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IASB: International Accounting Standards Board.
IATA: International Air Transport Authority.
IBC: Intermediate Bulk Container. Typically, a container for transporting liquids, often in the past comprising pails, drums and other steel equipment. IBCs of this material, however, are prone to contamination and are heavy when they are empty and must be returned. Nowadays, the preferred material is plastic. Plastic IBCs, typically 100 - 1000 litres, can be easily sterilised and constructed so that they can be stacked and folded on return. Plastic IBCs can also be used for asepic transportation, necessary for the transportation of foodstuffs and bulk pharmaceutical products.
IBM ( International Business Machines) : The world-famous computer company! IBM Corporation started life in 1911 as The Computing Tabulating Recording Company, becoming International Business Machines in 1924 under the aegis of Thomas J. Watson Jr. (*) In 1935 IBM marketed the first commercially successful electric typewriter; from the 1960s it developed a number of computer families, including the famous System 360 series. IBM was slow to understand the personal computer however, and began to suffer further in the 1980s as the prices of even large computers began to fall. By the early 1990s the company was in serious decline. Rescue came in 1993 with the appointment of "an outsider" as CEO - Louis V. Gerstner. Gerstner halted the proposed solution to its troubles of breaking up the company. Instead he switched marketing strategy from the sale of hardware alone to the provision of comprehensive computer-based business solutions, with its emphasis on (expensive) advice and know-how. He also terminated many entrenched IBM company practices in order to eliminate departmental thinking and speed up decision taking. Louis Gerstner retired from IBM in 2002 and is now chairman of the investment company Carlyle Group. His name ranks in IBM with the great Thomas Watson's. IBM meanwhile continues to make steady progress; it seems Big Blue's glory days are to return! (* For all the esteem rightly shown Watson, he is recorded in 1947 as having declared "I think there is a world market for about 5 computers".). Visit http://www.ibm.com/us; see also Big Blue.
ICAEW: Institute of Chartered Accountants in England and Wales. Visit www.icaew.co.uk.
ICC: International Chamber of Commerce, an international body with headquarters in Paris and set up in the 1930s to promote international trade The ICC is responsible for the periodic reissuing of the Incoterms and for issuing standard terms of letters of credit. Visit www.iccwbo.org.
ICE: Institute of Civil Engineers (UK)
ICL: International Computers Limited, in the 1970s a company challenging IBM for "big computer" supremacy.
ICT: In-Circuit Test, or International Computers and Tabulators, the predecessor of ICL.
Idle Time: The time that a machine (or machine operator) is waiting for work (does not include time under set-up or undergoing planned maintenance).
IED: Inside Exchange of Dies - synonymous with internal set-up time (qv).
IGD: visit the Institute of Grocery Distribution.
IMCS: Inventory Management & Control System.
IMPACT: The name of an IBM program of the 1950s, being the first to incorporate the replenishment lot size into the calculation of safety stock.
Imperial System: see conversion factors.
Impersonal Ledger: see Ledger.
Implied Terms (legal): Implied terms are those which are not written down in a contract, but are nevertheless assumed to be part of it, either by commonsense or by the "custom and practice of the trade" (see Custom and Practice). For example, a company purchases 100 bags of cement for delivery to its stockyard. On delivery, it rains, but the bags turn out to be not waterproof and the cement is ruined. Even though there is no express mention in the written contract that the bags will be waterproof, the requirement for their being so is implied. Consequently, the supplier will be deemed to be in breach of contract if it rains and the cement is ruined. To determine whether a condition is implied or not, the company can use the"Officious Bystander Test" (qv). Also, contrast "Express Terms".
Imprest Issue: see Issue (Imprest).
Implosion (of the Bill of Materials): Starting at a low level of the bill of materials, "implosion" of the bill is the determination of the plans or entries at increasingly higher levels of the bill which give rise to them. (For example, starting with bicycle wheel spokes, implosion leads us first to the bicycle wheel, whence further implosion leads ultimately to the bicycle itself.) Implosion of the bill is a central requirement in the calculation of product costs. (We start with the costs of raw materials, and accumulate - or "roll up" - more and more costs as we go up the bill of materials, finally arriving at the top product, the cost of which comprises all the lower costs which have so far been accumulated.) See also explosion.
IMT: International Mobile Telephone.
Inactive Inventory: see Stock (Slow Moving).
Incentive Contract: Buyer and supplier may agree to a target cost for the fulfilment of a large undertaking, but acknowledge that there is uncertainty of outcome. The contract may specify, therefore, that the contractor (the supplier) will bear - say - 3% of any overrun, and receive, as a bonus, a payment of - say - 3% of any underrun. See especially CPA (Contract Price Adjustment).
Incoterms: "The International Chamber of Commerce Terms of Sale" (see ICC). The Incoterms consist of 13 standard contractual terms relating to physical logistics (ie distribution) and the carriage of goods. The 13 standard terms define alternative arrangements, or obligations, of the seller, as the party providing the service of actual transportation and delivery of the goods, and buyer, the party requiring the goods to be transported, in such matters as: arranging for carriage; payment of insurance; the payment of dock dues; the completion and presentation of customs documents; and customs duty. For the buyer of service, the least onerous Incoterm is "Ex Works"(EXW, followed by a named place from which the goods are to be collected ). With EXW, the goods merely have to be placed by the buyer of the service, with immediate wrapping, at his despatch dock, and all subsequent activities involved in the move are the responsibility of the company undertaking it. (Note that there is no obligation to load the vehicle.) As one moves through the 13 terms, the obligations of the seller (ie the company undertaking the move) increase and those of the buyer correspondingly decrease. The maximum obligations of the seller are "Delivered Duty Paid" (DDP, followed by a named place within the country of destination). The Incoterms are revised about every ten years, the last revision effective from 1.1.00 being end 1999. The year of publication should be quoted on any agreement between seller and buyer involving the Incoterms (eg "FOB the SS Mary Rose, Liverpool, Incoterms 2000"). A booklet published by the ICC is available for about £26 setting out the terms in full, and may be ordered on the Internet through Amazon.co.uk. It is essential that any glossary reader wishing to become seriously involved in using an Incoterm should consult this booklet, and the commentary on the Incoterms written by Jan Ramberg, also available from Amazon. The complete list of Incoterms is: EXW ("Departure"), FCA, FAS and FOB ("Main carriage unpaid"), CFR, CIF, CPT and CIP ("Main carriage paid"), DAF, DES, DEQ, DDU, and DDP ("Arrival"). As stated, the two extremes are, of course, EXW where the seller does very little, and DDP where the seller does everything. See sub-section 2.3.1 of the free on-line purchasing course at this site.
Independent Demand:
See Demand (Independent).
Indeterminant Term (legal): synonymous with an innominate contractual term (qv).
Indirect Cost: See Cost (Indirect).
Indirect
Costs: Costs associated with the manufacture of a product but which
are not directly incurred in the product's literal manufacture. A problem
with the treatment of indirect costs is that while they must be taken account
of, their allocation to products must be accomplished somewhat artificially
(using a so-called cost driver). An example
of an indirect cost is the cost of supervision. A cost driver might be the
number of work hours involved in manufacture. In this case, suppose the cost
of supervision was £20,000 and the total number of work hours conducted
in the area supervised was 4,000 hours. Then a job taking 1000 hours would
bear an indirect supervision cost of £5,000 - ie £20,000 x (1000
/ 4000).
Industrial Autarky:
Industrial self sufficiency. For example, in order to promote the development
of its industry or make it invulnerable against foreign blockade, the government
of a country may pursue a policy of gaining industrial autarky, promoting
its policy with local development grants and tariff protection.
Inelasticity: see elasticity.
Infinite Capacity Scheduling: A humourous term which is the "opposite" of finite capacity scheduling, and which is intended to highlight the fact that in the creation of material plans in, say, MRP and MPS, direct account is not taken in the actual calculation of the plans of the limited resources available for their manufacture. (This failure to take direct account of capacity in the plans' actual calculation is why rough cut capacity planning (RCCP) must subsequently be performed before the master schedule's release.)
Innominate Term (legal): Innominate means, literally, "having no name", and is applied to a contractual term which may be either a condition of the contract, or a contractual warranty - one or the other, depending on the circumstances at the time. For example, the contractual term may be to deliver on the 15th of the month. If the delivery is late and the buyer is forced to scrap his production programme and tear down his plant, the date of delivery was a condition. If it is late and as a result the buyer merely manufactures a somewhat smaller batch, the date was a warranty.
Input / Output Control: A means of regulating the amounts of work waiting at gateway and other work centres on the shop floor by use of the following self-fulfilling equation: Queue at the end of this period = Queue at the end of the previous period +Input over the period -Output over the period. Thus if the previous queue at the end of Week 6 was 100 hours of work, the input during Week 7 was 50 hours of work to do and the output over Week 7 was 55 hours of work completed, the new queue at the end of Week 7 (and the start of Week 8) is 95 hours. It is important in I/O control to use an accurate and realistic figure for a work centre's expected output - see Demonstrated Capacity. I/O Control is the prime means of controlling production leadtimes including the emergence of viscious circles, other than through an APS.
Insolvency: A company is said to be insolvent either when (1) it cannot pay its debts because it has insufficient money in the bank, or (2) its total liabilities exceed its total assets. Situation (2) is referred to as balance sheet insolvency. An insolvent company may be put under receivership, or alternatively be placed in administration. If the receiver or administrator believes there is no chance of "rescuing" it, it is likely to be liquidated - ie its assets are likely to be sold forthwith, for what they will bring, to pay its debts. The term insolvency jurisdiction means the court having the power to issue such a winding up order.
Inspection (100%): Inspection itself means the detailed examination of a part to determine whether or not it conforms to specification (*). 100% inspection means that all raw materials parts coming into the company will be individually inspected, and non-conforming units returned to the supplier. Alternatively, it may mean that all the items manufactured by the company will be inspected before sending them on to the customer or onto the next stage of production. 100% inspection does not guarantee 100% conformance to specifications, since the inspection process is itself liable to error - ie inspectors grow weary and mistakenly pass non-conforming units. In fact, it was estimated by the late Joseph Juran that 100% inspection was only 80% effective. That is, if a lot of 100,000 units really contains 1% non-conformancies and is subjected to 100% inspection, 200 non-conforming items will eventually "get through" (1000 x 0.2). (* To determine whether a part 'conforms to specification', usually a particular facet of the part is chosen - usually one considered to be vital, or particularly susceptible to error - and conformance of the complete part judged by the conformance or not of the facet chosen.)
Inspection (Sampling): See Single Sampling and Double Sampling (of many sampling topics).
Institute of Operations Management: see IOM.
Institute of Purchasing & Supply: see CIPS
Institutional Investors: pension funds, trusts and insurance companies which have bought company shares. Institutional investors are usually the majority shareholders of large public companies.
Integer Programming: See Mathematical Programming.
Integrated Accounting: In calculating product costs and accumulating various classes of expenditure in cost centres, it is easy to lose sight of the fact that the precepts and rules of financial accounting must continue to be followed. Integrated accounting is a set of procedures whereby the expenditures considered in cost accounting can be translated into financial accounting terms. The procedures involve the setting up of a succession of "control accounts" in order to do so. Two examples of control accounts are the stores ledger and the finished goods stock account. See also interlocked accounting.
Interleaved 2 of 5: A numeric-only bar coding system, the advantage of which is the high physical density of the code. Interleaved 2 of 5 is used for grocery cartons (but not for the individual units within the cartons).
Interlocked Accounting: Like integrated accounting (qv), interlocked accounting is also concerned with the financial accounting side of cost accounting. Two sets of accounts are "interlocked" by a common ledger control account.
Intermediate: In the chemical industry, and in certain other process industries, an intermediate is a product which is manufactured at one stage of the manufacturing route, and is destined to be sent on to another stage - the engineering industry equivalent of a semi-finished part.
Intermittent Demand: (Also referred to as sporadic demand and lumpy demand.) Sales demand which occurs at infrequent and irregular intervals, the quantity demanded being typically for a large but irregular amount. Intermittent demand is associated with the sale of non-wearing spare parts (eg axles, steering wheels). Attempts have been made to forecast intermittent demand directly (by John Croston) and to deal with the problem by a modified order point system. (The modification adds a term to normal order point to allow for the average order size - ie the extent to which the order point has been passed by the time the new replenishment is called for.)
Internal Set Up Time: In changing over a machine from the manufacture of one product to the manufacture of the next, the internal set-up time is the duration during which the machine must be switched off and stopped while the necessary changes are carried out. Contrast External Set Up Time. See SMED.
Interoperation Time Compression: See Operation Compression.
Interpolation: the estimation or calculation of an intermediate value by reference to other values which are already known. For example, a shop floor technician may observe that a dimension lies on a measurement scale between 2 and 3, and may interpolate his observed reading as, say, 2.4. It is said that a practised technician can interpolate any reading between two adjoining scale values to one tenth of the interval between them, regardless of the physical closeness of the two scale readings.
Intrinsic Forecasting: The preparation of demand forecasts entirely from data relating to past demand - ie without further external inputs such as manual intervention.
Inventory: The term "Inventory" is synonymous with "stock". However, an inventory usually means a formal counting of stock and property (For example, one might hear the everyday statement "In order to make a quotation for his premium, the insurance company said it would have to carry out an inventory" - ie that it would have to inspect and record the stock goods which were to be insured).
Inventory Accuracy: see stock accuracy.
Inventory Management: A term very close to materials management (qv), but perhaps less concerned with procedures affecting production and more slanted to those relating to stock holding. Note that inventory is not itself directly managed. Instead, the production and holding of inventory and the determination of the levels, or quantities involved, are the result of many individual procedures working together. (For example, the levels of work-in-progress on the factory floor come about because of decisions made elsewhere as to the scheduling techniques to be used and the manufacturing lot sizes to be manufactured - the WIP is not directly "decided" by anyone.) The principal point where inventory levels are determined is at the Sales and Operations Planning stage of master schedule formulation, and the choice made there by senior management between (1) the maintenance of steady production levels, with the consequence then of large variations in stocks, and (2) constant change in production rates as demand rises and fall so as to preserve a low stock balance.
Inventory topics: See under Stock ( ... topic...).
Investment Centre: An area of operating activity such as a factory where the manager has responsibility for costs, revenues and capital investment.
Invitation to Treat (legal): Jargon for an inducement by a vendor to a potential buyer persuade him to make an offer to purchase goods (ie to persuade him to form a "treaty"). An object in a shop windows does not constitute a legal offer by the shop keeper to passers-by - it is an invitation to treat. The foregoing distinction came to prominence in 2000 when Argos mistakenly advertised TVs on the Internet for £2.99. The company managed to persuade the judge that this was an invitation to treat, not an offer. Consequently, persons who responded to Argos' advertisement were judged merely to be reacting to the invitation to treat and making a separate contractual offer to buy at £2.99 (which Argos refused!). If Argos' ad had been a contractual offer instead, a person responding would have been accepting the offer, and consequently a legal contract would have been formed.
Invoice: a bill requiring payment. A "VAT invoice" is an invoice bearing the VAT registration number of the company raising the document. This is required by the party paying the invoice in order for it to claim the VAT amount back from H.M.Customs & Excise at the end of the quarter. Note that a pro forma invoice is an invoice sent to a potential customer in advance - usually before the supply of goods or service, or perhaps with goods sent on approval. The pro forma invoice may be required by the customer in order to effect advance payment or for any other reason to do with its payment controls.
I/O Control: see Input/Output Control.
IOM: The Institute of Operations Management, a UK professional body concerned with production and inventory control. The IOM is in Coventry, phone 02476-692266. The web site is at http://www.iomnet.org.uk.
IP: Intellectual Property, or Internet Protocol.
IPPD: Integrated Product and Process Development.
IPR: Intellectual Property Rights.
IPT: Integrated Product Team.
IRR: Internal Rate of Return, synonymous with DCF rate of return, qv.
ISAM: index sequential access method, a computer term.
ISDN: Integrated Services Digital Network.
Ishikawa, Kaoru: A notable Japanese quality guru credited in 1952 with devising the PDCA circle of continuous improvement (qv).
ISO: International Standards Organisation, a body located in Geneva, Switzerland.
ISO 9000: A set of procedures, controls and documentation requirements issued by the International Standards Organisation in Geneva, Switzerland, which the ISO believes must be followed by an organisation in order for it to deliver "quality" goods or services. There have been two major issues of the standard: (1) ISO 9000 : 1994, including ISO 9001 : 1994, ISO 9002 : 1994, ISO 9003 : 1994 and ISO 9004 : 1994 and (2) ISO 9000 : 2000, ISO 9001 : 2000 and ISO 9004 : 2000. In December 2003, 9002 and 9003 of the 1994 standard will become obsolete. See ISO 9000 (The Case Against): a book by John Seddon, 2nd edition, Oak Tree Press.
ISO TS 16949: An ISO standard, successor to QS 9000.
ISP ( Internet Service Provider): a company providing access to the Internet and almost always providing such other services as the renting of disk space, customised web design, management of arrangements for acquiring domain names and e-mail addresses, and even, occasionally, comprehensible help and advice.
ISPM15 (Regulations): International Standards for Phytosanitary Measures (v. 15). Regulations concerning wood packaging and pallets, formulated to stop the spread of woodland pests. ISPM15 involves the heat treatment, fumigation and marking of wood packaging. (The US Customs and Border Protection Agency exacts very heavy penalties on companies failing to comply with ISPM15 and which attempt to import goods into the US.) Because the details of the regulations are under constant review, it is vital that company managers should receive up-to-date, informed advice from regulation experts. ISPM15 has brought about a substantial shift to the use of plastic pallets. For more information, visit Inka Presswood Pallets' site. Also visit www.ippc.int and www.timcon.org.
Issue (Allocated): material may be received into store from a supplier intended for a specific, identified works order or department. Care must be taken to ensure it is strictly reserved for and issued to the relevant job or user, and no-one else. A variation of this is the receipt in certain industries of material of the same item but different quality grades, with particular grades to be allocated only to certain jobs.
Issue (Bulk): A large quantity of material (eg components) typically issued to the factory floor for handy use over a reasonable period of time (eg for a day or week). Careful monitoring of bulk issues should be made to prevent waste.
Issue (Capital): The issue from the stores, for factory use, of a machine or tool, the machine or tool being individually identified in the company's Asset Register. Because it is individually identified, the fact of the issue should also to be recorded in the Register.
Issue Deck (Pick Deck): An issue deck is a number of documents, often in the form of cards, each one individually holding the details of each item to be picked. Storesmen and warehousemen often find issue decks easier to manage than long multi-item issue lists (see Issue List below) - for example, there may be problems with an issue list if many warehousemen are involved in picking the items or if, at the end of a shift, some items have been picked and some not picked.
Issue (Documents): Documents relating to the issue of stock from a store.
Issue (Imprest): an impress is a loan or advance, and hence an imprest issue is an issue of stock from the stores to a local stocking point such as a production line or an assembly point in anticipation of its use there (ie for production or assembly). The amount of stock subject to the imprest issue is often calculated by backflushing - ie by calculation involving data on the activity performed at the point of stock usage. As well, the imprest issue may be considered as a regular replenishment needed to top-up stock held on a semi-permanent basis in the factory area concerned, the required amount of stock will typically being calculated and requested by a local supervisor.
Issue List (Pick List): Normally, a single document listing all parts to be issued by the stores for a production job (the original meaning of a bill of materials!). Although those responsible for computer data input and output may find the issue list convenient, storesmen required to pick from a long list may find it less so. Care must be taken in stock recording as well, at the end of a shift, if certain items on a list have been picked and others not picked. Issue decks may be preferred to issue lists, qv.
Issue (Loan): A tool or instrument issued by the stores, perhaps to enable a repair to be effected, and which must be returned after use.
Issue (Replacement): A tool or part issued by the stores only in exchange for a used-up or burnt-out old tool.
Issue (Ticket): A document signed by a supervisor authorising the withdrawal of items from the store.
ISTC: Iron and Steel Trades Confederation, a trade union.
Item (invisible): Items coded and entered on the item master file may be present purely for their use in planning and as planning references - that is, they may in reality have no physical existence. Examples are pseudo parts (qv) and super items (qv). An everyday example is a sports pack, being a customer option on a motor vehicle indicating that the customer requires a number of distinct, separate features. Note that a phantom part (qv) is not an invisible item - it really does exist, albeit briefly.
Item Master File: A file of records relating to the products, components and raw materials of concern to the manufacturing company. Each record will be keyed on the item's code and contain permanent or relatively permanent data about the product in question - for example, its name, leadtime and standard cost.
