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f-laws: six cogent 'laws' which summarise the management philosophy of Systems Thinking, qv.
Fab: Jargon for a semiconductor manufacturing plant.
Fabrication: Literally, "manufacture", the term being used usually in relation to the operations involved in the manufacture of a component rather than in the manufacture of an assembly or final product.
Factor (in ANOVA and DOE): A set of conditions that has an effect on a system and which can be varied or controlled to observe the effect on the system in question. For example, the incidence of office invoice errors per 1000 invoices issued may be the observed result, and the factor under which they occur (ie the set of conditions) may be the employment of untrained invoice clerks. Two other factor levels under which invoice errors could be recorded might be the employment of clerks with 2 weeks training, and with 6 weeks training.
Factor Comparison: A quantitative job evaluation methodology which proceeds as follows. (1) First, 20 or 30 key company jobs are selected as a basis, and the various principle factors are identified as being required in their performance (examples might be mental ability; responsibility; working conditions, etc). (2) Next, the key jobs are evaluated by group discussion to verify that they are indeed representative and that all the vital factors have been identified. The jobs are then ranked against each other according to their degree of involvement in the factors - for example, Factor F1 is top in the requirements of Job A, but 2nd in the requirements for Job B. (3) Each job is then considered individually to allocate the split of its total work requirements among the factors involved in it - for example, splitting 100 points for Job A, we determine that Factor 1 takes 50 points, Factor 2 takes 30 points .... By arithmetic, the results from Steps 2 and 3 can be analysed to arrive at a pay rate for each job on the basis of existing rates and the jobs' various work contents. Factor comparison is relatively quick and easy to apply and was at one time a popular method. A full description of the method is difficult to find in HR literature.
Factory Gate Pricing: see FGP
Fail Safe (= "Failure to Safety"): an interlocking machinery guard system, being a guard with a moveable part connected with the macinery controls, such that (1) the parts of the machinery constituting a danger cannot be set in motion until the guard is closed, or (2) such that the power is switched off and the motion braked before the guard can be opened to allow access to the dangerous parts. Fail Safe is defined in BS 5304, and might be defined briefly as the characteristic of a device, system or manufactured part that ensures that when it fails due to malfunction, it remains safe or the assembly in which it is incorporated remains safe.
Failure Mode: The reaction of a manufactured product to a cause of failure. For example, the cause of failure may a surge of current; the failure mode of the product as a result of the surge may be a burnt out circuit. The concept of failure mode is employed in FMECA, qv.
Failure Rate: Usually denoted by the Greek letter lamda. Under operational conditions, the failure rate of a particular type of component or unit expresses the number of failing units to have occurred by a certain time as a fraction of the number of surviving units.
Fair Shares (lean DRP, or DRPII): A formal means of calculating the replenishment requirements of a distribution network. The system consists of three stages: (1) identification of those SKUs in the network that will require replenishment at some short time ahead; (2) calculation of the ideal quantities of material to be despatched to fulfil future needs of these SKUs; and (3) the making up of loads and schedules to despatch the quantities calculated in stage 2. Note that at stage 2, regarding the ideal quantities to be despatched, if there is insufficient stock at the network centre to fulfil needs at the depots fully, what stock that is available is allocated in the "fairest" way (for example, depots where there are emergency orders or where stocks are below their safety level will be allocated material in preference to those with enough stock to last several days). The fair shares system is more complicated and more difficult to follow than conventional DRP, but has the overwhelming advantage of actually working and being practical.
Fairtrade: a global scheme initiated by government development agencies within "first world" countries intended to persuade Western consumers to purchase fairtrade commodities in shops and supermarkets. Fairtrade commodities - coffee, cotton goods, fruit, tea ... - are commodities grown in "third world" countries, currently sold at very low prices and produced under poor working conditions and low wages. Under the scheme, fairtrade growers (typically small scale farmers) sell direct into their consuming markets at better prices than they would otherwise obtain. Fairtrade administrators also provide growers with marketing and technical expertise. For UK retailers, a Fairtrade label on a commodity has itself become a marketing weapon. For much more information on Fairtrade, visit www.fairtrade.org.uk.
FAK: (Freight All Kinds) A system of tariff charging applied in Deep Sea transportation employed by non-conference operators whereby a charge is made by the shipper dependent only on the cubic capacity of the load carried and the distance it is conveyed. Contrast the tariff rates charged by a Conference operator which is set depending on the cargo's financial value. (* See also Shipping Conference). Note that FAK is not one of the standard Incoterms.
Family Forecast: Synonymous with "Group Forecast" (qv).
Fao: office jargon meaning "for the attention of".
FAS (followed by a named port of shipment): Meaning 1 -Free Alongside Ship - Incoterms (Group F, "main carriage unpaid"). The seller has discharged his obligations when the goods are placed alongside the vessel at the named port of shipment. The buyer must bear all costs and risks from that moment. The term can only be used for sea or inland waterway transport.
FAS (Final Assembly Schedule): Meaning 2 - A product may consist of a basic structure but incorporate a number of alternative features specified on an individual basis by the customer when he places the order. An example is a standard Ford Focus, but with the customer specified options of a blue exterior, a 1400cc engine, automatic transmission etc.. Manufacture proceeds in two stages. Stage I is the manufacture of the basic parts and unassembled options. These are maintained in stock and master scheduled in an almost standard manner. Stage II is the final assembly schedule of the ultimate product, taking place over a short period and commenced on receipt of the customer's order. Because the company can offer the customer a vast range of semi-bespoke products in this way, two-level master scheduling, as it has been called, has been referred to as mass customisation. And because the customised product is available with minimum delay, it has been also been called QR (quick response).
FASB: In the UK, Financial Accounting Standards Board.
FCA (followed by a named place): Free Carrier - see Incoterms (Group F, "main carriage unpaid"). FCA means that the seller delivers the goods cleared for export to the carrier nominated by the buyer at the named place. Note that if delivery occurs at the seller's premises, the seller is responsible for loading, but if delivery occurs at any other place, the seller is not responsible for unloading.
FCA (alternative meanings) (1) Flip Chip Assembly, or (2) Fellow of the Institute of Chartered Accountants, a UK body.
FCFS: See First come, first served.
FCS: Finite Capacity Scheduling, qv.
FDI: foreign direct investment.
Federation of Shipbuilding and Engineering Trades: A UK national trade union.
Feeder Operation: Synonymous with Gateway Work Centre (qv).
FED: Field Emission Display.
FEM: Finite Element Method.
FFCA: Full Faraday Cycle Analysis - see AEN.
FGP:
Factory Gate Pricing - the assumption of responsibility by the retailer or
wholesaler for the costs and responsibility for the primary distribution of
goods from the supplier's factory to the next point in the supply chain -
ie usually to the retailer's or wholesaler's warehouse. A proposal for an
FGP deal is typically a supply chain initiative of the retailer and is to
remove uneconomic transportation costs (uneconomic because they are 'local'
and small scale) and improve efficiency. That is, the price that the supplier
now charges the retailer does not cover the cost of delivery, this being borne
directly by the retailer. Obvious major advantages where a large retailer
is involved, such as a supermarket chain, are that the retailer can organise
the transportation requirements of many different FGP suppliers by, say, consolidating
transportation loads, arranging cheaper insurance etc.. For further information
on FGP, visit the Food and Grocery
Information Site, and select the search term Factory Gate Pricing.
Note that in negotiating an FGP arrangement, the two parties must clearly
take account of three obvious changes: (1) that the price the retailer previously
paid covered the supplier's primary distribution costs and these will no longer
be incurred by him; (2) that he, the retailer, must himself now bear those
costs; and (3) the supplier must make absolutely sure that his production
is on time (for example, he can no longer make up for lateness in production
time by expediting delivery/transport times).
FHBR: Finance House Base Rate, the basic rate of interest charged by a lending insitution such as a leasing company. However, the company may charge its customers, say, 1% above its base rate in many circumstances, or may vary the rate charged in relation to its FHBR.
FIFO: First In, First Out - a commonsense and near universal principal of stock rotation (but see LIFO). FIFO is sometimes used synonymously with First Come, First Served (qv) as a simplistic despatching rule, its effectiveness being used as a benchmark whereby other, more sophisticated, despatching rules can be judged.
Fill Rate: Usually, the percentage of lines of customer orders filled from stock immediately on receipt. For example, if 10 orders were received each with 10 lines on each order, and 98 of the lines were filled straightaway, the fill rate of the company would be 98%. Other definitions relating to this common phrase are, of course, quite possible. See also First Pick Ratio.
Final Assembly Schedule: See FAS (2).
Finished Product: A product after its final stage of manufacture has been completed.
Finish-to-order: synonymous with assemble-to-order - see two-level master scheduling.
Finite Capacity Scheduling: The scheduling by computer of materials plans onto work centres and operations, taking strict account in so doing of: (1) the lengths of time the planned requirements will occupy the resources; (2) the limited availability of the resources; (3) the technical rules and restrictions relating to materials made on the work centres concerned; and (4) clashes in job priorities. Finite scheduling is at the heart of APS (qv).
Fire Safety: the Regulatory Reform (Fire Safety) Order of 2005 states that companies must ensure that their employees are provided with adequate fire safety training. For short courses throughout the UK on this subject, visit www.firetrainingacademy.co.uk.
Firm Planned Order (also Fixed Planned Order, or FPO): A plan type in closed-loop MRP, being a plan in the system the timing and quantity of which is specifically under the control of the (human) planner, not of the MRP system itself. A firm planned order may be created by directly changing the plan type of an MRP planned order from planned status to firm status, or may be created ab initio by the planner. The start and finish dates of a firm plan can be directly set by the planner so that the plan can be given a non-standard leadtime.The FPO may also have a non-standard manufacturing quantity, a non-standard set of immediate components (ie non-standard usages) and a non-standard scrap factor. The production controller may create firm plans in order to interject technical reality on the plan overall as produced by MRP, since capacity and scheduling issues are not directly taken account of by MRP. He may also have confused the term "firm plan" with a sales order that has been confirmed ("firmed") by a customer, so inserting these sales orders into the MRP manufacturing plan as MRP firm plans. Like open orders, firm plans in the MRP system cannot be rescheduled by the materials planning logic of the system when the calculations are applied each night to reappraise the timeliness and quantities of the plan overall. If firm plans are coming in later or earlier that the MRP arithmetical calculations determine that they ought to be coming in, the system merely draws this to the attention of the planner or buyer by the output of rescheduling messages. The need to manage firm plans and the hold-ups they can create until they are attended to means that their number must be kept to a minimum ... if the company finds it must continually "bend" its planning through the extensive use of firm plans, the time has probably arrived when it should consider migrating to an APS system.
Firm Zone: see Frozen Zone.
First Card Unload: An old shop floor practice of removing from the apparent work load of a work centre the entire content of a job operation immediately the first units of production have been reported as having been made. Although this puts the work centre supervisor in a good light, it also understates the remaining actual work requirements.
First Come, First Served: A popular everyday phrase, but here meaning a job despatching rule operating as the name says. The outcome of potentially using the FCFS rule in terms of job finishing times is used as a yardstick for judging the performance of the other rules in simulation exercises examining the effectiveness of alternatives.
First Pick Ratio: Where customer orders are being picked, the percentage of lines completely filled from stock, as specified on the orders, immediately on receipt. This definition is virtually the same as Fill Rate, except that Fill Rate may be thought to allow some order lines to be only partially completed, while First Pick Ratio implies that lines picked are100% satisfied as to quantity.
FIS: Factory Information System.
FISH: first in, still here ... a humourous reflection by a production or stores supervisor in one of their more cynical moments.
Five Whys, The: A dialectical procedure put forward by Sakichi Toyoda (a founding father of Toyota). A person asks why change needed to eliminate waste cannot be made to an existing situation, and receives an explanation. The person challenges the explanation with a second question - the second why, and so on, coming eventually to the fifth question and a challenge which gets to the heart of the matter. See also Goldratt's Evaporating Cloud.
Fixed Asset: See Asset (Fixed).
Fixed Cost: See Cost (Fixed).
Fixed Interval Re-Order System: The application of the POQ rule with a fixed, regular period (say, one month). Also referred to as the sales replenishment system.
Fixed Location Storage: A storage area in which each different product to be stored is assigned to an exclusive, pre-specified location (everything in its place, and a place for everything). See also Variable Location Storage and honeycombing.
Fixed Order Interval: A variation of the Order Point Replenishment System (qv), in which the reorder intervals are fixed. In the Order Point System proper, a new replenishment is ordered when stock falls to the "reorder point". In the Fixed Order Interval system, instead of ordering a specified replenishment lot R, what is ordered is sufficient stock to last until the time the next order is to be placed. For example, if the forecast of demand is M units per month, or M/30 units per day, and the fixed order interval is 14 days, the amount ordered is M/30 x 14.
Fixed Planned Order: An alternative name for a firm planned order (qv) in MRP.
Flag of Convenience: An expression meaning that a ship owner has registered the home port of his vessel outside his home country, usually for tax reasons and to avoid restrictions imposed by his home government on manning levels and wage rates. Panama, Liberia or Honduras are often chosen as countries of registration, and the national flag of one of these countries will be flown from the vessel concerned. (In justification, the owner of a British vessel, employing basic Chinese or Phillipino crew members, would be unlikely to be able to afford to pay the UK minimum wage rate.)
Flex (verb): To make an adjustment to a budget as described in Flexible Budget.
Flexible Budget: A budget in which an adjustment is made to allow for a difference between actual activity (ie actual production) and forecast activity.
Float: Stock, including WIP, in excess of the immediate requirements for it. There are a large number of dictionary definitions of "float", including (1) a dock or place where vessels may float, and (2) an issuance of shares. See also Slack.
Floating Order Point System: An order point system in which the order point is recalculated from time to time as the overall levels of sales demand fluctuate.
Floor (flatness of): In a stores or warehouses, the flatness of the floor is critical to economical and safe working. Floors which are not flat will slow down fork lift trucks and cause elevated loads to lean. "Flatness" is specified by BS8204 (Part 2). The maximum elevation difference should be 3mm, although the standard for "super flat" flooring is more exact, this being required where VNA trucks are employed in placing and picking items stacked to heights over 12 metres. Services relating to floor flatness are provided by a number of specialist UK companies, including Monofloor and, particularly, FACE Consultants of Huddersfield. The Concrete Society has issued a revised standard known as TR34 Edition 3 dealing with floor flatness. The flatness of a particular floor can be determined by a prophilograph machine, which is wheeled over the area being assessed. Also see sub-section 1.2.3 o the free on-line course on stores/warehouse management at this site.
Floor Stocks: Commonly used C-Class items issued to the shop floor for general use and replenished by the 2-bin system. Also known as line side stocks.
FLT: Fork Lift Truck. Also visit The Fork Lift Truck Association. Also see LOLER. For an associated topic, see Tyres.
Flytipping: the unauthorised and illegal dumping of rubbish on land, usually at night.
fmcg: Fast Moving Consumer Goods - typically groceries, bottled drinks and such like. Sports cars are not fast moving consumer goods.
FME: Failing Manufacturing Enterprise.
FMEA: synonymous with FMECA, qv.
FMECA: (a) Failure mode, (b) Effect and (c) Criticality analysis. A formal four-step procedure for investigating the reliability of a product currently under design. The potential liability to failure of the product under design is investigated thus: (1) Failure mode - what happened when it failed? (2) Failure mechanism - what was the cause of the failure? (3) Effect of Failure - what actually happened - what was the result? (4) Criticality analysis - what can be done about it, vis a vis the design? FMECA is a tool to reduce customer dissatisfaction, not a tool to increase customer satisfaction. See also Failure Mode and Risk Priority Number (RPN).
FO: Fibre Optic, or Foreign Office (UK).
FOB (followed by a named port of shipment): Free On Board - see Incoterms (Group F, "main carriage unpaid"). The seller has fulfilled his obligations when the goods pass the ship's rail at the named port of shipment. The buyer must bear all costs and risks from that point. The seller must clear the goods for export. If the parties do not intend to deliver the goods across the ship's rail, the FCA Incoterm should be used.
Focussed Factory: There appear to be a number of alternative definitions as to what constitutes a focussed factory. (If searching the Internet, use the American spelling of focused factory.) All definitions however relate to a lean/JIT manufacturing environment. One definition is one of several semi-autonomous manufacturing groups within a large factory overall, each group being treated as an individual profit centre with its own marketing responsibilities. Another definition is a unified set of manufacturing cells, unified by the fact that each set produces parts and sub-assemblies relating to a particular final product. According to this second definition, the focussed factory of cells will certainly include common manufacturing planning and engineering expertise, and might also include other common staff such as purchasing and administrative. The necessity for central services and the need to maintain the total organisation's sense of purpose are major problems in the management of focussed factories.
Footprint: See Pallet.
Force Majeure (legal): Literally, Latin for "irresistable force" - an overwhelmng event rendering a contract incapable of performance and void. Note the phrase "incapable of performance" ... ie not just very difficult, or suddenly more expensive than was originally envisaged. See also frustration.
Forcing: In hierarchical forecasting (qv), the imposition of a higher group forecast total on the sum of the individual forecasts at the next level down. For example, the group forecast for men's shirts, size 14, may be £100,000. However, if the individual forecasts for men's shirts, size 14, at the lower level are (1) white- £30,000, (2) blue - £40,000 , and (3) "other colours" - £50,000, together amounting to £120,000, then these three individual forecasts must be reduced by 10/12 each, to £25,000, £33,350 and £41,650. In other words, the more "senior" figure of £100,000 has been "forced" onto the three lower figures, to maintain consistency. Forcing techniques are necessary where there are a great many substitutes possible - eg giftware, wines and fashion. The forecasting package from American Software has a powerful forcing capability (phone 01932-855554).
Forecast (Consumption): See also Consumed Forecast, Error AddBack. The difference between a demand forecast and the actual demand placed by the customer (ie the "error" is not a mistake in the usual sense of the word).
Forecast Period: In demand forecasting, past demand is organised as a time-series (qv) - ie into divisions of equal duration. Forecasts are similarly calculated based on these periods. The periods chosen are likely to be either (1) weeks, (2) calendar months, or (3) costing periods of 4 weeks each, with 13 periods in the year. It is usually preferable to chose calendar months: the argument against weeks is that there is excessive randomness from week to week, requiring an overcompensating amount of safety stock, and the argument against costing months is that everyday users find them strange and confusing. However, since calendar months have different numbers of "trading days" from one to the next, it is necessary to make an adjustment to standardise the raw data to an "average month", with an average number of days, and then adjust the final forecast taking account of the actual number of trading days in the month to which it relates. (For example, if the average month was 23.7 days, divide the demand in the actual month by the number of trading days ... say, 26 ... and multiply it by 23.7. Then, before the forecast is issued, adjust it to take account of the actual number of trading days in the month to which it relates. See The Manufacturing Manager, Ch. 4.)
Forecasting : see Causal Forecasting, Naive Forecasting, Hierarchical Forecasting and, particularly, Demand Forecasting..
Forecasting (Hierarchical): The calculation of forecasts at many levels of a hierarchy, where the items at the bottom of the hierarchy are specific, individual products, all being members of one or other "groups". (Groups being the next level up in the hierarchy). Each group, however, is a member of one or other "super groups" at the next higher level in the hierarchy, and so on up to the single "supreme group" at the top of the hierarchy. Clearly the forecasts at the various levels must be consistent. One use of hierarchical forecasting in demand forecasting is where there are many substitutes in a product range (eg wine, giftware and fashion items). Thus a forecast may be made at the top of the hierarchy for total wine sales; at the next level down from the top, forecasts may be split between red, white and sparkling wines; at the third level, the split may be by price ranges of under £5, £5 to £10, £10 to £25, ... Finally at the bottom, forecasts may be according to actual wine labels (Mouton D'Rothschild, ... etc). A second use of hierarchical forecasting is in sales & operations planning, in which senior management judgment may be imposed on total company sales at the corporate level, then forecasts prepared at the next level down by marketing groups, and finally down to individual products. As described under forcing (qv), in some circumstances it may be necessary to impose a higher group forecast total on the sum of the individual forecasts at the next level down. The example given under forcing is the group forecast for men's shirts, size 14, which are forced onto the individual forecasts at the lower level for men's shirts, size 14, which are (1) white, (2) blue and (3) "other colours". These three individual forecasts should equal the overall forecast for the size 14 shirts. A standard forecasting technique is used to calculate forecasts for for the overall group; the lower level forecasts are derived merely by data manipulation and standard arithmetical processing.
Fork Lift Truck: see FLT above.
Forex: City jargon for foreign exchange.
Forrester's Curves: In 1961, Prof. Jay Forrester of the Massachusetts Institute of Technology employed a continuous simulation program named DYNAMO to illustrate the relationship of production rates, demand and stockholding in three consecutive links of a supply chain (which he called a "retailer", a "wholesaler" and a "manufacturer"). Theoretically, the stock and the demand on it in each of the three locations should be in equilibrium and remain in equilibrium as the sources communicate and despatch their interlinked requirements over time in the normal way. However, if the external demand on the retailer increases by 10% above forecast and there is a delay by him in communicating his changed requirements to the wholesaler, then two things happen: (1) the retailer's stock is depleted by more than he anticipated it would be, and (2) when the retailer eventually requests more stock from the wholesaler, the amount so requested is far larger than usual, so that he (the retailer) can cater for the 10% increased external demand and, in addition, make up his abnormally low stock situation. In short, the demand on the wholesaler is far more than the external 10% rise in demand since he is having to make up the retailer's stock position. As a consequence of this very large requirement from the retailer, the wholesaler's stock falls massively. If there is now a delay by the wholesaler in recognising and communicating the massive new requirements he must now make on the manufacturer, when he (the wholesaler) eventually makes this demand on the manufacturer, it is not only to satisfy the amount he has despatched to the retailer (including the increase in external demand), it is also to make up his own low stock situation. In satisfying the wholesaler's very large extra requirements, the stockholding of the manufacturer falls dramatically. At the end, the original equilibrium in the supply chain is totally disrupted - in particular, at the manufacturing stage, an attempt is made to deal with the huge downward swing in stock by ramping up production. The Forrester effect is observed not only in standard industrial inventory control, but in everyday life at the start and finish of an economic recession. At the start, although consumer demand may have dropped only (say) 3%, the drop in demand at the last link in the supply chain is dramatically more, since there is enough stock in the supply chain at that point to supply all the new, lower requirements. At the finish of the recession, when demand rises by, say, 3%, demand in the various links in the chain escalates as each one attempts to re-establish its pre-recession stock holding.
FORTRAN: FORmula TRANslation, the world's first high level computer language developed at IBM in the late 1950s by John Backus and seen to be geared to the programming of scientific and mathematical calculations. FORTRAN was standardised in 1966. As a consequence, programs have very high portability between computers. The publication of FORTRAN 2003 has given the language a new lease of life. There is a British Computer Society Fortran Specialist Group - visit the BCS at www.bcs.org.uk/siggroup/fortran.
Forward Market: When a company requires a foreign currency at a specified date in the future, at the time the deal is struck it must immediately take action to protect itself against an adverse movement in the exchange rate in the interval of time leading up to the moment when actual payment will be demanded. (If the company does nothing, in effect it is speculating.) The company's bank will purchase the required exchange at the spot rate prevailing, and hold the currency for the period required at the rate of interest offered by the foreign bank. The company will thus pay the original spot rate. However, if the rate of interest at the Bank of England is greater than the rate at the foreign bank, the company must pay a premium based on its bank's loss due to its investment at a lower rate of interest. If the rate of interest at the foreign bank is greater than the Bank of England's, the company will receive a discount over the spot rate, since its bank will have gained money from the investment. See the free on-line course on purchasing at this site.
Forwards Scheduling: The creation of a schedule by starting at the current date, and working forwards in time to find when, in the future, the work will be completed. Finite Schedulers and APS use forwards scheduling, although, as an option, backwards scheduling can be specified. (MRP uses backwards scheduling - qv.).
Fourier Analysis (Harmonic Analysis): In the statistical treatment of seasonal fluctuations of demand in sales forecasting, it can be shown that for a given number of observations n in a period (ie in a season), any fluctuation pattern in the period can be represented by n/2 sine waves of different amplitudes. That is, no more than 6 combined sine equations can represent the seasonality of the 12 months of the year. In contrast to the use of seasonal factors, Fourier Analysis is not a base index solution to seasonality.
Fourth Party Logistics (4PL): Multinational companies frequently outsource their logistical operations to many third party distribution companies (perhaps a different third party in each country in which inventory is held). The coordination of the activities of these third parties and the overall control of the total logistical operation by yet a further outside company - a single, principal logistical company - is termed fourth party logistics.
