C

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GO TO C, Cab, Cal, Cam, Can, Cap, Car, Cas, Cau, Cb, Cc, Cd , Ce, Cf, Cg, Ch, Ci, Cj, Ck, Cl, Cm, Coa, Cod, Col, Com Con, Coo, Cop, Cor, Cos, Cot, Cp, Cs, Cu Cv , Cy last entry

3C: See CCC.

4C: See CCCC.

6C: See CCCCCC.

c Chart: See Count Chart.

C Class Items: Sometimes used as a general term for unimportant or insignificant items. Strictly, however, C-Class items are those products which fall into the C Class when a group of products is analysed and ranked in some way (ie placed in order in some way). The ranking is often in accordance with "annual usage x unit value" - see ABC Classification and "the trivial many". As explained under ABC Classification, the C items are regarded as being relatively unimportant. For all that, note however that a number of them, albeit having low annual usages and low values, may be "line stoppers" - difficult and troublesome to replenish, but absolutely vital to ongoing operations. These may merit honorary promotion to A-Class in order that tighter control can be kept over them.

Cabotage: If a vehicle delivers goods to a foreign point, and then picks up a new load for delivery to a second point within the foreign territory, the action is referred to as cabotage, not backhaul. (Backhaul applies only if the second point is back in the vehicle's own country.) Because cabotage is seen as threatening to the foreign country's haulage business, regulations exist to prohibit it in such European countries as France.

CAD: See Computer Aided Design.

CAGR: Compound Annual Growth Rate.

Calling Population: See Queues (2)

CALS: Continuous Acquisition and Life-Cycle Support, or Commerce At Light Speed.

CAM: Computer-Aided Manufacture, or Customer Asset Management.

Campaign: in the process industries - chemicals, glass, steel and so on - manufacture becomes increasingly efficient as more and more product is made on dedicated plant. That is, percentage yields increase from batch to batch and the operation of the plant by process workers becomes increasingly efficient. A campaign is the manufacturing undertaking from the start of manufacture to its final completion some time later when sufficient material has been produced at high efficiency. The campaign might be expressed as a duration of time (a campaign of three weeks) or as a certain amount of production (a campaign of 22 batches). In industries involved in campaign manufacturing, a minimum campaign is usually specified.

CAMU: Computerised Assembly Mock Up.

Cando: (Literally the English phrase able to do something). A Japanese inspired technique, in English standing for C Clean Up (get rid of what is unnnecessary); A Arrange (organise the workplace); N Neatness (ensure everything is in its right place); D Discipline (conform to standard procedures); O Ongoing Improvements (look for ways to make procedures more effective). Closely related to SSSSS. The phrase 'can-do' is also used informally to mean that spirit of determination and energy needed to fulfil a task.

Capability Index: A succinct measure of the capability of a process to manufacture parts of given upper and lower specification limits. If the standard deviation of the spread of a variable is s, one possible capability index may be defined as (Upper Specification Limit - Lower Specification Limit) / 6s. If the capability index is 1.0, then 99.73% of the output of the process is just within the specification limits, and the process is said to be "just capable". In practice, an index is often aimed for of 1.33, although perhaps nowadays the target may be raised to 1.66. See also Six Sigma - with Six Sigma, the aim is for systems and processes to have a capability index of 2.0, with only 3.4 parts per million out of specification. Also see sub-sections 5.1 and 5.3 in the free on-line purchasing course at this site.

Capable to Promise: With Available-to-Promise (qv), what is available (to promise to a customer) is the anticipated production currently in the Master Schedule less what has been actually already been sold, or promised. With capable to promise, however, what is deemed to be "available" is the maximum output that could be manufactured (less what what has been sold, or promised). Capable to promise will often be a more useful indicator, in answering customer enquiries, when dealing with the output from a major device such as an extruder or a furnace. Of course, when answering a customer's enquiry using a capable-to-promise facility, the planner or sales clerk should realise that the master plan may need to be augmented to fulfil the promises made and ensure that other required facilities besides pure production must be available (eg finance, technical support ...).

Capacity Available to Promise: As with Available-to-Promise (qv), if customer orders are to be delivered on the dates promised, such orders must not exceed the company's commitment to future manufacture. With ordinary available-to-promise, a portion of the available master schedule effort is allocated to each customer order as it is accepted. With capacity available-to-promise, incoming orders are translated into the time they will take up on some nominated critical resource. That portion of the time on the resource scheduled to be available which has not been allocated remains "capacity available to promise (to future customers)". (If the critical resource is operating at maximum output, capacity available to promise is identical to capable to promise as defined immediately above, qv.)

Capacity Management: the tailoring of capacity to meet a planned manufacturing load. In a number of manufacturing environments, manufacturing capability (ie capacity) may be changed by, say, redeploying labour or authorising overtime. The creation of practical material plans is clearly easier if capacity management is possible, since capacity plans can then be stretched to fit the demands of the material output. In manufacturing environments with strictly fixed capacity plant, such as often pertain in the process industries, the creation of practical material plans is more troublesome - if capacity is slightly out of the strict material requirements for it, the materials plans must then be manipulated until they fit the capacity available.

Capacity Requirements Planning: a means of evaluating the work centre capacity demands of a materials plan. After the time-phased material requirements have been determined, a so-called "capacity database" is accessed to find the work centres where the materials are manufactured and the durations that will be required to do so. For example, Material X (requirement 600 units) may be made on Work Centre Y, the time required being 1 minute per unit of X. The demand on Y is consequently 10 hours. By adding up all the demands on each work centre, comparison can be made with each work centre's capacity. Typically, the results are shown on the VDU, one screen per work centre, with potential future overloads highlighted in colour. CRP is very broad brush. It does not take account, for example, of set up times and technical feasibility. An obvious further difficulty is in defining the capacity of a work centre, since capacity may be affected by local management action such as transferring in additional staff (see Capacity Management). CRP is usually associated with Rough Cut Capacity Planning in the formulation of the master schedule, where its use is generally very satisfactory in determining the go/no-go status of the potential MPS.

Capital: synonymous with finance, or money.

Capital Equipment: Machinery, equipment, tools and so on entered on the company's asset register along with its financial value, and so included in its fixed assets on the balance sheet. Note that small items of equipment such as fax machines or typewriters are usually lumped together under current assets.

Capital Reconstruction: With the permission of its shareholders and creditors, a company may vary its shareholders' rights and alter its capital structure (issued share capital, debentures, debts etc) as a means of "relaunching" itself with fresh funds and without the burden of existing debt.

Capital Value (of a Company): A company's assets less its liabilities, as deduced from the Balance Sheet. This is a strictly arithmetical view of a company's capital - it does not include, say, its prospects or the know-how of its staff.

Capitalisation Issue (of shares): a company may believe that certain financial entries within its accounts are in reality permanent, and that a more accurate view might be taken of its finances if they were indeed made permanent. It may therefore issue share capital covering the sum concerned, issuing the share capital free to existing ordinary shareholders and removing the financial entry they previously represented from the accounts. See also shares.

CAPOSS-E: Capacity Planning and Operations Sequence Scheduling - Extended. A very well thought-of IBM finite capacity planning system current in the 1980s.

CAR: Capital authorisation request - a request by a manager or department in the form of a formal proposal that the company should purchase an item of equipment or build a new facility etc.. The proposal will be supported by a financial evaluation in the form of DCF calculations, qv..

Carat: the unit of weight by which diamonds are reckoned. One carat = 0.2 grams. The word 'carat' originated in the carob tree (ceratonia siliqua). The small seeds of this tree are well known for their uniformity and consistency of weight; because the weight of a seed, or a few seeds, was well matched to the weight of a diamond, diamonds were weighed against them by prospectors in the diamond fields in the absence of readily available accurate scales.

Carbon Trust: Ostensibly, the UK organisation known as the Carbon Trust aims 'to accelarate the transition to a low carbon economy by helping organisations reduce their carbon emissions and developing low carbon technologies'. The English office is based in central London, and is devoted to supporting the swindle of Global Warming. Although the Carbon Trust is legally a company, it is, of course, a government organisation managing to waste taxpayers' money and spread deceit and lies as only a government organisation can. The expression is also used of a carbon footprint, this being the quantity of carbon an organisation emits per year, and a carbon label, a public declaration of an organisation's carbon footprint.

Carlo: a type of schwundgeld originating in January 2005 in Karlsruhe, southwest Germany.

Cardinal Number: a fundamental number - thus 1, 2 and 3 are the first three cardinal numbers, as opposed to an ordinal number ... first, second, third etc..

Carousel (Horizontal): An electromechanical storage and stock-to-picker stock retrieval device consisting of numerous stacks of trays or receptacles. All of the stacks move horizontally in relation to each other along a continuous rectangular circuit. Carousels are expensive items of equipment and are usually associated with the storage of small, expensive and frequently accessed items (see volume movement). Nevertheless, it has been said that it is not the carousel's inherent advantage as a storage medium which is of value, but the fact that it eliminates the inefficiency and travel times associated with the previous method of storage that it has replaced - ie the carousel takes items out of their original area and so reduces the picking/travelling times incurred there. Horizontal carousels can be heavy duty or light duty, and are often used for heavier or more bulky objects than objects stored in the more common traditional vertical carousel (see below). For efficiency, one picking station should be served by a number of the carousels ... perhaps 3 to 5 of them. These are arranged in groups of so-called 'pods', butting on to the station. The orders are input to the VDU console. Each carousel then rotates in turn, stopping at the trays/boxes of each of the required objects stored on it.

Carousel (Vertical): An electromechanical storage and stock-to-picker stock retrieval cabinet, smaller ones being about 10' to 15' high, especially suitable for small objects. The vertical carousel itself consists of stacked trays ascending or descending within the body of the device on a continuous pulley.The shelving within the cabinet of a vertical carousel rotates clockwise or anti-clockwise, to present the required tray at the picking front. The number of storage locations might be 928 (ie 58 × 16), but with long shelves, different things can be stored on the same shelf. They are driven by computer, and are usually combined with a facility to print customer labels and prepare accounting information including invoices. They are good for small objects and can achieve savings per pick of up to 80%. Because of their high cost, both horizontal and vertical carousels are generally viable only for small items of relatively low consumption. The principal problem regarding their operating efficiency is the time taken for the carousel to trundle round and present the stock to the picker. For that reason, one operator will typically have charge of two carousels, and for 35' carousels, one operator will have charge of three carousels. Popular makes are the well-spoken of Linvar (Leicester), Linpic (Nottingham), the Cardex Shuttle and - for picking bottles in pharmaceuticals distribution - the Haystack. Software includes Maximo. It has been said that it is not a carousel's inherent advantage as a medium of storage which is of value, but the fact that it eliminates the inefficiency and travel time associated with whatever method of storage it has replaced. In the words of one Ken Clark, manager of SLS Sears Logistics Services, Illinois, There is no way to justify the high cost of the carousel in terms of picking the items stored in it. The justification came from taking these items out of the area in which they were previously stocked, thus reducing order picking travel time in that area by compressing its size. See the comments under horizontal carousel.

Carrying Cost: Normally, the cost to the company of supporting the holding of stock (whether in the form of raw materials, components or finished goods). The cost is usually expressed as a percentage per annum of the value of the stock concerned and may be estimated at 25% pa. This percentage is arrived at by adding (i) the percentage to be applied to the money tied up in the stock (by reference to the company's target rate of return on invested capital, as set by senior management), (ii) the cost of the stock's insurance, (iii) its warehousing costs, (iv) the percentage cost due to any deterioration that might result, (v) general stock management, and (vi) the percentages applying to very many more small incidental costs.

Cartel: A group of companies that have conspired to fix prices of some product or service, contrary to the spirit of competition and free trade. Cartels are illegal in most first world countries.

CASE: Computer Aided System Engineering.

Cash Book: An account kept of cash at the bank, cash on hand and the receipts and payments of money.

Cash Cows: A humorous marketing term for products on the selling range with high market share but low market growth (see also Dogs!).

Cash Flow: Estimations of cash incomings set down alongside corresponding estimations of cash outgoings, both estimations being over future time. Companies typically prepare several types of cash flows: operations, taxation, assets etc.. Cash enables the company to proceed with its day to day operational activities.

CATV: Community Antenna Television (ie Cable TV).

Causal Forecasting: . (See also, by way of contrast to Causal Forecasting, Naive Forecasting. Also particularly see the overall subject of Demand Forecasting) Causal forecasting encompasses a small but powerful family of forecasting techniques based on the application of regression statistics. Normally, in the application of statistics, regression is used to investigate the relationship between the occurrence of one phenomenon and a second different phenomenon such as that discovered by Sir Richard Doll in the 1950s - ie between smoking and lung cancer (*). In forecasting, autoregression is used ... ie the relationship of current and future sales demand and past sales demand for the same products. It should be noted that regression and autoregression deal entirely with statistical probabilities and are not concerned with scientific relationships such as that propounded, say, in Ohm's Law to express the relation between current, voltage and resistance. For further detail on Causal Forecasting, see ARMA, ARIMA and MARIMA. (* Note that the relationship between catching disease and so-called secondary smoking has been shown to be statistically so weak that it can be completely discounted.)

Caveat Emptor (and Caveat Venditor): The phrase caveat emptor is Latin for beware the buyer, and means that the buyer should be most careful in what he purchases. If he buys something unwisely, he has only himself to blame. The expression is a powerful argument in denying the claim that a mistake has occurred in a contract such that the contract is void. One might also add the expression caveat venditor, beware the seller.

CBO: Common Business Object.

CBOT: Founded in 1848, the Chicago Board of Trade is the world's largest commodity market.

CBSA: Component Based Solution Assembly.

CBT: Computer-Based Training.

CC: Cost Centre - see below.

CCAS: Component Commonality Analysis System - a method developed by William Tallon for determining which component parts within a family of alternative assembled structures are common and which are unique. By "family" might perhaps be meant (say) a range of pumps or a range of motor cycles. Tallon's method involves a computer search of the family's bills of materials. (PhD dissertation, 1986, University of Iowa).

CCB:Change Control Board - see Engineering Change Committee.

CCC: In banking and finance, the attributes the lender should look for in a person wanting to borrow money - ie Capital (ie the would-be borrower's!); Competence (or Capabiliy); and Character. It is a pity these principles were abandoned by the greedy Banks responsible for the American 'sub-prime' fiasco of 2007 and the consequent global liquidity squeeze of that year.

CCCC: In Health & Safety management, the four attributes looked for in the management and ethos of an organisation - that is: Control (the allocation of responsibilities and the securing of commitment); Competence (the provision of training and advice); Co-operation ( ... between individuals and working groupp); and Communication.

CCCCCC: The six Cs are a notion of the quality guru Philip Crosby and represent Comprehension, Commitment, Competence, Communication, Correction and Continuance.

CCD: Charged Coupled Device. Bar code "imaging" scanners which are less expensive than the traditional laser scanners. The CCD is in effect a tiny digital camera which takes a digital photograph of the bar code.

CDE: Common Desktop Environment.

CDM (Construction (Design and Management) Regulations): part of the Health & Safety at Work Act. The CDM regulations were amended and re-issued in April 2007. Although the CDM regulations clearly apply principally to building sites, they also apply to racking in a warehouse: the Health & Safety Executive classifies the installation of racking as a construction project. To comply with the CDM regulations, the warehouse must ensure that a health and safety plan has been developed before any construction work begins. A health and safety file that is available for inspection at any given time must also be produced. The preparation of the plan is the responsibility of the warehouse manager. It will usually begin with a description of the 'project' and a general statement of health and safety principles and objectives of the work. It will include arrangements for managing and organising the project, and include the identity of those responsible for the actual erection.

CE Mark: The CE mark placed on a particular product is a self-declaration by the manufacturer that the product on which the mark is placed meets all the provisions of the relevant legislation implementing certain EU directives. The initials "CE" stand for "Communaute Europeean", and, as stated, are a declaration of compliance with EU procedures - ie the mark is not a statement of quality or a statement that any particular design features or testing methods have been employed in the product's manufacture. Products entering the EU bearing the CE mark cannot be inspected for quality or compliance by national inspectors. It is of interest that every one of the 2m toys made in China for Mattel that were withdrawn from the market in 2007 because of safety faults bore a CE mark. It is likely, if anyone, that Mattel should be blaming the EU not China for this corporate disaster.

CEDAC: Cause-and-Effect Diagram with Additional Cards - a continuous improvement methodology involving many participants.

Cell Manufacture: In Just-in-Time or lean manufacture, the company's plant must be laid out so as to permit the frequent manufacture of small quantities of product. To achieve this economically, plant must be rearranged to create mini flowlines, each one dedicated to the production of a few families of parts. (A "family" comprising parts having similar shapes and sizes and involving similar materials). It is efficient to arrange each mini flowline in the form of a open U shape, to promote good communications and teamwork, and eliminate delay. The machines and men constituting each U-shaped line is referred to as a cell. Also see functionally oriented layout and group oriented layout.

Central Limit Theorem: Suppose that, from a large population of parts, or items, we were to take a number of samples of the same size, and measure some given characteristic of each part in each sample. Suppose further that we were to calculate the mean, or average, of the measurements relating to each sample (which we now refer to as the sample-mean). Then the central limit theorem states three conclusions, of which the third is the basis of Statistical Process Control (SPC): (1) The grand average of the sample-means is the mean of the population of parts from which the samples are taken; (2) The standard deviation of the sample-means is the same as the standard deviation of the population of parts, divided by the square root of the size of the sample taken; (3) The statistical distribution of the sample-means is normal, or Gaussian (qv), regardless of the distribution of the population.

CEO: Chief Executive Officer. US terminology for the managing director.

Certainty of Terms (legal): All of the stipulations needed to perform a contract must be known to the contracting parties before the contract is agreed between them (or before the contract can come into existence).

Certificate of Incorporation: a legal document issued by Companies House, Cardiff, which in effect brings a company into existence.

Centre of Gravity Method: See Location of Distribution Depots.

CFAR: Collaboration Forecasting and Replenishment.

CFC: Chlorofluorocarbon - a class of chemical compound.

CFM: Continuous Flow Manufacture.

CFO: Chief Financial Officer. US terminology for the financial director.

CFR (followed by a named port of destination): Cost and Freight - see Incoterms (Group C, "main carriage paid"). The seller has fulfilled his obligations when the goods pass the ship's rail in the port of shipment. Although the seller must pay the costs and freight necessary to bring the goods to the named port of destination, the risk of loss or damage to them, as well as any additional costs due to events occurring after the time of delivery, are transferred from the seller to the buyer. The seller must clear the goods for export. CFR can only be used for sea and inland waterway transport. If the parties do not intend to deliver the goods across the ship's rail, the CPT term should be used.

CG: Consumer Goods.

CGE: Compagnie Générale d'Electricité - now named Alcatel-Alsthom.

CGI: Common Gateway Interface.

CGMP: Current Good Manufacturing Practice.

Chaku-Chaku: A Japanese term for the conduct of single piece manufacturing flow, whereby the machine operator personally conveys the object under manufacture from one work station to the next, setting up and running each machine at each step along the production route.

Chapter 11: Shorthand for a provision in the US insolvency code whereby, on application to the court, an insolvent company is permitted to continue trading but is under no obligation to pay creditors' invoices dated from before the protection came into force. It must pay invoices on or from that date however. (Suppliers in these circumstances usually insist on COD (cash on delivery)). No such provision is made in UK law - all invoices are due. See also Bankrupt.

Change Over: The action of converting a machine from its state of manufacture for Product A to its required state of manufacture for Product B. Synonymous with "Set Up".

Charge: a liability or financial obligation placed on a company, secured in some agreed way against the company's assets. (In everyday life, our mortgage is a charge against our house - we cannot sell the house without discharging the outstanding mortgage.)

Chartered Institute of Purchasing & Supply: see CIPS.

Chauvenet's Criterion: A test put forward by William Chauvenet (*) to decide whether a seemingly unusual experimental reading/measurement should be rejected as an error or accepted for what it is and incorporated with other readings. Chauvenet's criterion involves calculating the number of standard deviations (ie probability) that the suspect measurement lies from the mean of all measurements taken. Specifically, the test states that if there is less than a 0.5 probability of the suspect value occurring among the measurements recorded, it should be rejected. Many are reluctant to apply Chauvenet's criterion, and it is certainly true that if the suspect measurement can be repeated, it should be. However, an application of the criterion in manufacturing control would be in highlighting "non consuming demand" when consuming the forecast in master scheduling. (* Prof. William Chauvenet 1820 - 1870, US Naval Academy and Yale.)

Check Digit: In order to verify the validity of a numeric code, a simple arithmetic procedure may be applied to the digits which constitute the code in order to derive a further number. When this further number (or part of it) is appended to the end of the original code, it is said to be a check digit. For example, a check digit may be derived by the addition of the individual digits in the code. Thus the check digit calculated for code 123 is 6 - ie 1 + 2 + 3 = 6. The new code is now the original code with the check digit appended - in this case, 1236. If the code is subsequently written as 1237, it is clearly in error. Check digits are now defunct and should be consigned to the dustbin. They are a relic of the 1950s and the days of comptometers, which were capable of very limited arithmetical checking. The validity of codes are now checked directly by reference to a central database.

Check Standard: A stable, well-understood in-house physical standard that is re-measured at intervals to ensure that the measurement process remains in a state of statistical control. The difference between a check standard and a further reference material, such as a customer's sample, is the level of certification and traceability to some agreed, accepted standard.

CHEP: Commonwealth Handling and Equipment Pool, an Australian Government intiative begun at the end of WWII to deal with the huge surplus of materials handling equipment and military pallets at the time, and leading to the world's first national pallet standardisation. The Anglo-Australian company Brambles now manages this scheme, and operates an international pallet swopping system involving 200m pallets, although it is not always successful in keeping track of what it owns. See also unit load and pallet.

Chi: a Greek letter formed somewhat like a capital "X", spelled "chi" but pronounced "kai" (hence the abbreviation in English of Christmas as Xmas).

Chi Squared Test: A statistical test to decide whether a series of observations or the results of an experiment fall into the pattern of a specific theoretical distribution, such as the Normal, Binomial or Poisson distribuion. The test proceeds by comparing the actual achieved results to the distribution of values that would have been obtained had they followed the theoretical distribution perfectly. If the differences between the two sets of figures is acceptably small, the observations are probably distributed according to the theoretical distribution. If they are large, there is probably no theoretical correspondence. An example of the use of the chi squared test is in examining sales forecast errors: it cannot be assumed that forecast errors are Normal, and until their distribution has been determined, it is impossible to set product safety stocks.

Chiemgauer: a type of schwundgeld launched in January 2003 in Rosenheim, near Munich, Germany.

CI: Continuous Improvement (see continuous improvement, or the Channel Islands.

CIDM: Computer-Integrated Decision Making.

CIF (followed by a named port of destination): Cost, Insurance and Freight - see Incoterms (Group C, "main carriage unpaid"). The seller has fulfilled his obligations when the goods pass the ship's rail in the port of shipment. The seller must pay the costs and freight necessary to bring the goods to the named port of destination, but the risk of loss of or damage to the goods, as well as any additional costs due to events occurring after the time of delivery, are transferred from the seller to the buyer. However, under CIF, the seller must procure marine insurance against the buyer's risk of loss or damage to the goods during the carriage.

CIGS: (1) CuInGaSe2, a semiconductor compound that absorbs light by freeing electrons. The semiconductor can be embedded on a polymer base to form a 'revolutionary' form of solar panel. It is hoped that such panels will be capable of reducing the cost of solar power generated electricity to below $1 per watt, opening the way to cheap, plentiful power. (2) Chief of the Imperial General Staff, the highest UK military rank below HM The Queen.

CIP (followed by a named place of destination): Carriage and Insurance Paid To ... see Incoterms (Group C - "main carriage paid"). The seller delivers the goods to the carrier nominated by him, but the seller must in addition pay the cost of carriage necessary to bring the goods to the named destination. This means the buyer bears all risks and any additional costs occurring after the goods have been so delivered. However, the seller must procure insurance against the buyer's risk of loss or damage during the carriage.

CIPS: Chartered Institute of Purchasing & Supply, a much respected UK professional institute located at Easton House, Easton on the Hill, Stamford, Lincolnshire PE9 3NZ (UK), PEs, phone 01780-756777, web site http://www.cips.org.

Circulating density: a notion encountered in logistics to denote the degree to which distribution infrastructure (ie vehicles, FLTs and so on) is actually engaged in useful work carrying goods. For example, backhaul increases circulating density.

CIRM: Certified in Integrated Resource Management, personal certification obtainable through APICS (the American Production & Inventory Control, Society).

City (of London): An area of London of about one square mile, located around and to the east of St Paul's Cathedral. There are virtually no residential properties in the City - instead, the area houses almost all of the UK's financial, banking and brokerage businesses. The City has a working population of 500,000 and its services contribute 19% to the UK's GDP. It has been said that there are "many villages" in the City - ie one should be aware that insurance, banking, stockbroking, commodities dealing ... are separate activities with distinct skills and separate working communities.

CLASS: Capacity Loading And Sequence Scheduling - finite scheduling software.

Class A: A company that has installed MRP with maximum possible success - see ABCD Checklist.

Classification (of a Job): A simple qualitative job evaluation technique carried out as follows. First, a small number of representative key jobs are described and considered. Second, job grades are allocated to these key jobs. Third, the remaining non-key jobs within the company are discussed and compared to the key jobs, and assigned grades accordingly.

Climate Change: see Global Warming.

CLT: cumulative lead time - usually, the total leadtime of all stages of manufacture to make a product ab initio.

Clock-Card: A card usually about 8" x 3" used by an employee in conjunction with a special clock (a "time clock") for recording the time of his arrival at, and time of departure from, work. (Hence "clocking on" and "clocking off" - arriving at work and departing therefrom.)

Closed loop MRP - see MRP.

CM: Contract Manufacturing, or Change Management.

CMOS: Complementary Metal Oxide Semiconductor, a family of low power microchips used to store and process digital data.

CMRP: Capacitated Materials Requirements Planning.

CN: customer needs.

CNC: Computer Numerical Control.

CNG: Compressed Natural Gas - a fuel having the advantages of cleanliness, safety and low cost.

Co-Determination: A personnel policy which permits employees to participate actively in 'shaping' their work environment. Co-determination is brought about through company agreements with trade unions, by establishing for employees legal rights and by other informal ad hoc arrangements. The policy is most associated with German industry.

Co-Product (in Materials Planning): Two different products may both be manufactured by the same production process, both products being required in further stages of production. (Contrast the manufacture of a by-product, where the second product, the by-product, is not required.) The planning of co-products is difficult and usually entails specialist software, such as a "process industries" ERP package.

COA: Continuous Ordering Agreement. See Stage Deliveries.

COB: Chip On Board.

COBOL: COmmercial and Business Oriented Language, a procedural computer language especially geared to the programming and production of reports, presentations and so on, rather than to the programming of scientific calculations. COBOL was devised and developed by the late Capt. Grace Hopper (USN). The most used version of COBOL is COBOL 85, although a later version, from the International Standards Organisation, is COBOL 2002.

COC: cost of conformance, a notion seeming to contradict Crosby's maxim that quality is free.

COD: Cash On Delivery.

Code 39: a bar coding system capable of encoding both numbers and letters.

COGS: Cost Of Goods Sold.

Coincidence:(1) "the fact or condition or being concident - that is, occupying the same place or being exactly contemporaneous" (OED); (2) "occurence or existence at the same time" (OED); (3) "God's way of remaining anonymous" (A.Einstein, attrib.)

Coinciding Indicator: In sales or economic forecasting, two phenomena may occur in tandem, so that observation of one allows one to infer that the other phenomenon is also occurring. A flipant but correct example is the occurrence of heavy rain and the sudden demand for umbrellas. A more useful example is the degree of industrial "activity" (which is difficult to gauge) and the industrial consumption of electricity. See also Leading Indicator.

Cold Stores: A storage area maintained at a cool or cold temperature. A first critical factor in its operation is the activity taking place at the door, since the entry of warm air will allow ice to form, this being then expensive to remove. Conveyor tunnels and air locks are required. A second factor is the exposure of FLTs (*) and racking to the cold, since steel may become brittle. (*Specially modified fork lift trucks are obtainable, suitable for cold working.) Staff required to work in a cold stores work to a special shift system, so that the number of total and continuous hours exposed to the cold are strictly controlled. Also see sub-section 1.10.2 of the free GMCS 'course' on stores/warehouse operations at this site.

Collaborative Forecasting: Akin to consensus forecasting and Delphi forecasting, but with input from customers as well. More broadly, collaborative forecasting is also taken to mean demand forecasting carried out as a joint exercise by participants in a supply chain (eg suppliers, manufacturers and customers). As with Delphi, the value of this type of collaborative forecasting is less the derivation of hard numbers and more the sharing of market knowledge and opinions.

Co-Managed Stock: see Stock (Co-Managed).

COMAH: Control of Major Accident Hazards.

Commercial Terminology: the visitor to this Glossary is referred to the "Investor Words" Internet site.

Commission: Typically, a cash bonus paid to a salesman on his achieving an actual sale, the size of the bonus depending on the value of the sale See bonus schemes.

Commodity: Commodities are primary products at the 'bottom' of the supply chain such as metal, crops and oil, sold in worlwide markets. Because the sources of commodities are essentially limited by the amounts that can be supplied (ie by the limitations of mines, estates and oil wells), the prices of commodities are liable to very large fluctuations as demand rises and falls. To protect itself against a rise in the price of a commodity, a buyer can purchase a commodity future, entitling him to buy X amount of the commodity at future date Y. Then, when future date Y is reached, the buyer can sell his future and buy the commodity at the prevailing spot price (the spot price is the price in the market on the day). If this spot price is higher than it was originally, ie when the commodity future was purchased, the profit on the sale of the future will offset the extra cost of the commodity; if the spot price is lower than than it was originally, the loss on the sale of the future will be offset by the lower cost of the commodity. A commodity future therefore protects a buyer from a price rise, but blocks him from obtaining advantage of a price fall. In reverse, a commodity future protects the commodity producer from a price fall, but blocks him from taking advantage of a price rise. Commodity futures are sold and traded on various City of London (and other) markets - a particular market specialises in a particular type of commodity future.

Common Carrier: In distribution, a haulier whose vehicles are for hire to the public.

Common Causes (of Variation): A manufacturing process or system of procedures will not produce end results absolutely and exactly as intended. Instead, the end results will exhibit variation from the ideal (possibly extremely minute variation), due to "common causes". Common causes of variation are causes inherent in the process or system itself. (The variation is due to chance, which might include chance mistakes by those operating the system.) The output from a system which is subject only to common cause variation will be consistent within limits that can be statistically calculated. In this state, the system is said to be under statistical control. If the variation recorded is greater than engineering or management finds satisfactory, the only recourse is to change the system giving rise to it. The term "common cause" variation was introduced by W Edwards Deming. An alternative term preferred by Walter Shewhart was "unassignable variation". If the variation observed is greater than the calculated limits, a special cause of variation has intruded into the system's operation - see Special Causes of Variation.

Common Law: In Britain, Australia, Canada, The United States, New Zealand etc, common law is unwritten law based on ancient practice and universal usage. Although unwritten, common law is embodied in court decisions relating to past cases. Particular branches of the common law are the Law of Contract, and Tort.

Common Parts: In conjunction with assemble-to-order, a component or part is common if it is used in all of the final variants of the product that may be specified by the customer. The determination of which parts are common is a necessary precursor to the adoption of assemble-to-order planning.

Companies Act 1862: In the mid 19th century, 9 statutes were passed in Britain relating to the formation and regulation of joint stock companies. (A joint stock company is one where the shares are variously held by several owners). These culminated in 1862 with the first ever Act permitting the formation of a public company with full juridic personality and limited liability. Full juridic personality means the company is recognised as a distinct legal entity before the courts - for example, it can take legal action and, similarly, legal action can be taken against it. Limited liability means the company's liability for debts is limited to its assets (ie individual shareholders or directors cannot be personally sued in the courts for their own assets, such as their houses or bank assets.)

Companies Act 1985: A major Companies Act consolidating the extant legislation of all previous companies acts. Nowadays, this Act is the major reference point for company law. Legal cases involving company law are heard in the Court of Chancery, a division of the High Court.

Companies House: The office of the Registrar of Companies, now situated for social engineering reasons in Cardiff (having moved there from London, where it rightly belongs).

Competency-based Pay: Pay awarded to an employee on the basis of his acquisition of a relevant skill or his acquisition of relevant knowledge. An example in UK manufacturing would be increased pay awarded to an employee for obtaining the diploma of the Institute of Operations Management or somesuch.

Competent Person: This definition has been put forward by the HSE (2003): A competent person is one with sufficient professional or technical training, knowledge, actual experience and authority to enable him to: (1) carry out his assigned duties at the level of responsibility allocated to him; (2) to understand fully any potential hazards related to the work (or equipment) under consideration; (3) to detect any technical defects or omissions in that work (or equipment), recognise any implications for health and safety caused by those defects or omissions, and be able to specify a remedial action to mitigate those implications.

Component: A single item formed by the application of an engineering operation on a yet more basic component. Components are typically fitted together to form a sub-assembly or, perhaps, an assembly (see assembly).

Computer Aided Design: The use of computer software to assist in product design - for example, by the performance of calculations and by enabling final designs to be represented by 3D images on the VDU screen. See particularly Isodraw.

CONC: cost of non-conformance, a figure estimated by the quality guru Armand Feigenbaum to be 15% to 40% of turnover, and generally guessed at about 30%.

Conceptual Design: The conceptual design document describes how a product under design is to work - how it will be put together and how the components which constitute it will function so as to deliver the requirements laid down in the PDS (see Product Design Specification). Again, as with the PDS, conceptual design is not detailed design, although the end result here will include a drawing and, perhaps, a scale model.

Concurrent Engineering: synonomous with Simultaneous Engineering, qv.

Condition (of a contract): One or more conditions are central requirements in a contract between two (or more) parties. An obvious example of a condition in a contract to purchase goods from a supplier is the identity of the goods to be supplied - if the wrong goods are sent, it may make no sense to persevere with the contract. (Compare warranty, an incidental requirement - for example, the style of packaging in which the goods are to enclosed may indeed be stipulated in the contract but may be regarded as a warranty in a court of law *.) If a contractual condition is not met, the party adversely affected is able to terminate the contract and sue for damages, whereas if a warranty is not met, the party adversely affected may not terminate the contract (although it may still sue for damages). Note that the date of delivery of the goods is usually considered to be a warranty. However, if the buyer holds that a date of delivery is absolutely critical, all he needs to do is to draw attention to its importance in the wording of the contract - he might simply put "the date of delivery is a condition of this contract", although lawyers often use the phrase time is of the essence. Note that a condition may be express or implied. See however innominate. (* The style of packaging may be a warranty in the purchase of potatoes, but would presumably not be a warranty in the purchase of cosmetics. A buyer can always make a seemingly incidental requirement into a condition simply by stating in the words of the document that such-and-such is a condition of this contract.)

Conference: See Shipping Conference.

Conforming Unit: A manufactured part conforming to specifications. See Non-Conforming Unit.

Consensus Forecasting: A means of preparing sales forecasts over a specified time by combining the predictions of sales personnel, the totals arrived at then being successively scrutinised by sales management and corporate planners. See also Delphi Forecasting and Collaborative Forecasting.

Consideration (legal): (see also "contract"). Consideration has been defined as The thing given or done by the promisee in exchange for the promise. In manufacturing, that is typically the money to be paid by the buyer in exchange for the goods to be supplied. Executory consideration refers to the exchange of promises - ie to deliver and pay at some point in the future. Executed consideration means that what is done and paid takes place at the same moment as the contract is formed - eg a cash settlement by a dealer for an ad hoc delivery of scrap iron.

Consignment Note: A formal note from a supplier to a purchaser verifying that goods being despatched have been consigned to a third party for delivery (ie consigned to a haulier or distribution organisation).

Consignment Stock: See Stock (Consignment).

Consistency: a match of characteristics with those described in documentation, advertising, deadlines and industry standards.

Consolidation Centre: A node within a supply and distribution network used to effect the consolidation of many small incoming lots of material into fewer, larger loads for efficient onward despatch. Thus deliveries from Suppliers A, B and C, intended for Factory X, may be consolidated at the Consolidation Centre into a single container for economic onward delivery to X. See also node, crossdocking, postponement centre and breakbulk. Logisticians considering the establishment of a consolidation centre might also wish to investigate the employment of a shuttle vehicle to pick up loads direct from suppliers in a single "consolidation trip".

Consumable: A component or raw material widely and frequently used throughout the manufacturing site. Examples of consumables might be fuel, screws, wire, grease and cloth. It is not uncommon to control consumables by a two-bin system, thus ensuring that they are replenished in a timely fashion but without the maintenance of stock records or some elaborate replenishment system.

Consumed Forecast: (see also Error Addback). When the projected stock balance is calculated in the course of master schedule management, the calculation is made by adding to the stock or projected stock any master scheduled lot size and subtracting from it the forecast of demand. However, while this is correct and satisfactory in a make-to-stock environment, in make-to-order it is also necessary to take account of actual demand already received and booked into the schedule. If both actual demand and the full sales forecast were to be taken account of together, clearly there would be double counting. That is, actual demand is the forecast itself, "come true" and become manifest in the form of customer orders. To overcome the trap of double counting, a composite figure is introduced, termed the "consumed forecast". This is the greater of the sales forecast in a period and the actual demand in that period. The projected stock calculation then ignores both actual demand and the forecast - instead, it is calculated from "stock + master schedule amounts, less the consumed forecast". Note that the "greater of" rule is always applied, even though sometimes the actual demand may be less than the forecast in a specified period and it may be unlikely that any further demand will be received. For example, if actual demand is 4 units in a given period, and the forecast in the period is 5 units, the consumed forecast is 5 units, even though it may be unlikely that any further actual demand will be received to increase the 4 units. See also Demand (Consuming, Non-Consuming).

Consumer: An everyday purchaser of goods, a retail shopper. The concept of a private consumer is recognised legally - for example, in The Consumer Protection Act , The Unfair Contract Terms Act and under consumer rights. See also Returns Management.

Consumer Protection Act, 1987: An act relating to the supply of goods and services, including their hire. The supply of goods under this Act relates only to consumers, not to industrial users.

Consumer's Risk: The risk inherent in a sampling plan that an incoming lot of parts that it was intended should be rejected will, in fact, be accepted. (See also Producer's Risk.)

Consumer Tolerance: (see also LD50 and Loss to Society) Although there are strict physical limits of quality and product performance for the engineer or manufacturer, the consumer may be willing to tolerate actual performance and quality outside such limits. Taguchi maintained that as far as departure of performance from the ideal was concerned, the consumer's limits of toleration could be represented by the following expression: SQRT (A/A0) x (T/2), where A = the price of the product, A0 = the cost to the consumer of obtaining a non-conforming unit, and T = the physical tolerance limits of manufacture.

Consuming Site: The factory site using Material M, as described under Multi-Site Netting (qv). See also Originating Site.

Containers (ISO): a standard container measuring 8' (wide) x 8' (high) x one of four standard lengths (10', 20', 30' and 40'). The ISO container is a type of unit load. The manufacturer wishing to despatch his goods overseas by container contacts a container base. The container is delivered by vehicle. It is packed and sealed, and returned to the container base. It then proceeds to a railway station where it is loaded onto a container train, which conveys it to a container port such as Southamptom or Immingham. (Container ports are those specialising in servicing container vessels, by providing such standard materials handling equipment as end loaders; side loaders; straddle carriers; and gantry cranes.) At the port, the container is loaded into a slot within a container vessel. See tue, a unit of measurement of container capacity.

Contango: the opposite of backwardation (qv). The situation existing when a commodity futures price is above the spot price, so that, as the maturity of the future approaches, the futures price falls until, at maturity, it has fallen to the same value as the spot price.

Continuous Improvement: see kaizen (which has a slightly different flavour to CI). CI is a quasi-philosophy of quality and a principle of lean manufacture that holds that further improvements are alway possible to a manufacturing process or procedure and should always be sought, evaluated and implemented. The status quo is never acceptable. Means of following the CI philosophy include MBWA and the instigation of worker discussion groups (see Kaizen Teian). In lean manufacture, an example of CI is the successful reduction in the number of kanban cards in the system (see especially the Toyota Equation.) See also benchmarking.

Continuous Production: Usually, but not necessarily, the manufacture of free flowing material in a lengthy production run (rather, say, than the manufacture of discrete items in a separate lot). An example of continuous production is the bottling of Glenmorangie Highland Malt Whisky by the distillery responsible for eventual sale to its highly discriminating, and very content, customers.

Contract (legal): An agreement between two or more parties for the supply of goods or the performance of a service. To be legally enforceable, there must be an offer (to supply), an acceptance of the offer and consideration (qv). Consideration is the prospect of money, and its existence proves that the agreement is a traditional bargain. The law encompassing contracts is a major branch of Common Law, termed the Law of Contract. It comes about from basic principles and previous decisions of the courts. That is, there is no specific statute law passed by parliament (although some statute laws have a bearing on contract law).

Contract Costing: See Costing (Contract).

Contract Price Adjustment: See CPA.

Contribution Costing: Synonymous with Costing (Variable) - qv.

Control Account: Used in Integrated Accounting, qv.

Control Board: See planning board.

Control Chart: See Variable Control Chart, Attribute Control Chart, Control Chart, Number Percentage Chart and U-Chart.

Control Group (in stock records management): a control group is a given selection of parts, or products, within a stores or warehouse chosen on the basis of being typical of the parts there stored and, most importantly, chosen because they are fast moving - ie because they have high levels of activity recorded against them. The items within the control group are counted every day (or, perhaps, twice a week) and any discrepancy between the physical count and the stock record is investigated vigorously to discover the root cause of the inaccuracy. It is to be hoped that since the inaccuracy came about only in the last 24 hours, it will not be difficult to find the cause. Two notes of caution in managing a control group are as follows: (1) the number of items in the group should not be so many that the member of staff responsible cannot fully investigate the root causes of errors found - ie the time to conduct the investigations may be greater than the time to carry out the counts themselves; and (2) the reconciliation of the physical counts and the stock records must be carried out with great care, since there may be recent outstanding transactions still in the IT system which have yet to modify the computer stock records - ie records that may at first appear to be wrong may be made correct a couple of hours later as late transactions are finally submitted. Note that two further very valuable uses of a control group are (i) to track the operation of a new stock recording IT system immediately after its implementation; and (ii) to verify that the method of reconciling a physical count with the stock record is correct. (In this last respect, it is pointed out that incorrect reconciliation is a significant source of record inaccuracy.)

Control Limits: Two horizontal lines are drawn on a control chart denoting the upper control limit (UCL) and the lower control limit (LCL). The sample-means and the ranges drawn on the chart every so often must lie within these limits. If they do so, the process is behaving normally and is said to be under control. If any point lies outside either of the limits, this denotes loss of control - the process must be halted and the reason determined.

Control of Substances Hazardous to Health: see COSHH

Controlled Convergence: A method advocated by the product design expert Stuart Pugh as a means of evaluating how well a product design meets the specifications originally aimed for. In his book on product design, Pugh also advocates controlled convergence as a way of deciding between many alternative design solutions. For an alternative, not dissimilar means of deciding between alternatives, see "Weights & Marks".

Convertible Loan Stock: Loan stock issued by a company that can be converted to ordinary shares at a specified future date at a price set at the time of issue.

Convertible Preference Shares: Preference shares which can optionally be converted to ordinary shares (allowing the shareholder the initial security of the preference share dividend and the option of cashing in on the hoped for rise in value of the ordinary share).

Conversion Factors: 1 inch = 2.54 centimetres; 1centimetre = 0.394 inches; 1 square inch = 6.45 square centimetres; 1 square centimetre = 0.394 square inches; 1 square mile = 640 acres; 10,000 square metres = 1 hectare; 1 square kilometre = 100 hectares; 1 hectare = = 2.47 acres; 1 cubic foot = 6.24 UK gallons; 1 litre = 0.220 UK gallons; 1 kilogramme = 2.20 pounds; 1 pound = 454 grams; 1 knot = 1 sea mile per hour (= 1.7 feet per second).

COO: Cost of Ownership.

COPQ: Cost of Poor Quality - see (The) Hidden Factory.

COPICS: Communications Oriented Production Information and Control System, a major and much respected manufacturing software planning system developed by IBM in the 1970s, and also the title of a set of 7 comprehensive booklets covering the same subject matter, also published by IBM in the 1970s.

Co-products: the joint, simultaneous production of two or more products as the result of a single manufacturing operation. An example in the chemical industry is the producion of sodium and chlorine from the electrolysis of sodium chloride (ie salt). The planning of co-product production can be somewhate involved, since the demands for the two products are different and independent.

Corn Laws: A system of tariffs protecting British agriculture from foreign imports, as a result of which British manufacturing exports were inhibited. The Corn Laws were famously repealed in 1846, ushering in an era of free trade (qv).

Corporate Culturism: a hot topic of HR conversation in the 1980s. The corporate culture is one that emphasises the adoption of shared values and common assumptions about what is "the right way" to achieve company success. The adoption of corporate culturism is said to benefit the manufacturing concern by putting organisational objectives before the self interest of individual members of staff - staff become"a community bound together by shared beliefs and the propect of a common fate". Staff groups may be invited to go on weekend survival trips to the Lake District (those that decline to go are shown the tent flap).

Corporation Tax: In the UK, a government tax levied on the profits of a company.

Corrective Maintenance: one of the components of TPM, and concerned with the carrying out of investigations into past trouble and malfunctions with a view to changing procedures in operation or making equipment modifications. In addition, corrective maintenance is concerned with the need for actual repairs to get machines back and running after a breakdown (also referred to as breakdown maintenance).

COS: Class of Service.

Cosco Ningbo: the world's largest container ship (2006), being 9,449 tue, 109,149 gross tonnage, 351m length and 42.8m width.

COSHH: The Control of Substances Hazardous to Health Regulations (1988) - 19 regulations and 4 codes of practice passed by the HSC (qv) in 1988, setting out principles to be followed in occupational health, including medicine and hygiene. The main requirements of the regulations are that the employer must take account of the properties of substances and hazardous agents used at work, by making health risk assessments, controlling the exposure of employees, carrying out monitoring and arranging for health surveillance/environmental monitoring and control measures. The starting point for making health risk assessments is the hazard data information supplied by the manufacturer or importer of the substance at issue as required under Section 6 of the HASAWA.

Cost/Benefit Analysis: The setting out of the estimated future costs of acquiring and operating an asset over time, usually year by year, alongside the estimated financial benefits likely to be gained year by year in doing so. The sums each year of cost less benefit is set out for each year. In evaluating the year by year totals, careful account must be taken of the "time value" of money - ie if one was to spend £100 now and then gain a benefit of £100 from doing so in a years time, he would be one worse of if the accepted opportunity value of money (ie the accepted rate of interest on money) was 10% pa. That is, the £100 in the first year could be earning interest over the year, so, at 10% pa, one would need a benefit of £110 in one years time in order to break even. In considering a cost/benefit case, the executive should pay particular attention to the financial value of the benefits. Costs are usually not difficult to estimate, but benefits are notoriously problematical. For example, consider the benefits of building a new plant - will sales department be able to sell the increased output, and, if so, at what price? Sometimes, even the costs are dubious - for example, how does one cost the destruction of the environment in evaluating a proposal for a windfarm? Frequently, we find cost/benefit analyses used to disguise very shaky assumptions, and to back up semi-political objectives. See importantly DCF and NPV.

Cost/Quantity/Price Analyses: Cost analyses centred round the CQP Equation, as follows:
Q (s - v) + F + P , where Q = quantity sold, s = selling price, v = variable cost, F = fixed overheads and P = profit. As an example of its use, suppose that s = £4, v = £1, F = £2000 and Q = 2000 units. What is the profit? Thus 2000 (4 - 1) - 2000 = P, whence P = £4000.

Cost (Direct): A cost which is unequivocally incurred in the manufacture of a specific product, such as the cost of flour and the cost of yeast in the manufacture of a loaf of bread.

Cost (Fixed): A cost incurred in the manufacture of a product which is relatively fixed regardless of the number of items made. An example is the cost of supervision of a bakery as a component of the cost of loaves of bread.

Cost (Fully Absorbed): A product's production cost, plus additional cost elements associated with it due to general company overheads, such as R&D, distribution, administration etc.

Cost (Imputed): synonymous with Standard Cost.

Cost (Indirect): A cost which is indirectly incurred in manufacture, but which cannot be directly attributed to a specific product. If a bakery made Loaf A and Loaf B, the costs of the bakery supervision must be allocated to the production of the two loaves in an indirect way (eg by estimating the time the supervisor spent in dealing with problems involved in the two loaves).

Cost (Normal): Synonymous with Cost (Standard), qv.

Cost (Notional): Synonymous with Cost (Standard), qv.

Cost (Prime): That part of an item's product cost which is directly incurred. That is, the sum of direct materials costs, direct labour costs and direct expenses. See sub-section 4.2 of the free on-line course on purchasing at this site.

Cost (Product): The financial resources calculated to have been incurred in the manufacture of one unit of a manufactured product. Two stages are involved in the calculation: (I) all manufacturing costs and expenditures are assigned to the production cost centres where they are incurred, and (II) the cost in each production cost centre from Stage I is allocated to the products made there. Allocations are made in a way reflective of the demand made by products on manufacturing resources (eg according to the number of employees involved, or according to the value of the capital machinery employed). Cost accounting was devised in c.1870 by Andrew Carnegie (1835 - 1919), founder of the US steel industry. It was instrumental in enabling him to reduce the then cost of steel rails at his Homestead, PA, factory from $160/ton to $17/ton, itself leading to the opening up of the American West. Nowadays, an important factor in determining a product cost is the ability to "implode" the bill of materials. See sub-section 4.2.1 of the free on-line course on purchasing at this site.

Cost (Production): A product cost made up of the sum of the production overhead and the prime cost. The production cost excludes any element attributable to general company overheads such as R & D, sales and marketing etc..

Cost (Standard): A product cost calculated before the start of the company's financial year based on production forecasts (qv), standard assumed materials costs, standard assumed labour costs, standard assumed expense costs and assumed or estimated production efficiency. A standard cost, estimated or otherwise, is deemed to be an essential requirement before setting the selling price of a new product. Standard costs were at one time more widely termed normal costs.

Cost (Sunk): an irrecoverable cost.

Cost (Variable): A cost incurred in the manufacture of a product which varies in accordance with the number of items made. An example is the cost of electricity in running a machine.

Cost Centre: An area of operating activity where the manager in charge has control of, and responsibility for, costs and expenditures incurred. The notion of a cost centre is central to product costing, since a budget can be set for the area and the manager's (cost) performance monitored.

Cost Driver: The specific means by which indirect costs incurred in a cost centre are allocated to the various products made there. The "allocation basis". See "cost driver", mentioned in the entry for indirect costs. Also, for an example in use, see the free on-line course on purchasing at this site (sub-section 4.2.1).

Cost Pool: Synonymous with Cost Centre. Cost pool is the preferred term in the US.

Costing (Absorption): A method of ascribing a cost to a product in which cost centre overheads and other indirect costs are ascribed to the products made using a Cost Driver. See also Cost (Fully Absorbed). In absorption costing, profit is proportional to both sales and production, and may appear erratic due to fluctuating stocks.

Costing (Batch): The identification and assignment of those costs incurred in completing the manufacture of a specified batch of components. Having arrived at the batch cost, the unit cost is simply derived by dividing it by the number of components in the batch.

Costing (Contract): Mainly associated with civil engineering works, although sometimes also with the manufacture of a major engineering structure over a considerable time (for example, a contract to manufacture a turbine generator).

Costing (Contribution): Synonymous with Costing (Variable), qv..

Costing (Direct): Synonymous with Costing (Variable).

Costing (Job): The identification and assignment of those costs incurred in completing a specified, individual works order on behalf of a customer commissioning it.

Costing (Marginal): Synonymous with Costing (Variable).

Costing (Period): see Process Costing immediately below.

Costing (Process): Process costing might be better termed period costing. Process costs are calculated from the units of product output achieved over a specified time period and the costs expended during that time to produce them. The period cost divided by the number of units produced gives the process cost per unit. For example, the expenditures incurred from the beginning of the period (say, 6am Day 1) to the end (6am, Day 2) are collected and divided by the number of units produced, to arrive at a unit cost. Although process costing has been named as such because of its association with the process industries and continuous manufacture - paper, chemicals, packing lines - its use is equally valid in engineering batch manufacture when output volume is substantial. There are three principal differences from job costing: (1) cost data collection is focussed directly on the costs of operating the production process itself over the time period chosen; (2) there is a definite need to adopt a system of apportioning cost centre or work centre costs between products; and (3) the cost accountant must become deeply involved in such particularities of production as scrap, component usages, rework and set-ups.

Costing (Variable): A problem with Absorption Costing (See Costing (Absorption)) is that the costs calculated depend on assumptions as to output, sales and stockholding that are most unlikely to prevail in practice. As a consequence, and in the event, misleading financial results are likely to result. To obtain a cleaner, clearer picture, an alternative to absorption costing is variable costing, in which the cost ascribed to the product comprises simply direct costs only, and which therefore vary only in proportion to the product output achieved. (Note that a variable cost is not necessarily the same as a prime cost, since a prime cost can include costs which do not vary in proportion to output - eg the cost of a catalyst.) In variable costing, profits are strictly proportional to sales, and are unaffected by stockholding.

Costs (Direct Expenses): The costs of services and sundries (not labour or materials) directly incurred in physical production (eg the cost of electricity consumed during the production run).

Costs (Direct Labour): The cost of labour directly undertaking the physical work of manufacture - eg the wages of machine operators.

Costs (Direct Materials): The cost of materials directly going into manufacture itself - ie taking part in physical production.

Costs (Indirect): Costs associated with the manufacture of a product but which are not directly incurred in the product's literal manufacture. (For example, the shop supervisor's wages.) A problem with the treatment of indirect costs is that while they must be taken account of, their allocation to the costs of the products made must be accomplished somewhat artificially (using a so-called cost driver). In the example of the supervisor's wages, the cost driver used to allocate his wages to the various different products made might be the number of man hours involved in the manufacture of the different products, or the consumption during their manufacture of, say, electricity.

Costs (Indirect Expenses): The costs of services, utilities or other sundry items (everything except materials and labour) associated with manufacture but not directly incurred in the manufacture itself. Examples are cleaning services and the cost of regular planned equipment maintenance.

Costs (Indirect Labour): The cost of personnel not directly involved in literal manufacture, such as the cost of management, supervision and so on.

Costs (Indirect Materials): Materials costs incurred in manufacture, where the materials do not directly contribute to the manufacture itself. Examples are the cost of tote trucks and other apparatus needed in the general running of the plant.

COTS: Commercial Off The Shelf.

Court of Chancery: the UK court dealing with matters involving companies.

Count Chart: When a single major structure is manufactured, such as an engine or an aircraft wing, there are likely to be many undesirable quality attributes, such as burrs, scratches or paint flecks. The total number of such attributes can be plotted on a count chart(with time on the horizontal axis and the number of undesirable attributes on the vertical axis).

Counteroffer (legal): A counteroffer is an alternative offer, or rather, an offer of alternative contractual conditions, made in response to an original offer by the other party. The counteroffer in effect rejects the original offer. For example, A offers to sell something to B for £10. B refuses, and makes a counteroffer to buy for £5. See The Battle of the Forms.

Counterpurchase: An aspect of countertrade in which a supplier undertakes to purchase from a country a specified quantity of goods or to engage services offered by the country as a condition of securing business.

Countertrade: A general term for deals between companies in which payment for suppliers is made through the further exchange of goods, services or favours, rather than by cash. Countertrading includes barter, buyback , direct and indirect offset etc..

Counting Scales: see Weigh Counting and Scale.

CP: (1) Cost Performance (see seven entries under "Costs" above); (2) critical path - see PERT.

CPA: (1) Contract Price Adjustment. A contract between supplier and buyer may provide for the prices and costs to be paid to be varied between the contract date and the completion date. This is usually done to take account of inflation and/or changes in foreign exchange rates over the duration of the work. It is vital for the two parties to specify exactly what costs are to be subject to adjustment, and the basis or bases on which they are to be made. See especially BEAMA. (2) Calico Printers Association.

CPD: Continuing Professional Development, often jargon for study for examinations and diplomas set by such institutions as CIPS, the IOM etc..

CPG: Consumer Packaged Goods.

CPI: Continuous Process Improvement.

CPIM: Certified in Production and Inventory Management (a certificate issued by APICS, similar to the diploma issued by the Institute of Operations Management in the UK).

CPM: Critical Path Method - see PERT.

CPT (followed by a named place of destination): see Incoterms (Group C "main carriage paid"). The seller delivers the goods to the carrier* nominated by him, but the seller must in addition pay the cost of carriage necessary to bring the goods to the named destination. This means that the buyer bears all risks and any other costs occurring after the goods have been so delivered. (* "Carrier" means any person who, in a contract of carriage, undertakes to transport the goods or procure transportation services.) CPT requires the seller to clear the goods for export. The term CPT may be used in multimodal transportation.

CPU: Central Processing Unit.

CQP Analysis: Cost/Quantity/Price Analysis, qv.

Cr: Credit or creditor (qv) - the right hand side of an account (UK, not US, where it is on the left).

CRC: Cyclic Redundancy Test.

Credit: A major term used if financial accounting, being a benefit received by the company - ie the supply by others of value to our company. Thus a supplier who has delivered raw materials to our factory is a creditor.

Credit Card: When a credit card is used for payment by a buyer, the invoice and amount charged have VAT included, and the "VAT invoice" is therefore needed by the buyer to claim back the tax paid. When a debit card is used, VAT is paid direct by the supplier to HM Revenue and Customs, so if an invoice is raised, it should be clearly marked "not a VAT invoice". Credit cards were introduced into the UK in 1966 (the Barclaycard).

Critical Path: That succession of tasks and jobs in a schedule or project, none of which can be late in completion without making the whole schedule or project correspondingly late. Also, Critical Path Analysis (CPA) - the analysis of the durations and interdependencies of the tasks and jobs anticipated as being necessary to complete a project in order to determine which particular continuous sucession of tasks from the starting point to final completion will be the longest in duration. (The particular sucession of tasks is "critical" because it defines the remaining maximum duration of the project, and any delay on this path will cause a delay in ultimate completion of the project.) See also slack and PERT.

Critical Ratio: A shop floor prioritisation rule in which jobs are prioritised according to the quotient: (time due minus time now) / (leadtime remaining). The lower the CR, the higher the priority. A critical ratio of 1.0 means the job is exactly on time. The merit of CR is that the priorities tend to restore the leadtime element of jobs, and consequently to restore the queue element of jobs on the shop floor.

Critical Resource: Any reasonable definition of this term is acceptable - say, a piece of equipment or a work centre or specialised skill group the continued operation of which is central to the achievement of the company's master plan.

CRM: Customer Relationship Management - the establishment of a way of servicing, helping, influencing and interacting with a customer contributed to by the whole company. Whole company includes master scheduling, order processing/despatch and any relevant technical function, all working together for the good of the relationship, not simply Sales & Marketing department. Notwithstanding these fine words, it is pointed out by Gartner Inc. and Meta Group Inc that the majority of CRM initiatives fail. See also Supplier Relationship Management.

Crossdocking: A crossdocking facility within a distribution network will typically comprise a large enclosed area with many receiving docks on one side and many despatching docks on the other. Incoming loads made up of many diverse SKUs from many suppliers are broken up and the materials then reassembled into new groupings for forward despatch to various destinations. A crossdocking operation might be established, say, by a consortium of food companies in a particular geographic area supplying to the regional warehouses of a number of different supermarkets. See also consolidation and breakbulk.

Croston J. - see Intermittent Demand.

CRP: Capacity Requirements Planning, qv.

CRT: Cathode Ray Tube, usually used in the US for the British "VDU".

CSM: Component Supplier Management. Software used for the management and control of a company's suppliers, especially with respect to a supplier reduction programme. See the free on-line purchasing course at this site (sub-sections 1.3.3, 1.4 and 5.1).

CSR: Corporate Social Responsibility - the notion that a company has responsibility not only to its shareholders, but to its staff (health and safety, pensions) and to society itself in such matters as environmental issues, waste management, pollution, global warming, immigration etc.. Policies must be formulated and a balance struck.

CTE: Coefficient of Expansion.

CTQ: "Critical to Quality" - an aspect of a service or manufactured item that is regarded by the customer as a quite essential attribute thereof, a sine qua non. For example, a roadside rescue and repair service would be a CTQ aspect of a driver's membership of a motoring organisation. Also CTQC - critical to quality characteristic. See as well CTQ Tree.

CTQ Tree: An hierarchical tree diagram used to identify CTQ (qv) aspects of a service or manufactured item. For example, a motoring organisation might place at the top of a CTQ Tree the goal "Response to members' breakdown calls". Branching from this might be the two measures (1) "Breakdowns fixed per day", and (2) Time to effect the breakdown repair. Beneath (1) might be (1a) Call outs per day and (1b) % Breakdowns fixed at the roadside; beneath (2) might be (2a) Time to respond to request, (2b) .... etc.

CTO: Configure to Order.

Cube: Volume - the term is frequently used in transport planning.

Cumulative Available to Promise: The future master scheduling effort which is "available to promise" (qv) is usually set down showing the available effort in each period, one after the other (say 0, 6, 20, 25 ...). However, the figures can also be displayed by accumulating the effort period by period (0, 6, 26, 51 ... in the preceding example). It is usually a software-provided option as to whether single figure available-to-promise should be displayed or the cumulative figures.

Current Asset: See Asset (Current).

Custom and Practice (legal): Provided they can be shown to be the case, the customs and practices of a business or trade will be assumed to be included in the implied terms of a contract. It will usually be held that both parties should be aware of custom and practice, and, if one is not, he is nevertheless bound by them. However, in the express terms of the agreement itself, a particular custom or practice can be specifically excluded or modified.

Customer Order: A request by an external party for goods or services supplied by the company. The request may not be a legal offer ... the legal offer may come in response to the customer order (request), setting out the terms of the supply of the goods, including their price. If this is the case, agreement by the customer constitutes acceptance of the offer, resulting in the formation of the legal contract. Note that a scheduled customer order is a customer order requesting deliveries of items at designated times in the future.

Customer Service Target: A quantitatively expressed goal set by the Sales & Marketing Manager for the satisfaction of customer orders. The goal may be set in quality terms (say, % conforming parts), delivery date and quantity (on-time, in full, or "OTIF") or, in the context of safety stocks, in terms of stock availability. A stock availability target might be, say, "every line of 95% of all orders fulfilled from stock, and 60% of all remaining lines ...".

CVA: Company Voluntary Arrangement, the management of a company unable to pay its debts, and often the first step to administration or receivership.

Cycle: In sales forecasting, a period over which sales demand assumes a particular pattern of highs and lows. Although cyclicality therefore seem similar to seasonality (qv), a major difference is that cycles are not of a fixed duration. Consequently, a first task of forecasting is to detect the start and finish of the cycle. Well known cycles in the UK in the past have been the industrial cycle (about 7 years) and the textile cycle. Cycles appear to be dying out, however, perhaps because of increasing globalisation.

Cycle Counting: (Also known as PI Checking - perpetual inventory checking). A technique for organising the physical counting of a group of products and the subsequent reconciliation of the quantities counted with the stock records of the items concerned. Instead of counting all of the products in the group over a very short period of time, with the high concentration of human effort thereby demanded (see Annual Stock Count), the products are counted over a "cycle" of many weeks. Thus 1000 products might be counted and reconciled over a cycle of, say, 10 weeks, so entailing 100 counts per week, or 20 counts per day. When the cycle has been completed, a further cycle is commenced, and so on in perpetuity. See also Stock Records Accuracy. Note that the text of the 'cycle counting' section of the free on-line 'Course Notes' on Stock Records Accuracy and Cycle Counting are available at this site (see major section 5). Also see Batch Progress Control and Control Group.

Cycle Stock: see Stock (Cycle).

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