Supply Chain Advanced

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Abaft

A point on a ship toward the stern and hence beyond the central point of the ship's length

Abandon

In shipping this term refers to the act of a shipper or consignee abandoning some or all of their cargo

Abatement

A type of discount granted to a shipper by a freight forwarder or carrier typically in response to an overcharge or damage to the shipper's cargo

ABC Analysis

A form of Pareto analysis applied to a group of products to enable selective inventory management controls. The inventory value for each item is obtained by multiplying the annual demand by unit cost and the entire inventory is then ranked in descending order of cost. However the classification parameter can be varied for example it is possible to use the velocity of turnover rather than annual demand value

ABC Classification

The classification of inventory after ABC analysis into three basic groups for the purpose of stock control and planning.

"A" Items

Items which according to an ABC classification belong to a small group of products representing around 75-80% of the annual demand usage or production volume in monetary terms but only some 15-20% of the inventory items. For the purpose of stock control and planning the greatest attention is paid to this category of products. "A" items may also be of strategic importance to the business concerned.

"B" items

An intermediate group representing around 5-10% of the annual demand usage or production value but some 20-25% of the total that is paid less management attention.

"C" Items

Products which according to an ABC classification belongs to the 60-65% of inventory that represents only around 10-15% of the annual demand usage or production value. Least attention is paid to this category for the purpose of stock control and planning and procurement decisions for such items may be automated

ABC Inventory Control

An inventory control approach using ABC analysis and classification as its basis

ABC Model

A cost management model representing resource costs incurred during a specific period by activities associated with customers services products or any other factor driving the demand for those activities

ABC System

A cost management system that maintains operational and financial data relating to an organisation's activities resources objects drivers and measures. It is upon such systems that ABC models are generated and maintained

Abnormal Demand

Any demand on an organisation's inventory that falls outside of management expectations. It may be for example that demand suddenly increases or decreases sharply and substantially or that the product mix fluctuates acutely or even that the timing of orders shifts from established norms

Absolute Minimum Charge

In freight carriage this is a charge stated by a carrier representing the minimum possible fee that the shipper must pay when all relevant terms are applied to the shipping order

Absorption

In shipping absorption is the term used when a carrier takes on the fees of another carrier without passing the charges on to the shipper

Absorption Costing

Sometimes known as allocation costing absorption costing is an approach used in cost management to assign variable costs along with some fixed costs or a portion of them to each production unit

Acceptable Quality Level (AQL)

A baseline parameter in quality management representing the lowest level of quality that will be considered an acceptable process average as the result of sampling inspections

Acceptable Sampling Plan

A quality management plan setting out sampling sizes and acceptance/non-acceptance criteria to be used in sampling inspections

Acceptance Number

In quality management acceptance sampling the acceptance number is a term used for either… a) A threshold value determining if an entire lot will be accepted or rejected based on the number of units in a sample that fall below the acceptable quality level . b) The test statistic value dividing all possible values into rejection and acceptance regions

Acceptance Sampling

In quality management acceptance sampling is a process by which a sample of an entire lot or batch of goods is inspected and if accepted indicates that the entire lot should be considered as acceptable for sale. The process removes the need to inspect the lot in its entirety

Access Space

An alternative term for aisles which are the spaces between rows of racking or stacks of inventory. In some cases an access space may not be wide enough for mechanical handling equipment to traverse and might only be used for inventory counting or similar checks

Accessibility

The ability of a freight carrier to provide transportation between the named points of origin and destination

Accessorial Charges

Charges imposed by a freight carrier for activities other than the primary task of carrying goods between locations. For example accessorial charges might include fees for loading unloading palletisation or depalletisation

Accountability

In business (and therefore supply chain and logistics) management accountability is the term used when an individual is answerable for the completion of tasks or performance of services. Hence the accountable person does not necessarily have to execute the tasks or services personally but must carry the weight of responsibility for such

Accounts Payable

The value of services and goods that a company has received or acquired but for which it has not yet made payment

Accounts Receivable

The value of services that a company has provided to customers or clients but for which it has not yet been paid

Accreditation

Formal recognition typically in the form of certification by a recognised authority or body of the integrity objectivity competence capabilities or facilities of an organisation company or individual relating to a specific industry or professional field

Accumulation Bin

In manufacturing and assembly an accumulation bin sometimes called an assembly bin is a location or receptacle into which components for assembly are gathered together

Accuracy

In quality management accuracy is the degree of conformity to a quality standard

Acknowledgement

In purchasing acknowledgement is the term used to describe a supplier's confirmation that the buyer's purchase order has been received and hence that the order is accepted

Acquisition Cost

A term used in accounting meaning the cost of a single unit multiplied by the quantity ordered (acquired)

ACS

Automated commercial systems or A.C.S is the primary digital system used by U.S. customs

Action Message

An alert generated by a materials requirement planning (MRP) or distribution requirements planning (DRP) system. Action messages typically notify the user of a situation or issue requiring attention

Activation

According to Goldratt's Theory of Constraints (TOC) activation refers to production that does not contribute to throughput. Conversely production that does contribute to throughput is termed utilisation

Active Inventory

Any item or element of inventory which has been used or sold within a given period-often set at 12 months

Active Stock

Inventory located in active picking locations and hence ready for order fulfilment

Ad Hoc Charter

This is the term used when a shipper charters a vessel or aircraft to carry a cargo from origin to destination as a one-time transaction

Adjustment

A term used in freight shipping to denote additional charges applied to a shipment after delivery. These charges typically arise when the size or weight of the cargo is greater than that declared by the shipper or when additional services are required that were not requested in the original shipping order

ADR

A governing standard for transportation of dangerous/hazardous materials by road. The standard includes specific requirements for vehicles and the training of drivers.

ADR - Class 1

Explosive substances

ADR - Class 2

Gases

ADR - Class 3

Flammable liquids

ADR - Class 4.1

Flammable solids

ADR - Class 4.2

Substances liable to spontaneous combustion

ADR - Class 4.3

Substances which in contact with water emit flammable gases

ADR - Class 5.1

Oxidizing substances

ADR - Class 5.2

Organic peroxides

ADR - Class 6.1

Toxic substances

ADR - Class 6.2

Infectious substances

ADR - Class 7

Radioactive substances

ADR - Class 8

Corrosive (acidic) substances

ADR - Class 9

Miscellaneous dangerous substances

Advance

In ocean freight shipping this term refers to the reallocation of a shipment to a vessel departing earlier than the one to which it was originally allocated

Advance Material Request

In manufacturing this is a request for materials to be supplied in advance of the formal need typically made to allow for lengthy component lead times

Advanced Planning and Scheduling (APS)

A digital technology application used for planning and scheduling of logistics and/or manufacturing activity. Typical components of an APS solution include demand planning production planning and scheduling transportation planning and distribution planning

Advanced Shipping Notice (ASN)

Detailed shipment information transmitted by the shipper to a customer or consignee in advance of delivery designating the contents (individual products and quantities of each) and nature of the shipment. In EDI data standards this is referred to as an 856 transaction. May also include carrier and shipment specifics including time of shipment and expected time of arrival. The ASN data can be valuable in providing digital knowledge about what is in a shipment without the need for manual data entry

Aft

A location towards the rear or stern of a ship

Aggregate Forecast

A sales forecast for a collection of product families or individual products. Aggregate forecasts are typically stated in terms of dollars units or both and are used in production sales and operations planning

Aggregate Inventory Management

The size of many inventories requires that they be broken down into groupings for the purpose of control. Aggregated inventory is the further collection of these groupings into a single entity to enable the establishment of operating policies key performance indicators targets and reports. Aggregate Inventory Management enables such things as the overall level of inventory desired to be established and then appropriate controls implemented to ensure that individual operating decisions achieve that goal at optimum cost

Aggregate Shipment

In freight shipping this term refers to the amalgamation of several shipments from several shippers into a single consignment for a single recipient

Agility

In the supply chain sector agility means the capability to create market and supply products or services in such a way that allows adaptation to market changes in a cost-effective and rapid manner without negatively impacting quality or reliability

Air Cargo

Freight that is transported by an aircraft

Air Cargo Containers

Freight containers specifically designed and constructed to fit snugly into the hold of an aircraft

Air Carrier

A company that offers transportation of people and/or goods by air

Air Express

An expedited air freight service typically allowing for shipment to be completed within 24 hours

Air Freight

Materials or goods for transportation by aircraft excluding mail

Air Freight Forwarder

A service provider specialising in moving freight by air for its customers. An air freight forwarder typically acts as a middleman between shippers and carriers. From the perspective of the customer (shipper) the forwarder is the carrier. From the perspective of the carrier the forwarder is the shipper

Air Waybill

In air-freight shipping an air waybill is the equivalent of a bill of lading used in road and ocean shipping. The air waybill serves the following purposes: It acts as a receipt for the party shipping the goods. It denotes that the carrier has accepted the goods for shipping. It places responsibility on the carrier to transport the goods to the destination airport in line with specific conditions stated in the air waybill document

Airport of Discharge

An air-freight term meaning the destination airport at which a shipment will be unloaded from the aircraft that carried it

Aisle

Passageways between rows of racking or floor storage in a warehouse used to provide access for material handling equipment and warehouse personnel

Alongside

A term used in ocean freight shipping to denote a location on a dock or quay beside a docked vessel. Goods placed in the location ready for loading or after unloading are said to be alongside the vessel

All-cargo Carrier

An air-freight term applied to any airline that carries freight only and does not operate passenger services

Allocated Stock

A part or product that has been reserved but not yet withdrawn or issued from stock and is thus not available for other purposes

All-Time Order

The last order for a particular product in the last phase of its life cycle. This order is of such a size that the stock provided will satisfy all expected future demand (see all- time requirement below) for the product concerned. Sometimes known as a life of type order

All-Time Requirement

The total requirement for a particular product to be expected in the future. Normally used for products in the last phase of their life cycles when production has (nearly) stopped

All-Time Stock

The stock resulting from the assessment of an all-time requirement and delivery of an all-time order. If necessary controls can be set for such stock to avoid consumption of items for reasons over and above those for which usage was predicted

Always Afloat (AA)

A contractual term in shipping meaning that a vessel must remain afloat at all times and therefore not berthed or navigated so as to contact the ground

Amidships

In ocean shipping this term refers to a location in the longitudinal centre of a ship at a point midway along an imaginary line running along the keel from the front (bow) to the back (stern) of the vessel

Anticipation Stock

Inventory held in order to be able to satisfy a demand with seasonal fluctuations with a production level that does not fluctuate at all or that varies to a lesser extent than the demand

Assemble to Order

A form of manufacturing/supply under which a product undergoes assembly from constituent parts after receipt of the customer's order

Automated Guided Vehicle System

An automated system in a warehouse that uses unmanned vehicles to move inventory from place-to-place. The system is controlled by a computer routing the vehicles around the warehouse and might be used for put-away and order picking

Automated Storage/Retrieval System

Also known as AS/RS an automated storage and retrieval system is an automated warehouse solution using high-density racking fitted with robotic cranes to stow remove and transport inventory from one location to another

Availability

The primary measure of system performance relating to the expected percentage of the supported system that will be available at a random point in time and not out of service for lack of spares

Available Stock

The stock available to service immediate demand

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

Back-to-Back Racking

Widely used in warehouses everywhere this is a racking design especially suitable for pallet storage. In a back-to-back racking system each row of racking has a front facing an aisle and a back which abuts the back of another row of racking which in turn has a front that faces the next aisle and so on

Backflushing

The deduction from inventory after manufacture of the component parts used in a parent by exploding the bill of materials by the production total of parents produced

Backhaul

Generally a back haul is any return load taken after the delivery has been made. An example of this would be the collection of supplier loads from the supplier by the retailer for delivery to the retailer's own regional distribution centre (RDC)

Backorder

Customer demand for which no stock is available and where the customer is prepared to wait for the item to arrive in stock

Balanced Scorecard

A system of performance measurement using a structured combination of metrics. The combination of metrics will typically include indicators of financial business process (or supply chain/logistics process if used specifically for a supply chain rather than general business performance monitoring) service and learning/innovation performance. The scorecard will also include objectives for each of the measurement categories

Barcode

A visible code comprising lines and spaces of differing widths which can be printed on labels or directly onto packaging and subsequently read by optical devices. When scanned to a relevant computer program the data contained in the code is readable as a combination of characters and numbers typically representing the identity of a product or stock keeping unit (SKU). Barcodes are used to identify and track items as they move through the supply chain

Barcode Scanner

An optical device capable of reading barcodes and transferring the codes' data into a computer system

Basic Producer

A producer that creates materials or products directly from natural resources. For example a company that creates ingots of iron directly from iron ore would be classed as a basic producer as would a company that creates wood pulp from timber or glass from sand

Batch Number

A code used to identify the specific production point for a product or an assembly in a manufacturing or assembly process

Batch Picking

In order fulfilment batch picking is a process in which warehouse operatives pick by product rather than by order. For example if there are say ten orders that all include one specific SKU a picker will be sent to pick the total number of units of that SKU to fulfil all ten orders. Meanwhile another picker might be picking another SKU required for multiple orders. As these SKUs are brought to the marshalling area or loading dock the orders are assembled from the picked SKU batches

Benchmarking

The process of comparing performance against the practices of other leading companies for the purpose of improving performance. Companies also benchmark internally by tracking and comparing current performance with past performance. Benchmarking seeks to improve any given business process by exploiting "best practices" rather than merely measuring the best performance. Best practices are the cause of best performance. Studying best practices provides the greatest opportunity for gaining a strategic operational and financial advantage

Beneficial Cargo Owner

In international freight shipping a beneficial cargo owner (BCO) is a party or company that takes full control of its inbound shipments on arrival at the destination port without engaging a third-party such as a freight forwarder or 3PL to handle receipt and onward transportation of the goods

Best Practice

A general business term but often used in supply chain and logistics management best practice refers to a way of performing a process or activity or meeting a specific objective that is widely recognised as an optimal approach

Beyond Economic Repair (BER)

Where the projected cost of repair normally for a repairable or rotable item exceeds a management set percentage of the replacement value of the item concerned

Bill of Lading

A document representing a formal agreement between a shipper and carrier. The bill of lading is typically issued by the carrier and then signed by the shipper. Once signed the carrier is obliged to transport the goods named in the bill to the destination specified in accordance with the terms and conditions contained in the bill

Bill of Material

A listing of components parts and other items needed to manufacture a product showing the quantity of each required to produce each end item. A bill of material is like a parts list except that it usually shows how the product is fabricated and assembled. Also called a product structure record formula recipe or ingredients list