Capable to Promise (CTP): A technique used to determine if product can be assembled and shipped by a specific date. Component availability throughout the supply chain, as well as available materials are checked to determine if delivery of a particular product can be made. The process of committing orders against available capacity as well as inventory. Capable-to-promise is used to determine when a new or unscheduled customer order can be delivered. Capable-to-promise employs a finite-scheduling model of the manufacturing system to determine when an item can be delivered. It includes any constraints that might restrict the production, such as availability of resources, lead times for raw materials or purchased parts, and requirements for lower-level components or subassemblies. The resulting delivery date takes into consideration production capacity, the current manufacturing environment, and future order commitments. The objective is to reduce the time spent by production planners in expediting orders and adjusting plans because of inaccurate delivery-date promises.
Capacity: The physical facilities, personnel and process available to meet the product or service needs of customers. Capacity generally refers to the maximum output or producing ability of a machine, a person, a process, a factory, a product, or a service. Also see: Capacity Management
Capacity Management: The function of establishing, measuring, monitoring, and adjusting limits or levels of capacity in order to execute all manufacturing schedules.
Capacity Planning: Assuring that needed resources (e.g., manufacturing capacity, distribution center capacity, transportation vehicles, etc.) will be available at the right time and place to meet logistics and supply chain needs.
Carload Lot: A shipment that qualifies for a reduced freight rate because it is greater than a specified minimum weight. Since carload rates usually include minimum rates per unit of volume, the higher LCL (less than carload) rate may be less expensive for a heavy but relatively small shipment.
Carrier: A firm, which transports goods or people via land, sea or air.
Cellular Manufacturing – A manufacturing process that produces families of parts within a single line or cell of machines and workstations operated by people who only work within that cell.
Certificate of Compliance: A supplier’s certification that the supplies or services in question meet specified-requirements.
Change Management: The business process that coordinates and monitors all changes to the business processes and applications operated by the business as well as to their internal equipment, resources, operating systems, and procedures. The change management discipline is carried out in a way that minimizes the risk of problems that will affect the operating environment and service delivery to the users.
Changeover: Process of making necessary adjustments to change or switchover the type of products produced on a manufacturing line. Changeovers usually lead to downtime and for the most part companies try to minimize changeover time to help reduce costs.
Closed-loop MRP: A system built around material requirements planning that includes the additional planning processes of production planning (sales and operations planning), master production scheduling, and capacity requirements planning. Once this planning phase is complete and the plans have been accepted as realistic and attainable, the execution processes come into play. These processes include the manufacturing control processes of input-output (capacity) measurement, detailed scheduling and dispatching, as well as anticipated delay reports from both the plant and suppliers, supplier scheduling, and so on. The term closed loop implies not only that each of these processes is included in the overall system, but also that feedback is provided by the execution processes so that the planning can be kept valid at all times.
Component: Material that will contribute to a finished product but is not the finished product itself. Examples would include tires for an automobile, power supply for a personal computer, or a zipper for a ski parka.
CAD/CAM – The integration of computer-aided design and computer-aided manufacturing to achieve automation from design through manufacturing.
Computer Aided Design (CAD) - The use of computers to automate the process of creating and storing engineering drawings. CAD programs complete the layout, geometric transformations, and cross-section views of a part.
Computer Aided Manufacturing (CAM) - The use of computers to program, direct, and control production equipment in the fabrication of manufactured items. This includes activities such as tool design, Nesting, and Post Processors, etc.
Computer Aided Engineering (CAE) - Computer-aided engineering utilizes advanced computer graphic simulation technologies to replace the long complex product prototype development Process. The CAE approach to mechanical product development emphasizes the use of analytical modeling and analysis software. CAE software produces three-dimensional graphic simulations that replace fabricated prototypes with initial concept layouts. These computer generated layouts are used to perform the following prototype testing/analysis evaluations prior to initial product launch: interference checking, weight and inertia distributions, stability, noise and vibration, load flow, structural analysis, durability and life estimates, ability to manufacture, serviceability, and maintainability. MCAE software products include 3D Solid Modeling, Finite Element Modeling/ Analysis, System Dynamics, and Testing.
Computer Aided Process Planning (CAPP) – Computer Aided Process planning is a management framework for data that assists the functions of process planning in manufacturing.
Computer Integrated Manufacturing (CIM) – Computer Integrated Manufacturing is a theory in which a manufacturing process is automatically controlled and executed through a computerized system of technology.
Configure/Package-to-Order: A process where the trigger to begin manufacture, final assembly or packaging of a product is an actual customer order or release, rather than a market forecast. In order to be considered a Configure-to-Order environment, less than 20% of the value-added takes place after the receipt of the order or release, and virtually all-necessary design and process documentation is available at time of order receipt.
Conformance: An affirmative indication or judgment that a product or service has met the requirements of a relevant specification, contract, or regulation. Synonym: Compliance.
Conformance Testing – The running of standard set of tests for determining weather a product meets a set of standards and/or specifications.
Constraint: Any element or factor that prevents a system from achieving a higher level of performance with respect to its planned objective.
Consuming the Forecast: The process of reducing the forecast by customer orders or other types of actual demands as they are received. The adjustments yield the value of the remaining forecast for each period.
Continuous Flow Distribution (CFD): The streamlined pull of products in response to customer requirements while minimizing the total costs of distribution.
Continuous Improvement (CI): A structured measurement driven process that continually reviews and improves performance.
Continuous Process Improvement (CPI): A never-ending effort to expose and eliminate root causes of problems; small-step improvement as opposed to big-step improvement.
Core Competency: Bundles of skills or knowledge sets that enable a firm to provide the greatest level of value to its customers in a way that is difficult for competitors to emulate and that provides for future growth. Core competencies are embodied in the skills of the workers and in the organization. They are developed through -collective -learning, communication, and commitment to work across levels and functions in the organization and with the customers and suppliers. For example, a core competency could be the capability of a firm to coordinate and harmonize diverse production skills and multiple technologies. To illustrate, advanced casting processes for making steel require the integration of machine design with sophisticated sensors to track temperature and speed, and the sensors require mathematical modeling of heat transfer. For rapid and effective development of such a process, materials scientists must work closely with machine designers, software engineers, process specialists, and operating personnel. Core competencies are not directly related to the product or market.
Cost Accounting: The branch of accounting that is concerned with recording and reporting business operating costs. It includes the reporting of costs by departments, activities, and products.
Cost Driver Analysis: In cost accounting, the examination, quantification, and explanation of the effects of cost drivers. The results are often used for continuous improvement programs to reduce throughput times, improve quality, and reduce cost. The marine insurance, and the freight charges on an ocean shipment of goods.
Cost Management: The management and control of activities and drivers to calculate accurate product and service costs, improve business processes, eliminate waste, influence cost drivers, and plan operations. The resulting information will have utility in setting and evaluating an organization’s strategies.
Cost of Goods Sold (COGS): The amount of direct materials, direct labor, and allocated overhead associated with products sold during a given period of time, determined in accordance with Generally Accepted Accounting Principles (GAAP)
Cp – A widely used process capability index, expressed as: C p = upper control limit – lower control limit divided by 6s, where s represents the standard deviation.
Cpk – A widely used process capability index. It is expressed as: C pk = m - nearer specification divided by 3s, where m is the mean and s is the standard deviation.
Cross Docking: A distribution system in which merchandise received at the warehouse or distribution center is not put away, but instead is readied for shipment to retail stores. Cross docking requires close synchronization of all inbound and outbound shipment movements. By eliminating the put-away, storage and selection operations, it can significantly reduce distribution costs.
Cumulative Available-to-Promise: A calculation based on the available-to-promise (ATP) figure in the master schedule. Two methods of computing the cumulative available-to-promise are used, with and without look ahead calculation. The cumulative with look ahead ATP equals the ATP from the previous period plus the MPS of the period minus the backlog of the period minus the sum of the differences between the backlogs and MPS of all future periods until, but not to include, the period where point production exceeds the backlogs. The cumulative without Look ahead procedure equals the ATP in the previous period plus the MPS, minus the backlog in the period being considered. Also see: Available-to-Promise
Cumulative Lead Time: The total time required to source components, build and ship a product.
Customer Order – An order for a particular product or a number of products from a customer.
Customer Order Servicing System – An automated system for order entry where orders are keyed into a local terminal and a bill-of-material translator converts the catalog end item ordering numbers into required manufacturing part numbers and due dates for the MRP system.
Customer Relationship Management (CRM) - Ranges from simple off the shelf contact management products to high-end interactive systems that combine sales, marketing, and executive information systems that provide: product configuration, quote and proposal management, and marketing tools. Some CRM systems include complex pricing, promotions, commission plans, and team selling methods. Enterprise-level CRM solutions installed at large companies with many employees have call center help desk and field service capabilities.
Cycle Time: The amount of time it takes to complete a business process.
Data Collection – The act of transferring information from remote devices to a central computer location in an organized format.
Decision Support System (DSS): Software that speeds access and simplifies data analysis, queries, etc. within a database management system.
Demand – A need for a particular product or component.
Demand Flow Manufacturing (FLOW) - Essentially a mixed-model production method that operates on production lines that manufacture up to a specific quantity of a particular product each day. These lines are designed to be able to produce unlimited variations of product on any given day. Flow lines achieve this level precise level of mixed-model production because they are designed to ensure that each product is built within a specific amount of time (Takt Time). In this method, each product moves through the production process at a steady rate from beginning to end without stopping. This synchronized movement of the product between workstations is similar to the JIT-Kanban, and Constraint based, Drum Buffer Rope methods.
Demand Planning: The process of identifying, aggregating, and prioritizing, all sources of demand for the integrated supply chain of a product or service at the appropriate level, horizon and interval. The sales forecast is comprised of the following concepts: The sales forecasting level is the focal point in the corporate hierarchy where the forecast is needed at the most generic level, i.e. Corporate forecast, Divisional forecast, Product Line forecast, SKU, SKU by Location. The sales forecasting time horizon generally coincides with the time frame of the plan for which it was developed, i.e. Annual, 1-5 years, 1- 6 months, Daily, Weekly, Monthly. The sales forecasting time interval generally coincides with how often the plan is updated, i.e. Daily, Weekly, Monthly, and Quarterly.
Demand Planning - The function of recognizing all demands for products and services and services to support the marketplace. Demand planning encompasses the activities of forecasting, order entry, order promising, determining outside warehouse requirements, production balancing, and spare parts. Discrete Manufacturing - Production of distinct products
Demand Planning Systems: The systems that assist in the process of identifying, aggregating, and prioritizing, all sources of demand for the integrated supply chain of a product or service at the appropriate level, horizon and interval.
Demand Pull: The triggering of material movement to a work center only when that work center is ready to begin the next job.
Deming Circle: The concept of a continuously rotating wheel of plan-do-check-action (PDCA) used to show the need for interaction among market research, design, production, and sales to improve quality. Also see: Plan-Do-Check-Action
Dependent Demand – Demand that is directly related to or derived from the bill of material structure for other items or end products.
Design For Manufacture / Assembly (DFMA): A product development approach that involves the manufacturing function in the early stages of product design to ensure ease of manufacturing and assembly.
Design for Quality – A product design approach that uses quality measures to capture the extent to which the design meets the needs of the target market, as well as design performance requirements.
Design of Experiments (DOE): 1) A process for structuring statistically valid studies in any science. 2) A quality management technique used to evaluate the effect of carefully planned and controlled changes to input process variables on the output variable. The objective is to improve production processes.
Deterministic Models: Models where no uncertainty is included, e.g., inventory models without safety stock considerations.
Direct Cost: A cost that can be directly traced to a cost object since a direct or repeatable cause- and-effect relationship exists. A direct cost uses a direct assignment or cost causal relationship to transfer costs. Also see: Indirect Cost, Tracing
Direct Production Material: Material that is used in the manufacturing/content of a product (example: Purchased parts, solder, SMT glues, adhesives, mechanical parts etc. Bill-of- Materials parts, etc.)
Discrete Available-to-Promise: A calculation based on the available-to-promise figure in the master schedule. For the first period, the ATP is the sum of the beginning inventory plus the
MPS quantity minus backlog for all periods until the item is master scheduled again. For all other periods, if a quantity has been scheduled for that time period then the ATP is this quantity minus all customer commitments for this and other periods until another quantity is scheduled in the MPS. For those periods where the quantity scheduled is zero, the ATP is zero (even if deliveries have been promised). The promised customer commitments are accumulated and shown in the period where the item was most recently scheduled. Also see: Available-to- Promise
Discrete Manufacturing: Discrete manufacturing processes create products by assembling unconnected distinct parts as in the production of distinct items such as automobiles, appliances, or computers.
Discrete Manufacturing – A production process that produces individual items in small lots or batches.
Distribution: Outbound logistics, from the end of the production line to the end user. 1) The activities associated with the movement of material, usually finished goods or service parts, from the manufacturer to the customer. These activities encompass the functions of transportation, warehousing, inventory control, material handling, order administration, site and location analysis, industrial packaging, data processing, and the communications network necessary for effective management. It includes all activities related to physical distribution, as well as the return of goods to the manufacturer. In many cases, this movement is made through one or more levels of field warehouses. Synonym: Physical Distribution. 2) The systematic division of a whole into discrete parts having distinctive characteristics.
Distribution Requirements Planning (DRP): A system of determining demands for inventory at distribution centers and consolidating demand information in reverse as input to the production and materials system.
Distribution Resource Planning (DRP II): The extension of distribution requirements planning into the planning of the key resources contained in a distribution system: warehouse space, workforce, money, trucks, freight cars, etc.
Dock-to-Stock: A program by which specific quality and packaging requirements are met before the product is released. Pre-qualified product is shipped directly into the customer's inventory. Dock-to-stock eliminates the costly handling of components, specifically in receiving and inspection and enables product to move directly into production.
Document Management – Provides storage, retrieval and manipulation of documents in a compact space.
Drop Ship: To take the title of the product but not actually handle, stock, or deliver it, e.g., to have one supplier ship directly to another or to have a supplier ship directly to the buyer’s customer.
Drum-Buffer-Rope (DBR): In the theory of constraints, the generalized process used to manage resources to maximize throughput. The drum is the rate or pace of production set by the system’s constraint. The buffers establish the protection against uncertainty so that the system can maximize throughput. The rope is a communication process from the constraint to the gating operation that checks or limits material released into the system to support the constraint.