Ocean Import Operation Flowchart by vin32111

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                               Logistics
                               glossary



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logistics glossary                                                                                                                                                                                                    logistics glossary




A                                      Anticipation stock                      Available To Promise (ATP)               Batch/Lot                              duty is paid or goods are released in    Business-to-Consumer (B2C)
                                       The stock formed in order to offset     Stock or planned stock not commit-       A definite quantity of a product        some other proper manner.                Describes online transactions
Activity Based Costing (ABC)           the foreseeable fluctuations in the      ted to a firm customer order. ATP         or a component that is treated                                                  between one business and consum-
An accounting system that attri-       demand for, and the delivery or pro-    is shown on the master produc-           and identified as one entity with       Bottleneck                               ers. For instance eBay, Yahoo, ama-
butes costs to activities, objects     duction of a particular product (i.e.   tion schedule (MPS) and is used          respect to certain operations e.g.     A facility, function, department,        zon.com etc.
and processes to support accurate      seasonal stock). Additional stock is    to make delivery promises to cus-        handling, processing, purchasing,      etc., that impedes:
product and process costing. The       built up during low season and con-     tomers. It is calculated by adding       production, transport.                 • Production, e.g. a machine or
methodology for accounting also        sumed during high season. Carry-        expected deliveries to the quanti-                                              work centre where jobs arrive at a       C
measures the cost and perfor-          ing costs thus have to be balanced      ty on hand, and subtracting actu-        Batch production                       faster rate than they can be com-
mance of specific activities per-       against cost for unutilized capacity                                                                                                                             Cabotage
                                                                               al customer’s orders up to the next      The production process where           pleted.
formed in an organization.             and cost for extra capacity.            point of supply.                         products/components are produced                                                Transport of cargo in a country
                                                                                                                                                               • Performance, e.g. a warehouse          other than the country where the
                                                                                                                        in batches and where each separate     or distribution centre where goods
Agility                                Articles Dangereux de                   Average Inventory                        batch consists of a number of the                                               vehicle is registered.
                                                                                                                                                               arrive at a faster rate than they
The ability of an organization to      Route (ADR)                             The average inventory level over a       same products/components.              can be transported or stored, thus
sense and respond to business          A European agreement concerning                                                                                                                                  Call-off
                                                                               period of time.                                                                 causing stock-piling at improper
opportunities in order to stay inno-   the international carriage of dan-                                               Batch quantity/Lot-size                                                         A call-off or blanket order, repre-
                                                                                                                                                               moments or in unwanted areas.
vative and competitive in a turbu-     gerous goods by road.                                                            The number of products/compo-                                                   sents a simplified ordering proce-
lent and quickly changing business                                             B                                        nents in a batch.                      Branch warehouse
                                                                                                                                                                                                        dure. The call-off/blanket order is
environment. An agile organiza-        Assemble To Order (ATO)                                                                                                                                          placed under the terms of a pre-
                                                                               Back order                                                                      A warehouse belonging to a point         negotiated framework agreement.
tion (one that demonstrates agil-      A type of manufacturing that con-                                                Benchmarking                           of sale of the sales organization.
ity) has the capabilities and pro-     verts lower-level components and        Product ordered but out of stock                                                                                         In the most simple case, only quan-
                                                                                                                        The process of comparing perfor-
cesses to respond to unexpected        raw materials to a predetermined        and promised to ship when the            mance against the practise of other                                             tity and delivery date must be pre-
                                                                                                                                                               Buffer stock                             cised in order to accomplish the
environmental changes.                 level of manufacture and assem-         product becomes available.               leading companies for the purpose      Buffer stock can be defined either        call-off/blanket order.
                                       bles or configures to customer                                                    of improving performance. Com-         as a synonym to safety stock, or as
Air Cargo                              order upon receipt or order.            Backhaul                                 panies also benchmark internally       a general definition of stock that is     Carrier
Freight that is moved by air trans-                                            The return movement of a vehicle         by tracking and comparing cur-         used in between two consecutive
portation.                             Audit                                   from its original destination to its     rent performance with past per-                                                 A firm, which transports goods or
                                                                                                                                                               processing steps in order to make
                                       A methodical examination and            original point of origin, especially     formance.                                                                       people.
                                                                                                                                                               them independent of each other,
Air Container                          review of a situation or condition      when carrying goods back over all                                               for instance between two stations
Container conforming to standards      (as within a business enterprise)       or part of the same route.               Best practise                          at an assembly line.                     Cash On Delivery (COD)
laid down for air transportation.      concluding with a detailed report                                                State-of-industry performance or                                                Terms of payment: if the carrier
                                       of findings.                             Backward integration                     application.                           Business Intelligence (BI)               collects a payment from the con-
Air Waybill (AWB)                                                              Increasing vertical integration by                                              A description of software and solu-      signee and remits the amount to
Air consignment note. A docu-          Automated Guided Vehicle                controlling and coordinating busi-       Bill of Lading (BIL)                   tions for collecting, accessing, rein-   the shipper.
ment made out by or on behalf of       System (AGVS)                           ness activities in the supplier’s val-   A transportation document that is      forcing, analyzing and reporting
the carrier(s), confirming receipt      Unmanned vehicles equipped with         ue chain.                                the contract of carriage containing    an organization’s data. Business         Central warehouse
of the goods by the carrier and        automatic guidance equipment                                                     the terms and conditions between       Intelligence gives organizations         A warehouse which performs
evidencing the contract between        which follow a prescribed path, stop-   Balanced scorecard                       the shipper and carrier.               possibilities to analyze data that       central functions for a number of
the shipper and the carrier(s) for     ping at each machining or assem-        A structured measurement system                                                 is stored in different places with-      warehouses, for example keeping
the carriage of goods by aircraft as   bly station for automatic or manu-      based on a mix of financial and non       Bill of Material (BOM)                 in the organization or from exter-       stocks of products for the other
described therein.                     al loading and unloading of parts.      financial measures of business per-       A structured list of all the materi-   nal sources.                             warehouses.
                                                                               formance.                                als or parts and quantities needed
ANSI (American National                Automatic Identification                                                          to produce a particular finished        Business Process                         Channel
Standards Institute)                   (Auto ID)                               Barcode                                  product, assembly, subassembly,        Reengineering (BPR)                      A method whereby a business dis-
A non-profit organization char-         A means of identifying an item          A symbol consisting of a series          manufactured part, whether pur-        The fundamental rethinking and           penses its product, such as a retail
tered to develop, maintain, and        by machine and entering the data        of printed bars representing val-        chased or not.                         radical redesign of business pro-        or distribution channel, call cen-
promulgate voluntary US nation-        automatically into a computer           ues. A system of optical charac-                                                cesses to achieve dramatic organi-       ter or web based electronic store-
al standards in a number of areas,     The most widely used technolo-          ter reading, scanning, and track-        Bonded warehouse                       zational improvements.                   front.
especially with regards to setting     gy at present is bar code: others       ing units by reading a series of         Warehouse approved by the Trea-
EDI standards. ANSI is the US rep-     include optical character recogni-      printed bars for translation into a      sury Department and under bond/        Business-to-Business (B2B)               Claim
resentative to the International       tion (OCR), radio frequency (RF)        numeric or alphanumeric identifi-         guarantee for observance of revenue    Describes online transactions            A charge made against a carrier for
Standards Organization (ISO).          and voice systems.                      cation code.                             laws. Used for storing goods until     between one business and another.        loss, damage, delay or overcharge.



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logistics glossary                                                                                                                                                                                               logistics glossary




CMR note                                mediate facility, reducing the num-    of a defined activity, resulting in a   the control over the export and          which a vessel can lift when load-   Distributor
This document is used for the car-      ber of individual shipments to end     cost. Examples of activity drivers     import of goods e.g. allowed quo-        ed to her maximum draught as         A business that does not manufac-
riage of goods by road. Like the air-   locations, and creating a more eco-    could be volume, quantity, weight,     ta, prohibited goods.                    applicable under the circumstanc-    ture its own products but purchas-
waybill it is evidence of the con-      nomical freight solution.              orders, order lines, customers,                                                 es. The deadweight is expressed      es and resells these products usu-
tract of carriage, acts as a receipt                                           products and distance.                 Customs clearance                        in tons.                             ally maintaining a finished goods
for the goods, and sets out the rele-   Container                                                                     Function satisfying customs                                                   inventory.
vant rules and regulations for road     A “box”, typically ten to forty feet   Cost of Goods Sold (COGS)              requirements by supplying the nec-       Delivery lead time/
transport.                              long, which is used primarily for      The amount of direct materials,        essary information, or certificates,      Delivery cycle                       Down time
                                        ocean freight shipments. For travel    direct labour, and allocated over-     and enabling customs authorities         The time between the receipt         The comparison of the projected
Collaborative Planning,                 to and from ports, containers are      head associated with products sold     to control goods physically.             of the customer order and the        completion date for an operation
Forecasting and                         loaded onto truck chassis’ or on       during a given period of time.                                                  delivery of the product to the
                                                                                                                                                                                                    or project task as compared to the
Replenishment (CPFR)                    railroad flatcars.                                                             Cycle time                               customer.
                                                                                                                                                                                                    required date, which indicates the
A concept where different compa-                                               Country of origin                      How often a part or product is                                                amount of time it could be delayed
nies part of a supply chain together    Continuous flow                         Country in which the goods have        completed by a process, as timed         Demand Chain Leadership
                                                                                                                                                                                                    without impacting later operations
focus on communication and col-         Producing and moving one item at       been produced or manufactured.         by observation. This time includes       (DCL)
                                                                                                                                                                                                    or tasks.
laboration in order to work with        a time (or a small and consistent                                             operating time plus the time             Increased earnings and unique
common accurate forecasts to            batch of items) through a series of    Cross docking                          required to prepare, load, and un-       competitiveness through more effi-
                                                                                                                      load. Also, the time it takes an                                              Downstream
assure a more safe and efficient         processing steps as continuously       A distribution system in which                                                  cient flow of goods, services and
                                        as possible, with each step mak-                                              operator to go through all work          information.                         One or more companies or individ-
sourcing and procurement process.                                              merchandise received at the ware-
                                        ing just what is requested by the                                             elements before repeating them.                                               uals who participate in the flow of
                                                                               house or distribution center is not
Competitive advantage                   next step.                                                                                                             Design for Manufacture and           goods and services from the man-
                                                                               put away, but instead is readied
                                                                                                                      Cycle counting                           Assembly (DFMA)                      ufacturer to the final user or con-
The strategies, skills, knowledge,                                             for shipment to retail stores. Cross
                                        Continuous Improvement (CI)                                                   An inventory accuracy audit tech-                                             sumer.
resources or competencies that dif-                                            docking requires close synchroni-                                               A product design methodology that
ferentiate a business from its com-     A structured measurement driven        zation of all inbound and outbound     nique where inventory is count-          provides a quantitative evaluation
petitors. The reason why custom-        process that continually reviews       shipment movements. By elimi-          ed on a cyclic schedule rather           of product designs.                  Drop shipments
ers choose a company’s product          and improves performance.              nating the put-away, storage and       than once a year. For example, a                                              Deliveries of shipments from a sin-
over its competitors’.                                                         selection operations, it can signifi-   cycle inventory count is usually         Detail planning                      gle shipper to multiple consignees
                                        Control tower                          cantly reduce distribution costs.      taken on a regular, defined basis         The planning (at the lower plan-     along the route leading to an ulti-
Computer Aided Design                   Bespoke packages of informa-                                                  (often more frequently for high-         ning levels) by which it is decid-   mate destination.
(CAD)                                   tion services used to manage and       Customer driven                        value fast-moving items and less         ed in detail where and when each
                                        control supply chain activities on     The end user, or customer, moti-       frequently for low-value or slow-        activity can and/or must be car-     Dual sourcing
A design process which uses a com-
                                        behalf of customers and suppliers.                                            moving items).                           ried out.                            Selecting of and working with two
puter system.                                                                  vates what is produced or how it
                                        Also known as logistics or trans-      is delivered.                                                                                                        equivalent suppliers for a certain
                                        port control tower.                                                           Cycle stock                              Direct delivery
Consignment                                                                                                                                                                                         product.
                                                                               Customer Relationship                  The portion of stock required to         The conveyance of goods directly
A separately identifiable amount of
                                        Core competencies                      Management (CRM)                       meet normal production demand,           from the vendor to the buyer.
goods transported from one con-
signor to one consignee via one or      A core competency is something         Covers methods and technologies
                                                                                                                      excluding excess stock and safety                                             E
                                        that a firm can do well, that pro-                                             stock.                                   Disposable pallet/One-way
more than one modes of transport                                               used by companies to manage their
                                        vides customer benefits, that is                                                                                        pallet/Expendable pallet             Economic Order Quantity
end specified in one single trans-                                              relationships with clients. Informa-
                                        hard for competitors to imitate and                                                                                                                         (EOQ)
port document.
                                        can be leveraged to many products
                                                                               tion stored on existing customers      D                                        Pallet intended to be discarded
                                                                                                                                                                                                    An inventory model that determines
                                                                               (and potential customers) is ana-                                               after a single cycle of use.
Consignment stock                       and markets.                           lyzed and used to this end. Automat-   Dangerous goods                                                               how much to order by determining
The stock of goods with an exter-                                              ed CRM processes are often used to     Goods are to be considered danger-       Distribution                         the amount that will meet custom-
nal customer which is still the         Corrective and preventive              generate automatic personalized        ous if the transport of such goods       Outbound logistics, from the end     er service levels while minimizing
property of the supplier. Payment       action                                 marketing based on the customer        might cause harm, risk, peril, or oth-   of the production line to the end    total ordering and holding costs.
for these goods is only made to the     Activities that are required after     information stored in the system.      er evil to people, environment, equip-   user.
supplier when they are sold by the      a break-down in order to get the                                              ment or any property whatsoever.                                              Economies of scale
customer.                               machines and other production          Customs                                                                         Distribution                         Economies of scale characteriz-
                                        resources up running again.            The department of the Civil Ser-       Deadweight (DWT)                         warehouse/centre                     es a process in which an increase
Consolidation                                                                  vice that deals with the levying       The total weight of cargo, cargo         A warehouse that stores finished      in the scale of the firm causes a
The combination of shipments            Cost driver                            of duties and taxes on imported        equipment, bunkers, provisions,          goods and from which customer        decrease in the long run average
from multiple points at an inter-       The factor used to measure usage       goods from foreign countries and       water, stores and spare parts            orders are assembled.                cost of each unit.



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logistics glossary                                                                                                                                                                                                   logistics glossary




EDIFACT                                Universal Product Code (UPC)             First In, First Out (FIFO)               2. Seiton: Neatly arrange what is     between a primary client and one        Groupage (in roadcargo)
Electronic Data Interchange for        system developed in North Ameri-         Warehouse term meaning first              left-a place for everything and       or more partners.                       The collection of several small
Administration, Commerce, and          ca. The EAN-13 barcode is defined         items stored are first used.              everything in its place.              4PL organization acts as a single       consignments and the formation
Transport.                             by the standards organisation                                                     3. Seiso: Clean and wash.             interface between the client and        of one large shipment thereof.
                                       GS1. UPC and EAN numbers are             Fixed order quantity                                                           multiple logistics service providers.
Efficient Consumer                      collectively called Global Trade                                                  4. Seiketsu: Cleanliness resulting
                                                                                A batch-sizing technique in MRP
Response (ECR)                         Item Numbers (GTIN), though              or inventory management that will
                                                                                                                         from regular performance of the       All aspects (ideally) of the client’s   H
                                       they can be expressed in differ-                                                  first three Ss.                        supply chain are managed by the
A demand driven replenishment                                                   always cause planned or actual
                                                                                                                                                               4PL organization.                       Heijunka (Japanese)
system designed to link all parties    ent kinds of barcodes. The EAN-13        orders to be generated for a pre-        5. Shitsuke: Discipline, to perform
                                       barcodes are used worldwide for          determined fixed quantity in MRP,         the first four Ss.                                                             Leveling the type and quantity
in the logistics channel to create a                                                                                                                           Free Trade Zone (FTZ)
                                       marking retail goods.                    or multiples thereof if net require-                                                                                   of production over a fixed peri-
massive flow-through distribution                                                                                                                               A commercial or industrial area
                                                                                ments for the period exceed the          Five why’s                                                                    od of time. This enables produc-
network. Replenishment is based                                                                                                                                usually near a port of entry where
                                                                                fixed order quantity.                                                                                                   tion to efficiently meet customer
upon consumer demand and point         European pallet pool                                                              A Japanese problem-analysis tech-     merchandise and raw material            demands while avoiding batching
of sale information.                   Pool for the exchange of standard                                                 nique that asks ”why” five times       imports are not subject to customs
                                                                                Flow chart                                                                                                             and results in minimum invento-
                                       size pallets (the so-called Euro-                                                 when reviewing a problem or sit-      charges or duties.
                                                                                                                         uation, with the belief that by the                                           ries, capital costs, manpower, and
Electronic Commerce (EC)               pallets) in European cargo traf-         A graphical representation of a
                                                                                                                         fifth ”why” the root cause will be                                             production lead time through the
Also written as e-commerce. Con-       fic, formed in 1961 by a number of        procedure or sequence of events,                                               Frozen zone
                                                                                                                         discovered.                                                                   whole value stream. Roughly, it
ducting business online. In the tra-   European rail administrators.            usually using symbols connected                                                Period in which no changes can          means “levelization” in Japanese.
ditional sense of selling goods, it                                             by flow lines.                                                                  be made to scheduled work orders
is possible to do this electronical-                                                                                     Flexible Manufacturing                based on changes in demand.
                                       Ex works                                                                                                                                                        Horizontal integration
ly because of certain software pro-                                             First tier supplier                      System (FMS)
                                       The incoterm by which the sell-                                                                                                                                 The grouping of companies on the
grams that run the main functions                                               A tier 1 supplier is the immediate       A group of computer-controlled
of an e-commerce website, such as
                                       er fulfils his obligation to deliver
                                                                                or primary set of vendors directly       independent workstations or           G                                       same production level under a sin-
                                       when he has made the goods avail-                                                 machines linked by material han-                                              gle management in order to work
product display, online ordering,                                               used by a company, and tier 2 is                                               Gantt chart
                                       able at his premises (i.e. works, fac-                                            dling systems that are able to                                                up a common market. Horizontal
and inventory management.                                                       a vendor to tier 1. In some indus-                                             A time-phased bar chart display
                                       tory, warehouse, etc.) to the buy-                                                accommodate wide variations in                                                integration is resulting in a widen-
                                                                                tries the final customers or domi-                                              that lists tasks or activities along
                                       er. In particular, he is not respon-                                              types and quantities of products.                                             ing product offer.
Electronic Data Interchange                                                     nant chain partners are consolidat-                                            the left side and a corresponding
                                       sible for loading the goods on the
(EDI)                                                                           ing (reducing) their number of tier                                            bar for each task. The length of        Hundredweight (cwt)
                                       vehicle provided by the buyer or         1 suppliers, and requiring proof of      FOB (Free On Board)
Intercompany, computer-to-com-         for clearing the goods for export,                                                                                      the bar represents the duration         A pricing unit used in transporta-
puter transmission of business                                                  the communications and fulfill-           Contractual terms between a buyer     of the activity, and may include
                                       unless otherwise agreed.                 ment capabilities between tier 1         and a seller, which define where,                                              tion (equal to 100 pounds).
information in a standard format.                                                                                                                              both scheduled and actual dura-
                                       The buyer bears all costs and risks      and tier 2.                              title transfer takes place.           tion information.
Enterprise Resource                    involved in taking the goods from
                                                                                Fishbone diagram                         Forecast
                                                                                                                                                                                                       I
Planning (ERP) System                  the seller’s premises to the desired                                                                                    General Agreement on
A class of software that integrate     destination. This term thus repre-       A systematic analysis tool that orga-    A formal statement established on     Tariff and Trade (GATT)                 Idle time
(or attempt to integrate) all data     sents the minimum obligation for         nizes the effects of a problem and its   basis of calculations about future    Major international agreement on        The period of time when a work sta-
and processes of an organization       the seller.                              possible causes, in a graphical dis-     situations and/or the expected        Tariff and Trade between nations        tion is available for production but
into a unified system. ERP systems                                               play that often resembles the skele-     trend of future events.               all over the world.                     is not utilized due to shortage of
typically include accounts payable,                                             ton of a fish. Developed by Dr. Kaoru                                                                                   tooling, material, operators etc.
accounts receivable, general led-      F                                        Ishikawa, it is sometimes referred to    Forwarder                             Globalization
ger, payroll, MRP (Manufactur-                                                  as an Ishikawa diagram.                  The party arranging the carriage                                              Inbound Logistics
                                       Failure Modes Effects                                                                                                   A dynamic process that signifies
ing), Resources Planning, Supply                                                                                         of goods including connected          an increased flow of goods, ser-         The movement of materials from
Chain and some other interrelated      Analysis (FMEA)                          Five S                                   services and/or associated for-                                               suppliers and vendors into pro-
                                                                                                                                                               vices, capital, people, and informa-
systems. A typical ERP system will     A pro-active method of predicting        Five related terms, beginning with       malities on behalf of a shipper       tion between the countries of the       duction processes or storage facil-
use multiple components of com-        faults and failures so that preven-      an S sound, describing workplace         or consignee.                         world. The process of globalization     ities.
puter software and hardware to         tive action can be taken.                practices conducive to visual con-                                             is increasingly making people and
achieve the integration.                                                        trol and lean production. The five        Fourth-Party Logistics (4PL)          companies more dependent upon           Incoterms
                                       Fast mover                               terms in Japanese are:                   Differs from third party logistics    each other.                             A set of international rules, issued
European Article Number                A product delivered or used in           1. Seiri: Separate needed from           in the following ways;                                                        by the ICC (International Chamber
(EAN)                                  production with a high frequen-          unneeded items-tools, parts, mate-       4PL organization is often a sepa-     Green logistics                         of Commerce) for the interpreta-
A barcoding standard which is a        cy or in relatively large numbers        rials, paperwork-and discard the         rate entity established as a joint    A supply chain process that takes       tion of the chief terms of delivery
superset of the original 12-digit      per period.                              unneeded.                                venture or long-term contract         into account the carbon footprint.      used in foreign trade contracts.



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logistics glossary                                                                                                                                                                                                   logistics glossary




The incoterms define the rights        (should) defer. Develops and moni-      Inventory control                        to flow smoothly and swiftly. Typi-       Kanban                                 Line balancing
and obligations of the seller and     tors international standards.           The management of inventories,           cal rocks encountered are quality,       A kanban is a signaling device that    The process of aligning operations
the buyer, for instance transfer of                                           including decisions about which          changeover times, vendor confor-         gives authorization and instruc-       within a specific production line,
the risk (at which point and time     In transit                              items to stock at each location; how     mance, and product design. Fail-         tions for the production or with-      that minimizes fluctuations in
the risk passes from the seller to    The status of goods or persons          much stock to keep on hand at var-       ure to ’remove the rocks’ will lead      drawal (conveyance) of items in a      production levels and operation
the buyer).                           between the outwards customs            ious levels of operation; when to        to system failure.                       pull system. The term is Japanese      downtime.
                                      clearance and inwards customs           buy; how much to buy; controlling                                                 for “sign” or “signboard”. Kan-
Indirect/Distributor channel                                                  pilferage and damage and manag-          Jidoka (Japanese)                        ban cards are the best-known and       Logistics
                                      clearance.
Your company sells and ships to the                                           ing shortages and back orders.           Providing machines and opera-            most common example of these           Logistics Management is that part
distributor. The distributor sells                                                                                     tors the ability to detect when an       signals.                               of Supply Chain Management
                                      Inventory                               Inventory management
and ships to the end user. This may                                                                                    abnormal condition has occurred                                                 that plans, implements, and con-
occur in multiple stages. Ultimate-   Raw materials, work in process, fin-     The process of ensuring the avail-       and immediately stop work. This          Key Performance                        trols the efficient, effective for-
ly your products may pass through     ished goods and supplies required       ability of products through inven-       enables operations to build in qual-     Indicator (KPI)                        ward and reverse flow and stor-
the Indirect/Distributor Channel      for creation of a company’s goods       tory administration.                     ity at each process and to separate      A measure which is of strate-          age of goods, services and related
and arrive at a retail outlet.        and services; the number of units                                                men and machines for more efficient       gic importance to a company of         information between the point of
                                      and/or value of the stock of goods      Inventory turns                          work. Jidoka is one of the two pillars   department.                            origin and the point of consump-
Insourcing                            held by a company.                      The cost of goods sold divided by        of the Toyota Production System                                                 tion in order to meet customers’
The opposite of outsourcing, that                                             the average level of inventory on        along with just-in-time. It’s relat-                                            requirements.
is, a serve performed in-house.       Inventory carrying cost                 hand. This ratio measures how            ed to the Japanese word for auto-        L
                                      One of the elements comprising a        many times a company’s inven-            mation, but with the connotations
Integrated Logistics                  company’s total supply-chain man-       tory has been sold during a peri-        of humanistic and creating value.        Label                                  M
                                      agements costs. This cost consists      od of time. Operationally, inven-                                                 A slip of e.g. paper or metal
A comprehensive, system-wide                                                                                                                                    attached to an object to indicate      Maintenance
                                      of the following:                       tory turns are measured as a total       Just-In-Time (JIT)
view of the entire supply chain as                                                                                                                              the nature, ownership, destina-        The combination of all technical
                                                                              throughput divided by average lev-       An inventory control system that
a single process, from raw mate-                                                                                                                                tion, contents and/or other par-       and corresponding administrative
                                      1. Opportunity Cost: The opportu-       el of inventory for a given period;      controls material flow into assem-
rials supply through finished                                                                                                                                    ticulars of the object.                actions intended to retain an item
                                      nity cost of holding inventory. This    How many times a year the aver-          bly and manufacturing plants by
goods distribution. All functions                                                                                                                                                                      in, or restore it to, a state in which
                                      should be based on your company’s       age inventory for a firm changes          coordinating demand and supply
that make up the supply chain are                                                                                                                               Landed cost                            it can perform its required function
                                      own cost of capital standards using     over, or is sold.                        to the point where desired materi-
managed as a single entity, rather                                                                                                                                                                     (stated condition).
                                      the following formula. Calculation:                                              als arrive just in time for use. An      Cost of product plus relevant logis-
than managing individual func-                                                ISO 9000
                                      Cost of Capital x Average Net Value                                              inventory reduction strategy that        tics costs such as transportation,
tions separately.                                                                                                                                                                                      Make or Buy
                                      of Inventory.                           A series of quality assurance stan-      feeds production lines with prod-        warehousing, handling.
                                                                              dards compiled by International          ucts delivered “just in time”. Devel-                                           The process of making a choice
Intermodal transportation                                                                                                                                       Last In, First Out (LIFO)              between producing a product one-
                                      2. Shrinkage: The cost associat-        Standardization Organization.            oped by the auto industry, it refers
Transporting freight by using two                                             In the United States, ISO is rep-        to shipping goods in smaller, more       Accounting method of valuing           self or buying it.
                                      ed with breakage, pilferage, and
or more transportation modes.                                                 resented by the American Nation-         frequent lots.                           inventory that assumes latest
                                      deterioration of inventories. Usu-
                                      ally pertains to the loss of material   al Standards Institute based in                                                   goods purchased are first goods         Make-To-Order
lnternational Air Transport                                                   Washington.                                                                       used during accounting period.         (Manufacture-to-Order)
                                      through handling damage, theft,
Association (IATA)
                                      or neglect.
                                                                                                                       K                                                                               A manufacturing process strategy
An international organization of                                                                                                                                Leadtime                               where the trigger to begin manufac-
airlines, founded in 1945, with the   3. Insurance and Taxes: The cost
                                                                              J                                        Kaizen
                                                                                                                                                                                                       ture of a product is an actual cus-
                                                                                                                       Continuous improvement of an             The total time that elapses
aim of promoting the commercial       of insuring inventories and tax-        The Japanese river                                                                between an order’s placement           tomer order or release, rather than
air traffic. This should be achieved                                                                                    entire value stream or an individ-
                                      es associated with the holding of       The process of production under                                                   and its receipt. It includes the       a market forecast. Other manufac-
by cooperation between parties                                                                                         ual process to create more value
                                      inventory.                              JIT can be compared to the prog-                                                  time required for order transmit-      turing process strategies are Con-
concerned and by performance of                                                                                        with less waste. The word is Jap-
                                                                              ress of a boat on a river with large                                              tal, order processing, order prepa-    figure/Package-to-Order, Engineer-
certain rules, procedures and tar-    4. Total Obsolescence for Raw Mate-                                              anese for gradual, continuous
                                                                              rocks under the water. The moving                                                 ration, and transit.                   to-Order, and Make-to-Stock.
iffs, regarding both cargo and pas-                                                                                    improvement. There are two lev-
                                      rial, WIP, and Finished Goods           river is the movement of materi-
sengers, by those parties.                                                                                             els of kaizen:
                                      Inventory: Inventory reserves tak-      als and the depth of water repre-                                                 Lean Production                        Make-To-Stock
                                      en due to obsolescence and scrap        sents the WIP. As the water level        1. System or flow kaizen focusing         Lean Production or Lean Manufac-       (Manufacture-To-Stock)
International Standards               and includes products exceeding         is lowered the rocks are gradually       on the overall value stream. This        turing – the philosophy of contin-     A manufacturing process strategy
Organization (ISO)                    the shelf life, i.e. spoils and is no   revealed. These rocks, symboliz-         is kaizen for management.                ually reducing waste in all areas      where finished product is continu-
An organization within the Unit-      good for use in its original purpose    ing manufacturing waste, must be         2. Process kaizen focusing on indi-      and in all forms; a phrase coined      ally held in warehouse inventory to
ed Nations to which all national      (do not include reserves taken for      removed to allow the river to have       vidual processes. This is kaizen for     to summarize Japanese manufac-         fulfil expected incoming orders or
and other standard setting bodies     Field Service Parts).                   less total water in it but to continue   work teams and team leaders.             turing techniques.                     releases based on a forecast.



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Mass customization                      Min-max ordering                        N                                     On-hand balance                          Pallet                                   by Edward Deming, that involves
The flexibility to meet the demands      A replenishment and inventory                                                 The quantity of an item shown            A horizontal platform, of minimum        continuous improvement based
of a customer base whose needs are      management system that sets a           Net weight                            in the inventory records as being        height compatible with handling          on analysis, design, execution
diverse and/or changing.                minimum inventory level, used to        The weight of the goods, exclud-      physically in stock.                     by pallet trucks, and/or fork lift       and evaluation. PDCA - plan/do/
                                        trigger a reorder when the avail-       ing all packing.                                                               trucks and other appropriate han-        check/act - emphasizes the con-
Master Production                       able plus incoming receipt total is                                           Operation                                dling equipment, used as a base for      stant attention and reaction to
Schedule (MPS)                          less than the min.                      Non value-adding activities           The smallest unit of work taken          assembling, storing, handling and        factors that affect quality.
Considers the high-level produc-                                                Activities and costs that can be      into account for a particular plan-      transporting goods and loads. It
                                        The amount of the order is the dif-     eliminated without reducing per-      ning or control purpose.                 may be constructed with, or fitted        Poka yoke (Japanese)
tion plan and rough cut capac-
                                        ference between the calculated          formance, function or value as per-                                            with, a superstructure.                  Japanese term meaning mistake-
ity availability, and aligns with
                                        (less than min) in-ventory and a        ceived by the customer.               Optimization                                                                      proofing techniques, such as manu-
management targets for linearity
and permissible level of changes.
                                        predefined max. Min-max systems                                                The process of making something          Parcel                                   facturing or setup activity designed
                                        are typically not time-phased.                                                as good or as effective as possi-        A classification of smaller ship-         in a way to prevent an error from
Once accepted, the MPS specifies
the date and quantity requirements                                              O                                     ble with given resources and con-        ments.                                   resulting in a product defect.
used by MRP to explode demand           Mode of transport                                                             straints.
                                                                                Obsolescence                                                                   Part number                              Pull production
through the bill of materials.          Method of transport used for the
                                        carriage of goods and/or persons.       Reduction of value of a product,      Order cycle                              The set of characters, normal-           A method of production control in
The MPS is the main driver for the                                              part or material due to reduced                                                ly alphanumeric, that identifies          which downstream activities sig-
                                        E.g.: by air or by road.                                                      The time and process involved
rest of the planning and scheduling                                             sales demand or technological                                                  a specific manufactured or pur-           nal their needs to upstream activ-
                                                                                                                      from the placement of an order to
system, and the level of success in                                             change.                               the receipt of the shipment.             chased item.                             ities. Pull production strives to
attaining a realistic MPS often indi-   Muda, Mura, Muri
                                                                                                                                                                                                        eliminate overproduction and is
cates how well the other detailed       Three Japanese terms often used         Obsolete stock                        Out of stock                             Physical distribution                    one of the three major components
parts of the system function.           together in the Toyota Production       The stock that cannot be or is        The state of not having invento-         Those activities related to the flow      of a complete just-in-time produc-
                                        System (and called the Three Ms)        unlikely to be consumed in future     ry at a location and available for       of goods from the end of conver-         tion system, along with takt time
Materials handling                      that collectively describe wasteful     production processes or to be sold                                                                                      and continuous flow.
                                                                                                                      distribution or for sell to the con-     sion to the customer.
The physical handling of products       practices to be eliminated.             in the usual way through the usu-     sumer.
and materials between procure-                                                  al outlets.                                                                    Picking                                  Primary supplier
                                        Muda: Any activity that consumes
ment and shipping.                                                                                                    Outbound Logistics                       The process of withdrawing from          If a company has several suppliers
                                        resources without creating value
                                                                                Offshoring                            The process related to the move-         stock the finished products to be         that can provide the same item, the
Materials management                    for the customer.
                                                                                Offshoring is defined as the move-     ment and storage of products from        shipped to a customer, or the com-       company sometimes appoints a pri-
Inbound logistics from suppliers        Mura: Unevenness in an operation;       ment of a business process done       the end of the production line to        ponents for making the products.         mary supplier, from which it usual-
through the production process.         for example, an uneven work pace        at a company in one country to        the end user.                                                                     ly purchases the particular item.
The movement and management of          in an operation causing operators       the same or another company in                                                 Picking list
materials and products from pro-        to hurry and then wait.                 another, different country. Almost    Outsource                                A list of all components and mate-       Process improvement
curement through production.                                                    always work is moved due to a low-    To utilize a third-party provid-         rials required to fill a specific pro-     Designs or activities, which
                                        Muri: Overburdening equipment           er cost of operations in the new      er to provide services previously        duction, sales or interplant order.      improve quality or reduce costs,
Materials Requirements                  or operators.                           location.                             performed in-house.                      It often specifies the warehouse          often through the elimination of
Planning (MRP)                                                                  Offshoring is sometimes contrast-                                              locations to pick from.                  waste or non-value-added tasks.
A system to support manufactur-
ing and fabrication organizations
                                        MRP-II                                  ed with outsourcing or offshore       P                                        Pick-by-light                            Procurement
                                        – Manufacturing                         outsourcing. Outsourcing is the
by the timely release of production                                             movement of internal business         Packaging                                A laser identifies the bin for the next   The activities which ensure the
and purchase orders using the pro-      Resource Planning                                                                                                      item in the rack; when the picker        availability of material in the
                                                                                processes to an external company.     Materials and components used in
duction plan for finished goods to       Direct outgrowth and extension of       Companies subcontracting in the       any packaging operation to wrap,         completes the pick, the bar code is      desired quality, quantity, place and
determine the materials required        closed-loop MRP. Was developed          same country would be outsourc-       contain and protect articles or sub-     scanned and the system then points       time for the requesting unit.
to make the product.                    as a method to calculate the uti-       ing, but not offshoring. A company    stances during transport.                the laser at the next bin.
                                        lization of resources (machines,        moving an internal business unit                                                                                        Product life cycle
Milk run                                material, people) in a manufac-         from one country to another would     Packing list/Shipping list               Piggyback transport                      The processes, costs and revenues
Numerous stops from or to mul-          turing company. The concept cov-        be offshoring, but not outsourcing.   List showing merchandise packed          Combined transport by rail and road.     associated with a product from its
tiple vendors in close geograph-        ers the step-by-step planning start-    A company subcontracting a busi-      and all particulars. Normally pre-                                                initial creation to its obsolescence
ic proximity received by the cus-       ing at the highest level in the plan-   ness unit to a different company      pared by shipper but not required by     Plan-Do-Check-Act (PDCA)                 and often categorized by the stages
tomer, normally done for a defined       ning hierarchy. Most ERP Systems        in another country would be both      carriers. Copy is sent to consignee to   A four step quality improvement          of introduction, growth, maturity
route on a recurring basis.             based on the principle.                 outsourcing and offshoring.           help verify shipment received.           cycle, based on a process described      and decline.



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logistics glossary                                                                                                                                                                                               logistics glossary




Product mix                            Queue time                             Retailer                               Safety stock                           next process or customer. The worst    or tool aiming to shorten the
The combination of individual          Time spent by a specific job or         One who sells goods in small           The stock formed in order to off-      form of waste because it contributes   exchange time by separating the
product types that makes up the        order waiting to be processed by a     quantities at a time, not usually      set the foreseeable fluctuations        to the other six.                      activities to be done when the
total range.                           resource that is currently not imme-   for resale.                            in the demand for, and the deliv-                                             machine has been stopped (Inside
                                                                                                                     ery or production of a particu-        2. Waiting: Operators standing idle    Exchange of Die) and the activities
                                       diately available for that job.                                                                                      as machines cycle, equipment fails,
Production planning and                                                       Reverse Logistics                      lar product (i.e. seasonal stock).                                            which can be performed in advance
                                                                                                                     Additional stock is built up during    needed parts fail to arrive, etc.
scheduling                                                                    A specialized segment of logis-                                                                                      during run of the machine or after
The systems that enable creation       R                                      tics focusing on the movement          low season and consumed during
                                                                                                                                                            3. Conveyance: Moving parts and        (Outside Exchange of Die).
                                                                              and management of products and         high season. Carrying costs thus
of detailed optimized plans and                                                                                                                             products unnecessarily, such as
                                       Radio Frequency                        resources after the sale and after     have to be balanced against cost                                              Single sourcing
schedules taking into account the                                                                                                                           from a processing step to a ware-
                                       Identification (RFID)                   delivery to the customer.              for unutilized capacity and cost for
resource, material, and dependency                                                                                                                          house to a subsequent processing       Selecting of and working with one
                                                                                                                     extra capacity.
constraints to meet the deadlines.     RFID is an automatic identifica-                                                                                      step when the second step instead      supplier for a certain product.
                                       tion method, relying on storing        Request For Information                                                       could be located immediately adja-
                                                                              (RFI)                                  SCOR Model                             cent to the first step.
Productivity                           and remotely retrieving data using                                                                                                                          Six Sigma Quality
                                                                              A document used in purchasing          The Supply Chain Operations Ref-
Relative measure of output per         devices called RFID tags or tran-                                                                                                                           A quality management and pro-
                                                                              processes to collect relevant infor-   erence Model- developed by the         4. Processing: Performing unnec-
labour or machine hour.                sponders. An RFID tag is an object                                            Supply-Chain Council to measure                                               cess improvement methodology
                                                                              mation about the supplier’s prod-                                             essary or incorrect processing,
                                       that can be attached to or incor-                                             total supply chain performance. It     typically from poor tool or prod-      particularly well suited to process
                                                                              ucts in order to get an understand-
Proof of Delivery (POD)                porated into a product, animal, or                                            includes delivery and order fulfill-    uct design.                            intensive industries like manufac-
                                                                              ing of whether the product meets
                                       person for the purpose of identifi-     the requirements.                      ment performance, supply chain                                                turing. Six Sigma measures a giv-
Information supplied by the carri-
                                       cation using radio waves.                                                     response time, production flexi-        5. Inventory: Having more than         en process by its average perfor-
er containing the name of the per-
                                                                              Request For Proposal (RFP)             bility, warranty and returns pro-      the minimum stocks necessary           mance and the standard deviation
son who signed for the shipment,       Chip-based RFID tags contain sil-
                                                                                                                     cessing costs, cash-to-cash cycle      for a precisely controlled pull        (or variation) of this performance,
the time and date of delivery, and     icon chips and antennas. Passive       A document used in purchas-
                                                                                                                     time, inventory and asset turns,       system.                                aiming to reduce the occurrence of
other shipment delivery related        tags require no internal power         ing processes to detail proposed
                                                                              goods or services requirements         and other factors in evaluating the                                           defects in a given process to a level
information.                           source, whereas active tags require                                                                                  6. Motion: Operators making move-
                                                                              and invites responses and bids         overall effective performance of a                                            of “Six Sigma” outside the norm;
                                       a power source.                                                               supply chain.                          ments that are straining or unnec-
                                                                              from prospective suppliers.                                                                                          no more than 3.4 defects per one
Public warehouse                                                                                                                                            essary, such as looking for parts,
                                                                                                                                                                                                   million opportunities.
A warehouse which is available to      Raw materials                                                                                                        tools, documents, etc.
                                                                              Routing/Transport routing              Seasonal demand
all companies and persons who          Crude or processed material that                                              The yearly recurring variation on
                                                                              The determination of the most effi-                                            7. Correction: Inspection, rework      Slow mover
wish to make use of the services       can be converted by manufactur-                                               monthly demand.
                                                                              cient route(s) that people, goods,                                            and scrap.                             A product delivered or used in
offered.                               ing, processing, or combination        materials and/or means of trans-                                                                                     production with a low frequency
                                       into a new and useful product.         port have to follow inside or out-     Set-up time                            Shipment                               or in relatively low numbers per
Purchase Order (PO)                                                           side the Company.                      The time required for preparing        A separately identifiable collection    period.
Form buyer uses when placing           Recycling                                                                     machines and other production          of one or more goods items (avail-
order for merchandise.                 The process by which materials         Rush order                             resources for carrying out opera-      able to be) transported together.      Standardized work
                                       otherwise destined for disposal are    An order which for some reason         tions.
                                                                                                                                                                                                   Establishing precise procedures for
Push system                            collected, processed, and remanu-      must be fulfilled in less than nor-                                            Shortage                               each operator’s work in a production
System of ordering where orders        factured into new products.            mal lead time.                         Service level                          The negative difference between        process, based on three elements:
are issued for completion by speci-                                                                                  The extent to which a supply-          actual available or delivered quan-
fied due dates, based on estimated      Reorder Point (ROP)                                                           ing resource satisfies customer         tity and the required quantity.        1. Takt time, which is the rate at
leadtimes.                                                                    S                                      requirements, often expressed                                                 which products must be made
                                       A specified inventory level used                                               in terms of error rate, resource
                                                                              Safety lead time                                                              Simulation                             in a process to meet customer
                                       to trigger a reorder when the total                                           availability or accuracy in meet-      Utilizing the operational data to      demand.
                                       of current on-hand inventory and       An additional lead time added to       ing requested dates.
Q                                      open scheduled receipts falls below    the actual or calculated lead time                                            perform “what-if” evaluations          2. The precise work sequence in
                                                                              that initiates earlier order releas-                                          of alternative plans relating to
Quality Function                       a given level.                                                                Seven wastes                                                                  which an operator performs tasks
                                                                              es. Items planned on a to-order                                               resources and materials.
                                                                                                                     The categorization of the seven                                               within takt time.
Deployment (QFD)                       The reorder point is set to cover      instead of a to-stock basis may use
A structured method for translat-      demand expected until the order        safety lead time instead of safety     major wastes typically found in        Single Minute Exchange of              3. The standard inventory, includ-
ing user requirements into detailed    is received, and often includes a      stock to handle critical require-      mass production:                       Die (SMED)                             ing units in machines, required
design specifications using a contin-   buffer based on past variability in    ments when carrying additional         1. Overproduction: Producing ahead     A method of analyzing the activ-       to keep the process operating
ual stream of ‘what-how’ matrices.     the demand or the lead time.           inventory is not desirable.            of what’s actually needed by the       ities needed for exchange of die       smoothly.



    186                                                                                                                                                                                                                        187
logistics glossary                                                                                                                                                                                                    logistics glossary




Stock/Inventory                          Supply                                  Tariff                                  Group in Japan, to ensure that          Upstream                                based on receipt of retail POS
The quantity of goods between            The delivery of goods by a supplier     The schedule of rates, charges and      every machine in a production           Principal direction of movement         and inventory data. Its goal is to
measuring points in a particular         to a customer in a particular time      related transport conditions.           process always is able to perform       for customer orders which origi-        increase retail inventory turns and
path, expressed in quantitative          period and expressed in quantita-                                               its required tasks.                     nate at point of demand or use, as      reduce stock outs.
and/or financial terms.                   tive or financial terms.                 Terminal                                                                        well as other flows such as return
                                                                                 A place where a modal change            Total Quality Management                product movements, payments for         Vertical integration
Stock control                            Supply Chain Management                 takes place. It is a location on        (TQM)                                   purchases, etc. Opposite of down-       The ownership by the same com-
                                         (SCM)                                   either end of a transportation line     A management strategy aimed at          stream.                                 pany of different functions in a
The systematic regulation of stock
                                         SCM is the process of planning,         including; office, servicing and         embedding awareness of quality in                                               value chain relating to the provi-
levels with respect to time and
                                         implementing, and controlling           handling facilities.                    all organizational processes. TQM                                               sion of a particular good or ser-
quantity.
                                         the operations of the supply chain                                              provides an umbrella under which        V                                       vice. The number of functions
                                         with the purpose to satisfy cus-        Third Party Logistics (3PL)             everyone in the organization can        Value chain                             owned dictates the level of verti-
Stock Keeping Unit (SKU)                                                                                                 strive and create customer satis-
                                         tomer requirements as efficiently        Outsourcing all or much of a com-                                               The linked set of activities within a   cal integration.
Numbering system which makes             as possible. SCM spans all move-        pany’s logistics operations to a spe-   faction.
a product or item distinguishable                                                                                                                                supply chain that actively add val-
                                         ment and storage of raw materi-         cialized company.                                                                                                       Visibility
                                                                                                                                                                 ue to the end product, as opposed
from all others.                         als, work-in-process inventory,                                                 Toyota                                                                          The ability to access or view per-
                                                                                                                                                                 to support or reporting activities.
                                         and finished goods from point-           Throughput                              production system                                                               tinent data or information as it
Stock location System                    of-origin to point-of-consump-          In a production system, through-        A combination of techniques devel-                                              relates to logistics and the sup-
                                                                                                                                                                 Value Stream Mapping
A system where all places within         tion. Importantly, it also includes     put represents the volume of out-       oped at the Toyota Motor Company        (VSM)                                   ply chain.
a warehouse are named and num-           coordination and collaboration          put generated by a resource in a        that focus on setup, lead time and
                                                                                                                                                                 A simple diagram of every step
bered to facilitate storage and          with channel partners, which can        specific period of time. Differently     lot size reduction and systematic
                                                                                                                                                                 involved in the material and infor-
retrieval of stock.                      be suppliers, intermediaries,           put, it can be defined as the rate       ways to improve quality.
                                         third-party service providers,          at which a system generates mon-
                                                                                                                                                                 mation flows needed to bring a           W
                                                                                                                                                                 product from order to delivery.
Stock-out                                and customers.                          ey. The term originates from the        Tracking and tracing
                                                                                 so called Theory of Constraints,
                                                                                                                                                                 The first step is to draw a visual       Warehouse
Merchandise that is requested                                                                                            Monitoring and recording ship-          representation of every step in a
                                                                                 developed by Eliyahu Goldratt.                                                                                          Storage place for products. Prin-
by a customer but is temporarily         Support process                                                                 ment movements from origin to           process, including key data, such       cipal warehouse activities include
unavailable. Also referred to Out        A business process that is not con-                                             destination.                            as the customer demand rate, qual-
                                                                                 Time-To-Market (TTM)                                                                                                    receipt of product, storage, ship-
of Stocks (OOS).                         tributing directly to creating value                                                                                    ity, and machine reliability.
                                                                                 The cycle time between product                                                                                          ment, and order picking.
                                         for the company and its customers,                                              Transit International
                                                                                 conception and fulfillment. Reduc-                                               Next, draw an improved future-
Stocktaking                              but is required in order to perform                                             par Route (TIR)
                                                                                 tion in time-to-market is a signif-                                             state map showing how the prod-         Warehouse
                                         value creating core processes                                                   A set of rules following a customs
A count of products actually held                                                icant competitive advantage in                                                  uct or service could flow if the         Management Systems
                                                                                                                         convention to facilitate the interna-   steps that add no value were elim-
in stock as a basis for verification of   SWOT analysis                           industries with short product life                                                                                      (WMS)
                                                                                                                         tional, European transport of goods     inated. Finally, create and imple-
the stock records and accounts.                                                  cycles.
                                         Analysis of an organization’s                                                   by road with minimal interference       ment a plan for achieving the           The systems used in effectively
                                         strengths, weaknesses, opportu-                                                 under cover of TIR-carnets.             future state.                           managing warehouse business pro-
Supplier                                                                         Total Cost of Ownership
                                         nities and threats and how these                                                                                                                                cesses and direct warehouse activi-
A person, department or organi-                                                  (TCO)                                   Transponder
                                         factors will impact organization-                                                                                       Value-adding activities                 ties, including receiving, putaway,
zation, both inside or outside the       al effectiveness. Often used in         In supply chain management, the         A device (chip) used for identifi-                                               picking, shipping, and inventory
                                                                                 total cost of ownership of the sup-                                             A process or operation that increas-
Company, which delivers goods            formulating strategic and busi-                                                 cation, which automatically trans-                                              cycle counts. Also includes sup-
                                                                                 ply delivery system is the sum of                                               es the worth of a good or service as
and/or services to one or more           ness plans.                                                                     mits certain coded data when actu-                                              port of radio-frequency commu-
                                                                                 all the costs associated with every                                             perceived by the internal or exter-
customers.                                                                                                               ated by a special signal from an        nal customer.                           nications, allowing real-time data
                                                                                 activity of the supply stream. The
                                                                                                                         interrogator.                                                                   transfer between the system and
Supplier evaluation                      T                                       main insight that TCO offers to the
                                                                                                                                                                 Vendor                                  warehouse personnel. They also
                                                                                 supply chain manager is the under-
Evaluation of potential suppliers                                                                                                                                                                        maximize space and minimize
                                         Takt time                               standing that the acquisition cost      U                                       The manufacturer or distributor of
in order to select the most appro-                                                                                                                               an item or product line.                material handling by automating
                                         The available production time divid-    is often a very small portion of the
priate one. Factors normally con-                                                                                                                                                                        putaway processes.
                                         ed by customer demand. For exam-        total cost of ownership.                Unit load
sidered are price level, product         ple, if a widget factory operates 480                                           A load consisting of items or pack-     Vendor-Managed
quality, delivery service, company       minutes per day and customers           Total Productive                        ages held together by one or more       Inventory (VMI)                         Waste (Japanese Muda)
size, location, organization, com-       demand 240 widgets per day, takt        Maintenance (TPM)                       means and shaped or fitted for han-      The practice of retailers making        Any activity that consumes
petences, production facilities and      time is two minutes. Takt is German     A set of techniques, originally         dling, transporting, stacking and       suppliers responsible for determin-     resources but creates no value for
equipment.                               for a precise interval of time.         pioneered by Denso in the Toyota        storing as a unit.                      ing order size and timing, usually      the customer.



   188                                                                                                                                                                                                                              189
logistics glossary




Waybill
Document containing description
of goods that are part of common
carrier freight shipment. Show
origin, destination, consignee/
consignor, and amount charged.
Copies travel with goods and are
retained by originating/delivering
agents. Used by carrier for internal
record and control, especially dur-
ing transit.

Wholesaler
An intermediary between man-
ufacturers and retailers in vari-
ous activities such as promotion,
warehousing and the arranging of
transport and/or distribution.

Wilson lot-size formula
A formula for calculating the opti-
mum order quantity.

Work-In-Process (WIP)
Parts and subassemblies in the
process of becoming completed
finished goods.


Y
Yield
The ratio of usable output from a
process to its input.


Z
Zero defect strategy
A quality philosophy based on the
idea that a level of perfect quality,
as in zero defects, is achievable and
should be a company-wide goal. It
emphasizes the examination of all
factors that lead to quality prob-
lems versus a system that builds
in an average or acceptable qual-
ity level.




    190                                 191
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Drottninggatan 20        Kimmeltie 3               Room 908,
se-252 21 Helsingborg    fi-02100 Espoo            Shanghai Zhongrong Plaza
Sweden                   pl 41                     1088 Pudong South Road
Phone +46-42-37 35 00    fi-02101 Espoo            Pudong New District
Fax +46-42-37 35 10      Finland                   Shanghai 200120
                                                   China
www.establish.se         Phone +358-9-455 92 454
                         Fax +358-9-455 90 202     Phone +86-21-5879 0363
                                                   Fax +86-21-5879 1905
                         www.establish.fi
                                                   www.establish.cn


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