SUPPLY CHAIN MINDED

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EAP
Abbreviation for employee assistance program.

Earliest due date (EDD)
A priority rule that sequences the jobs in a queue according to their (operation or job) due dates. See: earliest operation due date.

Earliest operation due date (ODD)
A dispatching rule that selects the job having the earliest due date for the impending operation. See: earliest due date.

Earliest start date
The earliest date an operation or order can start. It may be restricted by the current date, material availability, or management-specified “maximum ­advance.”

Earliness
If a job is finished before its due date, the difference between its completion date and the due date. See: lateness, tardiness.

Early finish date (EF)
In the critical path method of project management, the earliest time at which a given activity is estimated to be completed. This date can change as the project is executed.

Early manufacturing involvement
The process of involving manufacturing personnel early in the product design activity and drawing on their expertise, insights, and knowledge to generate better designs in less time and to generate designs that are easier to manufacture. Early involvement of manufacturing, field service, suppliers, customers, and so on means drawing on their expertise, knowledge, and insight to improve the design. Benefits include increased functionality, increased quality, ease of manufacture and assembly, ease of testing, better testing procedures, ease of service, decreased cost, and improved aesthetics. See: design for manufacture and assembly, participative design/engineering.

Early start date (ES)
In the critical path method of project management, the earliest time at which a given activity is estimated to begin. This date can change as the project is executed.

Early supplier involvement (ESI)
The process of involving suppliers early in the product design activity and drawing on their expertise, insights, and knowledge to generate better designs in less time and designs that are easier to manufacture with high quality. See: participative design/engineering.

Earmarked material
The reserved material on hand that is physically identified, rather than merely reserved in a balance-of-stores record.

Earned hours
A statement reflecting the standard hour assigned for actual production reported during the period. Syn: earned volume.

Earned value
In project management, the total value, including overhead, of approved estimates for completed activities or portions thereof.

Earned value method
In project management, a comparison of planned activity time and cost to actual activity time and cost to see if a project is on schedule by time and by budget.

Earned volume
Syn: earned hours.

Earnings before interest and taxes (EBIT)
Syn: net operating income.

Earnings before taxes (EBT)
Earnings before interest and taxes minus interest charges.

EBIT
Acronym for earnings before interest and taxes.

eBPP
Abbreviation for electronic bill presentation and payment.

EBT
Abbreviation for earnings before taxes.

eCash
An electronic system that provides for deposits and withdrawals of digital money. It permits a payer using it to remain anonymous.

Echelon
A level of supply chain nodes. For example, a supply chain with two independent factory warehouses and nine wholesale warehouses delivering product to 350 retail stores is a supply chain with three echelons between the factory and the end customer. One echelon consists of the two independent factory warehouses, one echelon consists of the nine wholesale warehouses, and one echelon consists of the 350 retail stores. Each echelon adds operating expense, holds inventory, adds to the cycle time, and expects to make a profit. See: disintermediation.

e-Commerce
Abbreviation for electronic commerce.

Econometric model
A set of equations intended to be used simultaneously to capture the way in which dependent and independent variables are interrelated.

Econometric modeling
The process of developing econometric models. See: econometric model.

Economic indicator
An index of total business activities at the regional, national, and global levels.

Economic infrastructure
A nation’s networks for supporting commerce, including transportation, communications, and finance.

Economic lot size
Syn: economic order quantity.

Economic order quantity (EOQ)
A type of fixed order quantity model that determines the amount of an item to be purchased or manufactured at one time. The intent is to minimize the combined costs of acquiring and carrying inventory.

The basic formula is

where d = annual demand, c = average cost of order preparation, i = annual inventory carrying cost percentage, and u = unit cost. Syn: economic lot size, minimum cost order quantity. See: total cost curve.

Economic value added
In managerial accounting, the net operating profit earned above the cost of capital for a profit center.

Economy of scale
A phenomenon whereby larger volumes of production reduce unit cost by distributing fixed costs over a larger quantity.

ECU
Abbreviation for European currency unit.

EDD
Abbreviation for earliest due date.

EDI
Abbreviation for electronic data interchange.

EDIFACT
Abbreviation for EDI for administration, commerce, and transport.

EDI for administration, commerce, and transport (EDIFACT)
A set of United Nations rules for electronic data interchange. These are international guidelines and standards for the electronic exchange of data regarding trade.

EEO
Abbreviation for equal employment opportunity.

EF
Abbreviation for early finish date.

Effective capacity
Syn: rated capacity.

Effective date
The date on which a component or an operation is to be added or removed from a bill of material or an assembly process. The effective dates are used in the explosion process to create demands for the correct items. Normally, bills of material and routing systems provide for an effectivity start date and stop date, signifying the start or stop of a particular relationship. Effectivity control also may be by serial number rather than date. Syn: effectivity, effectivity date.

Effective interest rate
Syn: annual percentage rate.

Effectivity
Syn: effective date.

Effectivity date
Syn: effective date.

Efficiency
A measurement (usually expressed as a percentage) of the actual output to the standard output expected. Efficiency measures how well something is performing relative to existing standards; in contrast, productivity measures output relative to a specific input, e.g., tons/labor hour. Efficiency is the ratio of (1) actual units produced to the standard rate of production expected in a time period or (2) standard hours produced to actual hours worked (taking longer means less efficiency) or (3) actual dollar volume of output to a standard dollar volume in a time period. Illustrations of these calculations follow. (1) There is a standard of 100 pieces per hour and 780 units are produced in one eight-hour shift; the efficiency is 780/800 converted to a percentage, or 97.5%. (2) The work is measured in hours and took 8.21 hours to produce 8 standard hours; the efficiency is 8/8.21 converted to a percentage or 97.5 percent. (3) The work is measured in dollars and produces $780 with a standard of $800; the efficiency is $780/$800 converted to a percentage, or 97.5 percent.

Efficiency variance
In cost accounting, the difference between the actual volume of a resource used and the budgeted volume, multiplied by the budgeted or standard price.

Efficient consumer response
1) A grocery industry-based, demand-driven replenishment system that links suppliers to develop a large flow-through distribution network. Information technology is designed to enable suppliers to anticipate demand. Manufacture is initiated based on point-of-sale information. Accurate, instantaneous data are essential to this concept. 2) A management approach that streamlines the supply chain by improving its effectiveness in providing customer service and reducing costs through innovation and technology.

e-Form
Abbreviation for electronic form.

EFT
Abbreviation for electronic funds transfer.

EI
Abbreviation for employee involvement.

80-20
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). See: ABC classification.

Elasticity of demand (supply)
The ratio of the percentage change in quantity demanded (supplied) to the percentage change in price.

Electronic bill presentation and payment (eBPP)
A system that connects the bill issuer, bill payer, and the payer’s bank to facilitate electronic payment. Payment is usually by credit card.

Electronic commerce (e-commerce)
The use of computer and telecommunication technologies to conduct business via electronic transfer of data and documents.

Electronic commerce application
A computer interface between two organizations that is used to carry out business transactions electronically.

Electronic communities
Communities of people who communicate exclusively electronically.

Electronic data interchange (EDI)
The paperless (electronic) exchange of trading documents, such as purchase orders, shipment authorizations, advanced shipment notices, and invoices, using standardized document formats.

Electronic document
The electronic representation of a document that can be printed.

Electronic form
An electronic version of a paper form. These forms eliminate the cost of printing, storing, and distributing paper forms.

Electronic funds transfer (EFT)
A computerized system that processes financial transactions and information about these transactions or performs the exchange of value between two parties.

Electronic mail (e-mail)
A technology for handling mail electronically.

Electronic market
An Internet-based market where most sales occur electronically.

Electronic publishing
Representation of text and multimedia documents electronically.

E-mail
Acronym for electronic mail.

Embezzlement
The fraudulent taking of another’s property while acting in a fiduciary capacity.

Empirical
Pertaining to a statement or formula based upon experience or observation rather than on deduction or theory.

Employee assistance program (EAP)
Employer-provided service aimed at helping employees and their families with personal and work-related problems. Examples include financial counseling and chemical-dependency rehabilitation programs.

Employee empowerment
The practice of giving nonmanagerial employees the responsibility and the power to make decisions regarding their jobs or tasks. It is associated with the practice of transfer of managerial responsibility to the employee. Empowerment allows the employee to take on responsibility for tasks normally associated with staff specialists. Examples include allowing the employee to make scheduling, quality, process design, or purchasing decisions.

Employee involvement (EI)
The concept of using the experience, creative energy, and intelligence of all employees by treating them with respect, keeping them informed, and including them and their ideas in decision-making processes appropriate to their areas of expertise. Employee involvement focuses on quality and productivity improvements. Syn: people involvement.

Employee stock ownership plan (ESOP)
In the United States: A program to encourage workers to purchase stock of the company, generally tied into the compensation/benefits package. The intention is to give workers a feeling of participation in the management and direction of the company.

Empowerment
A condition whereby employees have the authority to make decisions and take action in their work areas without prior approval. For example, an operator can stop a production process if a problem is detected, or a customer service representative can send out a replacement product if a customer calls with a problem.

Encryption
Changing readable words into another form, called a cipher, that hides the text’s meaning.

Ending inventory
A statement of on-hand quantities or dollar value of an SKU at the end of a period, often determined by a physical inventory.

End item
A product sold as a completed item or repair part; any item subject to a customer order or sales forecast. Syn: end product, finished good, finished product. See: good.

Endogenous variable
A variable whose value is determined by relationships included within the model.

End product
Syn: end item.

End user
1) The final consumer of a product. 2) The recipient of an output from a computer system.

End-user computing
Use of computer resources by non-information-system personnel to enter, retrieve, manipulate, or print data.

Enforced problem solving
The methodology of intentionally restricting a resource (e.g., inventory, storage space, number of workers) to expose a problem that must then be resolved.

Engineering change
A revision to a drawing or design released by engineering to modify or correct a part. The request for the change can be from a customer or from production, quality control, another department, or a supplier. Syn: engineering change notice, engineering change order.

Engineering change notice
Syn: engineering change.

Engineering change order
Syn: engineering change.

Engineering characteristics
The technical features designed into a product.

Engineering drawings
A visual representation of the dimensional characteristics of a part or assembly at some stage of manufacture.

Engineering order
Syn: experimental order.

Engineering standard
Design or test guidelines intended to promote the design, production, and test of a part, component, or product in a manner that promotes standardization, ease of maintenance, consistency, adequacy of test procedures, versatility of design, ease of production and field service, and minimization of the number of different tools and special tools required.

Engineer-to-order
Products whose customer specifications require unique engineering design, significant customization, or new purchased materials. Each customer order results in a unique set of part numbers, bills of material, and routings. Syn: design-to-order.

Enterprise
Any undertaking, venture, initiative, or business organization with a defined mission.

Enterprise resources management
The planning, execution, control, and measurement functions required to effectively operate an enterprise.

Enterprise resources planning (ERP)
Framework for organizing, defining, and standardizing the business processes necessary to effectively plan and control an organization so the organization can use its internal knowledge to seek external advantage.

Entrepreneur
One who organizes resources productively and bears the risk of the venture.

Environmentally responsible manufacturing
A collection of manufacturing activities that includes design of the product, facility, manufacturing processes, logistics, and supplier relationships that reduce or eliminate environmental waste through innovation and improvements.

Environmentally sensitive engineering
Designing features in a product that improve recycling, etc. It can include elimination of compounds that are hazardous to the environment.

Environmental Protection Agency (EPA)
A federal (U.S.) agency with regulatory authority over matters affecting the environment, including waste generation and habitat destruction.

Environmental scanning
Process used to expose an organization’s potential strengths, weaknesses, opportunities, and threats. Many experts emphasize opportunities and threats because the tool is primarily external.

EOQ
Abbreviation for economic order quantity.

EOQ = 1
Reducing setup time and inventory to the point where it is economically sound to produce in batches with a size of one. Often EOQ = 1 is an ideal to strive for, like zero defects.

EOQ tables
Tables listing several ranges of monthly usages in dollars and the appropriate order size in dollars or monthly usage for each usage range.

EPA
Abbreviation for Environmental Protection Agency.

Equal employment opportunity (EEO)
In the United States: The laws prohibiting discrimination in employment because of race or color, sex, age, handicap status, religion, and national origin.

Equal protection clause
A part of the Fourteenth Amendment to the U.S. Constitution requiring similar treatment of citizens in similar circumstances.

Equal runout method
Syn: equal runout quantities.

Equal runout quantities
Order quantities for items in a group that result in a supply that covers an equal time for all items. Syn: equal runout method. See: fair-share quantity logic.

Equilibrium point
The point in a market where the demand for a product and the supply of that product are exactly equal. If supply were greater, the price would fall. If demand were greater, the price would rise. Free markets tend to move toward their equilibrium point.

Equipment class
A means to describe a group of equipment with similar characteristics for purposes of planning and scheduling.

Equity
The part of a company’s total assets not provided by creditors; owner-invested funds.

Equivalent days
The standard hour requirements of a job converted to days for scheduling purposes.

Equivalent unit cost
A method of costing that uses the total cost incurred for all like units for a period of time divided by the equivalent units completed during the same time period.

Equivalent units
A translation of inventories into equivalent finished goods units or of inventories exploded back to raw materials for period end valuation of inventories. An equivalent unit can be the sum of several partially completed units. Two units 50% completed are equivalent to one unit 100% completed.

Ergonomics
Approach to job design that focuses on the interactions between the human operator and such traditional environmental elements as atmospheric contaminants, heat, light, sound, and all tools and ­equipment.

ERP
Abbreviation for enterprise resources planning.

ES
Abbreviation for early start date.

Escalation
An amount or percentage by which a contract price may be adjusted if specified contingencies occur, such as changes in the supplier’s raw material or labor costs.

ESI
Abbreviation for early supplier involvement.

ESOP
Acronym for employee stock ownership plan.

Estimate of error
In statistics, a measure of dispersion. See: standard deviation, standard error, variance.

Ethical standards
A set of guidelines for proper conduct by business professionals. For example, the ISM (formerly NAPM) provides a set of principles and standards for the proper conduct of purchasing activities.

Eurobond
An internationally marketed bond.

Eurocurrency
Money that is deposited outside of the country that issued it (outside of the issuing country’s control).

Eurodollar
A U.S. dollar held in a foreign bank.

European currency unit (ECU)
A currency consisting of fixed amounts of currencies of members of certain European countries based upon the exchange rate mechanism.

Evaporating cloud
In the theory of constraints, a logic-based tool for surfacing assumptions related to a conflict or problem. Once the assumptions are surfaced, actions to break an assumption and hence solve (evaporate) the problem can be determined.

Event
An event is an identifiable point in time among a set of related activities. Graphically, an event can be represented by two approaches: (1) in activity-on-node networks, it is represented by a node; (2) in activity-on-arrow networks, the event is represented by the arrow.

Event-on-arrow network
Syn: activity-on-arrow network.

Event-on-node network
Syn: activity-on-node network.

Exception message
Syn: action message.

Exception report
A report that lists or flags only those items that deviate from the plan.

Excess capacity
A situation where the output capabilities at a nonconstraint resource exceed the amount of productive and protective capacity required to achieve a given level of throughput at the constraint. See: idle capacity, productive capacity, protective capacity.

Excess inventory
Any inventory in the system that exceeds the minimum amount necessary to achieve the desired throughput rate at the constraint or that exceeds the minimum amount necessary to achieve the desired due date performance. Total inventory = productive inventory + protective inventory + excess inventory.

Excess issue
The removal from stock and assignment to a schedule of a quantity higher than the schedule quantity. Syn: overissue.

Exchange rate
The rate at which one currency converts to another.

Exchange unit
The number of units to be produced before changing the bit, tool, or die. See: process batch.

Executive information system
A software application used by top managers, without assistance, to access information on the current organizational status.

Exempt
Generally, a classification of employees/jobs for which compensation is not determined by extending the recorded hours worked by an hourly rate, e.g., pay is specified at an annual or monthly rate. Exempt employees include most professionals, administrative and management personnel, and sales representatives. Specifically, the term refers to and is fully defined by the U.S. Department of Labor Fair Labor Standards Act, which regulates minimum wages and overtime for nonexempt employees. See: exempt positions, nonexempt positions.

Exempt carrier
A for-hire carrier that is free from economic regulation.

Exempt employee
A person filling an exempt position. See: exempt positions.

Exempt positions
Positions that do not require the payment of overtime because they meet the tests of executive, supervisory, or administrative activity, as defined under the Fair Labor Standards Act.

Exit interview
An interview given to an employee who is leaving the company. The purpose is to find out why a person is leaving, what was liked and disliked about the job and the company, and what changes would make the department and the company a better place to work.

Exogenous variable
A variable whose values are determined by considerations outside the model in question.

Expansion
Any increase in the capacity of a plant, facility, or unit, usually by added investment. The scope of this increase extends from the elimination of problem areas to the complete replacement of an existing facility with a larger one.

Expected completion quantity
The planned quantity of a manufacturing order after expected scrap.

Expected demand
The quantity expected to be consumed during a given time period when usage is at the forecast rate. See: demand during lead time.

Expected life
The average length of time a product remains in service or in a serviceable condition.

Expected receipt date
Syn: due date.

Expected value
The average value that would be observed in taking an action an infinite number of times. The expected value of an action is calculated by multiplying the outcome of the action by the probability of achieving the outcome.

Expedite
To rush or chase production or purchase orders that are needed in less than the normal lead time; to take extraordinary action because of an increase in relative priority. Syn: stockchase.

Expeditor
A production control person whose primary duty is expediting.

Expendables
Syn: consumables.

Expense
Expenditures of short-term value, including depreciation, as opposed to land and other fixed capital. See: overhead.

Expensed stocks
Syn: floor stocks.

Experience curve
Syn: learning curve.

Experience curve pricing
The average cost pricing method, but using an estimate of future average costs, based on an experience (learning) curve.

Experimental design
A formal plan that details the specifics for conducting an experiment, such as which statistical techniques and responses, factors, levels, blocks, and treatments, are to be used.

Experimental order
An order generated by the laboratory, research and development, or engineering group that must be run through regular production facilities with potential future product or market development as a project or team goal. Syn: engineering order, laboratory order, pilot order, R&D order.

Experimental research
A form of research (sometimes used in marketing research) where matched sets of people are controlled for certain variables (such as income, age, and so on) while other variables (such as products offered) are varied to test research questions. See: marketing research.

Expert system
A type of artificial intelligence computer system that mimics human experts by using rules and heuristics rather than deterministic algorithms.

Explode
To perform a bill-of-material explosion.

Explode-to-deduct
Syn: backflush.

Explosion
Syn: requirements explosion. Ant: implosion.

Explosion level
Syn: low-level code.

Exponential distribution
A continuous probability distribution where the probability of occurrence either steadily increases or decreases. The steady increase case (positive exponential distribution) is used to model phenomena such as customer service level versus cost. The steady decrease case (negative exponential distribution) is used to model phenomena such as the weight given to any one time period of demand in exponential smoothing.

Exponential smoothing forecast
A type of weighted moving average forecasting technique in which past observations are geometrically discounted according to their age. The heaviest weight is assigned to the most recent data. The smoothing is termed exponential because data points are weighted in accordance with an exponential function of their age. The technique makes use of a smoothing constant to apply to the difference between the most recent forecast and the critical sales data, thus avoiding the necessity of carrying historical sales data. The approach can be used for data that exhibit no trend or seasonal patterns. Higher order exponential smoothing models can be used for data with either (or both) trend and seasonality.

Exports
Products produced in one country and sold in another.

Exposures
The number of times per year that the system risks a stockout. The number of exposures is arrived at by dividing the lot size into the annual usage.

Express
1) Carrier payment to its customers when ships, rail cars, or trailers are unloaded or loaded in less than the time allowed by contract and returned to the carrier for use. See: demurrage, detention. 2) The use of priority package delivery to achieve overnight or second-day delivery.

Express warranty
A positive representation, made by a seller, concerning the nature, character, use, and purpose of goods, that induces the buyer to buy and on which the seller intends the buyer to ­depend.

Extended enterprise
The notion that supply chain partners form a larger entity. See: supply chain community.

Extensible markup language (XML)
This language facilitates direct communication among computers on the Internet. Unlike the older hypertext markup language (HTML), which provides HTML tags giving instructions to a Web browser about how to display information, XML tags give instructions to a Web browser about the category of information.

External customer
A person or organization that receives a good, a service, or information but is not part of the organization supplying it. See: customer, internal customer.

External environment
All the factors that exist outside the boundary of the organization that have the possibility of affecting any part of the organization. See: internal environment, organizational environment.

External factory
A situation where suppliers are viewed as an extension of the firm’s manufacturing capabilities and capacities. The same practices and concerns that are commonly applied to the management of the firm’s manufacturing system should also be applied to the management of the external factory.

External failures cost
The cost related to problems found after the product reaches the customer. This usually includes such costs as warranty and returns.

Externality
The costs or benefits of a firm’s activities borne or received by others.

External setup time
The time associated with elements of a setup procedure performed while the process or machine is running. Ant: internal setup time.

Extranet
A network connection to a partner’s network using secure information processing and Internet protocols to do business.

Extrapolation
Estimation of the future value of some data series based on past observations. Statistical forecasting is a common example. Syn: projection.

Extrinsic forecasting method
A forecast method on a correlated leading indicator, such as estimating furniture sales based on housing starts. Extrinsic forecasts tend to be more useful for large aggregations, such as total company sales, than for individual product sales. Ant: intrinsic forecast method. See: quantitative forecasting technique.

 

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