Supply Chain Terminology

 

This appendix describes terminology used in the paper when dealing with aspects of the supply chain. The list is not exhaustively complete, some terms will be described as they are employed.

Assembly plant:

used here as manufacturing entity, transforming a set of components into a product. The term manufacturing plant or simply plant are also used in the same meaning.

Demand Forecast:

An estimation of the future quantity demanded of a product (in a market).

BOM:

Bill of Materials. A description of the components (often referred to as parts) that go into the assembly of a product.

Customer:

User of the products from an assembly plant. The assembly plant will be the customer's supplier.

Distribution Center (DC):

Entity receiving, stocking and shipping products on their way from suppliers to customer.

Downstream:

or downstream the supply chain. The direction in which materials flow, e.g. a customer will always be downstream from its suppliers. (Illustrated in fig. .)

FGI:

Finished Goods Inventory. The area of an assembly plant designated for finished products.

Fill Rate:

The percent of orders shipped within order due date.

Inventory:

A quantity of goods and materials, often a stock.

Lead Time:

The time from an order is sent from a customer to a supplier till the products ordered arrive at the customer.

Materials Planning:

Is used for both material requirement, or material procurement planning. It signifies the decisions made on the future quantity of components that are required and the quantities to be ordered. The materials planning is based on the production planning.

Metric:

A standard of measurement of performance.

Multi Echelon Supply Chain:

Supply chain with entities on several levels. Fig.  shows a multi echelon supply chain, with five levels from left to right.

On-Order Materials:

(or materials on-order) Materials that are ordered from suppliers, but not yet delivered.

Order Backlog:

Customer orders received but not shipped. (Often referred to as backlog.)

Part:

Used for both a part type (say a certain button is part number E-45 in a shirt factory) and an instances of this type (a physical buttons of type E-45). The context will show the meaning.

Product Life Cycle:

The time from first till last customer order for a product. The order volume will in general increase, level off, and decrease through the life cycle of a product.

Production Planning:

A decision of the future quantity to produce. This is based on orders from customers, production capacities, often a demand forecast, and the diverse inventory levels in the supply chain.

RPI:

Raw Product Inventory. The area of an assembly plant designated for components.

Safety Stock:

The level of inventory desired at any time to counterbalance the many uncertainties met in a supply chain.

Stock-out:

When at a given moment in a given inventory there is not the quantity of a part or a product that is demanded. A stock-out occurs in a distribution center when there are orders that can not be filled within their due date. A stock-out of a part in an RPI means that production of products containing the part will be interrupted.

Supplier:

Delivering entity, here usually delivering materials to an assembly plant. In that case the assembly plant will be the supplier's customer.

WIP:

Work in Process. The inventory under assembly in an assembly plant.

Upstream:

or upstream the supply chain, the direction in a supply chain opposite to the flow of materials, e.g. a supplier will always be upstream from its customers. (Illustrated in fig. .)

Vertically Integrated:

Where the same company owns several levels (echelons) of the supply chain.