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Open-to-Buy: A control technique used in aggregate inventory management in which authorizations
to purchase are made without being committed to specific suppliers. These authorizations are often
reviewed by management using such measures as commodity in dollars and by time period.
Open-to-Receive: Authorization to receive goods, such as a blanket release, firm purchase order
item, or supplier schedule. Open-to-receive represents near-term impact on inventory, and is often
monitored as a control technique in aggregate inventory management. The total of open-to-receive,
other longer term purchase commitments and open-to-buy represents the material and services cash
exposure of the company.
Operational Performance Measurements:1) In traditional management, performance
measurements related to machine, worker, or department efficiency or utilization. These performance
measurements are usually poorly correlated with organizational performance. 2) In theory of
constraints, performance measurements that link causally to organizational performance
measurements. Throughput, inventory, and operating expense are examples. Also see: Performance
Measures
Operating ratio: A measure of operation efficiency defined as:
(Operating expenses / Operating revenues) x 100
Optimization: The process of making something as good or as effective as possible with given
resources and constraints.
Option: A choice that must be made by the customer or company when customizing the end product.
In many companies, the term option means a mandatory choice from a limited selection.
Optional Replenishment Model: A form of independent demand item management model in which
a review of inventory on hand plus on order is made at fixed intervals. If the actual quantity is lower
than some predetermined threshold, a reorder is placed for a quantity M  x, where M is the maximum
allowable inventory and x is the current inventory quantity. The reorder point, R, may be deterministic
or stochastic, and in either instance is large enough to cover the maximum expected demand during
the review interval plus the replenishment lead time. The optional replenishment model is sometimes
called a hybrid system because it combines certain aspects of the fixed reorder cycle inventory model
and the fixed reorder quantity inventory model. Also see: Fixed Reorder Cycle Inventory Model, Fixed
Reorder Quantity Inventory Model, Hybrid Inventory System, Independent Demand Item Management
Models
Order: A type of request for goods or services such as a purchase order, sales order, work order, etc.
Order Batching: Practice of compiling and collecting orders before they are sent in to the
manufacturer.
Definitions compiled by:
Kate Vitasek
Supply Chain Visions
www.scvisions.com
Bellevue, Washington
Please note: The Council of Supply Chain Management Professionals (CSCMP) does not take responsibility for the content of these definitions,
nor does CSCMP endorse these as official definitions except as noted.
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SUPPLY CHAIN and LOGISTICS
TERMS and GLOSSARY
Updated October 2006
Order Complete Manufacture to Customer Receipt of Order: Average lead time from when an
order is ready for shipment to customer receipt of order, including the following sub-elements:
pick/pack time, preparation for shipment, total transit time for all components to consolidation point,
consolidation, queue time, and additional transit time to customer receipt. (An element of Order
Fulfillment Lead-Time).
Note: Determined separately for Make-to-Order, Configure/Package-to-Order,
Engineer-to-Order and Make-to-Stock products.
Order Consolidation Profile: The activities associated with filling a customer order by bringing
together in one physical place all of the line items ordered by the customer. Some of these may come
directly from the production line others may be picked from stock.
Order Cycle: The time and process involved from the placement of an order to the receipt of the
shipment.
Order Entry and Scheduling: The process of receiving orders from the customer and entering them
into a company s order processing system. Orders can be received through phone, fax, or electronic
media. Activities may include  technically examining orders to ensure an orderable configuration and
provide accurate price, checking the customer s credit and accepting payment (optionally), identifying
and reserving inventory (both on hand and scheduled), and committing and scheduling a delivery
date.
Order Entry Complete to Start Manufacture: Average lead-time from completion of customer
order to the time manufacturing begins, including the following sub-elements: order wait time,
engineering and design time. (An element of Order Fulfillment Lead-Time).
Note: Determined separately for Make-to-Order, Configure/Package-to-Order, and
Engineer-to-Order products. Does not apply to Make-to-Stock products.
Order Fulfillment Lead Times: Average, consistently achieved lead-time from customer order
origination to customer order receipt, for a particular manufacturing process strategy (Make-to-Stock,
Make-to-Order, Configure/Package-to-Order, Engineer-to-Order). Excess lead-time created by orders
placed in advance of typical lead times (Blanket Orders, Annual Contracts, Volume Purchase
Agreements, etc.), is excluded. (An element of Total Supply Chain Response Time)
Calculation:
Total average lead time from: [Customer signature/authorization to order receipt] + [Order
receipt to completion of order entry] + [Completion of order entry to start manufacture] + [Start
manufacture to complete manufacture] + [Complete manufacture to customer receipt of order] +
[Customer receipt of order to installation complete]
Note: The elements of order fulfillment lead time are additive. Not all elements apply
to all manufacturing process strategies. For example, for Make-to-Stock products, the
lead-time from Start manufacture to complete manufacture equals 0.
Order Interval: The time period between the placement of orders.
Order Level System: See Fixed Reorder Cycle Inventory Model
Definitions compiled by:
Kate Vitasek
Supply Chain Visions
www.scvisions.com
Bellevue, Washington
Please note: The Council of Supply Chain Management Professionals (CSCMP) does not take responsibility for the content of these definitions,
nor does CSCMP endorse these as official definitions except as noted.
Page 102 of 167
SUPPLY CHAIN and LOGISTICS
TERMS and GLOSSARY
Updated October 2006 [ Pobierz całość w formacie PDF ]

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