A
ABC
Analysis: A classification of items in an
inventory according to importance defined in terms of criteria such as sales
volume and purchase volume.
ABC Classification: Classification of a group of items in decreasing order of annual dollar volume or other criteria. This array is then split into three classes called A, B, and C. The A group represents 10 to 20% by number of items, and 50 to 70% by projected dollar volume. The next grouping, B, represents about 20% of the items and 20% of the dollare volume. The C-class contains 60 to 70% of the items, and represents about 10 to 30% of the dollar volume.
ABC Costing: See Activity-Based Costing (ABC)
ABC Inventory Control: An inventory control approach based on the ABC volume or sales revenue classification of products (A items are highest volume or revenue, C - or perhaps D - are lowest volume SKUs.)
ABC Model: In cost management, a representation of resource costs during a time period that are consumed through activities and traced to products, services, and customers, or to any other object that creates a demand for the activity to be performed.
ABC System: In cost management, a system that maintains financial and operating data on an organization's resources, activities, drivers, objects and measures. ABC Models are created and maintained within this system.
Abnormal Demand: Demand in any period that is outside the limits established by management policy. This demand may come from a new customer or from existing customers whose own demand is increasing or decreasing. Care must be taken in evaluating the nature of the demand: Is it a volume change, is it a change in product mix, or is it related to the timing of the order?
Absorption Costing: In cost management, an approach to inventory valuation in which variable costs and a portion of fixed costs are assigned to each unit of production. The fixed costs are usually allocated to units of output on the basis of direct labor hours, machine hours, or material costs. Synonym: Allocation Costing.
Accelerated Commercial Release Operations Support System (ACROSS): A Canada Customs system to speed the release of shipments by allowing electronic transmission of data to and from Canada Customs 24 hours a day, 7 days a week.
Acceptable Quality Level (AQL): In quality management, when a continuing series of lots is considered, AQL represents a quality level that, for the purposes of sampling inspection, is the limit of a satisfactory process average.
Acceptable Sampling Plan: In quality management, a specific plan that indicates the sampling sizes and the associated acceptance or non-acceptance criteria to be used. Also see: Acceptance Sampling.
Acceptance Number: In quality management, 1) A number used in acceptance sampling as a cut off at which the lot will be accepted or rejected. For example, if x or more units are bad within the sample, the lot will be rejected. 2) The value of the test statistic that divides all possible values into acceptance and rejection regions. Also see: Acceptance Sampling.
Acceptance Sampling: 1) The process of sampling a portion of goods for inspection rather than examining the entire lot. The entire lot may be accepted or rejected based on the sample even though the specific units in the lot are better or worse than the sample. There are two types: attributes sampling and variables sampling. In attributes sampling, the presence or absence of a characteristic is noted in each of the units inspected. In variables sampling, the numerical magnitude of a characteristic is measured and recorded for each inspected unit; this type of sampling involves reference to a continuous scale of some kind. 2) A method of measuring random samples of lots or batches of products against predetermined standards.
Accessorial Charges: A carrier's charge for accessorial services such as loading, unloading, pickup, and delivery, or any other charge deemed appropriate.
Accountability: Being answerable for, but not necessarily personally charged with, doing specific work. Accountability cannot be delegated, but it can be shared. For example, managers and executives are accountable for business performance even though they may not actually perform the work.
Accounts Payable (A/P): The value of goods and services acquired for which payment has not yet been made.
Accounts Receivable (A/R): The value of goods shipped or services rendered to a customer on whom payment has not been received. Usually includes an allowance for bad debts.
Accreditation: Certification by a recognized body of the facilities, capability, objectivity, competence, and integrity of an agency, service, operational group, or individual to provide the specific service or operation needed. For example, the Registrar Accreditation Board accredits those organizations that register companies to the ISO 9000 Series Standards.
Accredited Standards Committee (ASC): A committee of ANSI chartered in 1979 to develop uniform standards for the electronic interchange of business documents. The committee develops and maintains US generic standards (X12) for Electronic Data Interchange.
Accumulation Bin: A place, usually a physical location, used to accumulate all components that go into an assembly before the assembly is sent out to the assembly floor. Synonym: Assembly Bin.
Accuracy: In quality management, the degree of freedom from error or the degree of conformity to a standard. Accuracy is different from precision. For example, four-significant-digit numbers are less precise than six-significant-digit numbers; however, a properly computed four-significant-digit number might be more accurate than an improperly computed six-significant-digit number.
ACD: See Automated Call Distribution.
Acknowledgement: A communication by a supplier to advise a purchaser that a purchase order has been received. It usually implies acceptance of the order by the supplier.
Acquisition Cost: In cost accounting, the cost required to obtain one or more units of an item. It is order quantity times unit cost.
Action Message: An alert that an MRP or DRP system generates to inform the controller of a situation requiring his or her attention.
Activity: Work performed by people, equipment, technologies, or facilities. Activities are usually described by the action-verb-adjective-noun grammar convention. Activities may occur in a linked sequence and activity-to-activity assignments may exist. (1) In activity-based cost accounting, a task or activity, performed by or at a resource, required in producing the organization's output of goods and services. A resource may be a person, machine, or facility. Activities are grouped into pools by type of activity and allocated to products. (2) In project management, an element of work on a project. It usually has an anticipated duration, anticipated cost, and expected resource requirements. Sometimes major activity is used for larger bodies of work.
Activity Analysis: The process of identifying and cataloging activities for detailed understanding and documentation of their characteristics. An activity analysis is accomplished by means of interviews, group sessions, questionnaires, observations, and reviews of physical records of work.
Activity-Based Budgeting (ABB): An approach to budgeting where a company uses an understanding of its activities and driver relationships to quantitatively estimate workload and resource requirements as part of an ongoing business plan. Budgets show the types, number of, and cost of resources that activities are expected to consume based on forecasted workloads. The budget is part of an organization's activity-based planning process and can be used in evaluating its success in setting and pursuing strategic goals.
Activity-Based Costing (ABC): A methodology that measures the cost and performance of cost objects, activities, and resources. Cost objects consume activities and activities consume resources. Resource costs are assigned to activities based on their use of those resources, and activity costs are reassigned to cost objects (outpputs) based on the cost objects proportional use of those activities. Activity-based costing incorporates causal relationships between cost objects and activities and between activities and resources.
Activity-Based Costing Model: In activity-based cost accounting, a model, by time period, of resource costs created because of activities related to products or services or other items causing the activity to be carried out.
Activity-Based Costing System: A set of activity-based cost accounting models that collectively defines data on an organization's resources, activities, drivers, objects, and measures.
Activity-Based Management (ABM): A discipline focusing on the management of activities
within business processes as the route to continuously improve both the value
received by customers and the profit earned in providing that value. AMB uses
activity-based cost information and performance measurements to influence
management action. See Activity-Based Costing.
Activity-Based Planning (ABP): Activity-based planning (ABP) is an ongoing process to
determine activity and resource requirements (both financial and operational)
based on the ongoing demand of products or services by specific customer needs.
Resource requirements are compared to resources available and capacity issues
are identified and managed.
Activity Dictionary: A
listing and description of activities that provides a common/standard
definition of activities across the organization. An activity dictionary can
include information about an activity and/or its relationships, such as
activity description, business process, function source, whether value added,
inputs, outputs, supplier, customer, output measures, cost drivers, attributes,
tasks, and other information as desired to describe the activity.
Activity
Driver: The best single quantitative
measure of the frequency and intensity of the demands placed on an activity by
cost objects or other activities. It's used to assign activity costs to cost
objects or to other activities.
Activity
Level: A description of types of
activities dependent on the functional area. Product-related activity levels
may include unit, batch, and product levels. Customer-related activity levels
may include customer, market, channel, and project levels.
Activity
Ratio: A financial ratio used to determine
how an organization's resources perform relative to the revenue the resources
produce. Activity ratios include inventory turnover, receivables conversion
period, fixed-asset turnover, and return on assets.
Actual
Cost System: A cost system that collects costs
historically as they are applied to production, and allocates indirect costs to
products based on the specific costs and achieved volume of the products.
Actual
Costs: The labor, material, and associated
overhead costs that are charged against a job as it moves through the
production process.
Actual
Demand: Actual demand is composed of
customer orders (and often allocations of items, ingredients, or raw materials
to production or distribution). Actual demand nets against or consumes the
forecast, depending on the rules chosen over a time horizon. For example,
actual demand will totally replace forecast inside the sold-out customer order
backlog horizon (often called the demand time fence), but will net against the
forecast outside this horizon based on the chosen forecast consumption rule.
Actual to Theoretical Cycle Time: The ratio of the measured time required to produce a given
output divided by the sum of the time required to produce a given output based
on the rated efficiency of the machinery and labor operations.
Administrative Monetary Penalty System (AMPS ): A Canada Customs system of monetary penalties that will be
imposed against violations of Canada Customs regulations.
Advance Material Request:
Ordering materials before the release of the formal product design. This early
release is required because of long lead times.
Advanced Planning and Scheduling (APS): Techniques that deal with analysis and planning of
logistics and manufacturing over the short, intermediate, and long-term time
periods. APS describes any computer program that uses advanced mathmatical
algorithms or logic to perform optimization or simulation on finite capacity
scheduling, sourcing, capital planning, resource planning, forecasting, demand
management, and others. These techniques simultaneously consider a range of
constraints and business rules to provide real-time planning and scheduling,
decision support, available-to-promise, and capable-to-promise capabilities.
APS often generates and evaluates multiple scenarios. Management then selects
one scenario to use as the official plan. The five main components of an APS
system are demand planning, production planning, production scheduling,
distribution planning, and transportation planning.
Advanced Shipment Notice (ASN): An EDI term referring to a transaction set (ANSI 856) where
the supplier sends out a notification to interested parties that a shipment is
now outbound in the supply chain. This notification is list transmitted to a
customer or consignor designating items shipped. The ASN may also include the
expected time of arrival.
Advanced Shipping Notice (ASN): Detailed shipment information transmitted to a customer or
consignee in advance of delivery, designating the contents (individual products
and quantities of each) and nature of the shipment. May also include carrier
and shipment specifics, including time of shipment and expected time of
arrival. Also see: Assumed Receipt.
Aerodynamic Drag: Wind resistance
After-Sale
Service: Services provided to the customer
after products have been delivered. This can include repairs, maintenance,
and/or telephone support. Synonym: Field Service
Aggregate
Forecast: An estimate of sales, oftentimes
phased, for a grouping of products or product families produced by a facility
or firm. Stated in terms of units, dollars, or both, the aggregate forecast is
used for sales and production planning (or for sales and operations planning)
purposes.
Aggregate
Planning: A process to develop tactical plans
to support the organization's business plan. Aggregate planning usually
includes the development, analysis and maintenance of plans for total sales,
total production, targeted inventory, and targeted inventory, and targeted
customer backlog for families of products. The production plan is the result of
the aggregate planning process. Two approaches to aggregate planning exist -
production planning and sales and operations planning.
Aggregate Tender Rate:
A reduced rate offered to a shipper who tenders two or more class-related
shipments at one time and one place.
Agility: The ability to successfully manufacture and market a broad
range of low-cost, high-quality products and services with short lead times and
varying volumes that provide enhanced value to customers through customization.
Agility merges the four distinctive competencies of cost, quality,
dependability, and flexibility.
Air
Cargo Agent: An agent appointed by an airline to
solicit and process international airfreight shipments.
Air Cargo Containers:
Containers designed to conform to the inside of an aircraft. There are many
shapes and sizes of containers. Air cargo containers fall into three
categories: 1) air cargo pallets 2) lower deck containers 3) box type
containers.
Airport and Airway Trust Fund: A federal fund that collects passenger ticket taxes and
disburses those funds for airport facilities.
Air
Taxi: An exempt for-hire air carrier that
will fly anywhere on demand; air taxis are restricted to a maximum payload and
passenger capacity per plane.
Air
Waybill (AWB): A bill of lading for air transport
that serves as a receipt for the shipper, indicates that the carrier has
accepted the goods listed, obligates the carrier to carry the consignment to
the airport of destination according to specified conditions.
Algorithm: a clearly specified mathematical process for computation; a
set of rules, which, if followed, produce a prescribed result.
Allocation: 1) A distribution of costs using calculations that may be
unrelated to physical observations or direct or repeatable cause-and-effect
relationships. Because of the arbitrary nature of allocations, costs based on
cost causal assignment are viewed as more relevant for management
decision-making. 2) Allocation of available inventory to customer and
production orders.
American National Standards Institute (ANSI): A non-profit organization chartered to develop, maintain,
and promulgate voluntary US national standards in a number of areas, especially
with regards to setting EDI standards. ANSI is the US representative to the
International Standards Organization (ISO).
American Society for Quality (ASQ): Founded in 1946, a not-for-profit educational organization
consisting of 144,000 members who are interested in quality improvement.
American Society of Transportation & Logistics: A professional organization in the field of logistics.
American Trucking Associations: A motor carrier industry association composed of
sub-conferences representing various motor carrier industry sectors.
American Waterway Operators: A domestic water carrier industry association representing
barge operators on inland waterways.
Amtrak: The National Railroad Passenger Corporation, a federally
created corporation that operates most of the United States' intercity
passenger rail service.
Anti-Dumping Duty: An additional import duty imposed in instances where
imported goods are priced at less than the "normal" price charged in
the exporter's domestic market and cause material injury to domestic industry in
the importing country
Any-Quantity (AQ) rate:
A rate that applies to any size shipment tendered to a carrier; no discount
rate is available for large shipments.
APU: APUs automatically shut down the main locomotive engine
idle while maintaining all vital main engine systems at greatly reduced fuel consumption
Arrival
Notice: A notice from the delivering
carrier to the Notify Party indicating the shipment's arrival date at a
specific location (normally the destination).
Artificial Intelligence:
A field of research seeking to understand and computerize the human thought
process.
ASQ: See American Society for Quality.
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, semifinished, intermediate, sub-assembly, 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.
Assembly: A group of subassemblies and/or parts that are put together
and constitute a major subdivision for the final product. An assembly may be an
end item or a component of a higher-level assembly.
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
Association of American Railroads: A railroad industry association that represents the larger
U.S. railroads.
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: In reference to freight bills, the term audit is used to
determine the accuracy of freight bills.
Auditability: A characteristic of modern information systems gauged by
the ease with which data can be substantiated by tracing it to source
documents, and the extent to which auditors can rely on pre-verified and
monitored control processes.
Auditing: Determining the correct transportation charges due the
carrier; auditing involves checking the freight bill for errors, correct rate,
and weight.
Audit
Trail: Manual or computerized tracing of
the transactions affecting the contents or origin or a record.
AutoID: Referring to an automated identification system. This includes technology such as bar coding and radio frequency tagging (RFID).
Automated Broker Interface (ABI): The U.S. Customs program to automate the flow of
customs-related information among customs brokers, importers, and carriers.
Automated Call Distribution: 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 Guided Vehicle System (AGVS): A computer-controlled materials handling system consisting
of small vehicles (carts) that move along a guideway.
Automated Storage/Retrieval System (AS/RS): A high-density rack inventory storage system with unmanned
vehicles automatically loading and unloading products to/from the racks.
Automatic Tire Inflation System: Automatic tire inflation systems monitor and continually
adjust the level of pressurized air to tires, maintaining proper tire pressure
even when the truck is moving.
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 look ahead, and cumulative ATP without look
ahead.
Average Cost: Total cost, fixed plus variable, divided by total output.