A
ABC ClassificationA method of sorting items into three groups (A, B, and C) based on criteria such as annual dollar volume. Group A includes the most significant items (10–20%), which account for 50–70% of the dollar volume. Group B often represents 20% of the items and about 20% of the dollar volume. Group C comprises around 50% of the items but often only 10–30% of the dollar volume. The principle focuses on tighter management for Group A and less strict control for Group C.
Accounts PayableThe total amount a company owes for goods or services it has received but has not yet paid for.
Accounts ReceivableThe total value of goods delivered or services provided for which payment has not yet been received.
AccreditationThe official recognition by an authoritative body that an individual, organization, or facility meets specific standards of competence, objectivity, and integrity.
Acquisition CostThe expense incurred to purchase one or more units of an item, calculated by multiplying the order quantity by the unit cost.
Activity-Based Budgeting (ABB)A budgeting approach that uses insights into activities and their cost drivers to forecast workloads and resource needs.
Activity-Based Cost AccountingA system of cost accounting that tracks costs by activities performed and assigns them to products, customers, or projects based on cost drivers.
Activity-Based Costing (ABC)A cost accounting model that determines the cost of resources consumed by activities related to specific products, services, or other drivers during a particular period.
Additive ManufacturingAlso known as 3D printing, it is the process of creating objects layer by layer from digital models.
Advanced Planning and Scheduling (APS)A set of tools and methods that use advanced mathematical algorithms to analyze and optimize logistics and manufacturing operations over various timeframes. APS systems manage constraints and business rules to provide solutions for production scheduling, resource planning, demand management, and more. They often generate multiple scenarios for decision-making.
Agile Project ManagementA flexible project management methodology ideal for dynamic environments, such as software development, where outcomes evolve through iterative subprojects rather than fixed plans.
Agile Supply ChainA supply chain designed to adapt quickly and efficiently to unpredictable customer demands by reconfiguring its operations.
AGVsAGVs (Automated Guided Vehicles) are robotic systems used in warehouses and distribution centers for material handling and transportation tasks. Warehouse AGVs are self-driving vehicles that autonomously navigate through warehouse facilities to perform various logistics tasks such as moving inventory, picking orders, and transporting goods without direct human operation. AGVs can significantly improve efficiency, reduce labor costs, and minimize errors in inventory management and order fulfillment processes.
American Society for Quality (ASQ)An educational nonprofit organization established in 1946, dedicated to promoting quality improvement among individuals and organizations worldwide.
Analysis of Variance (ANOVA)A statistical technique used to identify the impact of independent variables on a dependent variable and assess the significance of these relationships.
AnalyticsThe process of analyzing large data sets using statistical methods, mathematics, and software to uncover patterns that aid in decision-making.
ANSIANSI, or American National Standards Institute is a non-profit organization chartered to develop, maintain, and promulgate voluntary US national standards in a number of areas, especially with regards to setting EDI standards. ANSI is the US representative to the International Standards Organization (ISO).
Anti-Bribery RegulationsLaws established by countries to penalize organizations involved in bribery. These regulations are supported by international agreements, such as the OECD Anti-Bribery Convention.
APICSA professional association founded in 1957 to advance operations management through education, certification, and global networking.
Approved Vendor List (AVL)A list of suppliers verified and approved to provide goods or services based on factors like quality, cost, and reliability.
Artificial IntelligenceArtificial Intelligence (AI) refers to the simulation of human intelligence in machines that are programmed to think and learn like humans. Here's a concise definition:
AI is the field of computer science focused on creating intelligent machines that can perform tasks that typically require human intelligence.
ASRSASRS or AS/RS is short for Automated Storage and Retrieval System. These systems are designed to automatically place and retrieve items from defined storage locations in a warehouse.
Augmented RealityTechnology that overlays digital information onto the physical world to enhance user experiences.
Automated Fulfillment SignalsSystems that use real-time data and automated triggers to manage supply chain processes like order placement, fulfillment, and returns, improving efficiency and visibility.
Automated Guided Vehicle System A material-handling system that uses automated vehicles, like carts or pallet trucks, to transport goods without human intervention.
B
BackhaulingThe process of a transportation vehicle returning to its point of origin after delivering goods. Backhauls can involve full, partial, or empty loads. An empty backhaul is referred to as deadheading.
BackorderA customer order that cannot be fulfilled immediately due to insufficient inventory.
BenchmarkingThe practice of comparing an organization’s products, processes, or services against those of another organization recognized for superior performance.
Best-In-ClassA title given to an organization recognized for exceptional performance in a specific process during benchmarking activities.
Best PracticeA consistently effective method or technique that achieves superior results and is often used as a benchmark.
BidA detailed price offer submitted to a prospective customer upon request, typically in competition with other vendors.
Bid EvaluationThe comparison of supplier proposals based on factors like price, quality, lead time, and delivery performance to select the best supplier.
Bid PricingProviding customized pricing for specific jobs instead of applying a standard price for all customers.
Big DataA catch-all term to describe data sets large enough to be analyzed via computer algorithms in order to discover patterns or trends that can be used to enhance human decision-making or automatically cause an automated action to take place. Big data can be structured (data in fixed fields of a database) or unstructured (everything else).
Bill of LaborA detailed list of all labor required for the fabrication, assembly, and testing of a product.
Bill of LadingA legal document issued by a carrier that confirms the receipt of goods for transport, defines shipment terms and conditions, and may serve as a title of ownership, enabling authorized parties to claim the goods at their destination.
Bill of MaterialA comprehensive list of all components, subassemblies, and raw materials needed to create a product, along with the quantities required. It is used with the master production schedule to plan procurement and production.
Bill of ResourcesA detailed account of the capacity and key resources required to produce one unit of an item.
BlockchainA secure, continuously growing chain of data records (blocks) linked using cryptography. Each block contains a reference to the previous block, a timestamp, and transaction details, making retroactive modifications highly resistant without altering all subsequent blocks.
Break BulkSplitting large shipments, such as truckloads or containers, into smaller quantities for distribution. Cargo that is not containerized but instead loaded directly into a ship’s hold is sometimes referred to as Break Bulk.
BufferA stockpile of materials awaiting further processing. This can include raw materials, semi-finished goods, or work backlogs maintained deliberately to ensure workflow continuity.
Buffer ManagementA theory of constraints process where material is expedited into designated buffers (e.g., constraint, shipping, or assembly buffers) to prevent system delays and missed deadlines.
Buffer PenetrationThe proportion of an inventory buffer that has been used, typically expressed as a percentage of the total buffer size.
Bullwhip EffectA supply chain phenomenon where small changes in customer demand at the downstream end lead to large fluctuations in inventory and order quantities upstream. This can cause inventory imbalances.
C
Capacity Bill ProcedureA rough-cut capacity planning technique that accounts for changes in product mix. It uses bill of material and routing data, along with direct labor-hour or machine-hour details for each operation.
Carbon EmissionsA measure of greenhouse gas emissions, including carbon dioxide, used to evaluate the climate impact of operations.
Carbon FootprintThe total carbon emissions generated by a person, organization, building, or operation.
Change ManagementA structured process for overseeing and coordinating changes to business processes, applications, equipment, and procedures.
Circular EconomyAn economic model aimed at reducing waste and maximizing resource use through activities such as design, maintenance, repair, reuse, remanufacturing, recycling, and upcycling.
Cloud ComputingCloud computing is the delivery of computing services, like servers, storage, databases, networking and software, over the Internet or the "cloud."
ConsolidationThe practice of combining shipments to reduce costs or improve transportation efficiency.
Consumer Durable GoodsDurable goods intended for personal use, such as appliances, as opposed to industrial goods like machinery.
Continuous Flow DistributionA pull-based distribution system that aligns product movement with customer demand while minimizing distribution costs.
Continuous ManufacturingA manufacturing method focused on producing a standard products with little variance in high volumes at low costs.
Contract CarrierA transportation provider that offers services under specific agreements for one or a limited number of clients.
Contract LiabilityA documented obligation outlining a company’s financial responsibility for service agreements, warranties, or return policies.
Control PointsStrategic locations in a product’s structure identified in the theory of constraints to simplify planning and scheduling.
Core CompetenciesUnique bundles of skills or knowledge that provide significant value to customers, are difficult for competitors to replicate, and support future growth.
Corporate Social Responsibility A company’s commitment to ethical, social, and environmental accountability as part of its business practices, ensuring compliance with laws and international norms.
Cost of Goods SoldAn accounting metric representing the direct costs—materials, labor, and overhead—associated with producing goods sold.
CRMCRM stands for Customer Relationship Management. It's a technology for managing all your company's relationships and interactions with customers and potential customers. CRM is a strategy and set of tools designed to manage customer data, track customer interactions and automate sales processes. Some of the goals of CRM are to improve business relationships, increase customer retention, and drive sales growth.
Cross-Docking WarehouseA facility where goods are directly transferred from inbound to outbound transportation with minimal storage.
Customs-Trade Partnership Against TerrorismA voluntary program initiated by U.S. Customs that partners with businesses to enhance supply chain and border security for imports. Participants assess their security measures in exchange for potential expedited customs clearance and reduced inspections.
D
DashboardA user-friendly management tool that visually displays key business metrics and objectives.
DatabaseA structured data management system that separates computer programs from data files, reducing redundancy and enabling modifications to data elements without altering existing programs.
Data MiningThe process of analyzing data to uncover hidden patterns or relationships, which can then be used to achieve specific business goals.
Data NormalizationA relational database optimization technique that minimizes data duplication and prevents logical or structural anomalies, often employed when merging multiple datasets.
Data WarehouseA centralized repository of processed data, designed specifically to support decision-making and analytical applications.
Days of SupplyA measure of how long the available inventory will last, calculated by dividing inventory units by daily usage.
Days OutstandingA measurement of an asset or liability expressed in terms of the number of days of sales.
Days Sales OutstandingThe average time, in days, between making a sale and receiving payment from the customer.
Delivery Lead TimeThe duration from receiving a customer order to the delivery of the product.
Delivery WindowA specific timeframe during which goods or services are scheduled for delivery.
Demand ChainThe supply chain as viewed from the customer’s perspective, focusing on entities that influence demand through product or service selection.
Demand-Driven Sales and Operations Planning A planning process that aligns strategic and tactical plans to establish key parameters for a demand-driven operating model, based on business strategy, market intelligence, and key objectives.
Demand-Driven Supply NetworkA supply network where customer purchases trigger real-time information flows and product movement through the system.
Demand Lead TimeThe amount of time potential customers are willing to wait for the delivery of a product or service.
Demand PlanningA comprehensive process combining statistical methods and judgment to estimate demand for products or services.
Design for Manufacture and AssemblyA product development methodology that integrates manufacturing considerations into the design phase to simplify production and assembly processes.
Digital Capabilities ModelA reference framework for supply chain professionals to develop digital supply networks, enabling the transformation of linear supply chains into dynamic, interconnected systems.
Digital Supply ChainA technology-driven approach that leverages digital tools, data, and advanced analytics to improve efficiency, visibility, and agility across the supply chain.
Digital TwinA virtual model of a real-world process, product, or service used for simulation, testing, and monitoring in a digital environment.
Distributed Ledger TechnologyA decentralized data management system where digital records are replicated, shared, and synchronized across multiple locations without a central administrator.
Distribution CentersFacilities used for storing inventory and supporting the movement of goods within the supply chain.
Distribution Requirements PlanningA process to determine inventory replenishment needs at warehouses, using material requirements planning (MRP) logic to calculate supply demands through the network.
Distribution Resource PlanningAn expanded form of Distributed Requirements Planning that includes planning for resources like warehouse space, workforce, and transportation within the distribution system.
Drop ShipA supply chain practice where a supplier ships goods directly to the customer or another entity without the purchasing company physically handling the product.
Dynamic FulfillmentA cross-enterprise system that ensures timely and accurate delivery of goods or services while optimizing logistics through visibility, responsiveness, and collaboration.
Dynamic Inventory ManagementThe real-time use of point-of-sale and inventory data to inform production and inventory decisions across retail and storage locations.
E
EfficiencyA percentage-based measure comparing actual output to the standard expected output. Efficiency evaluates performance against established benchmarks, differing from productivity, which examines output relative to a specific input.
Electronic Data InterchangeThe electronic exchange of standardized business documents—such as purchase orders, shipment notices, and invoices—without paper, streamlining communication between trading partners.
Electronic Product CodesUnique identifiers stored in RFID tags, providing product-specific information to support warranty programs and traceability.
End UserThe ultimate consumer of a product.
Enterprise Resource PlanningA framework for defining and managing business processes to improve planning and control. ERP systems provide extensive databases, including master records, cost and sales data, financial details, and transaction histories, to enhance internal knowledge and competitive advantage.
Environmental Management SystemA framework that enables organizations to assess, monitor, and manage the environmental impact of their activities, products, and services.
ERPERP stands for Enterprise Resource Planning. It's a type of software system used by organizations to manage and integrate core business processes. Here's a concise definition: ERP is an integrated suite of business management applications that allows an organization to use a system of interconnected modules to manage various aspects of its operations, including: Finance and accounting; Human resources; Manufacturing; Supply chain; Procurement; Project management; and Customer relationship management (CRM).
Ethical ProcurementThe integration of ethical considerations—such as supplier practices, fair trade, and corporate responsibility—into procurement processes to ensure integrity and sustainability.
Ethical SourcingA commitment to sourcing products responsibly, ensuring they are produced using sustainable and ethical methods.
Exception ManagementA focused management approach addressing only issues outside predefined thresholds, prioritizing critical matters such as budget deviations or project risks.
Export Trading CompanyA business entity that facilitates international trade by purchasing goods in one country and reselling them in another, handling logistics, transportation, and compliance.
F
Facility Master PlanningA strategic process for defining an organization’s facility requirements, incorporating regulatory, security, cost, and environmental considerations to align with long-term goals.
Federal Aviation AdministrationA U.S. government agency responsible for regulating and overseeing civil aviation, including airspace management and safety.
Federal Energy Regulatory CommissionAn independent U.S. agency overseeing interstate electricity, natural gas, and oil transmission, as well as approving energy infrastructure projects.
Federal Maritime Commission A U.S. Department of Transportation agency regulating the commercial shipping industry to ensure safety and efficiency in maritime transportation.
Federal Trade CommissionA U.S. agency protecting businesses and consumers from unfair practices, including false advertising and anti-competitive behavior.
Final Assembly ScheduleA schedule detailing end-item operations to fulfill customer orders in make-to-order or assemble-to-order environments.
First In, First OutAn accounting method where the oldest inventory is assumed to be used or sold first, regardless of actual physical movement.
Foreign/Free Trade ZoneDesignated areas treated as outside a country’s customs territory, allowing goods to remain duty-free until they enter the domestic market.
Fourth-Party LogisticsA logistics management model where a specialized entity oversees all aspects of a client’s supply chain, coordinating multiple service providers and optimizing end-to-end operations.
Freight ForwarderA logistics intermediary that coordinates transportation, consolidates shipments, and facilitates cost-effective delivery between shippers and carriers.
Freight ForwardingFreight forwarding is a service within the logistics and supply chain management industry that organizes the shipment of goods from one point to another. Freight forwarding is crucial for international trade, helping businesses navigate the complexities of global shipping and logistics.
G
GembaA philosophy encouraging direct observation and engagement with work processes to understand and improve them.
Gemba WalkA managerial practice where leaders visit the workplace to observe operations firsthand, provide coaching, identify areas for improvement, and collaborate with team members to implement corrective actions.
General and Administrative ExpensesCosts reported on an income statement related to general business operations, including management salaries, IT systems, research and development, and other overhead expenses.
Generally Accepted Manufacturing PracticesA set of principles for managing manufacturing operations effectively. These include data accuracy, collaboration between marketing and production, top-level management control, and tools for detailed production planning. It encompasses methodologies such as lean manufacturing, total quality management, and supply chain optimization.
Geographical Information SystemSoftware that collects and analyzes data from GPS satellites to study and optimize maps, routes, and location-based characteristics.
GlobalizationThe interconnectedness of global economies through increased international trade, services, investments, and technological advancements, fostering mutual economic reliance.
Graphical Forecasting MethodsVisual tools, such as graphs and charts, used to identify patterns and trends in historical data to predict future sales or demand.
Green ManufacturingAn environmentally conscious approach to production, aiming to minimize pollution and external costs by incorporating practices like reuse, disassembly, and remanufacturing in product design.
Green ProcurementThe selection of suppliers based on environmental criteria, with an emphasis on sustainable practices and regular audits of supplier operations.
Green SCORAn environmentally focused adaptation of the Supply Chain Operations Reference (SCOR) model, incorporating best practices, metrics, and processes for waste management and sustainability.
Green Supply ChainA supply chain designed to minimize environmental impact, adhere to safety regulations, and communicate sustainability efforts across partners and customers.
H
Harmonized Tariff ScheduleA standardized classification system managed by the U.S. International Trade Commission to determine tariffs for goods crossing international borders.
I
Idle CapacityThe unused capacity in non-critical resources beyond what is needed to support a system’s constraints, including protective and excess capacity.
Idle InventoryUnnecessary inventory within a system, typically consisting of safety stock or surplus items that do not directly support operations.
Indirect CostsExpenses not directly tied to specific tasks or products, such as utilities or administrative overhead.
Industrial RevolutionThe historical shift from manual labor to mechanized production in factories, leading to significant economic and social transformation.
Industry 4.0The integration of advanced technologies, IT, and connectivity into manufacturing to enable customization, innovation, and value chain transformation.
Information System ArchitectureA structured model of an organization’s information flow, addressing functions, coordination requirements, data modeling, and management structures.
Information TechnologyThe tools and systems for collecting, processing, storing, and transmitting data, supporting business planning and operations through hardware, software, and networks.
Institute for Supply ManagementA nonprofit organization supporting purchasing and supply chain professionals with resources, certifications, and industry standards.
Intelligent Supply ChainA supply chain enhanced by emerging technologies like AI and big data to improve efficiency, visibility, and responsiveness to disruptions and customer demands.
InventoryStocks of materials and goods maintained for production, maintenance, or customer service, including raw materials, work-in-progress, and finished products.
Inventory AccountingThe process of valuing and recording inventory using perpetual or periodic methods.
Inventory and Supply OptimizationTechniques for aligning inventory levels and supply flow to maximize efficiency, customer satisfaction, and profitability across the supply chain.
Inventory ManagementThe planning and control of inventory levels to balance supply and demand effectively.
Inventory OptimizationTechnology that identifies optimal inventory strategies to enhance customer service and maximize ROI across the supply chain.
Inventory PlanningStrategies for determining inventory levels, order quantities, and safety stock to meet production and customer needs.
Inventory VelocityThe rate at which inventory moves through a supply chain, measured by turnover frequency.
IoTThe Internet of Things (IoT) is a network comprised of physical objects capable of gathering and sharing electronic information through the Internet.
J
Just In TimeA production philosophy aimed at minimizing waste and improving efficiency by aligning inventory levels with actual demand and striving for zero defects and shorter lead times.
Just-In-Time PurchasingA procurement strategy relying on long-term supplier relationships and contracts to streamline purchasing and ensure consistent quality.
K
KaizenA Japanese term meaning improvement, it focuses on continuous enhancements involving all employees, from management to workers. In manufacturing, it targets eliminating waste in machinery, labor, and production methods.
Kaizen BlitzA short-term, focused improvement effort targeting a specific process or area, often completed within a week
Kaizen EventA structured, time-limited activity where team members work intensively on implementing process improvements, typically as part of a lean manufacturing initiative.
KanbanA just-in-time production system using visual signals, such as cards or boards, to manage workflow and inventory. Originating from Toyota, this pull system ensures that workstations request materials only as needed.
Key Performance IndicatorA measurable value, financial or non-financial, used to track progress toward specific organizational goals.
L
Labor CostThe monetary value of labor used in manufacturing, combined with material and overhead costs to determine total production expenses.
Labor ProductivityA performance metric comparing output per unit of time or per labor hour to an established standard, reflecting worker efficiency.
Last In, First OutAn accounting method for inventory valuation where the most recently acquired items are considered sold or used first, unrelated to the actual physical flow of goods.
Last-Mile DeliveryLast-mile delivery is the final stretch of a package’s journey from a warehouse to a customer’s door. It is increasingly coming under the logistics spotlight. It’s not just about getting items from point A to point B anymore; it’s about doing it quickly, efficiently, and in a way that delights the customer.
Last-Mile DeliveryThe final stage of goods transportation, moving items from a distribution hub to the customer’s doorstep.
Leadership in Energy and Environmental DesignA certification system evaluating a building’s sustainability based on criteria such as site development, water conservation, energy efficiency, material use, and indoor air quality.
Lead TimeThe total time required to complete a process or receive goods, encompassing preparation, processing, transportation, and inspection stages.
Lean Six SigmaA hybrid methodology combining lean’s focus on waste reduction with Six Sigma’s data-driven process improvement.
Lifecycle AnalysisA forecasting method that applies demand patterns from similar products to predict the lifecycle stages of a new product family.
Lifecycle AssessmentAn evaluation of a product’s environmental impact from raw material extraction to disposal, covering production, distribution, use, and end-of-life processes.
Lifecycle CostingAn approach to evaluating alternatives by considering total costs over a product’s lifecycle, including acquisition, operation, and disposal expenses.
LogisticsA supply chain function managing the movement, storage, and handling of goods to ensure timely delivery.
Logistics ChannelThe network of partners involved in storage, transportation, and communication, enabling the flow of goods through the supply chain.
Logistics ManagementThe strategic coordination of forward and reverse goods flows and related data within the supply chain to meet customer needs.
Logistics StrategyA comprehensive plan aligning warehousing, transportation, and information systems with overall business objectives to optimize logistics performance.
M
Make-to-OrderA production model where goods or services are manufactured only after receiving a customer order.
Make-to-StockA production strategy where products are manufactured in advance and stored.
Manufacturing Execution SystemsSoftware and systems that manage and monitor shop floor operations, including equipment control, process tracking, quality data collection, and real-time performance reporting.
Manufacturing Lead TimeThe total time required to produce an item, from order release to shipment or inventory receipt.
Manufacturing Planning and Control SystemAn integrated system managing production planning and execution, covering functions like sales and operations planning, master scheduling, material requirements, capacity planning, and real-time shop floor control.
Manufacturing Resource PlanningA comprehensive planning method addressing all manufacturing resources, integrating business, production, material, and capacity plans with financial forecasting and reporting.
Market-Driven Demand ManagementThe process of using real-time market signals to shape and respond to demand, employing strategies such as price optimization, promotions, and digital engagement.
Master BudgetA consolidated financial plan encompassing all organizational budgets, projecting cash flow, operational results, and a balance sheet for the budget period.
Master ContractA foundational agreement outlining terms for future purchases or transactions over a set period. Also, a collective bargaining agreement between an employer and a union.
Master DataCore enterprise information, such as product details, customer and supplier information, and organizational structures, essential for business operations.
Master Data ManagementA coordinated process ensuring enterprise data is accurate, consistent, complete, and accessible across systems and stakeholders.
Master PlanningA set of activities, including demand forecasting, production planning, and master scheduling, aimed at aligning resources with organizational goals.
Master ScheduleA comprehensive schedule integrating forecasts, customer orders, inventory projections, and production plans to meet organizational goals and constraints.
Material FlowThe coordinated movement, storage, and handling of materials and products throughout production, warehousing, and distribution processes.
Maverick SpendingUnauthorized purchases made outside of established procurement processes and from non-approved suppliers.
Milk RunA logistics strategy where a single vehicle collects smaller shipments from multiple suppliers, consolidating them into a single delivery to the customer.
Modular Bill of MaterialA planning tool organizing product components into modules or options, commonly used for products with numerous customizable features.
Monte Carlo SimulationA modeling technique using random sampling and probability distributions to analyze and predict outcomes in complex systems.
Multinational StrategyAn approach to competing globally by leveraging cross-country coordination to achieve cost efficiencies, economies of scope, and competitive advantages.
N
National Stock NumberA unique identifier assigned to items for inventory management within the U.S. supply system.
Network DesignThe strategic design of supply chain facilities and information flows to meet organizational goals like efficiency and responsiveness.
Network OptimizationThe process of analyzing supply chain structures to determine the most cost-effective locations for manufacturing and warehouse facilities while reducing total costs.
Nongovernmental OrganizationA nonprofit entity operating independently of government, typically addressing social, environmental, or humanitarian objectives.
O
Occupational Safety and Health ActA U.S. law applicable to employers involved in interstate commerce, aimed at ensuring safe and healthy workplaces by enforcing safety standards outlined in the act.
Ocean Bill of LadingA contract between a shipper and an ocean carrier outlining the terms for transporting goods.
Omnichannel NetworkA unified sales approach that integrates all channels—online, mobile, in-store, and others—to deliver a seamless customer experience consistent with the brand’s identity.
Omnichannel Order FulfillmentThe process of managing and completing customer orders across multiple service points (warehouses, stores, suppliers) using advanced systems to optimize speed, cost, and customer satisfaction.
On-time DeliveryA performance metric tracking the percentage of customer orders received by the promised date.
On-time In-fullA delivery performance measure where a target percentage is set, assessing whether deliveries meet deadlines and fulfill order requirements completely.
Order ManagementThe oversight of processes related to customer, manufacturing, and purchase orders.
Organizational DesignStructuring an organization to align with its strategic goals and mission, providing a framework for operational and managerial activities.
OutsourcingEngaging external suppliers to perform tasks previously managed in-house.
Overall Value at RiskThe total potential monetary loss calculated by multiplying the likelihood of risks by their financial impact.
P
Pareto’s LawA principle stating that a small fraction (e.g., 20%) of a group accounts for the majority (e.g., 80%) of its value or impact, as seen in inventory management.
Perfect OrderAn order meeting all criteria for accuracy, timeliness, completeness, and cost.
PESTLE AnalysisA strategic tool evaluating political, economic, social, technological, legal, and environmental factors affecting an organization, often paired with SWOT analysis.
Pick-to-LightA system using illuminated indicators at storage locations to guide workers during order picking.
Pick-to-TrailerAn order-picking method allowing items to be transferred directly from storage to a trailer without additional verification steps.
Pick-to-Voice SystemA warehouse picking method where workers follow verbal instructions to locate and retrieve items.
Planning HorizonThe time frame covered by a plan, ranging from short-term schedules to long-term capacity planning.
Predictive MaintenancePreventive maintenance that uses testing and data analysis to anticipate when servicing will be needed.
Private LabelProducts created by one company but branded and sold by a retailer.
ProcurementActivities involved in planning, purchasing, and managing inventory, as well as receiving and inspecting goods.
Product Data ManagementA system for tracking product configurations, revisions, and design histories, streamlining design and manufacturing processes.
Production ManagementPlanning and controlling the production process to convert inputs into finished goods.
Production PlanThe output schedule from production planning, detailing manufacturing targets typically stated in monthly rates for product families.
Production PlanningDeveloping tactical plans to balance production capabilities with sales forecasts, aligning with business objectives.
Product Lifecycle ManagementManaging the creation, use, and maintenance of product information throughout its lifecycle to meet customer needs.
Pull SystemA demand-driven approach where production or material replenishment occurs only when needed.
PurchasingManaging the acquisition of materials, supplies, and services for an organization.
Purchasing AgentAn individual authorized to procure goods and services on behalf of a company.
Purchasing Lead TimeThe total time required to acquire a purchased item, including preparation, supplier time, transportation, and inspection.
Push SystemA production or inventory system where materials are issued or manufactured based on a predefined schedule.
Q
Qualified SuppliersSuppliers that meet specific qualification standards and are approved for future business engagements.
R
Radio Frequency IdentificationA technology using electronic tags to store item data, retrievable via radio frequencies without requiring direct visibility or proximity.
Rate-Based SchedulingA scheduling approach that aligns production with demand rates (daily, weekly, or monthly).
Request for ProposalA document soliciting vendor responses for solutions when functional needs are defined but no specific product is predetermined.
Request for QuoteA document soliciting price quotes from vendors for a selected product or service.
Reverse LogisticsA supply chain process dedicated to moving products and materials backward for returns, repairs, remanufacturing, or recycling.
Reverse Supply ChainThe management of goods moving from the point of consumption back to origin for purposes like repair, recycling, or disposal.
Risk ManagementThe process of identifying, assessing, and addressing risks to minimize negative impacts and capitalize on opportunities.
Risk ToleranceThe level of risk an organization or stakeholder is willing to accept to achieve its objectives.
Robotic Process AutomationThe deployment of software robots to mimic human actions in executing predefined, repetitive business processes.
RoboticsThe use of machines or robots, operated manually or through automation, to perform tasks.
S
Sales and Operations PlanningA monthly process aligning sales, marketing, and supply chain plans to provide a unified strategy that balances supply, demand, and resource allocation over a strategic horizon.
ScorecardA tool summarizing key performance indicators (KPIs) to evaluate and monitor organizational or supplier performance against standards.
SCOR-Lean SigmaAn integrated methodology combining SCOR, Lean principles, and Six Sigma tools to address specific supply chain challenges.
SCOR MetricsPredefined metrics within SCOR used to evaluate supply chain performance. Level 1 metrics assess overall health, Level 2 metrics diagnose specific issues, and Level 3 metrics provide detailed diagnostics.
SCOR Performance AttributeCategories of metrics within SCOR—reliability, responsiveness, agility, cost, and asset management efficiency—used to guide strategic goals.
SCOR ProcessesStandardized descriptions of management practices and their relationships as outlined in the SCOR framework.
SeasonalityRecurring patterns of demand fluctuations within a calendar year, such as seasonal spikes or declines.
Serpentine PickingAn efficient picking method where workers collect items from both sides of an aisle in a continuous flow, reducing travel time.
Service-Level AgreementA formal document outlining performance expectations between a service provider and customer, detailing service terms, targets, and responsibilities.
Shipper’s Export DeclarationA document prepared by exporters detailing shipment specifics like value, weight, and destination, required by government authorities.
ShippingThe process of preparing goods for transport, including tasks like packaging, labeling, weighing, and loading.
Shipping DocumentsThe paperwork required for domestic or international transportation of goods.
Single SourcingA strategic procurement method where a company partners with a single supplier to foster quality, reliability, and cooperative relationships.
SIPOCAn acronym for Supplier, Input, Process, Output, Customer—a tool for mapping processes and identifying key elements.
Smart ContractsSelf-executing contracts stored on blockchain technology, ensuring compliance with terms through automated processes and secure validation.
Smart LabelA label embedded with RFID technology for enhanced tracking and data retrieval.
Software-as-a-ServiceA subscription-based software delivery model where applications are hosted online and accessed via web browsers, reducing the need for on-premises infrastructure.
Spend AnalysisA process of reviewing organizational spending patterns to identify cost-saving opportunities or quality improvements.
Spend ManagementThe practice of overseeing and optimizing company expenditures on goods and services, incorporating processes like outsourcing, procurement, and supply chain management.
StakeholderAny individual or group affected by or interested in an organization’s activities, including employees, customers, suppliers, governments, and investors.
Statement of WorkA project document outlining objectives, deliverables, success criteria, and contingency plans, serving as a foundation for planning and validation.
Strategic PlanningThe process of creating long-term goals and strategies to achieve organizational objectives.
Supplier Relationship ManagementA strategic approach to managing interactions with suppliers to streamline procurement processes, enhance supplier performance, and foster collaboration.
Supply ChainA network of suppliers and partners collaborating to deliver products from raw materials to end customers, encompassing the flow of goods, information, and finances.
Supply Chain Control TowersA centralized system offering end-to-end supply chain visibility, enabling stakeholders to track inventory, identify supply-demand mismatches, and proactively manage disruptions or excess inventory.
Supply Chain DesignThe strategic planning of supply chain structure, including partner selection, facility locations, transportation modes, product distribution, and supporting information systems.
Supply Chain ExecutionSoftware solutions focused on efficiently managing procurement, manufacturing, warehousing, and transportation processes within a supply chain.
Supply Chain ManagementThe coordinated management of supply chain activities to create value, build a competitive infrastructure, synchronize supply with demand, and monitor performance on a global scale.
Supply Chain MasteryAn organization’s ability to achieve superior results through exceptional supply chain management practices, including collaboration, risk management, data analytics, and technology utilization.
Supply Chain NetworkThe interconnected entities within a supply chain that manage the flow of materials, information, and finances from raw materials to end consumers.
Supply Chain Operations Reference ModelA standardized framework by the Supply Chain Council and ASCM for analyzing and improving supply chain performance, covering processes like planning, sourcing, making, delivering, returning, and enabling.
Supply Chain OptimizationThe use of simulations and data analysis to identify the most effective supply chain configurations.
Supply Chain PlanningThe development of strategies and policies governing marketing, inventory, replenishment, production, and overall supply chain operations to meet business objectives.
Supply Chain ResilienceThe capability to anticipate, mitigate, and recover from disruptions to ensure consistent supply chain performance.
Supply Chain Risk ManagementThe systematic approach to identifying, assessing, and mitigating risks to minimize disruptions and safeguard supply chain performance.
Supply Chain Risk MonitoringThe continuous observation of risk conditions to identify changes in the likelihood or impact of potential disruptions.
Supply Chain VisibilityThe transparent sharing of information among supply chain partners to improve decision-making and responsiveness to changes.
Supply Network DesignThe optimization of supply networks to meet service level goals at the lowest total cost.
SWOT AnalysisA strategic framework for evaluating an organization’s strengths, weaknesses, opportunities, and threats to inform planning and decision-making.
T
Tactical PlanningThe creation of actionable plans, such as production or sales plans, that align with strategic objectives and guide operational decisions.
TariffA government-imposed tax or duty on imported or exported goods.
Theory of ConstraintsA management philosophy focusing on identifying and addressing the key constraint(s) limiting a system’s performance to improve outcomes.
Theory of Constraints AccountingAn accounting approach emphasizing throughput, inventory, and operating expense to provide accurate cost insights and prioritize constraint management.
Third-Party LogisticsA partnership model where a third party provides logistics and delivery services, often offering supply chain expertise and operational support.
Total Cost to ServeThe comprehensive calculation of all supply chain costs to deliver products and services to customers.
Total Productive MaintenanceAn operator-led approach to equipment maintenance aimed at increasing flexibility, reducing material handling, and promoting continuous process flows.
Total Quality ControlAn integrated effort across all organizational functions to ensure goods and services meet or exceed customer expectations.
Total Quality ManagementA holistic management approach focusing on continuous improvement and customer satisfaction through organization-wide participation and quality practices.
Toyota Production SystemA lean manufacturing methodology emphasizing efficiency, waste reduction, and just-in-time production, originally developed by Toyota.
Transportation ManagementThe planning, execution, and oversight of transportation assets and services to optimize shipping processes from origin to destination.
U
Uniform Commercial CodeA standardized set of legal guidelines that regulate commercial transactions across the United States.
V
Vendor-Managed InventoryA supply chain strategy where the supplier takes responsibility for monitoring and replenishing the customer’s inventory.
Vertical MarketplaceAn online platform designed to connect buyers and sellers within a specific industry.
VisibilityThe capability to access and view critical information throughout a facility or supply chain.
Voice of the CustomerThe direct input from customers, expressed in their own words, regarding the desired features and functions of products or services.
W
Warehouse Management SystemA software solution designed to optimize warehouse operations, including inventory storage and workflow management.
Warehouse ReceivingA critical process in warehouse operations that verifies the accurate receipt of products, including correct quantity, condition, and timing.
WarehousesFacilities used for storing inventory and supporting the movement of goods within the supply chain.
What-If AnalysisAn evaluation method that explores the potential impacts of various changes, such as adjustments to forecasts, inventory levels, or production plans.
What-If SimulationA tool used within manufacturing or enterprise resource planning systems to conduct what-if analyses by modeling different scenarios.
Z
Zero-Based BudgetingA budgeting approach that requires all expenses to be justified from scratch, rather than being based on previous budgets, ensuring a fresh evaluation of expenditures each cycle.
Zone PickingAn order-picking strategy that divides a storage area into zones, with workers assigned to specific zones to enhance efficiency.
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3PLOutsourcing all or much of a company’s logistics operations to a specialized firm which provides multiple logistics services which are integrated or bundled together. Firms facilitate the movement of parts and materials from suppliers to manufacturers, and finished products from manufacturers, and finished products from manufacturers to distributors and retailers. Among the services provided are transportation, warehousing, cross docking, inventory management, packaging, and freight forwarding.
