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DEFINITIONS - Alphabetical glossary of 400+ terms used throughout Manufacturing: Materials Procurement, Operations Management, Design Engineering, Lean Production, Factory Automation, Machine Controls, Warehousing, Transportation, and Logistics.

A, B, C, D, E, F, G, H, I, J, K, L, M, N, O, P, Q, R, S, U, V, W, X, Y, Z  


Taguchi Method: A concept of off-line quality control methods conducted at the product and process design stages in the product development cycle.  This concept, expressed by Genichi Taguchi, encompasses three phases of product design: system design, parameter design, and tolerance design. The goal is to reduce quality loss by reducing the variability of the product’s characteristics during the parameter phase of product development.

Takt Time: Sets the pace of production to match the rate of customer demand and becomes the heartbeat of any lean production system.  It is computed as the available production time divided by the rate of customer demand.  For example, assume demand is 10,000 units per month, or 500 units per day, and planned available capacity is 420 minutes per day.  The takt time = 420 minutes per day/ 500 units per day = 0.84 minutes per unit.  This takt time means that a unit should be planned to exit the production system on average every 0.84 minutes.  

Theory of Constraints (TOC): A production management theory which dictates that volume is controlled by a series of constraints related to work center capacity, component availability, finance, etc.  Total throughput cannot exceed the capacity of the smallest constraint, and any inventory buffers or excess capacity at non-related work centers is waste.

Time Bucket: A number of days of data summarized into a columnar display.  A weekly time bucket would contain all of the relevant data for an entire week.  Weekly time buckets are considered to be the largest possible (at least in the near and medium term) to permit effective MRP.

Time Fence: A policy or guideline established to note where various restrictions or changes in operating procedures take place.  For example, changes to the master production schedule can be accomplished easily beyond the cumulative lead time, while changes inside the cumulative lead time become increasingly more difficult to a point where changes should be resisted.  Time fences can be used to define these points.

Total Productive Maintenance (TPM): Team based maintenance process designed to maximize machine availability and performance and product quality.
Total Sourcing Lead Time (95% of Raw Material Dollar Value): Cumulative lead time (total average combined inside-plant planning, supplier lead time [external or internal], receiving, handling, etc., from demand identification at the factory until the materials are available in the production facility) required to source 95% of the dollar value (per unit) of raw materials from internal and external suppliers. 

Touch Labor: The labor that adds value to the product - assemblers, welders etc. This does not include indirect resources such as material handlers (mover and stage product, mechanical and electrical technicians responsible for maintaining equipment.

Traffic Management: The management and controlling of transportation modes, carriers and services.

Transportation Planning: The process of defining integrated supply chain transportation plan and maintaining the information, which characterizes total supply chain transportation requirements, and the management of transporters both inter and intra company.

Transportation Planning Systems: The systems used in optimizing of assignments from plants to distribution centers, and from distribution centers to stores. The systems combine "moves" to ensure the most economical means are employed.

Transportation Management Software - Transportation planning systems optimize the point to point routing of shipments from manufacturing facilities to distribution centers, and from distribution centers to sale point locations. These systems combine moves, truckloads, travel routings, and freight expenses to ensure the most economical means are employed.  



U-Lines – Production lines shaped like the letter “U”. The shape allows workers to easily perform several nonsequential tasks without much waling between operations.

Unit Cost: The cost associated with a single unit of product.  The total cost of producing a product or service divided by the total number of units.  The cost associated with a single unit of measure underlying a resource, activity, product or service.  It is calculated by dividing the total cost by the measured volume.  Unit cost measurement must be used with caution, as it may not always be practical or relevant in all aspects of cost management.

Unit of Measure (UOM): The unit in which the quantity of an item is managed, e.g., pounds, each, box of 12, package of 20, or case of 144.  Various UOM may exist for a single item.  For example, a product may be purchased in cases, stocked in boxes and issued in single units.



Value-Add/Nonvalue-Add: Assessing the relative value of activities according to how they contribute to customer value or to meeting an organization’s needs. The degree of contribution reflects the influence of an activity’s cost driver(s).


Value Chain Analysis: A method to identify all the elements in the linkage of activities a firm relies on to secure the necessary materials and services, starting from their point of origin, too manufacture, and to distribute their products and services to an end user.

Vendor-Managed Inventory (VMI): The practice of retailers making suppliers responsible for determining order size and timing, usually based on receipt of retail POS and inventory data. Its goal is to increase retail inventory turns and reduce stock outs. 

Virtual Corporation: The logical extension of out partnering.  With the virtual corporation, the capabilities and systems of the firm are merged with those of the suppliers, resulting in a new type of corporation where the boundaries between the suppliers’ systems and those of the firm seem to disappear.  The virtual corporation is dynamic in that the relationships and structures formed change according to the changing needs of the customer.

Virtual Factory: A changed transformation process most frequently found under the virtual corporation. It is a transformation process that involves merging the capabilities and capacities of the firm with those of its suppliers.  Typically, the components provided by the suppliers are those that are not related to a core competency of the firm, while the components managed by the firm are related to core competencies.  One advantage found in the virtual factory is that it can be restructured quickly in response to changing customer demands and needs.



Wall-to-Wall Inventory: An inventory management technique in which material enters a plant and is processed through the plant into finished goods without ever having entered a formal stock area.

Warehouse: Storage place for products. Principal warehouse activities include receipt of product, storage, shipment, and order picking.

Warehouse Management Software (WMS) - Warehouse Management systems integrate work performed within warehouses and distribution centers. Most use automatic identification systems (Bar Codes), and radio frequency communications, allowing real time data transfer between the system and warehouse personnel. Warehouse management systems effectively automate the following activities: receiving, put-away, picking, shipping, and inventory counting. These systems also maximize space and minimize material handling.

Waste: 1) In Just-in-Time, any activity that does not add value to the good or service in the eyes of the consumer.  2) A by-product of a process or task with unique characteristics requiring special management control.  Waste production can usually be planned and controlled.  Scrap is typically not planned and may result from the same production run as waste.

Wave Picking: A method of selecting and sequencing picking lists to minimize the waiting time of the delivered material.  Shipping orders may be picked in waves combined by a common product, common carrier or destination, and manufacturing orders in waves related to work centers.

Work-in-Process (WIP): Parts and subassemblies in the process of becoming completed finished goods.  Work in process generally includes all of the material, labor and overhead charged against a production order, which has not been absorbed back into inventory through receipt of completed products.




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



Zone Picking: A method of subdividing a picking list by areas within a storeroom for more efficient and rapid order picking.  A zone-picked order must be grouped to a single location and the separate pieces combined before delivery or must be delivered to different locations, such a work centers. Also see: Batch Picking

80-20 Rule: A term referring to the Pareto principle.  The principle suggests that most effects come from relatively few causes; that is, 80% of the effects (or sales or costs) come from 20% of the possible causes (or items).


JUNE 2009

Please Note: LeanMean Manufacturing, Inc does not take responsibility for the content of these definitions, nor does LeanMean Manufacturing, Inc endorse these as official definitions. Some terms used in the LeanMean Manufacturing Glossary of terms were compiled from the American Production and Inventory Control Society’s (APICS) Dictionary.  For more information on APICS, visit

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