The purchasing process focused on transactions and nonstrategic material buying. It is closely aligned with the “ordering” portion of executing the purchasing transaction process. The characteristics for tactical buying include stable, limited fluctuations, defined standard specifications, noncritical to production, no delivery issues, and high reliability concerning quality-standard material with very little concern for rejects. See: strategic sourcing.
The set of functional plans (e.g., production plan, sales plan, marketing plan) synchronizing activities across functions that specify production levels, capacity levels, staffing levels, funding levels, and so on, for achieving the intermediate goals and objectives to support the organization’s strategic plan. See: aggregate planning, operational plan, production planning, sales and operations planning, strategic plan, tactical planning.
The process of developing a set of tactical plans (e.g., production plan, sales plan, marketing plan, and so on). Two approaches to tactical planning exist for linking tactical plans to strategic plans—production planning and sales and operations planning. See: operational planning, strategic planning, tactical plan.
Syn: takt time.
A concept of off-line quality control methods conducted at the product and process design stages in the product development cycle. This concept, expressed by Genichi Taguchi, encompasses three phases of product design: system design, parameter design, and tolerance design. The goal is to reduce quality loss by reducing the variability of the product’s characteristics during the parameter phase of product development. Syn: Taguchi methods.
Syn: Taguchi methodology.
Sets the pace of production to match the rate of customer demand and becomes the heartbeat of any lean production system. It is computed as the available production time divided by the rate of customer demand. For example, assume demand is 10,000 units per month, or 500 units per day, and planned available capacity is 420 minutes per day. The takt time = 420 minutes per day/ 500 units per day = 0.84 minutes per unit. This takt time means that a unit should be planned to exit the production system on average every 0.84 minutes. Syn: tact time.
Action taken to compensate for variation within the control limits of a stable system. Tampering increases rather than decreases variation, as evidenced in the funnel experiment. See: funnel experiment.
Things that can be quantitatively measured or valued, such as the costs of physical assets.
Goods stored in tanks. These goods may be raw materials, intermediates, or finished goods. The description of inventory as tank inventory indicates the necessity of calculating the quantity on hand from the levels within the tanks.
For jobs that are late, the delivery date minus the due date. See: earliness, lateness.
The weight of a substance, obtained by deducting the weight of the empty container from the gross weight of the full container.
The process of designing a product to meet a specific cost objective. Target costing involves setting the planned selling price, subtracting the desired profit as well as marketing and distribution costs, thus leaving the required manufacturing or target cost.
Target inventory level
In a min-max inventory system, the equivalent of the maximum. The target inventory is equal to the order point plus a variable order quantity. It is often called an order-up-to inventory level and is used in a periodic review system. Syn: order-up-to level.
1) A fairly homogeneous group of customers to whom a company wishes to appeal. 2) A definable group of buyers to which a marketer has decided to market.
The process of focusing marketing activities specifically on those people who are most likely to buy a company’s products and services. Data gathered on people who use the Internet are enabling companies to identify and focus on more likely candidates.
1) In project management, the lowest level to which work can be subdivided on a project. 2) In activity-based cost accounting, a task, a subdivision of an activity, is the least amount of work. Tasks are used to describe activities.
Abbreviation for time-based competition.
Abbreviation for total cost of ownership.
Abbreviation for transmission control protocol/Internet protocol.
Syn: participative design/engineering.
All work items required between the end of one operation or job and the start of setup for the next operation or job, both jobs requiring the same machinery or facilities. See: teardown time.
Teardown bill of material
Syn: disassembly bill of material.
The time needed to remove a setup from a machine or facility. Teardown is an element of manufacturing lead time, but it is often allowed for in setup or run time rather than separately. See: teardown.
Technical/office protocol (TOP)
An application-specific protocol based on open systems interconnection (OSI) standards. It is designed to allow communication between computers from different suppliers in the technical development and office environments.
The terms, concepts, philosophies, hardware, software, and other attributes used in a field, industrial sector, or business function.
The transmission of technology (e.g., knowledge, skills, software, hardware, etc.) from one country, organization, business, or entity to another country, organization, business, or entity.
Abbreviation for total employee involvement.
Transmission of voice and image data at a distance by electronic means.
Syn: overlapped schedule.
Software that enables a user to log on to remote computers.
An offer by an organization to buy a block of shares directly from shareholders of another organization.
Terms and conditions
All the provisions and agreements of a contract.
The maximum output capability, allowing no adjustments for preventive maintenance, unplanned downtime, shutdown, etc.
Theory of constraints (TOC)
A management philosophy developed by Dr. Eliyahu M. Goldratt that can be viewed as three separate but interrelated areas—logistics, performance measurement, and logical thinking. Logistics include drum-buffer-rope scheduling, buffer management, and VAT analysis. Performance measurement includes throughput, inventory and operating expense, and the five focusing steps. Thinking process tools are important in identifying the root problem (current reality tree), identifying and expanding win-win solutions (evaporating cloud and future reality tree), and developing implementation plans (prerequisite tree and transition tree). Syn: constraint theory. See: constraints management.
Theory of constraints accounting
A cost and managerial accounting system that accumulates costs and revenues into three areas—throughput, inventory, and operating expense. It does not create incentives (through allocation of overhead) to build up inventory. The system is considered to provide a truer reflection of actual revenues and costs than traditional cost accounting. It is closer to a cash flow concept of income than is traditional accounting. The theory of constraints (TOC) accounting provides a simplified and more accurate form of direct costing that subtracts true variable costs (those costs that vary with throughput quantity). Unlike traditional cost accounting systems in which the focus is generally placed on reducing costs in all the various accounts, the primary focus of TOC accounting is on aggressively exploiting the constraint(s) to make more money for the firm. Syn: constraint accounting, throughput accounting.
Syn: triple smoothing.
A buyer and supplier team with a third party that provides product delivery services. This third party may provide added supply chain expertise.
Third-party logistics company
A company that manages all or part of another company’s product delivery operations.
The outsourcing of the warehousing function by the seller of the goods.
A privately produced reference set that includes a listing of part suppliers by product type and geographic area.
1) The total volume of production through a facility (machine, work center, department, plant, or network of plants). 2) In the theory of constraints, the rate at which the system (firm) generates money through sales. Throughput is a separate concept from output. See: machine-limited capacity.
Syn: theory of constraints accounting.
Syn: cycle time (second definition).
Time and attendance
A collection of data relating to an employee’s record of absences and hours worked.
Time-based competition (TBC)
A corporate strategy that emphasizes time as the vehicle for achieving and maintaining a sustainable competitive edge. Its characteristics are (1) it deals only with those lead times that are important to the customers; (2) the lead-time reductions must involve decreases in both the mean and the variance; and (3) the lead-time reductions must be achieved through system/process analysis (the processes must be changed to reduce lead times). TBC is a broad-based strategy. Reductions in lead times are achieved by changing the processes and the decision structures used to design, produce, and deliver products to the customers. TBC involves design, manufacturing, and logistical processes.
Time-based order system
Syn: fixed reorder cycle inventory model.
A number of days of data summarized into a columnar or rowwise display. A weekly time bucket would contain all of the relevant data for an entire week. Weekly time buckets are considered to be the largest possible (at least in the near and medium term) to permit effective MRP.
In the theory of constraints: The amount of time that materials are released to the production process ahead of the scheduled due date. Time buffers protect against uncertainty.
A document recording attendance time, often used for indicating the number of hours for which wages are to be paid. Syn: clock card.
A policy or guideline established to note where various restrictions or changes in operating procedures take place. For example, changes to the master production schedule can be accomplished easily beyond the cumulative lead time, while changes inside the cumulative lead time become increasingly more difficult to a point where changes should be resisted. Time fences can be used to define these points. See: demand time fence, hedge, planning time fence.
Time period safety stock
A safety stock that is based on usage over a designated time frame. The period can be set as days, weeks, or months. Safety stock varies directly with the demand. This differs from statistical-based safety stocks in that the amount is not based on deviation from demand.
Time-phased order point (TPOP)
MRP-like time planning logic for independent demand items, where gross requirements come from a forecast, not via explosion. This technique can be used to plan distribution center inventories as well as to plan for service (repair) parts, because MRP logic can readily handle items with dependent demand, independent demand, or a combination of both. Time-phased order point is an approach that uses time periods, thus allowing for lumpy withdrawals instead of average demand. When used in distribution environments, the planned order releases are input to the master schedule dependent demands. See: fixed reorder quantity inventory model.
The technique of expressing future demand, supply, and inventories by time period. Time phasing is one of the key elements of material requirements planning.
A set of data that is distributed over time, such as demand data in monthly time periods. Various patterns of demand must be considered in time series analysis: seasonal, trend, cyclical, and random.
Time series analysis
Analysis of any variable classified by time in which the values of the variable are functions of the time periods. Time series analysis is used in forecasting. A time series consists of seasonal, cyclical, trend, and random components. See: cyclical component, random component, seasonal component, trend component.
Times interest earned
Ratio of profits before payment of interest and income taxes (EBIT) to interest on debt.
Tracking with each transaction the time of occurrence. It is used in period closings and to tie end items to samples for certification of item properties.
The predetermined times allowed for the performance of a specific job. The standard will often consist of two parts, that for machine setup and that for actual running. The standard can be developed through observation of the actual work (time study), summation of standard micromotion times (predetermined or synthetic time standards), or approximation (historical job times).
An operator-entered labor claim. Syn: job ticket.
The total time required to design, build, and deliver a product (timed from concept to delivery). See: procurement lead time.
The total time required to receive, fill, and deliver an order for an existing product to a customer, timed from the moment that the customer places the order until the customer receives the product. See: purchasing lead time.
Time value of money
1) The cumulative effect of elapsed time on the money value of an event, based on the earning power of equivalent invested funds. See: future worth, present value. 2) The interest rate that capital is expected to earn.
Abbreviation for telnet.
Abbreviation for theory of constraints.
TOC performance measures
In the theory of constraints, throughput, inventory, and operating expense are considered performance measures that link operational decisions to organizational profit.
Abbreviation for trailer on a flatcar.
Allowable departure from a nominal value established by design engineers that is deemed acceptable for the functioning of the good or service over its life cycle.
1) The upper and lower extreme values permitted by the tolerance. 2) In work measurement, the limits between which a specified operation time value or other work unit will be expected to vary. See: lower specification limit, upper specification limit.
Any instrument, such as a saw blade, that is the working part of a machine.
Tool calibration frequency
The recommended length of time between tool calibrations. It is normally expressed in days.
Tool issue order
Syn: tool order.
The identification number assigned to reference and control a specific tool.
A document authorizing issue of specific tools from the tool crib or other storage. Syn: tool issue order.
Acronym for technical/office protocol.
Top management commitment (quality)
In the total quality management philosophy, participation of the highest-level official in the organization’s quality improvement efforts. Participation includes establishing and serving on a quality committee, establishing quality policies and goals, deploying those goals to lower levels of the organization, providing the resources and training that the lower levels need to achieve the goals, participating in quality improvement teams, reviewing organizationwide progress, recognizing those who have performed well, and revising the current reward system to reflect the importance of achieving the quality goals.
Total cost concept
In logistics, the idea that all logistical decisions that provide equal service levels should favor the option that minimizes the total of all logistical costs and not be used on cost reductions in one area alone, such as lower transportation charges.
Total cost curve
1) In cost-volume-profit (breakeven) analysis, the total cost curve is composed of total fixed and variable costs per unit multiplied by the number of units provided. Breakeven quantity occurs where the total cost curve and total sales revenue curve intersect. See: break-even chart, break-even point. 2) In inventory theory, the total cost curve for an inventory item is the sum of the costs of acquiring and carrying the item. See: economic order quantity.
Total cost of ownership (TCO)
In supply chain management, the total cost of ownership of the supply delivery system is the sum of all the costs associated with every activity of the supply stream. The main insight that TCO offers to the supply chain manager is the understanding that the acquisition cost is often a very small portion of the total cost of ownership.
All the costs of operating a firm; total variable costs plus total fixed costs.
Total employee involvement (TEI)
An empowerment program in which employees are invited to participate in actions and decision making that were traditionally reserved for management.
Total factor productivity
A measure of the productivity of a department, plant, strategic business unit, firm, etc., that combines the individual productivities of all its resources including labor, capital, energy, material, and equipment. These individual factor productivities are often combined by weighting each according to its monetary value and then adding them. For example, if material accounts for 40% of the total cost of sales and labor 10% of the total cost of sales, etc., total factor productivity = .4 (material productivity) + .1 (labor productivity) + etc.
In project management, the length of time an activity can be late without delaying succeeding activities. See: float, free float, independent float.
Total lead time
Syn: lead time.
Total procurement lead time
Syn: procurement lead time.
Total productive maintenance (TPM)
Preventive maintenance plus continuing efforts to adapt, modify, and refine equipment to increase flexibility, reduce material handling, and promote continuous flows. It is operator-oriented maintenance with the involvement of all qualified employees in all maintenance activities.
Total quality control (TQC)
The process of creating and producing the total composite good and service characteristics by marketing, engineering, manufacturing, purchasing, etc., through which the good and service will meet the expectations of customers.
Total quality engineering (TQE)
The discipline of designing quality into the product and manufacturing processes by understanding the needs of the customer and performance capabilities of the equipment. See: design for quality.
Total quality management (TQM)
A term coined to describe Japanese-style management approaches to quality improvement. Since then, total quality management (TQM) has taken on many meanings. Simply put, TQM is a management approach to long-term success through customer satisfaction. TQM is based on the participation of all members of an organization in improving processes, goods, services, and the culture in which they work. The methods for implementing this approach are found in teachings of such quality leaders as Philip B. Crosby, W. Edwards Deming, Armand V. Feigenbaum, Kaoru Ishikawa, J.M. Juran, and Genichi Taguchi.
Total value analysis
A method of economic analysis in which a model expresses the dependent variable of interest as a function of independent variables, some of which are controllable.
Syn: direct labor.
Abbreviation for total productive maintenance.
Acronym for time-phased order point.
Abbreviation for total quality control.
Abbreviation for total quality engineering.
Abbreviation for total quality management.
1) The attribute allowing the ongoing location of a shipment to be determined. 2) The registering and tracking of parts, processes, and materials used in production, by lot or serial number.
A request to a transportation line to trace a shipment to expedite its movement or to verify delivery.
In activity-based cost accounting, connecting resources to activities to cost objects using underlying causal drivers to understand how costs occur during normal business activities.
The ratio of the cumulative algebraic sum of the deviations between the forecasts and the actual values to the mean absolute deviation. Used to signal when the validity of the forecasting model might be in doubt. See: forecast error, mean absolute deviation.
Knowledge of a manufacturing process that gives the owner an advantage over competitors who do not have it. Trade secrets are legally protectable.
Any organization external to the firm that plays an integral role within the supply chain community and whose business fortune depends on the success of the supply chain community.
A department or function charged with the responsibility for arranging the most economic classification and method of shipment for both incoming and outgoing materials and products.
Trailer on a flatcar (TOFC)
A specialized form of containerization in which motor and rail transport coordinate. Syn: piggyback.
An item to enhance training, usually minor in nature. Training aids may include charts, graphs, slides, and schematics.
Individual events reported to the system, e.g., issues, receipts, transfers, adjustments.
The quantity of an item moved between sequential work centers during production. See: batch, overlap quantity.
Price that one segment (subunit, department, division, etc.) of an organization charges for a good or service supplied to another segment of the same organization.
The pricing of goods or services transferred from one segment of a business to another. See: interplant transfer.
The process of converting inputs into finished goods or services. In a service firm, the input may be a customer. Syn: transformation system. See: manufacturing process, production process.
Syn: transformation process.
Transient bill of material
Syn: phantom bill of material.
Inventory in transit between manufacturing and stocking locations. See: transportation inventory.
Transition tree (TRT)
In the theory of constraints, a logic-based tool for identifying and sequencing actions in accomplishing an objective. The transitions represent the states or stages in moving from the present situation to the desired objective.
A standard allowance that is assumed on any given order for the movement of items from one operation to the next. Syn: travel time.
Transmission control protocol/Internet protocol (TCP/IP)
The communication protocol used by the Internet.
The function of planning, scheduling, and controlling activities related to mode, vendor, and movement of inventories into and out of an organization.
Inventory that is in transit between locations. See: pipeline stock, transit inventory.
Transportation legal classifications
Legal regulatory classification of transportation by product, shipping size, rates, carriers, and types of services.
A linear programming model concerned with minimizing the costs involved in supplying requirements to several locations from several sources with different costs related to the various combinations of source and requirement locations.
A carrier material to move solids in solution or slurry or to dilute ingredients to safe levels for reaction.
A copy of the manufacturing order that actually moves with the work through the shop. Syn: shop traveler.
Traveling purchase requisition
A purchase requisition designed for repetitive use. After a purchase order has been prepared for the goods requisitioned, the form is returned to the originator, who holds it until a repurchase of the goods is required. The name is derived from the repetitive travel between the originating and purchasing departments. Syn: traveling requisition.
Syn: traveling purchase requisition.
Syn: transit time.
Common stock that has been repurchased by the issuing company.
1) A management technique used to analyze a situation in increasing detail. The full range of tasks to be accomplished to achieve a primary goal and supporting subgoal may be illustrated. 2) In the theory of constraints, a diagram relating effects to underlying causes. See: current reality tree, future reality tree.
General upward or downward movement of a variable over time, e.g., demand, process attribute.
An analysis to determine whether trend (general upward or downward change) exists in data. See: trend forecasting models.
A component of demand, usually describing the impact of increasing or decreasing growth on demand. See: time series analysis.
Trend control chart
A control chart in which the deviation of the subgroup average, X-bar, from an expected trend in the process level is used to evaluate the stability of a process.
Trend forecasting models
Methods for forecasting sales data when a definite upward or downward pattern exists. Models include double exponential smoothing, regression, and triple smoothing. See: trend analysis.
Syn: order point.
A method of exponential smoothing that accounts for accelerating or decelerating trends, such as would be experienced in a fad cycle. Syn: third-order smoothing.
Abbreviation for transition tree.
A truck shipment that qualifies for a lower freight rate because it meets a minimum weight and/or volume.
A fiduciary relationship in which the trustee holds ownership for the benefit of another party (benefactor).
Syn: setup costs.
1) Computer packages that are already prepared by a hardware manufacturer or software house and are ready to run. 2) Any system of machines that is ready for immediate use.
1) Syn: inventory turnover. 2) In the United Kingdom and certain other countries, annual sales volume.
An indicator of whether or not a company is using its assets efficiently. It is measured by dividing sales by average assets during a particular period.
Two-bin inventory system
A type of fixed-order system in which inventory is carried in two bins. A replenishment quantity is ordered when the first bin (working) is empty. During the replenishment lead time, material is used from the second bin. When the material is received, the second bin (which contains a quantity to cover demand during lead time plus some safety stock) is refilled and the excess is put into the working bin. At this time, stock is drawn from the first bin until it is again exhausted. This term is also used loosely to describe any fixed-order system even when physical “bins” do not exist. Syn: bin reserve system. See: visual review system.
Two-card kanban system
A kanban system where a move card and production card are employed. The move card authorizes the movement of a specific number of parts from a source to a point of use. The move card is attached to the standard container of parts during movement to the point of use of the parts. The production card authorizes the production of a given number of parts for use or replenishment. Syn: dual-card kanban system. See: one-card kanban system.
Two-level master schedule
A master scheduling approach in which a planning bill of material is used to master schedule an end product or family, along with selected key features (options and accessories). See: hedge, multilevel master schedule, production forecast.
Type I error
An incorrect decision to reject something (such as a statistical hypothesis or a lot of products) when it is acceptable. See: producer’s risk.
Type II error
An incorrect decision to accept something when it is unacceptable. See: consumer’s risk.