Economic Order Quantity (EOQ): An inventory model that determines how much to order by determining the amount that will meet customer service levels while minimizing total ordering and holding costs.
EDI Standards: Criteria that define the data content and format requirements for specific business transactions (e.g. purchase orders). Using standard formats allows companies to exchange transactions with multiple trading partners easily. Also see: American National Standards Institute, Uniform Code Council.
Electronic Commerce (EC): Also written as e-commerce. Conducting business online. In the traditional sense of selling goods, it is possible to do this electronically because of certain
E-COMMERCE - Automation of many aspects of the buyer/seller relationship that culminates into a "digital supply chain" through use of Internet technology. Internet technologies have lead to numerous changes in manufacturing. First and foremost is inter-company collaboration between buyers and sellers. This collaboration works to take unnecessary inventory out of the supply chain, and fosters make to order manufacturing. Electronic commerce systems are less concerned with planning materials, and more concerned with taking, fulfilling, and tracking orders.
Electronic Data Interchange (EDI) - The paperless electronic exchange of trading documents, such as purchase orders shipment authorizations, advanced shipment notices, and receipt acknowledgements.
End Item – A competed product ready for delivery to a customer, or stocked for sale.
Engineering Change: A revision to a drawing or design released by engineering to modify or correct a part. The request for the change can be from a customer or from production, quality control, another department, or a supplier. Synonym: Engineering Change Order.
Engineering Characteristics – The design attributes and technical features designed into a product.
Engineering Drawings – The hard copy detail drawing that showing dimensional characteristics of a part or group of parts that make up a completed product.
Engineering Standard – Design or test guidelines intended to assure the design, production, and test of a part, component, or product meets predefined standards and performance specifications.
Engineer to Order - Products whose customer specifications require unique engineering design or significant customization. Each customer order requires a cost estimate, and special pricing. These orders generally result in a unique set of components, bills of material, and production routings.
Engineering Change Order (ECO): A documented and approved revision to a product or process specification.
Engineer-to-Order: A process in which the manufacturing organization must first prepare (engineer) significant product or process documentation before manufacture may begin.
Enterprise Applications - All software outside the applications traditionally integrated within ERP systems. These enterprise applications generally consist of: forecast, product configurations, EDI, etc. Enterprise Resource Planning (ERP) - An accounting oriented information system for identifying and planning the enterprise wide resources needed to take, make, ship, and account for customer orders. In the simplest terms, enterprise resource planning systems use database technology and a user interface to manage the information related to a company's business, including customer, product, employee, and financial data.
Enterprise Application Integration (EAI): A computer term for the tools and techniques used in linking ERP and other enterprise systems together. Linking systems is key for e-business. Gartner say 'firms implementing enterprise applications spend at least 30% on point-to-point interfaces'.
Enterprise Resource Planning (ERP) System: A class of software for planning and managing “enterprise-wide” the resources needed to take customer orders, ship them, account for them and replenish all needed goods according to customer orders and forecasts. Often includes electronic commerce with suppliers. Examples of ERP systems are the application suites from SAP, Oracle, PeopleSoft and others.
Expert System – Software that applies knowledge and reasoning techniques that involve rules and heuristics to solve problems normally requiring the abilities of human experts.
Exponential Smoothing Forecast: In forecasting, a type of weighted moving average forecasting technique in which past observations are geometrically discounted according to their age. The heaviest weight is assigned to the most recent data. The smoothing is termed exponential because data points are weighted in accordance with an exponential function of their age. The technique makes use of a smoothing constant to apply to the difference between the most recent forecast and the critical sales data, thus avoiding the necessity of carrying historical sales data. The approach can be used for data that exhibit no trend or seasonal patterns. Higher order exponential smoothing models can be used for data with either (or both) trend or seasonality
External Factory: A situation where suppliers are viewed as an extension of the firm’s manufacturing capabilities and capacities. The same practices and concerns that are commonly applied to the management of the firm’s manufacturing system should also be applied to the management of the external factory.
Failure Modes Effects Analysis (FMEA): A pro-active method of predicting faults and failures so that preventive action can be taken.
Feeder Workstations – An area of manufacturing whose products feed a subsequent work area.
Final Assembly: The highest level assembled product, as it is shipped to customers. This terminology is typically used when products consist of many possible features and options that may only be combined when an actual order is received. Also see: End Item, Assemble to Order
Final Assembly Schedule (FAS): A schedule of end items to finish the product for specific customers’ orders in a make-to-order or assemble-to-order environment. It is also referred to as the finishing schedule because it may involve operations other than just the final.
Finished Goods Inventory (FG or FGI): Products completely manufactured, packaged, stored, and ready for distribution. Also see: End Item
Finite Forward Scheduling: An equipment scheduling technique that builds a schedule by proceeding sequentially from the initial period to the final period while observing capacity limits. A Gantt chart may be used with this technique. Also see: Finite Scheduling
Finite Scheduling: A scheduling methodology where work is loaded into work centers such that no work center capacity requirement exceeds the capacity available for that work center. See: drum-buffer-rope, finite forward scheduling.
First In, First Out (FIFO): Warehouse term meaning first items stored are the first used. In accounting this tem is associated with the valuing of inventory such that the latest purchases are reflected in book inventory. Also see: Book Inventory
Fixed Costs: Costs, which do not fluctuate with business volume in the short run. Fixed costs include items such as depreciation on buildings and fixtures.
Fixed Order Quantity: A lot-sizing technique in MRP or inventory management that will always cause planned or actual orders to be generated for a predetermined fixed quantity, or multiples thereof if net requirements for the period exceed the fixed order quantity.
Flexible Manufacturing System (FMS) – A group of computer controlled machine tools and operator work stations, where the tools and workstations are interconnected by a central computer control system, and capable of rapid changeovers between various dissimilar parts and components.
Flow Process Chart – A graphic, symbolic representation of the work performed or to be performed on a product as it passes through some or all of the stages of a process.
Forecast: An estimate of future demand. A forecast can be constructed using quantitative methods, qualitative methods, or a combination of methods, and it can be based on extrinsic (external) or intrinsic (internal) factors. Various forecasting techniques attempt to predict one or more of the four components of demand: cyclical, random, seasonal, and trend.
Forecast Accuracy: Measures how accurate your forecast is as a percent of actual units or dollars shipped, calculated as 1 minus the absolute value of the difference between forecasted demand and actual demand, as a percentage of actual demand.
Forecasting: Predictions of how much of a product will be purchased by customers. Relies upon both quantitative and qualitative methods. Also see: Forecast
Freight Consolidation: The grouping of shipments to obtain reduced costs or improved utilization of the transportation function. Consolidation can occur by market area grouping, grouping according to scheduled deliveries, or using third-party pooling services such as public warehouses and freight forwarders.
Gateway Work Center – A work center that performs the first operation of a particular routing sequence. Generally, a gateway work center is directly related to converting a raw material into a form that will be further processed into a part, component or end item.
Group Technology (GT) - An engineering and manufacturing philosophy that identifies the physical similarity of parts (common routing) and establishes their effective production. It provides for rapid retrieval of existing designs and possible modular design characteristics.
Heijunka: In the Just-in-Time philosophy, an approach to level production throughout the supply chain to match the planned rate of end product sales.
Human Resources (HR): The function broadly responsible for personnel policies and practices within an organization.
Inbound Logistics: The movement of materials from suppliers and vendors into production processes or storage facilities.
In-Control Process – A process in which the statistical measure being evaluated is in a state of statistical control.
Independent Demand – Demand for finished goods, and parts required for service requirements are examples of independent demand.
Industrial Automation Software - Industrial Automation can be viewed as a hierarchy of control levels found on the plant floor. Generally, there are five levels in this control hierarchy: Plant, Center, Cell, Station, Machine and Process. This hierarchy can be viewed as a series of process specific layers. This hierarchical approach provides the structure required to establish both horizontal and vertical communications between all control points throughout the plant structure. Hundreds of hardware and software products fit within these five layers.
Integrated Logistics: A comprehensive, system-wide view of the entire supply chain as a single process, from raw materials supply through finished goods distribution. All functions that make up the supply chain are managed as a single entity, rather than managing individual functions separately.
Interoperability – the ability of computer systems on a network to share application software.
Inventory Management – The process of ensuring the availability of products through inventory administration. The systematic determination of items and quantities to be ordered; the coordination of order release and order due dates; changes in the required quantities; and the rescheduling of planned orders.
Inventory Planning Systems: The systems that help in strategically balancing the inventory policy and customer service levels throughout the supply chain by calculating time-phased order quantities and safety stock, using selected inventory strategies. Including conducting what-if analysis and that compares the current inventory policy with simulated inventory scenarios and improves the inventory ROI.
Inventory Turns: The cost of goods sold divided by the average level of inventory on hand.
This ratio measures how many times a company's inventory has been sold during a period of time. Operationally, inventory turns are measured as total throughput divided by average level of inventory for a given period; How many times a year the average inventory for a firm changes over, or is sold.
ISO 9000: A series of quality assurance standards compiled by the Geneva, Switzerland-based
International Standardization Organization. In the United States, ISO is represented by the
American National Standards Institute based in Washington.
Jidoka – The Japanese term for the practice of stopping the production line when a defect occurs.
Job Shop - A production environment in which similar operations and equipment are organized by function. A form of manufacturing in which the jobs pass through functional departments in lots, and each lot may have a different operational routing. However, each job follows a distinct routing through the shop.
Just in Time (JIT): 1) Just in time is an approach to manufacturing where each operation is closely synchronized with subsequent operations. 2) An inventory control system that controls material flow into assembly and manufacturing plants by coordinating demand and supply to the point where desired materials arrive just in time for use. 3) An inventory reduction strategy that feeds production lines with products delivered "just in time”. Developed by the auto industry, it refers to shipping goods in smaller, more frequent lots.
Just-in-Time II: Vendor-managed operations taking place within a customer's facility. The Bose Corporation popularized JITII. The supplier reps, called "in plants," place orders to their own companies, relieving the customer's buyers from this task. Many also become involved at a deeper level, such as participating in new product development projects, manufacturing planning (concurrent planning), and so on.