company that processes iron ore and produces steel ingots; others are those making wood pulp, glass, and rubber.

Blanket Order: See Blanket Purchase Order

Blanket Purchase Order: A long-term commitment to a supplier for material against which short-term releases will be generated to satisfy requirements. Often blanket orders cover only one item with predetermined delivery dates. Synonym: Blanket Order, Standing Order.

Blanket Release: The authorization to ship and/or produce against a blanket agreement or contract.

Bleeding Edge: An unproven process or technology so far ahead of its time that it may create a competitive disadvantage.

Blowthrough: An MRP process which uses a “phantom bill of material” and permits MRP logic to drive requirements straight through the phantom item to its components, but the MRP system usually retains its ability to net against any occasional inventories of the item. Also see: Phantom Bill of Material

BMP: See Bitmap Imagine

BOL: See Bill of Lading

BOM: See Bill of Materials

Book Inventory: An accounting definition of inventory units or value obtained from perpetual inventory records rather than by actual count.

Bookings: The sum of the value of all orders received (but not necessarily shipped), net of all discounts, coupons, allowances, and rebates.

Bonded Warehouse: Warehouse approved by the Treasury Department and under bond/guarantee for observance of revenue laws. Used for storing goods until duty is paid or goods are released in some other proper manner.

Bottleneck: A constraint, obstacle or planned control that limits throughput or the utilization of capacity.

Bottom-up Replanning: In MRP, the process of using pegging data to solve material availability or other problems. This process is accomplished by the planner (not the computer system), who evaluates the effects of possible solutions. Potential solutions include compressing lead time, cutting order quantity, substituting material, and changing the master schedule.

Box-Jenkins Model: A forecasting method based on regression and moving average models. The model is based not on regression of independent variables, but on past observations of the item to be forecast at varying time lags and on previous error values from forecasting. See: Forecast.

BPM: See Business Performance Measurement

BPO: See Business Process Outsourcing

BPR: See Business Process Reengineering

Bracketed Recall: Recall from customers of suspect lot numbers plus a specified number of lots produced before and after the suspect ones.

Branding: The use of a name, term, symbol, or design, or a combination of these, to identify a product.

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 the need 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 showing the total variable cost and fixed cost curve along with the total revenue curve. The point of intersection is defined as the break-even point, i.e., the point at which total revenues exactly equal total costs. Also see: Total Cost Curve

Break-Even Point: The level of production or the volume of sales at which operations are neither profitable nor unprofitable. The break-even point is the intersection of the total revenue and total cost curves. Also see: Total Cost Curve

Bricks and Mortar: The act of selling through a physical location. The flip side of clicks 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 them the ability to carry video, voice, and data simultaneously.

Brokered Systems: Independent computer systems, owned by independent organizations or entities, linked in a manner to allow one system to retrieve information from another. For example, a customer's computer system is able to retrieve order status from a 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

Bulletin Board: An electronic forum that hosts posted messages and articles related to a common subject.

Bucketed System: An MRP, DRP, or other time-phased system in which all time-phased data are accumulated into time periods, or buckets. If the period of accumulation is one week, then the system is said to have weekly buckets.

Bucketless system: An MRP, DRP, or other time-phased system in which all time-phased data are processed, stored, and usually displayed using dated records rather than defined time periods, or buckets.

Buffer: 1) A quantity of materials awaiting further processing. It can refer to raw materials, semifinished stores or hold points, or a work backlog that is purposely maintained behind a work center. 2) In the theory of constraints, buffers can be time or material and support throughput and/or due date performance. Buffers can be maintained at the constraint, convergent points (with a constraint part), divergent points, and shipping points.

Buffer Management: In the theory of constraints, a process in which all expediting in a shop is driven by what is scheduled to be in the buffers (constraint, shipping, and assembly buffers). By expediting this material into the buffers, the system helps avoid idleness at the constraint and missed customer due dates. In addition, the causes of items missing from the buffer are identified, and the frequency of occurrence is used to prioritize improvement activities.

Buffer Stock: See Safety Stock.

Bullwhip Effect: An extreme change in the supply position upstream in a supply chain generated by a small change in demand downstream in the supply chain. Inventory can quickly move from being backordered to being excess. This is caused by the serial nature of communicating orders up the chain with the inherent transportation delays of moving product down the chain. The bullwhip effect can be eliminated by synchronizing the supply chain.

Burn Rate: The rate of consumption of cash in a business. 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 their burn-rate in order to understand how much time they have before they need to raise more money, or show a positive cash flow.

Business Application: Any computer program, set of programs, or package of programs created to solve a particular business problem or function.

Business Continuity Plan (BCP): A contingency plan for sustained operations during periods of high risk, such as during labor unrest or natural disaster. CLM provides suggestions for helping companies do continuity planning in their Securing the Supply Chain Research. A copy of the research is available on the CLM website.

Business Plan: 1) A statement of long-range strategy and revenue, cost, and profit objectives usually accompanied by budgets, a projected balance sheet, and a cash flow (source and application of funds) statement. A business plan is usually stated in terms of dollars and grouped by product family. The business plan is then translated into synchronized tactical functional plans through the production planning process (or the sales and operations planning process). Although frequently stated in different terms (dollars versus units), these tactical plans should agree with each other and with the business plan. See: long-term planning, strategic plan. 2) A document consisting of the business details (organization, strategy, and financing tactics) prepared by an entrepreneur to plan for a new business.

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 8-bit byte can represent numerous special characters, 26 uppercase and lowercase alphabetic characters, and 10 numeric digits, totaling 256 possible combinations.

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 productio n 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.

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

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.

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.

Channel: 1) A method whereby a business dispenses its product, such as a retail or distribution channel, call center or web based electronic storefront. 2) A push technology that allows users to subscribe to a website to browse offline, automatically display updated pages on their screen savers, and download or receive notifications when pages in the website are modified. Channels are available only in browsers that support channel definitions, such as Microsoft Internet Explorer version 4.0

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: Any series of firms or individuals that participates in the flow of goods and services from the raw material supplier and producer to the final user or consumer.

Also see: Distribution Channel

CI: See Continuous Improvement

CIF: Abbreviation for cost, insurance, freight.

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 of online and real world experience."

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.

CLM: See Council of Logistics Management

Closed-loop MRP: A system built around material requirements planning that includes the additional planning processes of production planning (sales and operations planning), master production scheduling, and capacity requirements planning. Once this planning phase is complete and the plans have been accepted as realistic and attainable, the execution processes come into play. These processes include the manufacturing control processes of input-output (capacity) measurement, detailed scheduling and dispatching, as well as anticipated delay reports from both the plant and suppliers, supplier scheduling, and so on. The term closed loop implies not only that each of these processes is included in the overall system, but also that feedback is provided by the execution processes so that the planning can be kept valid at all times.

CMI: See Co-managed Inventory

COA: See Certificate of Analysis

Co-destiny: The evolution of a supply chain from intra-organizational management to inter-organizational management.

Co-packer: A contract co-packer produces goods and/or services for other companies, usually under the other company's label or name. Co-Packers are more frequently seen in CPG and Foods.

Co-Managed Inventory (CMI): A form of continuous replenishment in which the manufacturer is responsible for replenishment of standard merchandise, while the retailer manages the replenishment of promotional merchandise.

Code: A numeric, or alphanumeric, representation of text for exchanging commonly used information. For example: commodity codes, carrier codes,

Codifying: The process of detailing a new standard.

COGS: See Cost of Goods Sold

Collaborative Planning, Forecasting and Replenishment (CPFR): 1) A collaboration process whereby supply chain trading partners can jointly plan key supply chain activities from production and delivery of raw materials to production and delivery of final products to end customers. Collaboration encompasses business planning, sales forecasting, and all operations required to replenish raw materials and finished goods. 2) A process philosophy for facilitating collaborative communications. CPFR is considered a standard, endorsed by the Voluntary Interindustry Commerce Standards.

Combined Lead Time: See Cumulative Lead Time

Commercial Invoice: The commercial invoice is a legal document between the supplier and the customer that clearly describes the sold goods, and the amount due on the customer. The commercial invoice is one of the main documents used by customs in determing customs duties. It is also the primary document used for billing and accounts receivable.

Committed Capability: The portion of the production capability that is currently in use, or is scheduled for use.

Commodity: An item that is traded in commerce. The term usually implies an undifferentiated product competing primarily on price and availability.

Commodity Buying: Grouping like parts or materials under one buyer’s control for the procurement of all requirements to support production.

Commodity Procurement Strategy: The purchasing plan for a family of items. This would include the plan to manage the supplier base and solve problems.

Common Carrier: Transportation available to the public that does not provide special treatment to any one party and is regulated as to the rates charged, the liability assumed, and the service provided. A common carrier must obtain a certificate of public convenience and necessity from the Federal Trade Commission for interstate traffic.

Communication Protocol: The method by which two computers coordinate their communications. BISYNC and MNP are two examples.

Company Culture : A system of values, beliefs, and behaviors inherent in a company. To optimize business performance, top management must define and create the necessary culture.

Competitive Advantage: Value created by a company for its customers that clearly distinguishes it from the competition, and provides its customers a reason to remain loyal.

Competitive Benchmarking: Benchmarking a product or service against competitors. Also see: Benchmarking

Competitive Bid: A price/service offering by a supplier that must compete with offerings from other suppliers.

Complete & On-Time Delivery (COTD): A measure of customer service. All items on any given order must be delivered on time for the order to be considered as complete and on time.

Complete Manufacture to Ship Time: Average time from when a unit is declared shippable by manufacturing until the unit actually ships to a customer.

Compliance: Meaning that products, services, processes and/or documents comply with requirements.

Compliance Checking: The function of EDI processing software that ensures that all transmissions contain the mandatory information demanded by the EDI standard. Compares information sent by an EDI user against EDI standards and reports exceptions. Does not ensure that documents are complete and fully accurate, but does reject transmissions with missing data elements or syntax errors.

Compliance Monitoring: A check done by the VAN/third party network or the translation software to ensure the data being exchanged is in the correct format for the standard being used.

Compliance Program: A method by which two or more EDI trading partners periodically report conformity to agreed upon standards of control and audit. Management produces statements of compliance, which briefly note any exceptions, as well as corrective action planned or taken, in accordance with operating rules. Auditors produce an independent and objective statement of opinion on management statements.

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.

Computer Aided Engineering (CAE): The use of computers to model design options to stimulate their performance.

Configuration: The arrangement of components as specified to produce an assembly.

Configure/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 of order receipt.

Confirmation: With regards to EDI, a formal notice (by message or code) from a electronic mailbox system or EDI server indicating that a message sent to a trading partner has reached its intended mailbox or been retrieved by the addressee.

Confirming Order: A purchase order issued to a supplier, listing the goods or services and terms of an order placed orally or otherwise before the usual purchase document.

Conformance: An affirmative indication or judgment that a product or service has met the requirements of a relevant specification, contract, or regulation. Synonym: Compliance.

Consignee: The party to whom goods are shipped and delivered. The receiver of a freight shipment.

Consignment: 1) A shipment that is handled by a common carrier. 2) The process of a supplier placing goods at a customer location without receiving payment until after the goods are used or sold. 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 the vendor until they are sold to the consumer.

Consignor: The party who originates a shipment of goods (shipper). The sender of a freight shipment, usua lly the seller.

Consolidation: Combining two or more shipments in order to realize lower transportation rates. Inbound consolidation from vendors is called make-bulk consolidation; outbound consolidation to customers is called break-bulk consolidation.

Consortium: A group of companies that work together to jointly produce a product, service, or project.

Constraint: A bottleneck, obstacle or planned control that limits throughput or the utilization of capacity.

Consumer-Centric Database: Database with information about a retailer’s individual consumers, used primarily for marketing and promotion.

Consuming the Forecast: The process of reducing the forecast by customer orders or other types of actual demands as they are received. The adjustments yield the value of the remaining forecast for each period.

Container: 1) A "box", typically ten to forty feet long, which is used primarily for ocean freight shipments. For travel to and from ports, 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.

Containerization: A shipment method in which commodities are placed in containers, and after initial loading, the commodities per se are not rehandled in shipment until they are unloaded at the destination.

Continuous Flow Distribution (CFD): The streamlined pull of products in response to customer requirements while minimizing the total costs of distribution.

Continuous Improvement (CI): A structured measurement driven process that continually reviews and improves performance.

Continuous Process Improvement (CPI): A never-ending effort to expose and eliminate root causes of problems; small-step improvement as opposed to big-step improvement. Synonym: Continuous Improvement. 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: An agreement between two or more competent persons or companies to perform or not to perform specific acts or services or to deliver merchandise. A contract may be oral or written. A purchase order, when accepted by a supplier, becomes a contract. Acceptance may be in writing or by performance, unless the purchase order requires acceptance in writing.

Contract Administration: Managing all aspects of a contract to guarantee that the contractor fulfills his obligations.

Contract Carrier: A carrier that does not serve the general public, but provides transportation for hire for one or a limited number of shippers under a specific contract.

Contribution: The difference between sales price and variable costs. Contribution is used to cover fixed costs and profits.

Contribution Margin: An amount equal to the difference between sales revenue and variable costs.

Cookie: A computer term. A piece of information from your computer that references what the user has clicked on, or references information that is stored in a text file on the user's hard drive (such as a username). Another way to describe cookies is to say they are tiny files containing information about individual computers that can be used by advertisers to track online interests and tastes. Cookies are also used in the process of purchasing items on the Web. It is because of the cookie that the "shopping cart" technology works. By saving in a text file, the name, and other important information about an item a user "clicks" on as they move through a shopping Website, a user can later go to an order form, and see all the items they selected, ready for quick and easy processing.

Core Competency: Bundles of skills or knowledge sets that enable a firm to provide the greatest level of value to its customers in a way that is difficult for competitors to emulate and that provides for future growth. Core competencies are embodied in the skills of the workers and in the organization. They are developed through -collective -learning, communication, and commitment to work across levels and functions in the organization and with the customers and suppliers. For example, a core competency could be the capability of a firm to coordinate and harmonize diverse production skills and multiple technologies. To illustrate, advanced casting processes for making steel require the integration of machine design with sophisticated sensors to track temperature and speed, and the sensors require mathematical modeling of heat transfer. For rapid and effective development of such a process, materials scientists must work closely with machine designers, software engineers, process specialists, and operating personnel. Core competencies are not directly related to the product or market.

Core Process: That unique capability that is central to a company’s competitive strategy.

Cost Accounting: The branch of accounting that is concerned with recording and reporting business operating costs. It includes the reporting of costs by departments, activities, and products.

Cost Allocation: In accounting, the assignment of costs that cannot be directly related to production activities via more measurable means, e.g., assigning corporate expenses to different products via direct labor costs or hours.

Cost Center: In accounting, a sub-unit in an organization that is responsible for costs.

Cost Driver: In accounting, any situation or event that causes a change in the consumption of a resource, or influences quality or cycle time. An activity may have multiple cost drivers. Cost drivers do not necessarily need to be quantified; however, they strongly influence the selection and magnitude of resource drivers and activity drivers.

Cost Driver Analysis: In cost accounting, the examination, quantification, and explanation of the effects of cost drivers. The results are often used for continuous improvement programs to reduce throughput times, improve quality, and reduce cost.

Cost Element: In cost accounting, the lowest level component of a resource, activity, or cost object.

Cost, Insurance, Freight: A freight term indicating that the seller is responsible for cost, the marine insurance, and the freight charges on an ocean shipment of goods.

Cost Management: The management and control of activities and drivers to calculate accurate product and service costs, improve business processes, eliminate waste, influence cost drivers, and plan operations. The resulting information will have utility in setting and evaluating an organization’s strategies.

Cost of Capital: The cost to borrow or invest capital.

Cost of Goods Sold (COGS): The amount of direct materials, direct labor, and allocated overhead associated with products sold during a given period of time, determined in accordance with Generally Accepted Accounting Principles (GAAP)

Cost Variance: In cost accounting, the difference between what has been budgeted for an activity and what it actually costs.

COTD: See Complete & On-Time Delivery

Council of Logistics Management (CLM): The CLM is a not-for-profit professional business organization consisting of individuals throughout the world who have interests and/or responsibilities in logistics and the related functions that make up the logistics profession. Its purpose is to enhance the development of the logistics profession through logistics professionals by providing them with educational opportunities and relevant information through a variety of programs, services, and activities.

CPFR: See Collaborative Planning Forecasting and Replenishment CPI: See Continuous Process Improvement

Critical Differentiators: This is what makes an idea, product, service or business model unique. Cross docking: 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.

Cross Docking: 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.

Cross-Shipment: Material flow activity where materials are shipped to customers from a secondary shipping point rather than from a preferred shipping point.

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.

CRP: See Continuous Replenishment Program

Critical Success Factor (CSF): Those activities and process that must be done to enable the company to reach its goals.

CRM: See Customer Relationship Management CSF: See Critical Success Factor CSR: See Customer Service Representative CTP: See Capacity to Promise Cubage: Cubic volume of space being used or available for shipping or storage. Cube Utilization: In warehousing, a measurement of the utilization of the total storage capacity

of a vehicle or warehouse. Cubic Space: In warehousing, a measurement of space available or required in transportation and warehousing.

Cumulative Available-to-Promise: A calculation based on the available-to-promise (ATP) figure in the master schedule. Two methods of computing the cumulative available-to-promise are used, with and without lookahead calculation. The cumulative with lookahead ATP equals the ATP from the previous period plus the MPS of the period minus the backlog of the period minus the sum of the differences between the backlogs and MPSs of all future periods until, but not to include, the period where point production exceeds the backlogs. The cumulative without lookahead procedure equals the ATP in the previous period plus the MPS, minus the backlog in the period being considered. Also see: Available-to-Promise

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 or parts on order, and no prior forecasts existing with suppliers. (An element of Total Supply Chain Response Time)

Calculation: The critical path along the following elements: Total Sourcing Lead Time, Manufacturing Order Release to Start Manufacturing, To tal 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

Customer: 1) In VMI, the Trading Partner or reseller, i.e. Wal-Mart, Safeway, or CVS. 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 or how it is delivered.

DC: See Distribution Center

Deadhead: The return of an empty transportation container to its point of origin. See: backhauling.

Decision Support System (DSS): Software that speeds access and simplifies data analysis, queries, etc. within a database management system.

Decomposition: A method of forecasting where time series data are separated into up to three components: trend, seasonal, and cyclical; where trend includes the general horizontal upward or downward movement over time; seasonal includes a recurring demand pattern such as day of the week, weekly, monthly, or quarterly; and cyclical includes any repeating, non-seasonal pattern. A fourth component is random, that is, data with no pattern. The new forecast is made by projecting the patterns individually determined and then combining them.

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.

Delimiters: 1) ASCII, characters which are used to separate data elements within a data stream. 2) EDI, two levels of separators 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-Duty-Paid: Supplier/manufacturer arrangement in which suppliers are responsible for the transport of the goods they have produced, 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 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 item also constitute multiple orders.