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Activity-Based Costing—A management accounting system that assigns costs to products based on the amount of resources used (including floor space, raw materials, machine hours, and human effort) in order to design, order or make a product. Contrast with standard costing.

Aggregate Planning (Aggregate Scheduling)—An approach to determine quantity and timing of production for the intermediate future; usually 3 to 18 months.

Alliances—Cooperative agreements that allow firms to remain independent, but that pursue strategies consistent with their individual missions.

Andon—Call light that signals problems.

Andon Board—A visual control device in a production area, typically a lighted overhead display, giving the current status of the production system and alerting team members to emerging problems.

Assembly Chart—A graphical means of identifying how components flow into subassemblies and ultimately into a final product.

Assembly Drawing—An exploded view of the product, usually via a three-dimensional or isometric drawing.

Assembly line—An approach that puts fabricated parts together at a series of workstations; used in repetitive processes.

Attribute Inspection—An inspection that classifies items as being either good or defective.

Automated Guided Vehicle (AVG)—Electronically guided and controlled cart used to move materials.

Average Observed Cycle Time—The arithmetic mean of the times for each element measured, adjusted for unusual influence for each element.

Back Flush—A system to reduce inventory balances by deducting everything in the bill of material on completion of the unit.

Backlog—Orders in process for goods and services.

Backward Scheduling—Scheduling that begins with the due date and schedules the final operation first and the other job steps in reverse order.

Batch-and-Queue—The mass production practice of making large lots of a part and then sending the batch to wait in the queue before the next operation in the production process. Contrast with single piece flow.

Benchmarking—benchmarking involves comparing aspects of an organization’s performance with others (if possible this will be with what are regarded as best in class). Using this information, areas are identified that require improvement. Sometimes the comparisons will just be with one other organization or more frequently will be part of a group of organizations (benchmarking group) who will agree to participate jointly in such an exercise.

Bill of Materials (BOM)—A listing of the components, their description, and the quantity of each required to make one unit of product.

Blanket Order—A long term purchase commitment to a supplier for items that are to be delivered against short-term releases to ship.

Bottleneck—An operation that limits output in the production sequence.

Breakdown Maintenance—Remedial maintenance that occurs when equipment fails and must be repaired on an emergency or priority basis.

Break-Even Analysis—A means of finding the point in dollars and units at which costs equal revenues.

Brownfield—An established design or production facility operating with mass-production methods and systems of social organization. Contrast with Greenfield.

Buckets—Time units in a material requirements planning system (MRP).

Bucketless System—Time-phased data are referenced using dated records rather than defined time periods, or buckets.

Business Planning—Is the comprehensive planning for the whole of the business and involves defining the overall objectives for the organization, and all the actions that must be adopted in order that those objectives are achieved.

Capacity—The “throughput” or number of units a facility can hold, receive, store or produce in a period of time.

Cause-and-Effect Diagram—A schematic technique used to discover possible locations of quality problems.

Cells—The layout of machines of different types performing different operations in a tight sequence, typically in a U-shape, to permit single-piece flow and flexible deployment of human effort by means of multi-machine working. Contrast with process villages.

Chaku-Chuka—A method of conducting single piece flow in which the operator proceeds from machine to machine, taking the part just removed from that machine and loading it in the following machine, etcetera. Literally means “load-load” in Japanese.

Changeover—The installation of anew type of tool in a metal working machine, a different paint in a painting system, a new plastic resin and new mold in an injection molding machine, new software in a computer, and so on. The term applies whenever a production device is assigned to perform a different operation.

Closed-Loop MRP System—A system that provides feedback to the capacity plan, master production schedule, and production plan so planning can be kept valid at all times.

Clustering—The location of competing companies near each other, often because of a critical mass of information, talent, venture capital, or natural resources.

Competitive Advantage—The creation of a unique advantage over competitors.

Computer-Aided-Design (CAD)—Interactive use of a computer to develop and document a product.

Computer-Aided-Manufacturing (CAM)—The use of information technology to control machinery.

Computer Integrated Manufacturing —A manufacturing system in which CAD, FMS, inventory control, warehousing, and shipping are integrated.

Control Charts—Graphic representations of process data over time with predetermined control limits.

Concurrent Engineering—Use of participating teams in design and engineering activities.

Consignment Inventory—An arrangement in which the supplier maintains title to the inventory until it is used.

Continuous Improvement—Continuous improvement, often known as Kaizen, is essentially a small step improvement strategy. It is based on a belief that continual improvement can be brought about by a continuing series of small changes. Even if there is a culture of big innovative changes it is argued that these will still need to be supplemented by continuing small step changes.

Constraints—The limiting factors which determine the methods which can be used on an asset.

Contribution—The difference between selling price and variable costs.

Control Files—Files that track each work order’s actual progress against the plan.

Craft Production– System in which highly skilled workers use simple, flexible tools to produce small quantities of customized goods which may appear identical but usually do not readily interchange parts between products.

Crashing—Shortening activity time in a network to reduce time on the critical path so completion time is reduced.

Critical Path—The computed longest time path(s) through a network.

Critical Path Method (CPM)—A project management technique that uses only one time factor per activity.

Critical Success Factors—Those activities or factors that are key to achieving competitive advantage.

Cycle Counting—A continuing reconciliation of inventory with inventory records.

Cycle time—The time required to complete one cycle of an operation. If cycle time for every operation in a complete process can be reduced to equal takt time, products can be made in single-piece flow.

Decision Table—A tabular means of analyzing decision alternatives and states of nature.

Decision Theory—The body of knowledge concerned with making selection from a range of alternative possible actions.

Decision Trees—A visual aid device for illustrating some or all of the choices available at various stages in a multi-stage decision process, and the consequences of each choice.

Demand Forecasts—Projections of a company’s sales for each time period in the planning horizon.

Design Capacity—The theoretical maximum output of a system in a given period.

Design for Manufacture and Assembly (DFMA)—Software that allows designers to look at the effect of design on manufacturing of the product.

Differentiation—To distinguish the offerings of the organization in any way that the customer perceives as adding value.

Distribution Resource Planning (DRP)—A time-phased stock replenishment plan for all levels of a distribution network.

Drop Shipping—Shipping directly from the supplier to the end consumer, rather than from the seller, saving both time and reshipping costs.

E-Commerce—The use of computer networks, primarily the internet, to buy and sell products, services, and information.

E-Procurement—Purchases and order releases communicated over the internet or to approved vendor online catalogs.

Earliest Due Date (EDD)—Earliest due date jobs are performed after shortest processing time jobs.

Economic Forecasts—Planning indicators valuable in helping organizations prepare medium-to long-range forecasts.

Economic Part Period (EPP)—That period of time when the ratio of setup cost to holding cost is equal.

Effective Capacity—Capacity a firm can expect to achieve given its product mix, methods of scheduling, maintenance, and standards of quality.

Efficiency—Actual output as a percent of effective capacity.

Employee Empowerment—Enlarging employee jobs so that the added responsibility and authority is moved to the lowest level possible in the organization.

Engineering Change Notice (ECN)—A correction or modification of an engineering drawing or bill of material.

Engineering Drawing—A drawing that shows dimensions, tolerances, materials, and finishes of a component.

Enterprise Resource Planning (ERP)—An information system for identifying and planning the enterprise-wide resources needed to take, make, ship, and account for customer orders.

Ergonomics—The study of work; often called human factors.

Fabrication line—A machine-paced product-oriented facility for building components.

Five Ss—Five terms beginning with S utilized to create a workplace suited for visual control and lean production. Seiri means separate needed tools, parts, and instructions from unneeded materials and to remove the later. Seiton means to neatly arrange and identify parts and tools for ease of use. Seiso means to conduct a cleanup campaign. Seiketsu means to conduct seiri, seiton, and seiso at frequent, indeed daily, intervals to maintain a workplace in perfect condition. Shitsuke means to form the habit of always following the first four Ss.

Five Whys—Taiichi Ohno’s practice of asking “why” five times whenever a problem was encountered in order to identify the root cause of the problem so that effective countermeasures could be developed and implemented.

Finite Scheduling—Computerized short-term scheduling that overcomes the disadvantage of rule-based systems by providing the user with graphical interface computing.

Fixed Costs—Cost that continue even if no units are produced.

Flexible Manufacturing System (FMS)—A system using an automated work cell controlled by electronic signals from a common centralized computer facility.

Flextime—A system that allows employees, within limits, to determine their own work schedules.

Flow—The progressive achievement of tasks along the value stream so that a product proceeds from design to launch, order to delivery, and raw materials into the hands of the customer with no stoppages, scrap, or backflows.

Flow Diagram—A drawing used to analysis movement of people or material.

Forecasting—The art and science of predicting future events.

Forward Scheduling—A schedule that begins as soon as the requirements are known.

Gantt Chart—The Gantt chart, is a two axis graphical chart with the vertical axis used for a list of related tasks or project stages and the horizontal axis representing the passage of time on a linear scale. These planning charts are used to schedule resources and allocate time.

Green Manufacturing—Sensitivity to a wide variety of environmental issues in the production process.

Greenfield—A new design or production facility where best-practice, lean methods can be put in place from the onset. Contrast with brownfield.

Gross Material Requirements Plan—A schedule that shows the total demand for an item (prior to subtraction of on-hand inventory and scheduled receipts) and (1) when it must be ordered from suppliers, or (2) when production must be started to meet its demand by a particular date.

Group Technology—A product and component coding system that specifies the type of processing and the parameters of the processing; it allows similar products to be grouped.

Heijunka—The creation of a “level schedule” by sequencing orders in a repetitive pattern and smoothing day-to-day variations in total orders to correspond to longer-term demand. For example, if customers during a week order 200 of product A, 200 of Product B, and 400 of Product C in batches of 200, 200, and 400 respectively, level scheduling would sequence these products to run in progression A, C, B, C, A, C,B, C,A, C,… Similarly, if customer orders totaling 1000 products per week in batches of 200 products on day one, 400 on day two, zero on three, 100 on day four, and 100 on day five, the level schedule would produce 100 per day, and in sequence A, C, A, B,… Some type of level scheduling is unavoidable at every producer, mass of lean, unless the firm and all its suppliers have infinite capacity and zero changeover times. However, lean producers tend to create excess capacity over time as they free up resources and to work steadily at reducing changeover times so short-term discrepancy between heijunka schedule and actual demand is steadily minimized, aided by level selling.

Heuristic—Problem solving using procedures and rules rather than by mathematical optimization.

Holding Cost—The cost to keep or carry inventory in stock.

Hoshin Kanri—A strategic decision making tool for a firm’s executive team that focuses resources on the critical initiatives necessary to accomplish the business objectives of the firm. By using visual matrix diagrams similar to those employed for the quality function deployment, three to five key objectives are selected while all others are clearly deselected. The selected objectives are translated into specific projects and deployed down to the implementation level in the firm. Hoshin kanri unifies and aligns resources and establishes clearly measurable targets against which progress toward key objectives is measured on a regular basis. Also called policy-deployment.

Infant Mortality—The failure rate early in the life of a product or process.

Input-Output Control—A system that allows operations personnel to manage facility work flows by tracking work added to a work center and its work completed.

Inspection—A means of that an operation is producing at the quality level expected.

ISO 9000—A set of quality standards developed by the International Standards Organization. “ISO” is Greek for equal or uniform, as in uniform throughout the world.

ISO 14000—An environmental management standard established by the International Standards Organization (ISO).

Internet Outsourcing—The transfer of an organizations activities that have traditionally been internal to internet suppliers.

Intranet—An in house internet.

Jidoka—See autonomation.

Job Enlargement—The grouping of a variety of tasks about the same skill level; horizontal enlargement.

Job Enrichment—A method of giving an employee more responsibility that includes some of the planning and control necessary for job accomplishment.

Job Rotation—A system in which an employee is moved from one specialized job to another.

Joint Ventures—Firms establishing joint ownership to pursue new products or markets.

Just-in-Time—A system for producing and delivering the right items at the right time in the right amounts. Just-in-Time approaches just-on-time when upstream activities occur minutes or seconds before downstream activities, so single-piece flow is possible. The key elements of Just-in-Time are flow, pull, standard work (with standard in-process inventories) and takt time.

Just-In-Time Inventory—The minimum inventory necessary to keep a perfect system running.

JIT Partnerships—Partnerships of suppliers and purchasers that remove waste (muda) and drive down costs for mutual benefits.

Kaikaku—Radical improvement of an activity to eliminate muda, for example by reorganizing processing operations for a product so that instead of traveling to and from isolated “process villages,” the product proceeds through the operations in a single-piece flow in one short space. Also called breakthrough kaizen, flow kaizen, and system kaizen.

Kaizen—Continuous, incremental improvement of an activity to create more value with less muda. Also called point kaizen and process kaizen.

Kanban—A small card attached to boxes of parts that regulates pull in the Toyota Production System by signaling upstream production and delivery.

Keiretsu—A grouping of Japanese firms through historic associations and equity interlocks such that each firm maintains its operational independence but establishes permanent relations with other firms it its group. Some keiretsu, such as Sumitomo and Mitsui, are horizontal, involving firms in different industries. Other keiretsu, such as the Toyota Group, are vertical, involving firms up- and downstream from a “system integrator” firm that is usually a final assembler.

Knowledge-Based Pay Systems—A portion of the employees pay depends on demonstrated knowledge or skills of the employee.

Knowledge Society—A society in which much of the labor force has migrated from manual work to work based on knowledge.

Labor Planning—A means of determining staffing policies dealing with employment stability and work schedules.

Labor Standards—The amount of time required to perform a job or part of a job.

Lean—is a continuous improvement strategy used by organizations to achieve world-class performance. These organizations will strive to:
Improve quality, safety and productivity
Eliminate waste and focus on value-added activities
Reduce delays, lead times, inventories and costs
Create an empowered workforce
Capitalize on effective teamwork
Foster a continuous improvement culture

Lead Time—The total time a customer must wait to receive a product after placing an order. When a scheduling and production system is running at or below capacity, lead time and throughput time is the same. When demand exceeds the capacity of a system, there is additional waiting time before the start of scheduling and production, and lead time exceeds throughput time. See throughput time.

Learning Curves—The premise that people and organizations get better at their tasks as the tasks are repeated; sometimes called experience curves.

Level Material Use—The use of frequent, high-quality, small lot sizes that contribute to just-in-time production.

Level Schedules—Scheduling products so that each day’s production meets demand for that day.

Level Selling—A system of customer relations that attempts to eliminate surges in demand caused by the selling system itself (for example, due to quarterly or monthly sales targets) and that strives to create long-term relations with customers so that future purchases can be anticipated by the production system.

Linear programming—A method for solving complex problems in the two main areas of product mix and distribution of goods. It is a tool within the field of operational research. In product mix the technique may be used where it is difficult to decide just how much of each variable to use in order to satisfy certain criteria such as maximizing profits or minimizing costs. The situation may be subject to certain constraints present.

Linear and Quadratic Equations—Linear and quadratic equations are useful in management as mathematical models which describe any situation and subsequently can be used for predicting outcomes and trends. As models they can produce rapid solutions to defined situations once the parameters of that situation have been inserted into the model.

Loading—The assigning of jobs to work center processing centers.

Load Report—A report for showing the resource requirements in a work center for all work currently assigned as well as all planned and expected orders.

Logistics Management—An approach that seeks efficiency of operations through the integration of all material acquisition, movement, and storage activities.

Longest Processing Time (LPT)—Jobs with the longest processing time are performed last in sequence.

Lot-For-Lot—A lot sizing technique that generates exactly what is required to meet the plan.

Lot-sizing Decision—The process of, or techniques used in determining lot size.

Low-Cost Leadership—Achieving maximum value as perceived by the customer.

Make-or-buy Decision—The choosing between producing a component or a service and purchasing it from an outside source.

Management Process—The application of planning, organizing, staffing, leading, and controlling for the achievement of objectives.

Maintenance—All activities involved in keeping a system’s equipment in working order.

Manufacturing Resource Planning (often called MRPII) expands MRP to include capacity planning tools, a financial interface to translate operations planning into financial terms, and a simulation tool to assess alternative production plans.

Manufacturability and Value Engineering—Activities that help improve a product’s design, production, maintainability, and use.

Mass Customization—Rapid, low-cost production that caters to constantly changing unique customer desires.

Mass Production—Large-scale production of identical goods on a continuous basis. Today’s process requires high automation almost always on an assembly line basis. The labor required is usually unskilled to semi-skilled. Orders are seldom received in advance. Production is based on push criteria.

Master Production Schedule—A timetable that specifies what is to be made and when.

Material Requirements Planning (MRP)—A computerized system used to determine the quantity and requirements for materials used in a production operation. MRP systems use a master production schedule, a bill of materials listing every item needed for each product to be made, and information on current inventories of these items in order to schedule the production and delivery of the necessary items.

Mean Time Between Failures (MTBF)—The expected time between a repair and the next failure of a component, machine, process, or product.

Meister—A production group leader in a German manufacturing firm.

Milk Run—A routing of a supply or deliver vehicle to make multiple pickups or drop-offs at different locations.

Mission—The purpose or rationale for an organization’s existence.

Mittelstand—Mid-sized and usually family-controlled German manufacturing firms that have been the backbone of the postwar economy.

Mixed Strategy—A planning strategy that uses two or more controllable variables to set a feasible production plan.

Modules—Parts or components of a product previously prepared, often in a continuous process.

Modular Bills—Bills of material organized by major sub assemblies or by product options.

Modular Design—Parts or components of a product are subdivided into modules that are easily interchanged or replaced.

Monument—Any design, scheduling, or production technology with scale requirements necessitating that designs, order, and products be brought to the machine to wait in a queue for processing. Contrast with right-sized tool.

Muda—Any activity that consumes resources but creates no value (waste).

Multi-machine Working—Training employees to operate and maintain different types of production equipment. Multi-machine working is essential to creating production cells where each worker utilizes many machines.

Multiple Regression Analysis (MRA) —A useful method for generating mathematical models where there are several (more than two) variables involved.

Negotiation Strategies—Approaches taken by supply-chain personnel to develop contractual relations with suppliers.

Net Material Requirements—The result of adjusting gross requirements for inventory on hand and scheduled receipts.

Net Present Value—A means of determining the discounted value of a series of future cash receipts.

Network Analysis—A group of techniques for presenting information to assist the planning and controlling of projects. The information, usually represented by a network, includes the sequence and logical inter-relationships of all project activities. The group includes techniques for dealing with time, with resources and with costs.

Normal Time—The observed time adjusted for pace.

Open-book Management—A situation in which all financial information relevant to design, scheduling, and production tasks is shared with all employees of the firm, and with suppliers and distributors up and down the value stream.

Operation—An activity or activities performed on a product by a single machine. Contrast with process.

Operations Decisions—The strategic decisions of OM are product design, quality, process design, location, selection, layout design, human resources, and job design, supply chain management, inventory scheduling, and maintenance.

Operations Management—The set of activities that creates value in the form of goods and services by transforming inputs into outputs.

Outsourcing—Paying for specific business functions to be carried out by external organizations that have traditionally been internal functions.

Pareto Analysis—Pareto analysis is a statistical technique in decision making that is used for selection of a limited number of tasks that produce significant overall effect. It uses the Pareto principle – the idea that by doing 20% of work you can generate 80% of the advantage of doing the entire job.

Pareto Charts—A graphic method of identifying the few critical items as opposed too many less important ones.

Part-Time Status—When an employee works less than a normal week; less than 32 hours per week often classifies an employee as “part time”.

Pegging—In material requirements planning systems, tracing upward in the bill of material (BOM) from the component to the parent item.

PDCA—A continuous improvement model of Plan, Do, Check, Act.

Perfection—The complete elimination of muda so all activities along a value stream create value.

Perpetual Inventory System—A system that keeps track of each withdrawal or addition to inventory continuously, so records are always current.

Phantom Bills of Material—Bills of material for components, usually assemblies, that exist only temporarily; they are never inventoried.

Planned Order Receipt—The quantity planned to be received at a future date.

Planned Order Release—The scheduled date for an order to be released.

Planning Bills (or Kits)—A material grouping created in order to assign an artificial parent to the bill of material.

Poka-yoke—A mistake-proofing device or procedure to prevent a defect during order-taking or manufacture. An order-taking example is a screen for order input developed from traditional ordering patterns that questions orders falling outside the pattern. The suspect orders are then examined, often leading to discovery of inputting errors or buying based on misinformation. Literally translated, “foolproof”. A manufacturing example is a set of photocells in parts containers along an assembly line to prevent components from progressing to the next stage with missing parts. The poka-yoke in this case is designed to stop the movement of the component to the next station if the light beam has not been broken by the operator’s hand in each bin containing a part for the product under assembly at the moment. A poka-yoke is sometimes also called a baka-yoke.

Policy Deployment—See hoshin kanri.

Preventive Maintenance—A plan that involves routine inspections, servicing and keeping facilities in good repair to prevent failure.

Priority Rules—Rules that are used to determine the sequence of jobs in process-oriented facilities.

Process—A series of individual operations required to create a design, completed order, or product.

Process Control—The use of information technology to control a physical process.

Process Focus—A production facility organized around processes to facilitate low-volume high-variety production.

Process Reengineering—The fundamental rethinking and redesign of business processes to bring about dramatic improvements in performance.

Process Strategy—An organizations approach to transform resources into goods and services.

Processing Time—The time a product is actually being worked on in design or production and the time an order is actually being processed. Typically processing time is a small fraction of throughput time and lead time.

Process Villages—The practice of grouping machines or activities by type of operation performed; for example, grinding machines or order-entry. Contrast with cells.

Product Decision—The selection, definition and design of products.

Product Development Teams—Teams charged with moving from market requirements for a product to achieving product success.

Product Family—A range of related products that can be produced interchangeably in a production cell. The term is often analogous to “platforms”.

Product Focus—A facility organized around products; a product-oriented, high-volume, low-variety process.

Product Life Cycle—The cycle of a product’s existence in the marketplace. Four stages define the life of a product; introduction, growth, maturity, and decline.

Production—The creation of goods and services.

Production Order Quantity Model—An economic order quantity technique applied to production orders. See Batch-and-Queue.

Production Smoothing—See heijunka.

Production Studies—A continuous study of relatively lengthy duration often made with the object of checking an existing or proposed standard time or its constituent’s parts, or obtaining information concerning the rate of output.

Productivity—The ratio of outputs (goods and services) divided by one or more inputs (such as labor, capital, or management).

Productivity Variables—Three factors critical to productivity improvement—labor, capital, and the art and science of management.

Profit—is equal to the difference between what the customer pays and
what you pay (Price – cost = Profit). The customer determines the price (more accurately, the customer determines if they will pay the posted price…).

Program Evaluation and Review Technique (PERT)—A project management technique that employs three time estimates for each activity.

Project Management –The application of general management discipline and a variety of specific techniques and software to the planning, management and completion of projects. Or, more simply, the art and science of introducing changes in the status quo.

Pull—A system of cascading production and delivery instructions from downstream to upstream activities in which nothing is produced by the upstream supplier until the downstream customer signals a need. The opposite of push. See also kanban.

Pull Data—Accurate sales data that indicates transactions to “pull” product through the supply chain.

Pull System—A JIT concept that results in material being produced only when requested and moved to where it is needed just as it is needed.

Push System—A system that pushes materials into downstream workstations regardless of their timeliness or availability of resources to perform work.

Quality—The ability of a product or service to meet customers needs.

Quality Circle—A group of employees meeting regularly with a facilitator to solve work-related problems in their work area.

Quality Function Deployment (QFD)—A visual decision-making procedure for multi-skilled project teams which develops a common understanding of the voice of the customer (customer “wants”) and a consensus on the final engineering specifications of the product that has the commitment of the entire team. QFD integrates the perspectives of team members from different disciplines, ensures that their efforts are focused on resolving key trade-offs in a consistent manner against measurable performance targets for the product and deploys these decisions through successive levels of detail (the “hows”). The use of QFD eliminates expensive backflows and rework as projects near launch.

Quality Loss Function (QLF)—A mathematical function that identifies all costs connected with poor quality and shows how these costs increase as product quality moves from what the customer wants.

Quality Robust—Products that are consistently built to meet customer needs in spite of adverse conditions in the production process.

Queue Time—The time a product spends in a line awaiting the next design, order-processing, or fabrication step.

Redundancy—The use of components in parallel to raise reliabilities.

Reliability—The probability that a machine part or product will function properly for a specified time under stated conditions.

Reorder Point—The inventory level (point) at which action is taken to replenish the stocked item.

Response—That set of values related to rapid, flexible and reliable performance.

Right-sized Tool—A design, scheduling, or production device that can be fitted directly into the flow of products within a product family so that production no longer requires unnecessary transport and waiting. Contrast with monument.

Robot—A flexible machine with the ability to hold, move, or grab items. It functions through electronic impulses that activate motors and switches

Robust—A model that gives satisfactory answers even with substantial variation in its parameters.

Robust Design—A design that can be produced to requirements even with unfavorable conditions in the production process.

Route Sheet—A listing of operations necessary to produce the component with the material specified in the bill of material.

Safety Stock—Extra stock to allow for uneven demand; a buffer.

Scheduling Decisions—Making plans that match production to changes in demand.

Sensei—A personal teacher with mastery of a body of knowledge, in this context, lean thinking and techniques.

Sequencing—Determining the order in which jobs should be done at each work center.

Services—Those economic activities that typically produce an intangible product such as education, lodging.

Service Sector—That segment of the economy that includes trade, financial, lodging, education, legal, medical, and other professional occupations.

Setup Cost—The cost to prepare a machine or process for production.

Setup Time—The time required to prepare a machine or process for production.

Seven Muda—Taiichi Ohno’s original enumeration of the wastes commonly found in physical production. These are overproduction ahead of demand, waiting for the next processing step, unnecessary transport of materials (for example, between process villages or facilities), over-processing of parts due to poor tool and product design, inventories more than the absolute minimum, unnecessary movement by employees during the course of their work (looking for parts, tools, prints, help, etcetera), and production of defective parts.

Shortest Processing Time (SPT)—Jobs with the shortest processing times are assigned first.

Shusa—A strong team leader in the Toyota product development system. (Literally, however, a level of supervisor, like katcho, or honcho.)

Simulation—The attempt to duplicate the features, appearance, and characteristics of a real system, usually via a computerized model

Single Minute Exchange of Dies (SMED)—A series of techniques pioneered by Shigeo Shingo for changeovers of production machinery in less than ten minutes. One-touch setup is the term applied when changeovers require less than a minute. Obviously the long term objective is always zero setup, in which changeovers are instantaneous and do not interfere in any way with continuous flow.

Single-piece Flow—A situation in which products proceed, one complete product at a time, through various operations in design, order-taking, and production, without interruptions, backflows, or scrap. Contrast with batch-and-queue.

Slack Time—Free time for an activity.

Spaghetti Chart—A map of the path taken by a specific product as it travels down the value stream in a mass-production organization, so-called because a products route typically looks like a plate of spaghetti.

Source Inspection—Controlling or monitoring at the point of production or purchase—at the source.

Standardization—Reducing the number of variations in materials and components as an aid to cost reduction.

Standard Costing—A management accounting system which allocates costs to products based on a number of machine hours and labor hours available to a production department during a given period of time. Standard cost systems encourage managers to make unneeded products or the wrong mix of products in order to minimize their cost-per-product by fully utilizing machines and labor. Contrast with activity-based costing.

Standard Time—An adjustment to the total normal time; the adjustment provides allowances for personal needs, unavoidable work delays, and fatigue.

Standard Work—A precise description of each work activity specifying cycle-time, takt time, the work sequence of specific tasks, and minimum inventory of parts on hand to conduct the activity.

Standard Work Schedule—Five 8 hour days in the U.S.

Statistical Process Control (SPC) — A process used to monitor standards, making measurements and taking corrective action as a product or service is being produced. The fundamentals of Statistical Process Control (though that was not what it was called at the time) and the associated tool of the Control Chart were developed by Dr Walter A Shewhart in the mid-1920’s.

Standard for the Exchange of Product Data (STEP)—Provides a format allowing the electronic transmittal of three dimensional data.

Strategy—How an organization expects to achieve its missions and goals.

Supply-Chain Management—Management of activities that procure materials and services, transforming them into intermediate goods and final products, and delivering the products through a distributions system.

System Nervousness—Frequent changes in the MRP system.

Takt Time—The available production time divided by the rate of customer demand. For example, if customers demand 240 widgets per day and the factory operates 480 minutes per day, takt time is two minutes; if customers want two new products designed per month, takt time is two weeks. Takt time sets the pace of production to match the rate of customer demand and becomes the heartbeat of any lean system.

Target Cost—The development and production cost which a product cannot exceed if the customer is to be satisfied with the value of the product while the manufacture obtains an acceptable return on its investment.

Target-Oriented Quality—A philosophy of continuous improvement to bring the product exactly on target.

Technological Forecasts—Long-term forecasts concerned with the rates of technological progress.

Theory of Constraints (TOC)—That body of knowledge that deals with anything that limits an organization’s ability to achieve its goals.

Throughput Time—The time required for a product to proceed from concept to launch, order to delivery, or raw materials into hands of the customer. This includes both processing and queue time. Contrast with processing time and lead time.

Time-Based Competition—Competition based on time; rapidly developing products and moving them to market.

Time Fences—A way of allowing a segment of the master schedule to be designated as “not to be rescheduled.”

Time Study—Timing a sample of a workers performance and using it as a basis for setting a standard time.

Total Productive Maintenance (TPM)—A series of methods originally pioneered by Nippondenso (a member of the Toyota group), to ensure that every machine in a production process is always able to perform its required tasks so that production is never interrupted.

Total Quality Management (TQM)—A strategy for improving business performance through the commitment and involvement of all employees to fully satisfying agreed customer requirements, at the optimum overall costs, through the continuous improvement of the products and services, business processes and people involved.

Toyota Production System (TPS)—Developed by Toyota Motor Company, TPS is the forerunner of lean production concepts, emphasizing employee learning and empowerment.

Training—A method to solve production problems through people; it is specific and helps employees to acquire skill through the use of what they have learned.

Transparency—See visual control.

Turn-back Analysis—Examination of the flow of a product through a set of production operations to see how often it is sent backwards for rework or scrap.

Six Sigma—A tool from the lean organization productivity toolkit, particularly concerned with output and services of an organization in terms of quality, productivity and effectiveness. It provides targets to be achieved by that organization. The concept originated with the Motorola organization.

Utilization—Actual output as a percent of design capacity.

Value—A capability provided to a customer at the right time at an appropriate price, as defined in each case by the customer.

Value Added—The value added to a product or service by an activity or operation. It is work that a customer would be happy to pay for. Analysis of many businesses and associated processes find that there is a distinct lack of activities that add real value to a product or service.

Value Analysis—A review of successful products that takes place during the production process

Value Stream—the specific activities required to design, order, and provide a specific product from concept to launch, order to delivery, and raw materials into the hands of the customer.

Value Stream Mapping—Identification of all the specific activities occurring along a value stream for a product or product family

Variability—Any deviation from the optimum process that delivers perfect product on time, every time.

Variable Costs—Costs that vary with the volume of units produced.

Variable Inspection—Classifications of inspected items as falling on a continuum scale such as dimension, size, or strength.

Vertical Integration—Developing the ability to produce goods or services previously purchased or actually buying a supplier or distributor.

Virtual Companies—Companies that rely on a variety of supplier relationships to provide services on demand. Also known as hollow corporations or network companies.

Virtual Reality—A visual form of communication in which images substitute for reality and typically allow the user to respond interactively.

Visual Control—The placement in plain view of all tools, parts, production activities, and indicators of production system performance, so the status of the system can be understood at a glance by everyone involved. Used synonymously with transparency.

Work Oder—An instruction to make a given quantity of a particular item, usually to a given schedule.

Wholesaler—The sale of goods in quantity, as to retailers. Sale in large quantities. A large-scale sale.

Retailer—The sale of goods to ultimate consumers, usually in small quantities.

Scrap—A piece of material that is not needed for the build or construction of a particular structure. Garbage or excess material.

Disintermediation—Bypassing a traditional channel, to link buyers with suppliers in a more direct manor.

Automatic Storage and Retrieval System (AS/RS)—An automated, robotic system for sorting, storing and retrieving items in a warehouse.

Batch Picking—A warehouse picking process where enough quantity is picked to satisfy the demand for multiple orders. The batch is later sorted by order and/or delivery address.

Free On Board (FOB)—Seller pays for transportation costs of goods to port of shipment. Buyer is responsible for shipping costs, insurance, and unloading costs to ultimate destination. Also marks the passing of risk responsibility from seller to buyer at specific time. Incorrectly referred to as “Freight on Board”.

Cold Calling—The process of approaching prospective clients without prior invitation or knowledge.

Customer Orientation—A set of beliefs or philosophy that customer needs and satisfaction are the priority of an organization.