Supply Chain and Operations Management Glossary (A)

This glossary was originally compiled in conjunction with a course on Logistics and Supply Chain Management at the University of Chicago.

Entries tend to be arranged according to their abbreviation. Thus, Bill-Of-Material is defined under BOM. The reasoning is that it is easier to deduce the abbreviation from a phrase, than deduce the phrase from the abbreviation.

3PL (Third Party Logistics): The use of an outside party to perform some part of the logistics function, typically trucking or warehousing. It is appropriate if there are economies of scale in the logistics function.

ABC Analysis: Partition of products into three groups according to their yearly dollar volume. A typical result is that 30% of the products (the A’s) comprise 70% of the volume. More sophisticated control procedures are appropriate for class A products. Very simple, cheap methods suffice for managing class C items. This is similar to Pareto analysis.

ABC (Activity Based Costing): An accounting method that attempts to closely associate costs, particularly indirect costs, with the activities that generate the costs. This is sometimes also called transactionbased costing. The most crucial aspect of ABC is identifying the “cost drivers” (e.g., number of stops on a delivery route, number of miles on a delivery route, number of pallets delivered, etc.) and then deducing the cost rate to apply to each activity.

A.C. Nielsen: A Chicago based supplier of industry sales data for consumer products (e.g., supermarkets). These data are obtained from sources such as cash register scanners. Another supplier of such data is IRI.

Acre: unit of land measure= 4840 square yards=0.4049 hectares. 640 acres=1 square mile. See SI units.

AGV (Automatic Guided Vehicle): a driverless vehicle used in warehouses and factories to move material. It can replace forklifts for some tasks. Usually the material to be moved must be on a standard pallet. In its most automated form, when a pallet is to be moved to a new location, the AGV system is informed of the origin and the destination of the desired movement. An AGV will pick up the pallet, navigate through the factory following either wires or magnets buried in the floor or laser beams. An AGV may be managed by a WMS.

AICPA (American Institute of Certified Public Accountants).

ANSI (American National Standards Institute): see http://www.ansi.org or http://www.nssn.org. This is an agency for publishing U.S. and international standards.

AP (Accounts Payable): List of amounts due to our suppliers. Software system for deciding when to pay which bills based upon discounts and penalties that depend upon when paid.

AR (Accounts Receivable): List of amounts due to us by customer. Software system for monitoring and updating amounts due and highlighting accounts according to their need for attention (e.g., more than 30 days past due, more than 60 days past due, etc).

ASA (Average Speed of Answer): A standard measure of service quality in in-bound call centers. A typical target is 20 seconds or less. In the US, the time between “ring” tones is six seconds, so this corresponds to a little over three rings.

ASN (Advance Shipping Notice): An electronic message from the shipper (or supplier or sender) to the customer (or receiver) that the product has been shipped and is expected to arrive during a specified time interval.

ASP (Application Service Provider): A firm that provides both computing power and business software to businesses via the web, somewhat similar to timesharing firms in the 1970’s. A business that uses an ASP can be billed per transaction, so that a small firm might be able to use a powerful piece of software without having to pay a high fixed license fee for it. Another advantage is that the details of software maintenance and upgrades are invisible to the user. A risk in using an ASP is that the ASP may fail either physically or financially, in which case the business that uses it may have less recourse than if its information processing was done in-house.

AS/RS: Automated storage and retrieval system. The benefits of an AS/RS are typically: higher pick rates per person and greater storage density of products. The greater density is because items may be stored higher.

ATP (Available To Promise): Amount of product that a facility can promise to deliver quickly because it has a) the required product and components on hand, b) not promised already to some other customer, and c) has production capacity to assemble the product, not already scheduled for production of other products for other customers.

Attributes sampling: In quality assurance, sampling in which a yes/no attribute is measured (e.g., defective or not). In contrast, see variables sampling.

AVI (Automatic Vehicle Identification): A system in which participating vehicles (e.g., trucks) carry a transponder that may be queried by a reader (e.g., at a weight scale, a toll booth, or at port of entry at a state border). The transponder, if it recognizes the device or system sending the query, will respond with its identification code. This kind of system is also used in automobile toll collection. The identification code contains information about the type of vehicle, such as the number of axles. The roadway may have additional sensors to count the number of axles and/or estimate the length of the vehicle and check if it matches the vehicle description in the code sent by the transponder.

AVL (Approved Vendor List): For each SKU that we might buy, a list of vendors who have been approved to supply this SKU (e.g., on the basis of quality, price, delivery time).

About the Author: AJ Amjad Khanmohamed

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