80-20 Inventory Rule: A principle based on the Pareto Principle, stating that 80% of profits should come from 20% of inventory. Also known as the 80/20 rule, it highlights that 80% of effects result from 20% of causes.
Asset Control:
The process of managing long-term assets by organizing, tracking, auditing, and recording essential details. It involves adopting an effective asset management system, such as asset management software.
Asset Management Software:
A system storing inventory data, including quantity, location, value, and condition. Also known as asset tracking software, it helps streamline operations, identify inventory loss, and centralize asset information.
Asset Tagging:
An inventory management strategy involving affixing labels or "tags" to assets to identify and display additional information about each item.
Asset Tracking:
Continual management of business-owned assets, such as equipment and technology. It helps monitor assets as they change hands, locations, and depreciate over time.
ABC Stratification:
Ranking items based on a system (A-B-C) related to a characteristic, often used by times sold.
Action Message:
Notifications in MRP, DRP, and planning systems indicating that an action needs to be taken, such as releasing or rescheduling an order.
Adaptive Smoothing:
A variation on exponential smoothing that automatically adjusts the smoothing factor based on forecast error.
Advanced Planning and Scheduling (APS):
A step beyond MRPII, it includes capabilities for finite capacity scheduling and reacting to rapidly changing demand.
Advanced Shipment Notification (ASN):
A document notifying a customer of a shipment, often including PO numbers, SKU numbers, lot numbers, quantities, and container details.
Allocations:
Actual demand created by sales or production orders against a specific item.
Anticipation Inventory:
Inventory buildup to meet demand during a period of time when demand exceeds capacity.
APICS:
The Association for Operations Management, formerly known as the American Production and Inventory Control Society.
Average Forecast Bias:
The average of a series of forecast errors.
Bill of Materials (BOM):
Itemized list of raw materials, parts, and components needed for product manufacturing. It includes quantities and secondary requirements like manuals and packaging.
Backflush:
Method for automatically issuing materials to a production order. Material is issued when production is posted against an operation. Quantities are calculated through the BOM, reducing on-hand balances.
Backorder:
Quantity on an order not filled on the required date due to inadequate inventory levels.
Best of Breed:
Term used for highly functional, independent software modules from different vendors. It recognizes that a single software suite may not have the best modules for every business area.
Blockchain:
Distributed database for secure, transparent, and tamper-proof data sharing. It records transactions in a way resistant to modification, enhancing transparency and traceability. It's useful for tracking items in the supply chain.
Black-box Forecasting:
Automated forecasting system making decisions without human input.
Bullwhip Effect:
Phenomenon amplifying demand variation up the supply chain. It was triggered by an increase in demand at a low level in the supply chain.
Consignment Inventory:
Inventory in the possession of the customer but owned by the supplier. The customer purchases after reselling or consuming.
Capacity:
The capabilities of a process, machine, location, or facility.
Capacity Requirements Planning (CRP):
A detailed capacity planning tool that verifies resource ability to meet scheduled production.
Carrying Costs:
Costs associated with specific inventory quantities, including investment and storage costs.
Cheats:
Mathematical calculations for desired results, not necessarily precise or correct, used in inventory management.
Cost of Goods Sold(COGS):
Total cost of products sold during a specific period, expensed when products are sold.
Collaborative Planning:
Planning strategy where trading partners share inventory planning data.
Component:
Any item used to produce another item.
Composite Forecast:
A forecast created by combining results of multiple forecasting methods.
Configuration Processing:
Software functionality allowing product definition by selecting predefined options.
Configure-to-Order:
Manufacturing strategy between make-to-stock and make-to-order, stocking components in anticipation of customer orders.
Cost of Capital:
Costs associated with having money tied up in inventory, typically the interest rate on business debt.
Cumulative Forecast Bias:
The sum of a series of forecast errors.
Cumulative Lead Time:
The longest sum of consecutive lead times.
Current-Demand Inventory:
Inventory carried to meet immediate expected demand.
Cycle Count:
Process verifying inventory correctness by counting portions regularly, not the entire inventory at once.
Demand:
The need for a specific item in a specific quantity.
Demand Override:
Adjustment to supersede demand history, used for forecasting or safety stock calculation. It can be a fixed quantity or a factor.
Demand Planning Software:
Software with forecasting capabilities for determining order quantities and safety stock.
Demand Variability:
Changes in demand due to trend, seasonality, events, and noise.
Dependent Demand:
Demand created as a direct result of another item's demand or demand from another facility.
Deseasonalized:
Remove seasonality effect on demand.
De-trend:
Remove trend effect on demand.
Direct Shipping (Drop-shipping):
Procurement strategy allowing product sale without stocking; shipped directly from supplier to customer.
Distribution Inventory:
Result of distribution network, increased inventory due to multiple distribution points.
Distribution Requirements Planning (DRP):
Process for determining inventory requirements in a multiple facility environment. Works with both distribution and manufacturing.
Dock-to-Stock Cycle Measurement:
Measure of time between arrival at the dock and availability for sale or use.
Double Exponential Smoothing:
Forecasting method using exponential smoothing for both demand and trend.
DRP Relationship:
Also called bill of distribution, specifies item or facility-based supply relationship between facilities, used by DRP to flow demand.
Economic Order Quantity (EOQ):
Determines the optimal order quantity to meet demand while minimizing holding and ordering costs.
Eaches:
Unit of measure where each individual piece is tracked as a quantity of one in the computer system.
Effective Dates:
Dates on bills of materials and routings indicating when they should be included in planning and execution activities.
Effective Lead Time:
Lead time adjusted to consider additional factors, such as time between ordering opportunities.
Engineer-to-Order:
Manufacturing strategy for custom products, involving design or engineering tasks as part of the order process.
Enterprise Resource Planning (ERP):
Software systems managing various aspects of manufacturing or distribution enterprises.
Event Index:
Number describing the relationship of demand over the time affected by an event, e.g., promotion.
Excess Inventory:
Inventory greater than the "right amount" needed.
Exponential Smoothing:
Forecasting method using a weighted moving average and a smoothing factor.
Exponentially Smoothed Absolute Deviation (ESAD):
Variation of Mean Absolute Deviation (MAD) using exponential smoothing on absolute values.
Exponentially Smoothed Forecast Bias:
Application of exponential smoothing to a series of forecast errors.
Fair Share Distribution:
Method of dividing inventory at a supplying facility among facilities based on demand.
First-in, First-out (FIFO):
An inventory valuation method where the first goods purchased are the first to be sold. This ensures that older inventory is shipped out before newer inventory, providing a more accurate estimation of prices or values for each piece of inventory.
Fill Rate:
Success rate in filling orders, stated as line fill, order fill, unit fill, or dollar fill.
Finished Goods:
Inventory in a salable or shippable form based on its location within the supply chain. May vary between supplying and receiving plants.
Finite Capacity Scheduling:
Manufacturing planning system scheduling within the capacity constraints of work centers.
Firm Planned Order:
Special status preventing MRP from replanning a planned order.
Fixed Reorder Point:
Also called fixed order point, a preset quantity triggering the need for a new order.
Fixed-Schedule Ordering System:
Replenishment system where orders are placed based on a predetermined schedule, e.g., ordering every Tuesday for a Friday delivery.
Flattening:
Removing levels from bills of materials, making the first item as part of the manufacturing process for the second item in the same production order.
Forecast:
Estimation of future demand.
Forecast Basis:
Data and information used to produce the forecast, often historical demand.
Forecast Bias:
Tendency of a forecast to be high or low.
Forecast Consumption:
Depleting the forecast as actual orders are received.
Forecast Error:
Measurement representing forecast error/accuracy, commonly calculated as ([Forecasted Sales] - [Actual Sales]) / [Actual Sales].
Forecast Horizon:
Length of time into the future over which the entire forecast is based, considering cumulative lead time and other planning factors.
Forecast Interval:
Length of time over which each forecast period is based, following standard cumulative measures of time.
Forecast Override:
Adjustment used to supersede the normal forecast, either a fixed quantity or a factor adjusting the forecast.
Forecast Period:
Specific span of time described by a forecast quantity, often referred to as "time buckets."
Freight Terms:
Agreement between a supplier and customer describing responsibility for transportation costs.
Generic Software:
Products designed for broad environments. It focuses on standard business practices for general industry.
GMROII (Gross Margin Return on Inventory Investment):
Calculation showing margin relative to average inventory investment. It's calculated by dividing annual gross margin by average inventory investment. Also, applicable to individual items or groups.
Gross Margin:
Difference between cost and sell price.
Gross Requirements:
Total demand (dependent and independent) for an item within a specific time period. It's used to calculate net requirements.
Group Logic:
Methods to manage inventory based on groups of items rather than single items.
Hedge Inventory: Inventory purchased to anticipate events making necessary items challenging or expensive. Used to protect against or capitalize on price fluctuations due to factors like seasonal variations, supply and demand imbalances, exchange rate changes, or special promotions.
Inventory:
Any quantifiable item that a business handles, buys, sells, stores, consumes, produces, or tracks.
Inventory Asset:
An owned and reusable item such as equipment, tools, machinery, vehicles, etc., used for day-to-day operations.
Inventory Automation:
The use of inventory management software and technology, including barcodes or QR codes, to track, analyze, and control items efficiently.
Inventory Cycle Counting:
A strategy where defined portions of inventory are counted on a rotating schedule, spreading the count throughout the year to avoid the need for a single comprehensive count.
Inventory List:
A complete, itemized list of every product in stock, including raw materials, work-in-progress, and finished goods.
Inventory Management:
The process of ordering, organizing, storing, and utilizing a business’s inventory to keep operations running smoothly.
Inventory Optimization:
Maintaining an optimal inventory level to meet customer demand, reducing costs, and avoiding issues like stockouts and excess inventory.
Inventory Turnover:
The measure of how many times a company has sold and replaced inventory within a specific period, indicating efficiency.
IF-THEN-ELSE:
The common logic used by software to make decisions, describing actions based on whether a given situation is true or false.
IF Statement:
A calculation using IF-THEN-ELSE logic, often referring to a spreadsheet (Excel) formula or similar program.
Independent Demand:
Demand not created as a result of another item’s demand or demand from another facility.
Industry-specific Software:
Software designed for a specific industry, focusing on typical business practices of that industry.
Infinite Capacity Scheduling:
A manufacturing planning system ignoring capacity constraints and scheduling based purely on demand.
In-transit Quantity:
Quantity shipped from one facility but not yet received into another.
Inventory Characteristic:
Any trait describing the types of inventory, such as physical size, form, demand patterns, and costs.
Inventory Classification:
Logical grouping of inventory based on user-defined characteristics.
Inventory Management:
Control of inventory to best achieve business objectives, involving both physical management and data/systems management.
Inventory System:
Collection of programs and data used to plan and track inventory balances and activities.
Inventory Turns:
A measure of inventory velocity calculated by dividing average/current inventory investment into annual cost of goods sold (COGS).
ISM (Institute for Supply Management):
Formerly known as National Association of Purchasing Management (NAPM), it is an organization for supply management professionals.
Issue:
To reduce on-hand inventory and assign it to a specific document or process, such as issuing raw materials to a production order or finished goods to a sales order.
Item:
Any unique configuration of a material or product managed as part of inventory, used synonymously with SKU.
Item Master:
A collection of data describing a specific item, also used to describe the database table containing this data.
Item Number:
The identification number assigned to an item, also called part number, SKU number, or SKU.
Item Numbering Scheme:
The format or template used for assigning item numbers.
Just in Time Inventory (JIT): An inventory management system focused on minimizing inventory levels to reduce costs, enhance efficiency, and minimize waste. JIT, or just-in-time, is a strategy optimizing manufacturing processes by eliminating process waste, such as wasted steps, materials, and excess inventory. It is often synonymous with "Lean manufacturing" or the "Toyota production system."
Kitting:
Inventory management strategy bundling individual items into a kit. Tracked, used, and sold as a single piece despite multiple parts.
Kanban:
Replenishment system triggered by emptying a container. Physical notification (card or empty container) sent for refilling to the previous operation or supplier.
Kit:
Items made up of multiple separate parts, not assembled.
Landed Cost:
The total cost of shipping a product, including taxes, fees, customs, risk, and overhead. Also referred to as "true cost" or "delivered cost."
Lead Time:
The duration it takes to receive an order after placement. Lead-time demand is the expected demand during this period.
Last Mile:
The final stage of the supply chain, involving delivery to the customer's doorstep. It is often the most expensive and time-consuming part of the shipping process.
Last-Period Demand:
A forecasting method using demand from the previous period as a forecast for subsequent periods.
Last-Relative-Period Demand:
A forecasting method using the relative period (usually from the previous year) to forecast demand.
Law of Large Numbers:
Observation that larger numbers generally result in lower variability.
Lead-Time Factor:
A multiplier adjusting standard deviation based on forecast periods to estimate standard deviation based on lead time.
Lead-Time Offsetting:
The process of offsetting dependent demand items based on the lead time of parent items or facilities.
Lean:
Also known as Just-In-Time (JIT), emphasizing efficiency by minimizing waste and maintaining low inventory.
Legacy System:
Outdated computer system, often custom-built or modified over the years.
Level:
Also known as normalized demand or base demand, it represents the starting point for a forecast.
Last-in First-out (LIFO):
An inventory valuation method where the latest purchased or produced goods are the first to be expensed.
Line Item:
A single detail record, commonly used in sales orders or purchase orders.
Lot-for-Lot:
Basic lot sizing method using demand during the planning time period as the lot size.
Lot Size:
The quantity of an item ordered for delivery on a specific date or manufactured in a single production run.
Lot-Size Inventory:
Result of ordering or manufacturing more inventory than required to meet current demand and safety stock.
Minimum Order Quantity (MOQ):
The smallest amount of product a supplier sells to a business placing an order.
Moving Average Cost:
The cost of existing inventory on hand plus the cost of new inventory ordered divided by the exact number of items in stock.
MRO Inventory (Maintenance, Repair, and Operations Inventory):
Inventory utilized by a business for preventive and corrective maintenance on assets or to keep day-to-day business activities running efficiently.
MAD (Mean Absolute Deviation):
Average of the absolute values of a series of variances, used in forecast error measurement and safety stock calculations.
Make-to-Order:
Manufacturing strategy where products are not manufactured until actual orders are received, reducing the need for finished goods inventory.
Make-to-Stock:
Manufacturing strategy where adequate finished goods inventory is carried to meet forecasted demand.
Management by Exception:
A strategy automating most decisions and monitoring for exceptions.
Manufacturing Execution System (MES):
Software integrating with enterprise systems to enhance shop floor control functionality.
Manufacturing Lead Time:
Combination of setup time, run time, move time, and queue time in the manufacturing process.
Master Production Schedule (MPS):
Planning tool balancing demand with capacity by moving production to periods with available capacity.
Modification:
A change to software requiring changing or adding to the software code.
Move Time:
Time taken to physically relocate materials from one manufacturing operation to the next.
Multi-bin System:
Replenishment system using two or more physical bins for each item.
Multi-level Bill of Materials:
A bill-of-materials structure where components have their own bills below them, logically linked for planning purposes.
Multi-Period Forecast Error Amplitude Measurement (MPFEAM):
Measurements quantifying the size of forecast errors over multiple forecast periods.
Multi-Plant:
Environments where multiple facilities are managed.
Multi-Plant MRP:
MRP extended with DRP logic to plan inventory in multi-plant environments.
Nervousness (in MRP systems):
Frequent changes to planned orders for lower-level items resulting from minor changes in demand for higher-level items.
Net Change MRP:
A process recalculating gross and net requirements and planned orders for items with changes in planning data. Can be run as a batch or real-time in a live environment.
Net Requirements:
The result of adjusting gross requirements by current on-hand, safety stock, and inbound quantities.
Netting:
The process of adjusting gross requirements by current on-hand, safety stock, and inbound quantities.
Noise (in demand):
Unpredictable variation in demand not attributed to trend, seasonality, or other predictable factors.
Non-stock Inventory:
Inventory not tracked in the perpetual inventory system. May lack an item-master record or internal SKU number. Can also refer to order-as-needed inventory with an item-master record and SKU, but no carried stock.
Normal Distribution (in statistical analysis):
A distribution model with a bell-shaped curve representing the probability of an occurrence. Commonly used to predict demand variability based on historical data.
Normalize:
To remove elements like seasonality, trend, or event effects from demand.
Obsolescence:
The process when inventory becomes obsolete.
Obsolete:
The condition of being no longer useful due to outdated designs or the passage of time.
On-time Delivery:
A fill-rate measurement indicating the percentage of orders filled by the promised date.
Operation:
Combination of a physical facility and its processes. Also, referred to as a step in the manufacturing process.
Optimization:
The process of obtaining the best practical result from a given problem.
Optional Reorder Point:
A higher reorder point used to avoid downtime or meet specific requirements.
Order as Needed:
A replenishment method triggering orders only when actual demand is present.
Order Cost:
Sum of fixed costs incurred with each item order or production.
Order Cycle:
The time between receipts of an item or the duration an ordered quantity should last.
Ordering System:
An inventory ordering system ensures efficient stock replenishment by determining optimal reorder points and quantities to meet customer demand while minimizing holding costs. Examples are Fixed reorder point, min-max, multi-bin, MRP, DRP.
Outsourcing:
Transferring responsibilities for a process to an outside supplier.
Overhead:
Indirect costs associated with facilities and management applied to manufacturing costs.
Override:
An adjustment used to supersede standard results in decision-making or calculations.
Pick List:
Document specifying inventory for order fulfillment.
Purchase Requisition:
Internal document informing the purchasing department of intended purchases.
Pareto Principle (80/20 Rule):
Small causes responsible for a majority of effects.
Part Number (Item Number):
Identifier for components in production.
Parts List (Materials List):
Inventory of materials needed for production.
Payment Terms:
Agreement specifying payment details between supplier and customer.
Period Order Quantity (POQ):
Ordering method based on time rather than units.
Periodic Review Inventory System:
System reviewing and replenishing inventory periodically.
Perpetual Inventory System:
System adjusting on-hand balances through transactions.
Phantom Bill of Materials:
Fictitious BOM for common subassemblies or kits.
Physical Inventory:
Counting all inventory in a single event.
Planned Order:
System-generated order recommendation in MRP and DRP.
Planning Bill of Materials (Super Bill):
Fictitious BOM grouping products or options.
PO (Purchase Order):
Document authorizing, tracking, and processing purchased items.
Postponement:
Delaying specific operations until just before shipping.
Predictor Variable:
Data set predicting another set in regression analysis.
Procure-to-Order:
Inventory strategy procuring products after receiving customer orders.
Procure-to-Stock:
Inventory strategy maintaining finished goods inventory for forecasted demand.
Product Life Cycle:
Period an item is considered actively saleable.
Product Life Cycle Index:
Number describing demand over the complete product life cycle.
Production Order:
Document for processing a production run.
Production Plan:
High-level, long-term plan for what will be produced.
Production Run:
Physical execution of tasks for a production order.
Promised Date:
Date a supplier expects to fulfill a customer order.
Pull System:
Ordering or production system driven by actual customer demand.
Purchase Order (PO):
Document authorizing, tracking, and processing purchased items.
Purchasing Contract:
Legal document on pricing and terms for significant sales transactions.
Push System:
Ordering or production system triggered by expected demand.
Pick List:
Document specifying inventory for order fulfillment.
Purchase Requisition:
Internal document informing the purchasing department of intended purchases.
Pareto Principle (80/20 Rule):
Small causes responsible for a majority of effects.
Part Number (Item Number):
Identifier for components in production.
Parts List (Materials List):
Inventory of materials needed for production.
Payment Terms:
Agreement specifying payment details between supplier and customer.
Period Order Quantity (POQ):
Ordering method based on time rather than units.
Periodic Review Inventory System:
System reviewing and replenishing inventory periodically.
Perpetual Inventory System:
System adjusting on-hand balances through transactions.
Phantom Bill of Materials:
Fictitious BOM for common subassemblies or kits.
Physical Inventory:
Counting all inventory in a single event.
Planned Order:
System-generated order recommendation in MRP and DRP.
Planning Bill of Materials (Super Bill):
Fictitious BOM grouping products or options.
PO (Purchase Order):
Document authorizing, tracking, and processing purchased items.
Postponement:
Delaying specific operations until just before shipping.
Predictor Variable:
Data set predicting another set in regression analysis.
Procure-to-Order:
Inventory strategy procuring products after receiving customer orders.
Procure-to-Stock:
Inventory strategy maintaining finished goods inventory for forecasted demand.
Product Life Cycle:
Period an item is considered actively saleable.
Product Life Cycle Index:
Number describing demand over the complete product life cycle.
Production Order:
Document for processing a production run.
Production Plan:
High-level, long-term plan for what will be produced.
Production Run:
Physical execution of tasks for a production order.
Promised Date:
Date a supplier expects to fulfill a customer order.
Pull System:
Ordering or production system driven by actual customer demand.
Purchase Order (PO):
Document authorizing, tracking, and processing purchased items.
Purchasing Contract:
Legal document on pricing and terms for significant sales transactions.
Push System:
Ordering or production system triggered by expected demand.
Raw Materials (Components):
Inventory used in the manufacturing process. It includes bulk materials like ore, paper, plastic, or steel.
Receipts:
Materials or transactions associated with the receiving process.
Receiving:
Process of placing materials into inventory. It describes the department where receiving activities take place.
Regenerative MRP:
Process of completely regenerating planned orders for all items. It wipes out existing planned orders, recalculates gross and net requirements.
Regression Analysis:
Techniques to determine a mathematical relationship between sets of data. It involves predicting one set of data (predictor variable) based on others.
Relevant History:
Data recorded under business conditions similar to current/future conditions. It used to effectively forecast future demand.
Reorder Point:
Inventory level triggering an order for a specific item. It's calculated as expected usage during lead time plus safety stock.
Replenishment:
Process of moving inventory within a warehouse or plant. It involves moving inventory between facilities or from suppliers to meet demand.
Requested Date:
Date a purchased item is requested to be received at a customer's location.
Requisitions:
Documents created by individuals without purchasing authority. It specifies item, quantity, cost, terms, and vendor information.
Resources Requirements Planning (RRP):
Capacity planning tool verifying key resource ability for production/business plans. It focuses on long-term planning for facilities, major equipment, capital, and workforce.
Restock:
An act of replenishing inventory by ordering additional stock to meet customer demand and maintain optimal supply levels.
Rough-Cut Capacity:
Capacity planning tool verifying key resource ability to meet master production schedule. It's intermediate level between Resources Requirements Planning (RRP) and Capacity Requirements Planning (CRP).
Routing:
List of operations/steps to complete a manufacturing process. It's used with the bill of materials to specify steps, including labor and machine requirements.
Run Time:
Time taken to produce a single unit in an operation step. It excludes setup time or queue time. It can accumulate for multiple operations or units in a production order.
Safety Stock:
Extra inventory held in anticipation of unexpected disruptions or delays.
Supplier Relationship Management (SRM):
Strategic approach to optimizing and coordinating business relationships with suppliers for maximum profitability.
Safety Lead Time:
Additional time incorporated into lead time calculations for ordering, excluding from the final requested date calculation.
Sales Order:
Document approving, tracking, and processing outbound customer shipments.
Supply Chain Management(SCM):
SCM focuses on optimizing processes for efficient production, distribution, and delivery of goods or services.
Scrap:
Inventory to be discarded or recycled due to manufacturing processes or damage during storage.
Scrap Rate:
Expected rate of scrap for specific components in the manufacturing of an item.
Seasonality:
Fluctuations in demand with a repeating pattern over equivalent time periods.
Seasonality Index:
Number indicating the relationship of each period's demand to the average demand over a complete seasonal cycle.
Self-Induced Seasonality:
Repeating demand patterns caused by internal processes and policies.
Semi-Processed Materials:
Stockable items that undergo partial processing before additional processing.
Service Factor:
Multiplier in statistical safety stock calculations associated with a desired service level.
Service Level:
Key input to statistical-based safety stock calculations and a measure of fill-rate and on-time delivery.
Setup Costs:
Costs associated with initiating a production run, including labor, machine time, and setup-related expenses.
Setup Time:
Time required to prepare equipment and materials for a production run.
Shipping Order:
Document approving, tracking, and processing outbound shipments.
SKU (Stock-Keeping Unit):
Specific item in a specific unit of measure, identified by a unique number.
Smoothing:
Removing variation from demand.
Smoothing Factor:
Number (0.01 to 0.99) used to weight recent demand against forecast in exponential smoothing calculations.
Sourcing:
Activity of finding suppliers for products, materials, or services.
Spreadsheet Modeling:
Creating a mathematical representation of a business problem in a spreadsheet.
Square Root Trick:
Statistical tool softening a ratio by taking the square root.
Standard Business Practices:
Typical practices for general or specific industries.
Standard Deviation:
Statistical term describing the spread of variation in a distribution.
Stocking Type:
Classification in planning and execution systems identifying primary stocking characteristics.
Stocking Unit of Measure:
Unit of measure used to track inventory within a facility.
Stockout:
Situation with inadequate inventory levels to meet current demand.
Storage Cost:
Costs associated with the physical storage of inventory, including space and equipment.
Subassembly:
Stockable item that undergoes assembly and is used in the assembly of other items.
Supply-Chain Optimization Software:
Software with advanced optimization algorithms for inventory, transportation, and multi-facility planning in complex supply chains.
Terms:
Agreement between a supplier and customer outlining sale conditions, including payment, freight, change-of-ownership, and return policies.
Time Fence:
Time frame for controlling changes to production schedules, usually implemented as guidelines.
Time-phased Order Point:
System using immediate forecast and actual customer orders to trigger reorder decisions.
Total Quality Management (TQM):
Management strategy focusing on continuous improvement.
Tracking Signal:
Calculation describing the overall health of the forecast relative to trend, used to initiate changes in forecasting technique or parameters.
Transportation Inventory:
Inventory currently in-transit, from shipper's facility to consignee's facility.
Trend:
Gradual increase or decrease in demand over time.
Trend Adjustment:
Mathematical calculation to adjust future forecasts for trend extension.
Trend Element:
Specific aspect of trend, e.g., changes in market share.
Trend Lag:
Forecast's inability to adequately account for trend, often due to smoothing calculations or lack of proper trend extension.
Triple Exponential Smoothing:
Forecasting method using exponential smoothing for demand, trend, and seasonality index.
Two-bin System:
Simplistic replenishment system using two physical bins for each item, sent for refill when one is emptied.
UOM Inventory:
Unit-of-Measurement inventory is standardized, physical units for quantifying stock in a business.
Unfinished Goods:
Items used to produce finished goods, known as components, ingredients, raw materials, semi-processed materials, and subassemblies.
Units:
Individual pieces of physical inventory that constitute the quantity of an item.
Unit of Measure:
Describes how the quantity of an item is tracked in the inventory system (e.g., eaches, cases, pallets, pounds).
Unit-of-Measure Conversion:
Conversion ratio for handling multiple units-of-measure with the same item.
Vendor Managed Inventory (VMI):
Process where a supplier manages customers' inventory levels and purchases of supplied materials.
Vendor Managed Inventory (VMI): A supply chain arrangement where a qualified third-party, such as a supplier or manufacturer, controls inventory and related decisions on behalf of the seller. VMI is often used as an abbreviation for Vendor Managed Inventory.
Warehouse Management:
Refers to daily operations ensuring smooth warehouse functioning, including inventory ordering, tracking, and management during movement, usage, or sale.
Warehouse Management System (WMS):
Software providing visibility into inventory, assets, logistics, and fulfillment operations.
Weighted Moving Average:
Forecasting method where different weights (totaling 1) are applied to historical periods to calculate the forecast.
Work-in-Process (WIP):
Financial account representing the value of inventory, labor, and overhead issued to production but not yet resulting in a finished product.
Work Order (or Production Order):
Instruction for manufacturing or production processes.
Yield Rate: The anticipated success rate in the manufacturing process for an item. It is measured at the parent-item level, contrasting with the scrap rate, which is assessed at the component level.