Inventory Accuracy Glossary
This is the complete and updated glossary from Inventory Accuracy: People, Processes, & Technology.
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1D bar code—a bar code that uses a series of bars and spaces to represent data. 1D barcodes (also called linear bar codes) are read scanning across the width of the bars (one dimension).
2D bar code—a bar code that uses small geometric shapes to represent data. 2D codes stack the shapes or use a matrix to allow more information to be stored in the same space as a 1D bar code. Whereas a 1D bar code only requires the scanner to read a single narrow band across the bar code, a 2D bar code requires the scanner to read the code both horizontally and vertically (two dimensions).
24/7—refers to operations that run non-stop 24 hours per day, 7 days per week.
ABC classification—stratification of inventory using a specific activity-based driver. Examples of ABC classifications would include ABC by velocity, ABC by units sold, ABC by dollars sold, and ABC by average inventory investment. ABC classifications may be used to determine cycle count frequencies, tolerance levels, and to break down accuracy measurements.
Absolute variance—a numeric representation of a variance that ignores whether the variance is positive or negative. A summarized variance number or amount where positive and negative variances are not allowed to offset each other.
Accuracy—correctness of data to reality. Inventory accuracy is the consistency to which the data in your inventory system is in agreement with the actual inventory in your supply chain.
Accuracy audit—a periodic verification of the accuracy of inventory by using a sampling of inventory data and physical counts to determine correctness. Accuracy audits can be used as a replacement for the annual physical inventory for financial accounting purposes.
ActiveX control—a small computer program that can be plugged into compliant applications to provide added functionality. ActiveX controls are often used to add bar code printing functionality to applications.
ADC—automated data capture. Systems of hardware and software used to automatically pass data used to process transactions in warehouses and manufacturing operations. Data capture systems may consist of fixed terminals, portable terminals and computers, radio frequency (RF) computers, and various types of bar code scanners and RFID readers.
A-frame—a type of automated picking system. A-frames are large machines that dispense items onto a conveyor that runs down the center of the machine.
AGV—automated guided vehicle. Vehicles that can be programmed to automatically drive to designated points and perform preprogrammed functions
Aisle—the physical passageway used for the travel of material handling equipment and pedestrians. Also, the location designation of the set of locations on either side of the physical aisle.
Allocations—refers to actual demand created by sales orders or production orders against a specific item. The terminology and the actual processing that controls allocations will vary from one software system to another. Basically a standard allocation is an aggregate quantity of demand against a specific item in a specific facility, standard allocations may be referred to as normal allocations, soft allocations, soft commitments, regular allocations. Standard allocations do not specify that specific units will go to specific orders. A firm allocation is an allocation against specific units within a facility such as an allocation against a specific location, lot, or serial number. Firm allocations are also referred to as specific allocations, frozen allocations, hard allocations, hard commitments, holds, reserved inventory. Standard allocations simply show that there is actual demand while firm allocations reserve or hold the inventory for the specific order designated.
Annual physical inventory—a yearly count of all inventory. See also Physical inventory.
APICS—American Production and Inventory Control Society. www.apics.org
ASN—advanced shipment notification. Advanced shipment notifications are used to notify a customer of a shipment. ASNs will often include PO numbers, SKU numbers, lot numbers, quantity, pallet or container number, and carton number. ASNs may be paper based, however electronic notification is preferred. Advanced shipment notification systems are usually combined with bar coded compliance labeling that allows the customer to receive the shipment into inventory through the use of bar code scanners and automated data collection systems.
ASQ—American Society for Quality. www.asq.org
ASRS—automated storage and retrieval systems. A system of rows of rack, each row has a dedicated retrieval unit that moves vertically and horizontally along the rack picking and putting away loads. Versions include unit-load ASRS and mini-load ASRS.
Audit—a verification of the accuracy of data.
Automatic mode—describes the manner by which people process information and apply actions when their attention is divided while performing repetitive tasks.
Autodiscrimination—the functionality of a bar code reader to recognize the bar code symbology being scanned thus allowing a reader to read several different symbologies consecutively
Available—refers to the status of inventory as it relates to its ability to be sold or consumed. Availability calculations are used to determine this status. Availability calculations vary from system to system but basically subtract any current allocations or holds on inventory from the current on-hand balance. See also Allocations
Backflush—method for issuing (reducing on-hand quantities) materials to a production order. In backflushing the material is issued automatically when production is posted against an operation. The backflushing program will use the quantity completed to calculate through the bill of material the quantities of the components used and reduce on-hand balances by this amount. See also Transaction by exception.
Backorder—an order that is past its required date for an item that has inadequate inventory to fill the order.
Batch computer—portable computers that are designed to periodically download data to a host system through a wired connection.
Batch picking—order picking method where orders are grouped into small batches. An order picker will pick all orders within the batch in one pass. Batch picking is usually associated with pickers with multi-tiered picking carts moving up and down aisles picking batches of usually 4 to 12 orders, however batch picking is also very common when working with automated material handling equipment such as carousels.
Bar code—a series of bars and spaces that are encoded to represent characters. Bar codes are designed to be machine-readable.
Bar code font—a font that is used to create bar codes. Additional programs are often needed to convert the bar code data into the proper format prior to applying the bar code font.
Bar code printer—a printer capable of converting characters into a bar code. A bar code printer can provide faster printing by allowing the computer to send special codes to the printer designating the data to be converted into a bar code. The printer then generates the bar code rather than requiring the computer software to generate an image of a bar code and send the image to the printer.
Bar code reader—any device that can convert a bar code image into data. Common bar code readers consist of pistol-type scanners, wand scanners, and fixed position scanners.
Bar code verifier—a device used to check the quality of a printed bar code.
Bar code symbology—a "bar code version" consisting of a set of specifications that determine how the bars and spaces are produced and later converted to numbers, letters, and characters. Bar code symbologies are broken into two primary groups: one-dimensional bar codes, and two-dimensional bar codes.
Batch-level transactions—transactions that are executed in large numbers through the use of a batch program. Batch-level transactions are usually confirmation-type transactions where the system is automatically completing a large group of transactions based on the assumption that all tasks were completed based upon the computer's recommendations. Batch-level transactions are only possible with directed tasks.
Benchmark—a measurement that is used for comparison purposes.
Benchmarking—the act of comparing measurement to a benchmark. External benchmarking seeks to compare internal measurement to measurement from an external source. Internal benchmarking seeks to compare internal measurements to historic internal measurements.
Bin—a physical storage container such as a small corrugated or plastic parts bin. Also used interchangeably with the term slot to designate a single storage location.
Blind counts—describes method used in cycle counting and physical inventories where your counters are provided with item number and location, but no quantity information.
BOM—bill of materials. Lists materials (components or ingredients) required to produce an item. Multilevel BOMs also show subassemblies and their components. Other information such as scrap factors may also be included in the BOM for use in materials planning and costing.
Brainstorming—method used to generate ideas on causes and possible solutions to process problems. A brainstorming session usually involves a group of people getting together and listing ideas. Analysis and commentary on ideas is held off until after the brainstorming session has concluded.
Built-in check—a check that intrinsically exists as part of a process.
Bulk—the classic use of the term bulk (bulk materials, bulk inventory, bulk storage) in inventory management and distribution refers to raw materials such as coal, iron ore, grains, etc. that are stored or transported in large quantities. This would include rail cars, tanker trucks, or silos full of a single material. However, this term can also have a variety of other definitions based upon the specific industry or facility. For example, a small-parts picking operation may refer to a case storage area as "bulk", while a case-picking operation may refer to the full-pallet area as the "bulk area".
Business objectives—the strategic goals of the organization.
Carousel—type of automated material handling equipment generally used for high volume small parts order picking operations. Horizontal carousels are a version of the same equipment used by dry cleaners to store and retrieve clothing; they have racks hanging from them that can be configured to accommodate various size storage bins. Vertical Carousels consist of a serious of horizontal trays on a vertical carousel. Vertical carousels are frequently used in laboratories and specialty manufacturing operations.
Carton—a corrugated box.
Case—a container (usually a corrugated box) that contains multiple units of an item.
Catch weight—Used primarily in the food industry for products such as seafood, meats, and cheeses; catch weights refer to the actual weight of variable-weight items that use weight as the sales unit of measure. Catch weights are generally recorded during the order picking or shipping process. Systems using catch weights must be able to correctly process sales order line items based on the catch weights being within specific tolerances of the "order quantity".
CCD—charged coupled device. Used to describe a type of barcode scanner that acts like a small digital camera that takes a digital image of the barcode as opposed to the standard barcode scanner that uses a laser.
Check—any type of verification of a process or data.
Check character—characters added to a bar code to verify a correct read of the bar code. Check characters are usually the result of a mathematical calculation based upon the data in the bar code. Not all bar codes contain check characters.
Check-weighing—a method that uses scales as a check to verify the accuracy of orders or containers.
Clonable—functionality to copy programming from one device to another.
Code 128—a linear (1D) bar code symbology commonly used in warehouse and inventory tracking applications.
Commodity—a logical grouping of inventory based upon user-defined characteristics. Different industries will define commodity classifications differently. For example, in one industry they may have a classification of "building materials" that encompasses anything that would be used to describe all construction materials while another industry may have separate commodity classifications for "framing lumber," "decking materials," "fasteners," and "concrete products."
Compliance labels—standardized label formats used by trading partners usually containing bar codes. Compliance labels are used as shipping labels, container/pallet labels, carton labels, piece labels. Many bar code labeling software products now have the more common compliance label standards set up as templates.
Components—inventory used in the manufacturing process. Though some would categorize components as lower level manufactured discrete items, I consider anything used in the manufacturing process a component. I use the term synonymously with the term "raw materials." I also consider a subassembly a component.
Compounding a sample—method used with counting scales to use a smaller sample and then use the scale to build a larger quantity that is then resampled to represent the final sample.
Conditional formatting—formatting of data on reports or computer programs that changes based upon specific criteria. Examples of conditional formatting would include printing and displaying negative quantities in red, only printing the unit of measure if it is not "eaches," or printing an item number in reverse text if there are special handling instructions associated with the item. Conditional formatting is used to help focus attention on data elements when the importance of the data element may be different from one record to the next.
Configuration processing—software functionality that allows a product to be defined by selecting various pre-defined options rather than having every possible combination of options pre-defined as specific SKUs. Placing an order for a computer and specifying hard drive, processor, memory, graphics card, sound card, etc. would be an example of configuration processing.
Confirmation transactions—transactions that are completed by a simple confirmation step rather than by entering details of the transaction. Confirmation transactions are only possible when the computer already "knows" the details of the task. See also Transaction by exception.
Container—can be anything designed to hold (contain) materials for storage or transport including cartons, totes, drums, bags, etc.
Containerization—using standardized containers for the storage and transport of materials within a facility or supply chain. Materials are ordered in multiples of the container quantity. The benefits of containerization include reduced product damage, reduced waste (by using reusable containers), less handling, and greater levels of inventory accuracy by simplifying counting process.
Continuous improvement—a quality philosophy that assumes further improvements are always possible and that processes should be continuously reevaluated and improvements implemented.
Contract warehouse—a business that handles shipping, receiving, and storage of products on a contract basis. Contract warehouses will generally require a client to commit to a specific period of time (generally in years) for the services. Contracts may or may not require clients to purchase or subsidize storage and material handling equipment. Fees for contract warehouses may be transaction and storage based, fixed, cost plus, or any combination. See also Public warehouse and 3PL.
Control group—a small sample of items that are repeatedly counted over a period of time to identify process problems.
Control policy—a documented policy that describes process controls.
Coproduct—the term coproduct is used to describe multiple items that are produced simultaneously during a production run. Coproducts are often used to increase yields in cutting operations such as die cutting or sawing when it is found that scrap can be reduced by combining multiple-sized products in a single production run. Coproducts are also used to reduce the frequency of machine setups required in these same types of operations. Coproducts, also known as byproducts, are also common in process manufacturing such as in chemical plants. Although the concept of coproducts is fairly simple, the programming logic required to provide for planning and processing of coproducts is very complicated.
Counting scale—a scale that converts weight information into piece count information and vice versa.
COGS—cost of goods sold. Accounting term used to describe the total value (cost) of products sold during a specific time period. Since inventory is an asset, it is not expensed when it is purchased or produced, it goes into an asset account (the inventory account). When product is sold, the value of the product (the cost, not the sell price) is moved from the asset account to an expense account called “cost of goods sold” or COGS. COGS appears on the profit and loss statement and is also used for calculating inventory turns.
Cost of errors—the costs associated with errors. Costs of errors include both tangible and intangible costs. Tangible costs would include costs such as transportation costs incurred by expediting materials or by correcting shipping errors, cost of production delays and interruptions related to inventory errors, labor costs associated with searching for lost product, clerical costs of correcting errors, and even costs associated with a cycle count program. Intangible costs include cost of customer dissatisfaction and costs associated with employee frustration.
Count frequency—the number of times per year you plan on counting an item. Count frequency is used to calculate cycle count period. See also Cycle count period.
Count sheet—a document used in cycle counting and physical inventories to facilitate the counting of inventory. A count sheet will contain multiple items and locations to be counted and can be a simple report or a live document produced by cycle counting programs.
Count tag—a document used in physical inventories to facilitate the counting of inventory. A separate count tag is created for each item/location combination and a unique ID number is assigned to each count tag to facilitate data entry and verification of counts.
Cross-docking—in its purest form cross-docking is the action of unloading materials from an incoming trailer or rail car and immediately loading these materials in outbound trailers or rail cars thus eliminating the need for warehousing (storage). In reality pure cross-docking is rare outside of transportation hubs and hub-and-spoke type distribution networks. Many "cross-docking" operations require large staging areas where inbound materials are sorted, consolidated, and stored until the outbound shipment is complete and ready to ship. This staging may take hours, days, or even weeks in which case the "staging area" is essentially a "warehouse".
Cross-training—training workers in tasks outside of their normal job responsibilities.
Cube utilization—term used in warehouse management systems. Cube logic is often incorporated but seldom used in WMS systems because of its tendency to treat your product as liquid (fitting a round peg in a square hole).
Custom form—any form designed for a specific task in a specific environment.
Cycle count—any process that verifies the correctness of inventory quantity data by counting portions of the inventory on an ongoing basis. In other words, any process that uses regularly scheduled counts but does not count the entire facility's inventory in a single event.
Cycle count number—number assigned to a group of cycle counts used to facilitate tracking and updating of transactions associated with the group.
Cycle count period— a time period used in cycle counting programs to calculate the next count date based upon the previous count date. Count period is generally stated in the number of days between counts. An understanding of whether your system uses calendar days or work days is necessary to properly convert count frequency to count period. See also Count frequency.
Cycle time—the time that transpires from the time a task (or series of tasks) is initiated to the time a task is completed. For example, from the time a shipping order is printed to the time it is loaded on the truck and the system is updated.
Database—computer term that describes the structured electronic storage of data. A database is the highest level of a group of data, in most business software, all data is maintained in a single database. A database is a collection of files (also called tables), with each file consisting of one or more records, with each record consisting of one or more fields.
Data elements—individual pieces of data in a database, on a report, or on a computer screen. Individual fields in a database file such as the item number or quantity from an inventory record are examples of data elements.
Data element identifier—text used to describe a data element. For example, the text that reads "PHONE NUMBER" that appears on a report used to identify the data element that contains the customer's phone number.
Data formatting—the specific way data elements are displayed or printed on a report or computer screen. Data formatting not only includes the font and style (bold, italics, etc.) of the text but also the inclusion of spaces or special characters to make the data element more readable.
Data identifier— a character or set of characters added to a bar code to identify the type of data included in the bar code.
DataMatrix—a two-dimensional (2D) bar code symbology.
Data selection—term that describes the "filtering" of data to only display certain records on reports or computer screens. Setting a count program to only release counts for a specific aisle is an example of data selection.
Data sequencing—refers to the sorting of data on reports and computer screens. Sorting a count sheet by location is an example of data sequencing.
Decoded scanner—scanner that has built-in logic to convert the bar code into ASCII characters and then pass the ASCII characters to the connected device.
Decoder—interface device that allows you to connect one or more undecoded scanners or other devices (such as scales and credit card readers) to a computer or terminal. Decoders are often called wedges because they frequently use a keyboard wedge interface to connect and communicate with a computer or terminal. The decoder will convert the scanner output into ASCII characters and then pass this data to your computer.
Demand—The need for a specific item in a specific quantity.
Depth of field—describes the working distance of a particular scanner from the bar code. This cannot be listed as a single range since the depth of field is also dependant upon the density (size) of the bar code and the reflectivity of the media on which the bar code is printed.
Directed tasks—tasks that can be completed based upon detailed information provided by the computer system. An order picking task where the computer details the specific item, location, and quantity to pick is an example of a directed task. If the computer could not specify the location and quantity forcing the worker to choose locations or change quantities, it would not be a directed task. Directed tasks set up the opportunity for confirmation transactions.
Direct thermal—printing method used to produce bar code labels. Direct thermal uses a heated print head to darken areas on special thermal activated label stock.
Discrete manufacturing—manufacturing of distinct items (items you can easily count, touch, see) such as a pencil, a light bulb, a telephone, a bicycle, a fuel pump, etc. Discrete as opposed to process manufacturing. See also Process manufacturing.
Dock-to-stock—receiving method whereby materials are delivered directly to the point of use (storage or manufacturing) skipping the normal receipt check in process.
Document—a physical piece of paper produced by a computer system used to execute a task, or the electronic representation of a set of data used to execute a task.
Document-level transactions—confirmation transactions where multiple detail-level transactions are executed by confirming the completion of a set of tasks at the document level. For example, using the confirmation of a shipping order to automatically complete transactions for all items shipped on the order. Document-level transactions are only possible with directed tasks.
Double-deep rack—pallet rack designed to allow storage of pallets two-deep. Requires use of a double-deep reach truck to place and extract loads.
DRP—distribution requirements planning. Software used to plan inventory requirements in a multiple plant/warehouse environment. DRP may be used for both distribution and manufacturing. In manufacturing DRP will work directly with MRP. DRP may also be defined as distribution resource planning, which also includes determining labor, equipment, and warehouse space requirements.
Drive-in rack—racking system designed to allow a lift truck to drive into the bay creating very high-density storage for non-stackable loads. Useful for operations with limited SKUs and high quantities of pallets per SKU. FIFO is difficult to maintain in drive-in racking systems.
EDI—electronic data interchange. A method for exchanging data between systems based on a set of standardized specifications.
Environmental factor—any characteristic of the operating environment. Environmental factors include anything from storage methods and product packaging to facility temperature and lighting.
EPC—electronic product code. EPC is the RFID version of the UPC barcode. EPC is intended to be used for specific product identification. However, EPC goes beyond UPC by not only identifying the product as an SKU, but also providing access to additional data (via the EPC Network) about the origin and history of the specific units. The EPC tag itself identifies the manufacturer, product, version, and serial number. It's the serial number that takes EPC to the next level. This is the key to data related to specific lots/batches as well as potentially tracking the specific unit's history as it moves through the supply chain. This data is stored somewhere else (the internet or other network) but a standardized architecture allows you to access the data much like you would access a web page (though this would be happening automatically behind the scenes).
EPC Network—an architecture similar to the internet designed to store and allow access to data related to EPC. For example, detailed item information such as description, ingredients, size, weight, cost; manufacturing information about the specific lot such as when and where it was produced and expiration dates; and distribution information about where it has been including addresses, dates and times. The data could be as detailed as including environmental factors such as temperatures during manufacturing or storage. This data flexibility is accomplished through the use of a new computer language called Physical Markup Language (PML) which is essentially a variation of the more commonly known Extensible Markup Language (XML).
ERP—enterprise resource planning. Software systems designed to manage most or all aspects of a manufacturing or distribution enterprise (an expanded version of MRP systems). ERP systems are usually broken down into modules such as financials, sales, purchasing, inventory management, manufacturing, MRP, DRP. The modules are designed to work seamlessly with the rest of the system and should provide a consistent user interface between them. These systems usually have extensive set up options that allow you some flexibility in customizing their functionality to your specific business needs.
Event-triggered counting method—any method used to determine when to count an item that is based upon a specific event occurring. Examples of events that could trigger a count would include inventory level dropping below reorder point, the completion of a production run, or on-hand inventory reaching zero.
Exception handling—the process of managing atypical events that occur during a process. Exception handling is critical in automated processes.
Exception report—a report that uses data selection based on a very specific set of circumstances to identify process exceptions. Reports that identify items with negative on-hand quantities or locations with more than one item stored in them would be examples of exception reports.
Faking the count—the activity of changing a count quantity in a cycle count program to make it match the expected quantity.
Field—a specific data element within a record. Examples of fields that would be found in an Item Master file would include Item Number, Item Description, Stocking Type, and Vendor,
FIFO—first-in first-out. Describes the method of rotating inventory to use oldest product first. Actually an accounting term used to describe an inventory costing method. See also LIFO
File—in database terminology, files (also known as tables) are organized (structured) groups (lists) of similar information. Each file consists of one or more records that consist of one or more fields. An inventory management database will consist of many files used to store the needed data. File examples would include an Item Master File, Purchase Order File (usually broken down into two files, a header and a detail file), and Transaction History File.
Finished goods—inventory that is in a salable or shipable form based upon its location within the supply chain. An item considered a finished good in a supplying plant might be considered a component or raw material in a receiving plant.
Fixed location storage—storage method where an item is always stored in the same physical location.
Fixed-position scanner—stationary bar code reader that requires the bar code to be placed in front of the reader to scan.
Floor stock—inventory that is consumed in production but is not tracked in the perpetual inventory system. Floor stock is different from non-stock inventory since it does actually have an SKU number and item master record, but rather than tracking quantities in the inventory system, the materials are expensed as they are received
Floor-to-system count— describes a method of counting inventory where you document inventory balances found in storage and staging areas and then compare this data with the system information
Flow rack—racking system that incorporates sections of conveyor to allow the cartons or pallets to flow to the face of the rack. Stocking is performed from the rear of the rack.
Focus-related errors—errors caused by a lack of attention to the task at hand. Focus-related errors are common in repetitive tasks where divided attention allows the worker to incorrectly execute the task.
Forced count—counting an item based upon an expected error. When there is reason to suspect inventory of an item may be incorrect, the item is manually added to the next cycle count.
Forecast—a forecast is an estimation of future demand. Most forecasts use historical demand to calculate future demand. Adjustments for seasonality and trend are often necessary.
Fork lift—See Lift truck.
Form—anything that requires a worker to write on it. A document may also be a form. Data entry programs are also sometimes referred to as forms.
Freezing inventory balances—in most cycle counting programs the term "freezing" refers to copying the current on-hand inventory balance into the cycle count file. This may also be referred to as taking a snapshot of the inventory balance. It rarely means that the inventory is actually frozen in a way that prevents transactions from occurring.
Gaylord—a large corrugated container usually sized to match the length and width dimensions of a pallet. Gaylord is actually a trade name that has become synonymous with this specific type of container.
Good count bad count—accuracy measurement method that compares the number of good counts to the number of total counts. Tolerances are often used to allow counts that are close but not perfect to still be categorized as good counts.
GTAG—global tag. GTAG is an international RFID standard that can be used for general asset tracking.
GUI—graphical user interface. Computer interface normally associated with operating systems like Windows and Macintosh where a mouse can be used to navigate the screen. A graphical user interface will allow the use of graphics such as icons and buttons to execute actions and also uses drag-and-drop to perform actions.
Hand-held scanner—a bar code reader that that is manually pointed at a bar code to read it. Most common are the wired pistol-shaped devices used in retail stores. Hand-held scanners can also be wireless.
Hand-held computer—any portable computer that can be operated while holding it in one hand.
Headmount display—a wearable device that is positioned in front of one of the user's eyes and projects a viewable image of a computer screen.
High-density storage—describes a variety of storage methods where unit loads such as full pallets, crates, rolls, or bales are stored more than one unit deep and/or high. Stacked bulk floor storage, drive-in/drive-thru racking, pushback rack, flow rack, and to a lesser extent, double-deep rack, are examples of high-density storage methods.
Host system—the primary computer system. The computer system on which the primary database resides.
Housekeeping—the orderliness and cleanliness of work areas and storage areas.
Human-machine interface—any point where data is communicated from a worker to a computer or from a computer to a worker. Data entry programs, inquire programs, reports, documents, LED displays, and voice commands are all examples of human-machine interfaces.
IF THEN ELSE—describes the most common logic used by software to make decisions. IF THEN ELSE is used to describe a situation and then describe what the program should do if the situation is true and what it should do if the situation is false. For example, for your computer to tell you when you have email, the software is programmed such that IF there is new mail in your mailbox, THEN execute the sound file that has the "you've got mail" message, ELSE do nothing.
IIE—Institute of Industrial Engineers. www.iienet.org.
Incentive—any type of reward given when a specific goal is achieved.
Inner pack—a smaller container within a container used to separate smaller quantities of an item. Inner packs are usually smaller chipboard boxes or poly bags used within a case to break down the larger case quantity into smaller, easier to handle and count quantities. Also known as unit packs.
Integration—process of making separate software and hardware systems and devices communicate with each other.
In-transit inventory—usually refers to inventory in a multi-plant environment that has been shipped from one plant to another. When it is shipped, the inventory is reduced in the shipping plant and added to the in-transit inventory. When received, the inventory is reduced from the in-transit inventory and added to the inventory at the receiving plant.
Inventory adjustment—any transaction that increases or decreases on-hand balances.
Inventory characteristic—any distinguishing trait that describes the types of inventory you are handling. The physical size, the form, and the method of unitizing are examples of inventory characteristics. More specific examples of characteristics would be rolls of steel, liquids in drums, or cases of small parts on pallets.
Inventory system—the software used to plan and track inventory balances and activities.
Issue—to reduce on-hand inventory and assign it to a specific document or process. Such as issuing raw materials to a production order or issuing finished goods to a shipping order.
Item—any unique material or product stored or handled, or any unique configuration of a material or product stored or handled. Item is used synonymously with SKU.
Item master—a collection of data that describes a specific item. Item master is also used to describe the database file that contains this data.
Item number—the identification number assigned to an item. Also called the part number, SKU number, or SKU.
Item numbering scheme—the format or template used for assigning item numbers.
Item history file—a database file that contains detail records for each inventory transaction that has occurred.
JIT—just-in-time Term usually thought of as describing inventory arriving or being produced just in time for the shipment or next process. Actually JIT is a process for optimizing manufacturing processes by eliminating all process waste, including wasted steps, wasted material, excess inventory, etc.
Kanban—used as part of a just-in-time production operation where components and sub-assemblies are produced based upon notification of demand from a subsequent operation. Historically, kanban has been a physical notification such as a card (kanban cards) or even an empty hopper or tote sent up the line to the previous operation.
Keyboard wedge interface—an interface that allows you to connect a bar code scanner or other device between your keyboard and the computer or terminal. Any data scanned will be sent as ASCII characters and immediately appear on the computer screen just as though it were typed on the keyboard.
Key data element—pieces of information that are critical to the completion of a task.
Kit—items that are made up of multiple separate parts (not assembled).
Laser scanner—bar code scanner that uses a laser to read the bar code.
Last count date—date maintained in the inventory database that records the last date that the item/location combination was on an approved count sheet. Last count date is used in combination with cycle count period to calculate the next count date.
Lead-time—amount of time required for an item to be available for use from the time it is ordered. Lead time should include purchase order processing time, vendor processing time, in-transit time, receiving, inspection, and any prepack times.
Lead-time demand—forecasted demand during the lead time period. For example, if your forecasted demand is 3 units per day and your lead time is 12 days your lead time demand would be 36 units.
License plate—a document, tag, or label used to identify a unitized load.
LIFO—last-in first-out. In warehousing, LIFO describes the method for using the newest inventory first (I've never seen an operation that uses this). In accounting it's a term used to describe an inventory costing method. See also FIFO
Lift truck—vehicles used to lift, move, stack, rack, or otherwise manipulate loads. Material handling people use a lot of terms to describe lift trucks, some terms describe specific types of vehicles, others are slang terms or trade names that people often mistakenly use to describe trucks. Terms include industrial truck, forklift, reach truck, motorized pallet trucks, turret trucks, counterbalanced forklift, walkie, rider, walkie rider, walkie stacker, straddle lift, side loader, order pickers, high lift, cherry picker, Jeep, Towmotor, Yale, Crown, Hyster, Raymond, Clark, Drexel.
Light-directed—systems that use visible lights or displays to direct activities. See also Pick-go-light, Put-to-light.
Line item—a single detail record.
Linear bar code—See 1D bar code.
Live document—a document that can be tracked within a computer system by a status designation.
Load—in manufacturing, describes the amount of production scheduled against a plant or machine. In warehousing, describes the materials being handled by a piece of equipment. In transportation, describes the materials being transported.
Location—the place where the inventory is physically stored or staged. Also used to describe the identification number assigned to the specific storage slot.
Locator System—locator systems are inventory-tracking systems that allow you to assign specific physical locations to your inventory to facilitate greater tracking and the ability to store product randomly. Location functionality in software can range from a simple text field attached to an item that notes a single location, to systems that allow multiple locations per item and track inventory quantities by location. Warehouse management systems (WMS) take locator systems to the next level by adding functionality to direct the movement between locations.
Logical location—location set up within a locator system that does not exist as a specific physical location.
Lost inventory—inventory that probably still physically exists somewhere within the facility or supply chain, but cannot be found.
Lot number—number assigned to a discrete batch of an item. Lot numbers are usually assigned to each separate production run of an item.
Lot tracking—the process of tracking inventory by lot number through manufacturing and distribution processes.
LTL—less-than-truckload. Transportation term that describes shipments that are less than a trailer load in size. LTL also is used to describe the carriers that handle these loads.
Macro—a simple computer program that scripts a series of actions. Macros can usually be created without writing any programming code. The simplest way to create a macro is to record a series of keystrokes that can then be reused later.
Manufacturing order—See Production order
Materials list—a listing of material required for a production order. The manufacturing planning system will use the bill of material to calculate the material requirements for a manufacturing order resulting in the materials list. Materials lists can also be created or edited manually.
MES—manufacturing execution system. Software systems designed to integrate with enterprise systems to enhance the shop floor control functionality that is usually inadequate in ERP systems. MES provides for shop floor scheduling, production and labor reporting, integration with computerized manufacturing systems such as automatic data collection and computerized machinery.
Memory-related errors—type of focus-related error where your memory accesses incorrect detail information during the execution of a task.
MHMS—Material Handling Management Society. www.mhia.org/mhms
Middleware—software designed to integrate separate software and/or hardware systems. Middleware provides the communication between the separate systems.
Minimum standard—a statement of the lowest acceptable level of performance.
Modification—a change to software that requires changing or adding to the source code.
Move ticket—a document used to move inventory within a facility. Warehouse management systems use move tickets to direct and track material movements. In a paperless environment the electronic version of a move ticket is often called a task or a trip.
MRP—manufacturing resources planning. Process for determining material, labor and machine requirements in a manufacturing environment. MRPII (manufacturing resources planning) is the consolidation of material requirements planning (MRP), capacity requirements planning (CRP), and master production scheduling (MPS). MRP was originally designed for materials planning only. When labor and machine (resources) planning were incorporated it became known as MRPII. Today the definition of MRPII is generally associated with MRP systems.
MRO—maintenance, repair, and operating inventory. Term used to describe inventory used to maintain equipment as well as miscellaneous supplies such as office and cleaning supplies.
Multi-plant—environments where multiple facilities are managed. DRP is often used to plan inventory in multi-plant environments. See also DRP
Net variance—a summarized variance number or amount where positive and negative variances are allowed to offset each other.
Next count date—date used in cycle counting programs that is calculated by adding the cycle count period (in days) to the last count date.
Non-stock inventory—inventory that is not tracked within your perpetual inventory system. Non-stock inventory will not have an item-master record or internal SKU number.
Obsolete—the condition of being no longer of use due to passage of time. Usually associated with old, outdated designs.
Omni-directional scanner—bar code scanner that can scan in several directions negating the need to orientate the scanner with the bar code.
Open order—a live document (usually a shipping order, purchase order or production order) that has been initiated but has not been completed or closed in the computer system. An active order that still has tasks associated with it that are not yet completed.
Operation—in manufacturing an operation is a step in the manufacturing process. In more general terms, an operation is the combination of a physical facility and the processes that occur within that facility.
Opportunity counts—counts that are timed to take advantage of a specific set of circumstances.
Order picking—the process of selecting and assembling inventory for shipments or for use in production processes.
Order selector—lift truck designed specifically for manual handling of less than pallet load quantities in racking. Man-up design has fixed forks attached to a platform that elevates the load and the operator to facilitate manual loading and unloading from racking.
Outside operation—a step in the manufacturing process that is performed by an outside supplier.
Outsourcing—the act of transferring responsibilities for a process to an outside supplier.
Overhead—indirect costs associated with facilities and management that are applied to the costs of manufactured goods through the manufacturing reporting process.
Paperless system—any system that replaces the paper-based interface with other forms of communication such as using computer screens, lights, or speech technology.
Pareto principle—states that a small number of causes are responsible for a great number of effects. Also known as the 80/20 rule.
Part number—See Item number.
Parts list—See Materials list.
Past due—a status at which the tasks associated with an order are not yet completed by the required date on the order. Usually refers to purchase orders, production orders, or shipping orders.
PDF—portable document format. A standardized computer file format that is used for documents that can be printed or displayed on a computer screen. A PDF file retains all graphics, fonts, and formats of the original document and incorporates compression to reduce the overall size of the file.
PDF417—a two-dimensional (2D) bar code symbology.
Perpetual inventory system—an inventory system that uses transactions to adjust on-hand balances to coincide with physical activities that are occurring.
Physical inventory—the process of counting all inventory in a warehouse or plant in a single event. Also called a wall-to-wall inventory.
Physical Markup Language—a variation of the more commonly known Extensible Markup Language (XML). Physical Markup Language (PML) is designed specifically for the EPC Network. See also EPC Network.
Pick-and-pass—See Zone picking.
Picking accuracy—accuracy measurement associated with the order picking process.
Pick slip—the document used to pick shipping or production orders. Also known as a pick list.
Pick tag—a version of a pick slip in which each line item is printed as a separate document (usually a smaller paper document or label)
Pick-to-clear—method often used in warehouse management systems that directs picking to the locations with the smallest quantities on hand.
Pick-to-carton—pick-to-carton logic uses item dimensions/weights to select the shipping carton prior to the order picking process. Items are then picked directly into the shipping carton.
Pick-to-light—pick-to light systems consist of lights and LED displays for each pick location. The system uses software to light the next pick and display the quantity to pick.
Pick-to-trailer—order-picking method where the order picker transports the materials directly from the pick location to the trailer without any interim checking or staging steps.
Planned order—term used within MRP and DRP systems for system generated planned order quantities. Planned orders only exist within the computer system and serve multiple functions. One function is to notify the materials/planner or buyer to produce or order materials, which is done by converting a planned order into an purchase order, production order, or transfer order. Another function is used by the MRP or DRP system to show demand that is used by subsequent MRP and DRP programs to generate additional planned orders.
PO—See Purchase order.
Point-of-use inventory—material used in production processes that is physically stored where it is consumed.
Portable computer—any computer that can be used while being transported. Portable computers can be hand-held devices, wearable systems, or vehicle-mounted systems.
Postponement—a manufacturing /distribution strategy where specific operations associated with a product are delayed until just prior to shipping. Storing product in a generic state and then applying custom labels or packaging before shipping is an example of postponement.
Procedure—a listing of the rules and instructions associated with a task.
Process-correction cycle—describes a condition that exists when processes are changed without considering the impact of the changes on other business objectives. The result is that each correction creates additional problems that require additional corrections.
Process manufacturing—type of manufacturing where a product is produced or transformed through mixing, chemical reactions, etc. Examples of process manufacturing would be refining crude oil into gasoline, extracting copper from ore, combining materials to make paint. Process as opposed to Discrete manufacturing. See also Discrete manufacturing.
Production order—the document used to process a production run of an item. Also known as a job, work order, or manufacturing order, a production order is usually made up of a production order header, a materials list, and a routing.
Production run—the physical act of performing all tasks associated with a production order or a group of production orders that require similar setup and processing.
Programmable—describes the functionality of some bar code decoders and scanners. Programming functionality may include the ability to take different actions for different bar codes based upon data identifiers, format the data from the barcode, and script the keyboard wedge input — and do all of this without actually writing any "code."
Program generator—software programs that generally provide graphical user interfaces and tools that allow a user to create a program without having to write actual computer code. Currently these programs are more frequently referred to as "development tools" and are usually designed to write code for specific applications such as data collection programs for portable computers. While a user does not need to be a programmer to use this software, the user does need to have a higher level of technical skills than that of most standard software users.
Public warehouse—a business that provides short or long-term storage to a variety of businesses usually on a month-to-month basis. A public warehouse will generally use their own equipment and staff however agreements may be made where the client either buys or subsidizes equipment. Public warehouse fees are usually a combination of storage fees (per pallet or actual square footage) and transaction fees (inbound and outbound). Public warehouses are most often used to supplement space requirements of a private warehouse. See also Contract warehouse and 3PL.
Purchase order—document used to approve, track, and process purchased items.
Push-back rack—racking system that incorporates a carriage or other sliding device to allow you to feed multiple pallets into the same location "pushing back" the previous pallet..
Putaway—the process of physically placing inventory into storage.
Putaway accuracy—the measurement of the accuracy of the putaway process.
Put-to-light—method that uses lights to direct the placement of materials. Most often used in batch picking to designate the tote to place picked item into.
Quantity per—the numeric representation of the quantity of a specific item required to make one unit of another item. Quantity per exists on the bill of material and on the materials list associated with a production order.
Queue—computer term referring to data that is awaiting further processing. Also describes inventory that is staged awaiting further processing.
Queue time—the amount of time inventory is staged prior to processing.
Query program—computer program that allows the extracting of data from a database. Query programs will usually have the ability to pull data from multiple files (tables), perform calculations, apply selection criteria (filtering) to the data, sequence (sort) the data, and summarize data for reporting or output to a file or other program.
Quiet zone—clear area on either side of a 1D bar code required for an accurate read of the code. Quiet zones for 2D bar codes must exist on all four sides.
Raw materials—inventory used in the manufacturing process. Though some would categorize raw materials as very base materials in bulk form such as carloads of ore or unitized loads of paper, plastic, or steel, I generally consider anything used in the manufacturing process as a raw material. I use the term synonymously with the term "components".
Reach truck—a narrow aisle (8'-10') truck designed specifically for racked pallet storage. It consists of outriggers in front and telescoping forks that use a hydraulic scissors type mechanism that allow you to pick up the load and retract it over the outriggers reducing the overall truck and load length allowing you to turn in a narrower aisle. Double-deep versions use an extended reach mechanism that allows you to store pallets two deep in specially designed double-deep rack. Also known as stand up reach, straddle reach, and double-deep reach.
Receipts—the materials or transactions associated with the receiving process.
Receiving—the process of placing materials into inventory. Also describes the department in which receiving activities take place.
Reconciling variances—the process of evaluating and correcting inventory variances.
Record—a unique line of information within a file or table. For example, there would be a separate record for each item in an Item Master file. A record will consist of one or more fields.
Recounts—additional counts that are conducted after an initial count has resulted in a variance or when checking the accuracy of initial counts.
Reorder point—the inventory level set to trigger an order of a specific item. Reorder point is generally calculated as the expected usage (demand) during the lead time plus safety stock.
Replenishment—within a warehouse, replenishment is the process of moving inventory from secondary storage areas into fixed storage locations. Within a supply chain or a multi-plant environment, replenishment is the process of moving inventory between facilities to meet demand.
Replenishment accuracy—measure of the accuracy of the internal location replenishment process.
Reverse logistics—fancy term for returns. Reverse logistics covers activities related to returned product, returned pallets and containers, and returned materials for disposal or recycling.
Reverse sampling—the process of using a known case quantity as the sample for a counting scale rather than manually counting a sample. Materials can then be removed from the case to count out the required quantity.
RF computer—refers to the portable data collection devices that use radio frequency to transmit data to the host system.
RFID—radio frequency identification. Refers to the technology that uses devices attached to objects that transmit data to an RFID receiver. These devices can be large pieces of hardware the size of a small book like those attached to ocean containers or very small devices inserted into a label on a package. RFID has advantages over bar codes such as the ability to hold more data, the ability to change the stored data as processing occurs, does not require line-of-sight to transfer data and is very effective in harsh environments where bar code labels won't work.
RFID tag—small RFID devices attached to objects.
Root cause—the ultimate source of an effect.
Root cause analysis—the process of evaluating, assigning, and measuring root causes.
Routing—a list of operations used in manufacturing in conjunction with the bill of materials. While the BOM contains the material requirements, the routing will contain the specific steps required to produce the finished items. Each step in the routing is called an operation, each operation generally consists of machine and labor requirements.
RTLS—real time locator system. A real time locator system uses RFID technology to transmit the physical location of RFID tagged objects. System requires some type of RFID tag to be attached to each object that needs to be tracked and RF transmitters/receivers located throughout the facility to determine the location and send information to computerized tracking system.
Ruggedized—describes devices designed for industrial environments.
Sales order—document used to approve, track, and process outbound customer shipments.
Scrap—inventory that must be discarded or recycled as a result of a manufacturing process or damage that occurs during storage or material handling.
Screen mapping—the functionality to change the arrangement of data fields on a computer screen. Screen mapping is frequently used in combination with terminal emulation software to "remap" data fields from a standard mainframe program to be used on the smaller screen of a portable handheld device. Also known as screen scraping.
Scorecard—See weighted scorecard.
Sequence of events—the order in which the specific steps in a task are performed.
Serial number–a unique number assigned to each discrete unit of an item.
Serial number tracking—the process of tracking serial numbers through manufacturing and distribution processes.
Set—item that is made up of multiple units of a single part.
Shipping—the process of removing materials from stock and transporting them to a customer or other facility.
Shipping accuracy—the measure of the accuracy of the shipping process.
Shipping order—document used to approve, track, and process outbound shipments.
Shrinkage—term used to describe the undocumented loss of inventory.
SKU—stock-keeping unit. Referring to a specific item in a specific unit of measure Also refers to the identification number assigned to each SKU. Used interchangeably with the terms item and item number.
Slap-and-ship—term used to describe an approach to complying with customer requirements for physical identification of shipped goods. Most recently, slap-an-ship has been used to describe complying with RFID requirements (such as those from Wal-Mart), however, it is also applicable to any compliance labeling requirement (such as compliance bar code labels). Slap-and-ship implies you are meeting the customer's requirement by applying the bar code labels or RFID tags, but are not utilizing the technology internally.
Slot—a single storage location.
Slotting—describes the activities associated with optimizing product placement in locations in a warehouse.
Smart label—a label that has an RFID tag integrated into it.
Smart shelve—as the name would imply, a smart shelf is a shelf that has capabilities beyond just preventing the stored product from falling on the floor. In this instance, the shelf has an integrated RFID reader. Each unit on the shelf will have an RFID tag, allowing the reader to track inventory levels in real time.
Smart stand—device that allows a hand-held bar code scanner to be used as a fixed-position scanner.
Speech-based technology—also known as voice technology, is really composed of two technologies — voice directed, which converts computer data into audible commands, and speech recognition, which allows user voice input to be converted into data. Portable voice systems consist of a headset with a microphone and a wearable computer.
Staged inventory—inventory that is in a temporary storage area awaiting further processing.
Staging location—a physical location used to temporarily store queued inventory that is awaiting further processing.
Start character—a character placed in a bar code to designate the beginning of the bar code.
Standard—a specific level of performance. Also a standardized set of specifications.
Static shelving—fixed shelving units.
Stocking type—a classification used by planning and execution systems to identify the primary stocking characteristic of the inventory. Examples of stocking types would include classifications that distinguish manufactured inventory, purchased inventory, direct ship inventory, or non-stock inventory.
Stocking unit of measure—the unit of measure used to track inventory within a facility. Stocking unit of measure is usually, but not always, the smallest unit of measure handled.
Stop character—a character placed in a bar code to designate the end of the bar code.
Subassembly—an item that has gone through an assembly process, but is also used in the assembly of other items. A subassembly is also a component.
Substitution—the replacement of an ordered item on a shipping order or a required item on a production order with another item.
System-to-floor count—describes a method of counting inventory where you take the system quantity information and then go to the storage areas to verify the accuracy of the system information.
Tare weight—the weight of the container that holds the materials you are weighing.
Task interleaving—term used in describing functionality of warehouse management systems to mix tasks to reduce travel time. Sending a forklift driver to put away a pallet on his way to his next pick is an example of task interleaving.
Terminal emulation—software used on desktop and portable computers that allows the computer to act like a terminal connected to a mainframe system. If you have a networked desktop PC and are accessing mainframe programs you are using terminal emulation. Terminal emulation is also a common method used to connect portable computers (as in warehouse bar code data collection systems) to mainframe software. See also Screen mapping
Test count—a count used to test the counting process.
Thermal transfer—common method for printing bar code labels. Thermal transfer uses a heated print head to transfer an image from a ribbon to the label.
3PL—third party logistics. Describes businesses that provide one or many of a variety of logistics-related services. Types of services would include public warehousing, contract warehousing, transportation management, distribution management, freight consolidation.
Three-way match—an accounting practice that compares a vendor invoice against a receipt and a purchase order.
Tolerance—an allowable variation. Tolerances are sometimes used in accuracy measures and in decision-making processes.
TQM—total quality management. A management strategy that focuses on continuous improvement.
Transaction by exception—any method that automates the completion of transactions that are executed consistently with system instructions. Only the exceptions require the manual entry of transaction details.
Transaction history file—the database file that contains a detail record for each transaction that has changed the on-hand balance of an item.
Transfer—the movement of inventory between storage locations within a facility or between facilities. Also describes that transaction associated with the transfer activity.
Transfer order—document used to move inventory between facilities in a multi-plant environment. Inventory moved between locations within a facility will usually use a move ticket rather than a transfer order.
Undecoded scanner—a bar code scanner that requires a separate device or software to convert the scanned image into ASCII characters.
Unit load—any configuration of materials that allows it to be moved by material handling equipment as a single unit. While smaller manually handled configurations could be considered unit loads, the term generally defines larger configurations that would be moved by a lift truck such as pallet loads, crates, bales, etc. Short for unitized load.
Unit of measure—the unit of measure describes how the quantity of an item is tracked in your inventory system. The most common unit of measure is "eaches," which simply means that each individual item is considered one unit. An item that uses "cases" as the unit of measure would be tracked by the number of cases rather than by the actual piece quantity. Other examples of units of measure would include pallets, pounds, ounces, linear feet, square feet, cubic feet, gallons, thousands, hundreds, pairs, dozens. See also Unit-of-measure conversion.
Unit-of-measure conversion—a conversion ratio used whenever multiple units-of-measure are used with the same item. For example, if you purchased an item in cases (meaning that your purchase order stated a number of cases rather than a number of pieces) and then stocked the item in eaches, you would require a conversion to allow your system to calculate how many eaches are represented by a quantity of cases. This way, when you received the cases, your system would automatically convert the case quantity into an each quantity.
Unit pack—See Inner pack.
User interface—See Human-machine interface.
Vehicle-mounted computer—a portable computer designed to be mounted to a vehicle such as a forklift.
Verification count—counting method where the counters are provided the system quantity of the item being counted.
VMI—vendor managed inventory. Phrase used to describe the process of a supplier managing the inventory levels and purchases of the materials he supplies. This process can be very low tech such as an office supplies supplier or maintenance supplies supplier coming into your facility once per week to visually check stock levels and place a re-supply order or high tech such as an electronic component supplier having remote access to your inventory management and MRP system and producing and automatically shipping to meet your production schedule. Vendor managed inventory reduces internal costs associated with planning and procuring materials and enables the vendor to better manage his inventory through higher visibility to the supply chain. Vendor managed inventory may be owned by the vendor or the customer.
Voice directed—See Speech-based technology
Wall-to-wall inventory—See Physical inventory.
Wand scanner—pen-type device used to read bar codes.
Wave picking—a variation on zone picking where rather than orders moving from one zone to the next for picking, all zones are picked at the same time and the items are later sorted and consolidated into individual orders. Wave picking is the quickest method for picking multi-item orders, however, the sorting and consolidation process can be tricky. See also Batch picking, Zone picking
Wearable computer—a small portable computer that can be carried on a worker. Examples of wearable computers are computers that are worn in a fanny pack, clipped to a belt, or worn on the wrist.
Wearable system—a system that includes a wearable computer combined with one or more other devices such as a bar code scanner or voice headset.
WERC—Warehouse Education and Research Council. www.werc.org
WIP—work-in-process. Generally describes inventory that is currently being processed in an operation or inventory that has been processed through one operation and is awaiting another operation. Is actually a financial account that contains the dollar value of all inventory, labor, and overhead that has been issued to production but has not yet produced a finished product.
Wireless device—any device that can communicate with other devices without being physically attached to them. Most wireless devices communicate through radio frequency.
WMS—warehouse management system. Computer software designed specifically for managing the movement and storage of materials throughout the warehouse.
Work order—See Production order.
XML—extensible markup language. A method for exchanging data between systems based on a set of standardized specifications. XML was designed for communicating over the internet and is more flexible than EDI.
Zone picking—order picking method where a warehouse is divided into several pick zones, order pickers are assigned to a specific zone and only pick the items in that zone, orders are moved from one zone to the next (usually on conveyor systems) as they are picked (also known as "pick-and-pass"). See also Batch picking, Wave picking