The web’s largest Lean glossary. A lexicon of over 1,500 terms used in industrial engineering, lean thinking, operations management, quality management, and business statistics.

Internal organizational functions such as production operations or cycle counting that normally do not interact with outside entities.

Scheduling small, short-run production jobs using fixed duration or stop-time parameters that use idle or underutilized resources and can be run without delaying the start of priority jobs. Typically used in filling safety stock or other to-stock requirements.

The calculated reduction of a component inventory balance based on the reported production of a parent item and the quantity of the component used per each parent. A system transaction that may not represent physical usage based on timing and bill of material accuracy issues. (syn: post-deduct)

Variables which are of no experimental interest and are not held constant. Their effects are often assumed insignificant or negligible, or they are randomized to ensure that contamination of the primary response does not occur.

Booked (accepted) but unshipped customer orders or interplant orders. The backlog represents all open orders, not necessarily a past due status.

A current or past due customer order (or line item) that cannot be shipped due to lack of inventory availability. Customer agreements govern how backorders are handled (ship when available, ship whole order only, cancel, etc.).

A method that calculates production and purchase order dates by taking a given order or operation due date and backing into the required start or release date based on the indicated lead time. The opposite of forward scheduling.

A basic financial statement that measures the positions of a company's assets, liabilities and shareholders' equity as of a given date and usually compares those positions to the status on the same date in the previous fiscal year.

A plant where capacity of all resources are balanced exactly with market demand.

A business performance measurement and management system developed by Robert S. Kaplan and David P. Norton that analyzes organizational success by reviewing the combination of financial, customer, internal business process and employee learning and growth perspectives. A balanced system includes both leading and lagging measures, and aligns individual and department goals with overall corporate strategic objectives.

A reference number that points to a component or assembly on an engineering drawing and corresponds to a part number, usually listed in a table on the side of the drawing. (syn: bubble number)

An arrangement of bars and spaces on a label or stamped or embossed onto an item or container that identifies the item and sometimes its quantity. A variety of fixed and variable length code schemes are used by industries and standards bodies to enable automatic interpretation by collection systems and avoid manual input.

A movable or fixed device that scans a bar code and interprets the combination of bars and spaces to record a transaction or a status.

In a costing system, the initial standard established at the beginning of a fiscal year used for creating budgets and performance measurements for that period. The base standard may be frozen to provide a consistent starting point for the period; the current standard is updated to reflect changes in process or material costs during the year.

A set of measurements that establishes the status of a system or other item as of a given date. Used to provide a common denominator and starting point for later measurements and comparisons.

1) In production, a lot or given quantity processed at the same time with the same process parameters. A batch may consist of more than one item number but all items are considered to have the same characteristics for purposes of traceability. 2) In data processing, a set of files or records gathered and processed together instead of one at a time. When a batch run is being processed, the files or records used may be locked from additional update until the batch is done.

A bill of material typically used in process industries that describes an ingredients list required for a batch quantity of the end item, instead of a quantity of one as typically used in discrete manufacturing environments.

An order picking efficiency technique that combines multiple orders for a date or customer range and summarizes the total requirements for items on all orders. It allows going to an inventory location once to pick for several orders instead of returning to the same location multiple times.

The production of multiple parts at a given operation as a batch that is finished and moved to the input queue of the succeeding operation.

The rate of a unit of signal speed equal to the number of code elements (pulses and spaces) per second or twice the number of pulses per second.

A formula that considers the conditional probability of the existence of a given event or variable as being caused by a second variable, and the probability of the occurrence of the second variable.

A structured list of the items used in making a parent assembly that reflects the actual production process in terms of timing and quantities consumed. It is constructed in conjunction with the routing, which describes the individual production steps and rates used. A BOM may optionally include information relating to backflushing, use of alternate and optional components, tie between components and the operations that use them, and other data. BOMs are used by the MRP function to calculate component requirements when given a parent demand, and in building product costs. (Syn: product structure, recipe, formulation, ingredients list)

A tool that compares two or more bills of material to identify duplicates and highlight exceptions and differences in the components. Used in database maintenance and obsolescence reporting.

The function of using the bill of material to generate component item demand quantities and timing given a requirement for the parent.

A listing of the key resources and quantities used in production of an item or family. A bill of resource may list only critical resources consumed (machine, personnel, logistics or other), while the product routing shows each individual step or operation. Used in rough cut capacity planning (RCCP) to provide resource requirements for a given forecast or master schedule.

A distribution with two identifiable curves within it, indicating a mixing of two populations such as different shifts, machines, workers, etc.

1) A standard container for components 2) An inventory shelf or rack location with a specific identifier.

The smallest unit of information that can be recognized by a computer.

In the six sigma quality improvement methodology, a fulltime leadership position in teams that develop related programs and monitor progress.

A purchase order or customer order combining requirements for a given vendor or customer and group of items over an agreed-upon time frame. It creates a purchase commitment and pricing definition for the specified period, which can range from weeks to years based on the industries or commodities involved. The blanket often consists of the total agreement terms only; individual delivery dates and quantities are later generated by the planning system.

A purchase or customer order requesting delivery of specific items and quantities against a previously-created blanket authorization. Based on requirements generated by the planning system, releases are accumulated against the total commitment in the blanket authorization.

The mixing or combination of multiple ingredients to create a liquid, powder or gas form identified by a unique item number. An initial batch may be modified with a subsequent blend based on the analysis of quality tests that require additional processing to meet specifications.

A physical inventory or cycle count in which the count tag or sheet contains item and location information but does not include the book (calculated) inventory as of the time of count.

A schedule based on blocks or periods of time rather than quantities. Sometimes required when the process dictates a fixed drying or curing time, or a contracted vendor turnaround time.

A relatively homogenous set of conditions within which different conditions of the primary variables are compared. Used to ensure that background variables do not contaminate the evaluation of primary variables.

See: phantom.

A third party, specific application designed to enhance or extend a base system through increased functionality.

Contractual description of service delivery performance specifying terms and conditions that may involve posting a bond.

See: perpetual inventory.

New customer orders taken or accepted over a designated time frame. Cancellations are deducted to arrive at net bookings.

A resource that constrains the flow of production, inventory movement or data in a system. In a free-flowing system, the first place to restrict throughput when demand is raised.

A three-level, multiple-variable experiment design method that assumes values at the center point and eliminates extreme values.

A variation of ARIMA modeling that creates a forecast using regression and moving average and incorporates previous errors. Most often used in developing short-term forecasts.

A graphical representation of a quality test that shows process variability distribution based on the mean, upper and lower specification limits in the form of a box.

An examination of changes in fixed and variable costs based on varying revenue and production levels that identifies a break-even point where revenues are equal to costs. It highlights the profit results from alternative levels of operation. (syn: cost-profit-volume analysis)

Objectives that are ‘stretch goals’ for the organization. Breakthroughs represent a significant change for the organization providing a significant competitive advantage. Breakthrough goals are achieved through multi-functional teamwork with sponsorship by executive leadership.

A bill of material that accounts for the generation and cost implications of byproducts as a result of manufacturing the parent item.

Organizations with physical (vs. Internet-only) production or logistics facilities and operations.

Sequenced plans or data communicated to multiple points at the same time in order to provide a common view and synchronize results.

An existing and operating production facility that is set up for mass-production manufacturing and management methods.

British Standard

British Standards Institution

A reporting system that accumulates multiple daily records into a larger, user-specified time frame (weeks, quarters, years, etc.). Enables easier analysis when daily detail is not required.

A reporting system that presents a view of orders or records based on individual dates rather than accumulating into a larger time frame. Useful for short-term detail planning and analysis.

A planning, control and reporting system that estimates future costs and revenues based on projected operating levels. It provides target spending levels and profit estimation, and allows for interim review and corrective action.

The earned (standard) cost or budget value of project tasks completed for a given time period. It is compared to actual cost of work performed (ACWP) to determine variance conditions.

The earned (standard) cost or budget value of project tasks scheduled to be completed for a given time period. A cumulative view of the planned costs based on the budget schedule.

The set of processes used in the theory of constraints to manage the buffers used to ensure continued operation of the constraint. Activities and materials processing operations are prioritized on the basis of their criticality to maintaining or rebuilding buffer stocks.

Stock positioned at a processing or usage point to allow for demand or process variations, or to maintain continued operation of a constrained resource.

Components and materials issued to the production floor based on the cumulative requirements for multiple production orders, shifts or days. Not used in to-order environments where lot traceability is an issue.

A percentage or fixed-dollar amount that allocates department or product overhead expenses to production on a labor hour, machine hour. labor dollar, material dollar or unit basis. (syn: overhead rate)