Warehouse Dictionary

Safety Lead Time thru Synchronization



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Safety Lead Time
a means of adding some time to your lead time as part of your ordering calculations. Though safety lead time is used in the ordering calculation to determine when you need to order something, it is excluded from the calculation that then determines the “requested date” for the order.
Safety Stock
The inventory a company holds above normal needs as a buffer against delays in receipt of supply or changes in customer demand.
Salable Goods
A part of assembly authorized for sale to final customers through the marketing function.
Sales and Operations Planning (S&OP)
A strategic planning process that reconciles conflicting business objectives and plans future supply chain actions. S&OP usually involves various business functions, such as sales, operations, and finance to agree on a single plan/forecast that can be used to drive the entire business.
Sales Mix
The proportion of individual product-type sales volumes that make up the total sales volume.
Sales Order
document used to approve, track, and process outbound customer shipments.
Sawtooth Diagram
A quantity-versus-time graphic representation of the order point/order quantity inventory system showing inventory being received, used up, and reordered.
1) How quickly and efficiently a company can ramp up to meet demand.
2) How well a solution to a problem will work when the size of the problem increases. The economies of scale don’t really kick in until your reach the critical mass, and then revenues start to increase exponentially.
Scanlon Plan
A system of group incentives on a companywide or plant-wide basis that sets up one measure that reflects the results of all efforts. The Scanlon plan originated in the 1930s by Joe Scanlon and MIT. The universal standard is the ratio of labor costs to sales value added by production. If there’s an increase in production sales value with no change in labor costs, productivity has increased while unit cost has decreased.
Scientific inventory control
the use of mathematical models to find optimal stock levels and ordering policies
Supply Chain Operations Reference Model. This is the model developed by the Supply-Chain Council (SCC), and is built around six major processes: plan, source, make, deliver, return, and enable. The aim of the SCOR is to provide a standardized method of measuring supply chain performance, and to use a common set of metrics to benchmark against other organizations.
A performance measurement tool used to capture a summary of the key performance indicators (KPIs)/metrics of a company. Metrics dashboards/scorecards should be easy to read and usually have red, yellow, green indicators to flag when the company is not meeting its metrics targets. Ideally, a dashboard/scorecard should be cross functional in nature and include both financial and non-financial measures. In addition, scorecards should be reviewed regularly – at least on a monthly basis and weekly in key functions, such as manufacturing and distribution where activities are critical to the success of a company. The dashboard/scorecards philosophy can also be applied to external supply chain partners like suppliers to ensure that their objectives and practices align.
inventory that must be discarded or recycled as a result of a manufacturing process or damage that occurs during storage or material handling.
Scrap rate
the rate of expected scrap for specific components within the context of manufacturing an item. A scrap rate would be attached to a specific component on the bill of materials for a specific item
fluctuations in demand that repeat with the same pattern over equivalent time periods. The most common representation of seasonality occurs with changing demand patterns measured weekly, monthly, or quarterly, that repeat annually.
Seasonality index
consists of a number for each specific forecast period that describes the relationship of each period’s demand to the average demand over the complete seasonal cycle. The average demand is represented by the number one. If seasonality for a period results in demand greater than the average demand, it will be represented by a number greater than one. For example, if December’s sales were, on average, 30% greater than the average monthly sales for the year, you would have a seasonality index of 1.3 (1 plus .30) for December.
Secure Electronic Transaction (SET)
In e-commerce, a system of guaranteeing the security of financial transactions conducted over the Internet.
Self Billing
A transportation industry strategy which prescribes that a carrier will accept payment based on the tender document provided by the shipper.
Self Correcting
A computer term for an online process that validates data and won’t allow the data to enter the system unless all errors are corrected.
Semi-processed materials
stockable items (meaning they have their own unique item number) that have gone through some processing, but will be later pulled from stock and undergo additional processing.
The rate at which a forecast responds to changes in demand
Serial Number
A unique number assigned for identification to a single piece that will never be repeated for similar pieces. Serial numbers are usually applied by the manufacturer but can be applied at other points by the distributor or wholesaler. Serial numbers can be used to support traceability and warranty programs.
SSCC (Serial Shipping Container Code)
A globally unique serial number for identifying a movable unit (e.g., a pallet).
Service Parts Revenue
The sum of the value of sales made to external customers and the transfer price valuation of sales within the company of repair or replacement parts and supplies, net of all discounts, coupons, allowances, and rebates.
Setup costs
the costs associated with initiating a production run. May include labor and machine time to get equipment ready, as well as scrap or tooling associated with the setup process.
Setup time
the time it takes to prepare (equipment and materials) for a production run.
Shared Services
Consolidation of a company’s back-office processes to form a spinout (0r a separate “shared services” unit to be run like a separate business), providing services to the parent company and sometimes, to external customers. Shared services typically lower overall cost due to the consolidation, and may improve support as a result of focus.
Shelf Life
The amount of time an item may be held in inventory before it becomes unusable. Shelf life is a consideration for food and drugs which deteriorate over time, and for high-tech products which become obsolete quickly.
Shingo’s Seven Wastes
Shigeo Shingo, a pioneer in the Japanese just-in-time philosophy, identified seven barriers to improving manufacturing. They are the waste of overproduction, waste of waiting, waste of transportation, waste of stocks, waste of motion, waste of making defects, and waste of the processing itself.
The party that tenders goods for transportation.
Shipper-carriers (also called private carriers) are companies with goods to be shipped that own or manage their own vehicle fleets. Many large retailers, particularly groceries and “big box” stores, are shipper-carriers.
The function that performs the tasks for the outgoing shipment of parts, components, and products. It includes packaging, marking, weighing, and loading for shipment.
Shipping Lane
A predetermined, mapped route on the ocean that commercial vessels tend to follow between ports. This helps ships avoid hazardous areas. In general transportation, the logical route between the point of shipment and the point of delivery used to analyze the volume of shipment between two points.
Shipping Manifest
A document that lists the pieces in a shipment. A manifest usually covers an entire load regardless of whether the load is to be delivered to a single destination or many destinations. Manifests usually list the items, piece count, total weight, and the destination name and address for each destination in the load.
Shipping order
document used to approve, track, and process outbound shipments.
Shop Floor Production Control Systems
The systems that assign priority to each shop order, maintaining work-in-process quantity information, providing actual output data for capacity control purposes, and providing quantity by location by shop order for work-in-process inventory and accounting purposes.
Shop order
Request that indicates the type and quantity of SKUs to be transported from a warehouse to a production area; each SKU-quantity pair in the order is termed a line (cf. customer order and shop order).
Short Shipment
Piece of freight missing from shipment as stipulated by documents on hand.
occurs when customer demand cannot be met from stock (resulting in backorders or lost sales)
Shortage cost
cost associated with each shortage (which may be dependent or independent of the amount of shortage or its duration)
Short-term schedules
detailed timetables for all resources used in an organization
Reductions of actual quantities of items in stock, in process, or in transit. The loss may be caused by scrap, theft, deterioration, evaporation, etc.
Simultaneous picking
Variation of zone picking and where the items for an order are picked simultaneously in each zone and then consolidated, making it possible to minimize the total picking time required for an order (which is useful if there are multiple waves per shift).
uses a dynamic model to duplicate the continuous operation of a system over time
Six-Sigma Quality
A term generally used to indicate that a process is well controlled, I.e., tolerance limits are +-6 sigma (3.4 defects per million events) from the centerline in a control chart. The term is usually associated with Zebra Technologies which named one of its key operations initiatives Six-Sigma Quality.
Skills Matrix
A visible means of displaying people’s skill levels in various tasks. Used in a team environment to identify the skills required by the team and which team members possess those skills.
Warehouse slotting is defined as the placement of products within a warehouse facility. Its objective is to increase picking efficiency and reduce warehouse handling costs through optimizing product location and balancing the workload.
Small Group Improvement Activity
An organizational technique for involving employees in continuous improvement activities.
The process of merging, identifying, inducting, and separating material to be conveyed to specific destinations.
Spare parts
items held in stock as replacements to keep machinery, equipment, etc. working properly
Split-case picking
Variation of case picking where inner packs of items from cartons are retrieved.
Split Delivery
A method by which a larger quantity is ordered on a purchase order to secure a lower price, but delivery is divided into smaller quantities and is spread out over several dates to control inventory investment, save storage space, etc.
Spot Demand
Demand with a short lead time that’s difficult to estimate. Usually supply for this demand is provided at a premium price. An example of spot demand would be when there’s a spiked demand for building materials as a result of a hurricane.
Pulling material for an order from inventory before the material is required. This action is often taken to identify shortages, but it can lead to increased problems in availability and inventory accuracy.
People with a vested interest in a company, including manager, employees, stockholders, customers, suppliers, and others.
Standard business practices
business practices that are typical for general industry or specific industries.
Standard Components
Components (parts) of a product for which there is an abundance of suppliers. Not difficult to produce. An example would be a power cord for a computer.
Standard Cost Accounting System
A cost accounting system that uses cost units determined before production for estimating the cost of an order or product. For management control purposes, the standards are compared to actual costs, and variances are computed.
Statement of Work (SOW)
1) A description of products to be supplied under a contract. A good practice is for companies to have SOWs in place with their trading partners – especially for all top suppliers.
2) In projection management, the first project planning document that should be prepared. It describes the purpose, history, deliverables, and measurable success indicators for a project. It captures the support required from the customer and identifies contingency plans for events that could throw the project off course. Because the project must be sold to management, staff, and review groups, the statement of work should be a persuasive document.
Statistical Process Control (SPC)
A visual means of measuring and plotting process and product variation. Results are used to adjust variables and maintain product quality.
Placing customer-specific stickers on boxes of product. An example would be where Wal-Mart has a request for their own product codes to be applied to retail boxes prior to shipment.
all the goods and materials that are stored by an organization until they are needed
Stock cycle
sequence of repeated events for stock holdings; the time between consecutive replenishments
periodic checks to find differences between recorded and actual stock levels
Stock-Keeping Unit (SKU)
A category of unit with a unique combination of form, fit, and function (i.e., unique components held in stock).
To illustrate: If two items are indistinguishable to the customer, or if any distinguishing characteristics visible to the customer are not important to the customer so that the customer believes the two items to be the same, these two items are part of the same SKU.
As a further illustration: consider a computer company that allows customers to configure a complete computer from a selection of standard components. For example, they can choose from three keyboards, three monitors, and three CPUs. Customers may also individually buy keyboards, monitors, and CPUs. If the stock were held at the configuration component level, the company would have nine SKUs. If the company stocks at the component level, the company would have 36 SKUs. (9 component SKUs + 3*3*3 configured product SKUs.) If, as part of a promotional campaign, the company also specially packaged the products, the company would have a total of 72 SKUs.
Stocking type
a classification used by planning and execution systems to identify the primary stocking characteristic of the inventory. Examples of stocking types would include classifications that distinguish manufactured inventory, purchased inventory, direct ship inventory, or order-as-needed inventory.
Stocking unit of measure
the unit of measure used to track inventory within a facility. Stocking unit of measure is usually, but not always, the smallest unit of measure handled.
a situation where you have inadequate inventory levels to meet current demand.
Storage cost
the costs associated with the physical storage of inventory. This would include the cost of the physical space dedicated to the inventory, as well as storage equipment (racking, shelving) used to store the inventory.
Storage location
An identifiable location in a warehouse assigned a unique address and used to store a single item, where the capacity of the location corresponds to the maximum number of units of the item that can be stored at the location.
Straight Truck
Straight trucks do not have a separate tractor and trailer. The driving compartment, engine and trailer are one unit.
Strategic Alliance
Business relationship in which two or more independent organizations cooperate and willingly modify their business objectives and practices to help achieve long-term goals and objectives.
a stockable item that has gone through an assembly process, but is also used in the assembly of other items. A subassembly is also a component.
Decisions or activities in part made at the expense of the whole. An example of sub-optimization is where a manufacturing unit schedules production to benefit its cost structure without regard to customer requirements or the effect on other business units.
Sending production work outside to another manufacturer. This can involve specialized operations such as plating metals or complete functional operations.
A subhauler drives a tractor under contract for a company. Usually a subhauler is an owner/operator or a small company.
Sunk Cost
1) The unrecovered balance of an investment. It’s a cost already paid that is not relevant to the decision concerning the future that is being made. Capital already invested that for some reason cannot be retrieved.2) A past cost that has no relevance with respect to future receipts and disbursements of a facility undergoing an economic study. This concept implies that since a past outlay is the same regardless of the alternative selected, it should not influence the choice between alternatives.
1) A provider of goods or services.
2) A seller with whom the buyer does business, as opposed to vendor, which is a generic term referring to all sellers in the marketplace.
Supplier Certification
Certification procedures verifying that a supplier operates, maintains, improves, and documents effective procedures that relate to the customer’s requirements. Such requirements can include cost, quality, delivery, flexibility, maintenance, safety, and ISO quality and environmental standards.
Supplier-Owned Inventory
A variant of Vendor-Managed Inventory and Consignment Inventory. In this case the supplier not only manages the inventory, but also owns the stock close to or at the customer location until the point of consumption or usage by the customer.
Supply Chain
(1) Starting with unprocessed raw materials and ending with the final customer using the finished goods, the supply chain links many companies together. (2) The material and informational interchanges in the logistical process, stretching from acquisition of raw materials to delivery of finished products to the end user. All vendors, service providers, and customers are links in the supply chain.
Supply Chain Design
The determination of how to structure a supply chain. Design decisions include the selection of partners, the location and capacity of warehouse and production facilities, the products, the modes of transportation, and supporting information systems.
Supply Chain Execution (SCE)
The ability to move the product out of the warehouse door. This is a critical capacity and one that only brick-and-mortar firms bring to the B2B table. Dot coms have the technology, but that’s only part of the equation. The need for SCE is what is driving the dot coms to offer equity partnerships to the wholesale distributors.
Supply Chain Event Management (SCEM)
SCEM is an application that supports control processes for managing events within and between companies. It consists of integrated software functionality that supports five business processes: monitor, notify, simulate, control, and measure supply chain activities.
Supply Chain Integration (SCI)
Likely to become a key competitive advantage of selected e-marketplaces. Similar concept to the back-end integration, but with greater emphasis on the moving of goods and services.
Supply Chain Inventory Visibility
Software applications that permit monitoring events across a supply chain. These systems track and trace inventory globally on a line-item level, and notify the user of significant deviations from the plans. Companies are provided with realistic estimates of when the material will arrive.
Supply Chain Management (SCM)
Supply chain management encompasses the planning and management of all activities involved in sourcing and procurement, conversion, and all logistics management activities. Importantly, it also includes coordination and collaboration with channel partners, which can be suppliers, intermediaries, third party service providers, and customers. In essence, supply chain management integrates supply and demand management within and across companies. Supply chain management is an integrating function with primary responsibility for linking major business functions and business processes within and across companies into a cohesive, high-performing business model. It includes all of the logistics management activities noted above, as well as manufacturing operations, and it drives coordination of processes and activities with and across marketing, sales, product design, finance, and information technology. — as defined by the Council of Supply Chain Management Professionals (CSCMP)
Supply Chain Network Design Systems
The systems employed in optimizing the relationships among the various elements of the supply chain manufacturing plants, distribution centers, points of sale, as well as raw materials, relationships among product families, and other factors to synchronize supply chains at a strategic level.
Supply Chain-Related Finance and Planning Cost Element
One of the elements comprising a company’s total supply chain management costs. These costs consist of the following:
1. Supply-Chain Finance Costs: Costs associated with paying invoices, auditing physical counts, performing inventory accounting, and collecting accounts receivable. Does NOT include customer invoicing/accounting costs.
2. Demand/Supply Planning Costs: Costs associated with forecasting developing finished goods, intermediate, subassembly or end-item inventory plans, and coordinating demand/supply.
Supply Chain-Related IT Costs
Information technology (IT) costs (in US dollars) associated with major supply chain management processes as described below. These costs should include:
* Development costs (costs incurred in process reengineering, planning, software development, installation, implementation, and training associated with new and/or upgraded architecture, infrastructure, and systems to support the described supply chain management processes)
* Execution costs (operating costs to support supply chain process users, including computer and network operations, EDI and telecommunications services, and amortization/depreciation of hardware)
* Maintenance costs (costs incurred in problem resolution, troubleshooting, repair, and routine maintenance associated with installed hardware and software for described supply chain management processes. Includes costs associated with database administration systems configuration control, release planning, and management).
These costs are associated with the following processes:
1. Product Data Management – Product phase-in/phase-out and release; post-introduction support and expansion; testing and evaluation; end-of-life inventory management. Item master definition and control.
2. Forecasting and Demand/Supply Manage and Finished Goods – Forecasting; end-item inventory planning, DRP, production master scheduling for all products, all channels.
1. Sourcing/Material Acquisition – Material requisitions, purchasing, supplier quality engineering, inbound freight management, receiving, incoming inspection, component engineering, tooling acquisition, accounts payable.
2. Component and Supplier Management – Part number cross references, supplier catalogs, approved vendor lists.
3. Inventory Management – Perpetual and physical inventory controls and tools.
1. Manufacturing Planning – MRP, production scheduling, tracking, manufacturing engineering, manufacturing documentation management, inventory/obsolescence tracking.
2. Inventory Management – Perpetual and physical inventory controls and tools.
3. Manufacturing Execution – MES detailed and finite interval scheduling, process controls, and machine scheduling.
1. Order Management – Order entry/maintenance, quotes, customer database, product/price database, accounts receivable, credits and collections, invoicing.
2. Distribution and Transportation Management – DRP, shipping, freight management, traffic management.
3. Inventory Management – Perpetual and physical inventory controls and tools.
4. Warehouse Management – Finished goods, receiving and stocking, pick/pack.
5. Channel Management – Promotions, pricing and discounting, customer satisfaction surveys.
6. Field Service/Support – Field service, customer and field support, technical service, service/call management, returns, warranty tracking.
Plan/Source/Make/Deliver – Interfaces, gateways, and data repositories created and maintained to exchange supply chain-related information with the outside world. E-commerce initiatives. Includes development and implementation costs.
Note: Accurate assignment of IT-related cost is challenging. It can be done using activity-based costing methods or using other approaches, such as allocation based on user counts, transactions counts, or departmental headcounts. The emphasis should be on capturing all costs. Costs for any outsourced IT activities should be included.
Supply Chain Strategic Planning
The process of analyzing, evaluating, and defining supply chain strategies, including network design, manufacturing and transportation strategy, and inventory policy.
Supply Planning
The process of identifying, prioritizing, and aggregating, as a whole with constituent parts, all sources of supply that are required and add value in the supply chain of a product or service at the appropriate level, horizon, and interval.
Supply Warehouse
A warehouse that stores raw materials. Goods from different suppliers are picked, sorted, staged, or sequenced at the warehouse to assemble plant orders.
Support Costs
Costs of activities not directly associated with producing or delivering products or services. Examples are the costs of information systems, process engineering, and purchasing.
Surrogate [item] Driver
In ABC costing, a substitute for the ideal cost driver, but closely correlated to the ideal driver, where [item] is Resource, Activity, or Cost Object. A surrogate driver is used to significantly reduce the cost of measurement while not significantly reducing accuracy. For example, the number of production runs is not descriptive of the material-disbursing activity, but the number of production runs may be used as an activity driver if material disbursements correlate well with the number of production runs.
Sustaining Activity
An activity that benefits an organizational unit as a whole, but not any specific cost object.
SWOT Analysis
An analysis of the strengths, weaknesses, opportunities, and threats of and to an organization. SWOT analysis is useful in developing strategy.
The concept that all supply chain functions are integrated and interact in real time; when changes are made to one area, the effect is automatically reflected throughout the supply chain.

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