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5S: see SSSSS.
S&OP: see Sales and Operations Planning.
S Curve: see below.
SAB: Starting available balance, a term sometimes used in materials planning to mean what it says - ie stock on-hand which is available for immediate use (as opposed, say, to stock on-hand which has been allocated to a specific job).
Safety Stock: see Stock (Safety).
Safety Time: (1) one meaning is the duration of time between the date on which materials are planned to arrive and the date it is calculated that they will actually be needed - for example, a 'safety time' of 5 days might be placed on a raw material required date of Day 12, so that the raw material is actually ordered for Day 7. Hopefully, the safety time will ensure that the material really will be available when it is wanted. The concept of safety time is rightly looked down on by companies that pride themselves on OTIF deliveries. (2) the length of time it is estimated that safety stock will last.
Sage: (1) an aromatic herb widely used throughout history in cooking; (2) a person of profound wisdom - for example, the seven sages of Greece (Thales, Solon, Periander, Cleobulus, Chilon, Bias and Pittacus). Also Warren Buffett (1930 - ), the sage of Omaha and founder of Berkshire Hathaway, the investment fund (in 2007, Berkshire Hathaway stock exceeded $100,000 per share).
St Agnes Eve (Ah bitter chill it was!): the evening of January 20th (St Agnes Day itself is January 21st.). St Agnes is the patron saint of virgins, and on St Agnes eve a maiden may by devine means catch a glimpse of her husband-to-be. See the famous poem by Keats.
St Bartholomew's Day: see St Swithin.
St Swithin's Day: July 15th: St Swithin's day if thou dost rain For forty days it will remain. / St Swithin's day if thou be fair For forty days 'twill rain na mair. (Found on analysis to be utter nonsense, of course.) A follow-up verse is All the tears St Swithin can cry, / St Bartholomew's mantle wipes them dry. (St Bartholomew's day is August 24th).
Sale of Goods Act: There have been very many 'Sale of Goods' Acts passed in the UK. A particular instance of an Act is normally suffixed with the corresponding year: for example, The Sale of Goods Act (1893). A complete discourse on these Acts should be read in a legal textbook, but see the free on-line 'course' on purchasing at this site.
Sales and Operations Planning (S&OP): "Organised common sense!" Towards the end of the month, the old master schedule must be replaced by a new one taking account of the passage of time, new sales forecasts and other revised facts and figures. Formulation of the new master schedule takes place in two stages. Stage I is referred to as Sales & Operations Planning. Its purpose is to begin the reformulation at a high strategic level - ie at a level considering overall, long-term stocking levels; general economic prospects; and resources such as manpower and, especially, money. It is vitally important for the credibility of the process that senior management should direct the S&OP. However, since senior managers have neither the time nor knowledge of the detail to work at the level of individual products and work centres, S&OP must usually be conducted at a broader level, typically that of market product groups. Different companies will have different ways of conducting Sales & Operations Planning, but to be performed acceptably, all must have one common factor - namely that senior managers take responsibility for the process and its outcome . See also Resource Requirements Planning.
Sales Demand: See Demand (Sales)
Sales Forecasting: Companies do not usually forecast sales, they forecast demand. What they sell will depend on demand, stocks and the master production schedule. This is not a pedantic point - see the Glossary definitions of Demand (Latent) and Demand (Patent). Also, see especially Demand Forecasting which gives a short list of prominent forecasting software packages.
Sales Order Processing (SOP): The activities which are put in train on receipt by the company of a customer's order are quite critical. How well procedures are carried out directly determines the perception of the company in the customer's eyes - their smoothness and efficiency, and the correctness of the clerical work, for example. They also lead to the (hopefully) efficient actual fulfilment of the order itself by the numerous staff involved. Thus participating departments and sections include: the sales office; stores and despatch; stock replenishment; invoicing and accounts; and transport/distribution.
Sales Replenishment System: synonymous with Fixed (Re-)Order Point System, qv.
Sample Mean: Suppose some characteristic is measured in relation to an item - eg the item's diameter. Then, if a sample of, say, 5 such items is withdrawn from the "population" of them, and the chosen characteristic measured for each of the 5 members of the sample, the sample mean is the mean or average of the 5 measurements taken.
Sampling: the taking of a small number of units (the sample) from a large population of units, the sample being as representative of the population as possible (ie by avoiding bias in selecting the members of the sample). The relationship of the characteristics of the sample to the characteristics of the population as a whole can be computed by statistics, enabling inferences to be drawn about the population - this being the purpose of the whole procedure. The manufacturer should be certain that the sampling of incoming parts is economical and necessary (see breakeven point analysis). It should be remembered that the purpose of sampling is to make a decision either to accept an in-coming lot, including necessarily the non-conforming items therein, entailing the need for subsequent correction on non-conforming parts, or to reject an incoming lot, forcing 100% inspection of the parts anyway. If a sample plan always leads to the acceptance of incoming material, why sample in the first place? And if it always leads to rejection, again why sample? Also see the seven Glossary entries under "Sampling" immediately below.
Sampling (Double): Randomly selecting a specified (*) quantity of n1 units (the first sample) from an incoming lot of materials of size N, and 100% inspecting it. If the number of non-conforming parts in the sample is less than or equal to acceptance criterion c1, the incoming lot is accepted at once (ie a second sample is not taken). If the total number is greater than acceptance criterion c2, the incoming lot is rejected at once. If the number of non-conforming parts is between c1 and c2, a second sample is taken of specified size n2 and 100% inspected to find the number of non-conforming units. If the total number of non-conforming units from the two samples is equal to, or less than, c1 + c2, the incoming lot is accepted. If it is greater, it is rejected. Note that double sampling is cheaper to perform than single sampling, since the first sample n1 taken is about half the size of a sample taken in single sampling, and it is not usually necessary to take the second sample n2. (In addition, double sampling is preferred since it appears to be giving the incoming batch another chance!) (* The sizes n1 and n2, and the acceptance criteria c1 and c2, are read directly from sampling tables.)
Sampling (Single): Taking a randomly chosen quantity n units (the sample) from an incoming lot of materials of size N, and 100% inspecting the sample so taken. If the number of non-conforming items in the sample is less than or equal to the "acceptance criterion" c, the incoming lot is accepted. If not, it is rejected. The values of N, n and c are obtained from Sampling Tables (qv).
Sampling by Attributes: The normal method of sampling, whereby a sample is taken and the number of items with one or more non-conforming attributes is counted. Contrast Sampling by Variables.
Sampling by Variables: A major variation of sampling involving the assessment of the distribution of a quality characteristic in the incoming parts, in a similar way to the assessment of such a characteristic over a period of time which is the subject of a variable control chart. Sampling by variables requires close co-operation between supplier and consumer regarding the origin of the parts (eg assurance that they are all from a single production run).
Sampling Table: The data that constitute sampling tables are calculated through probability theory and, in particular, through the use of the binomial theorem. In broad terms, a sampling table requires the user to specify (1) a desired or expected quality level of incoming parts, p, and (2) the size of the incoming lot, N. If single sampling is to be employed, the user then reads the following from the table: (a) the size of the sample n to be taken from the incoming lot and subsequently 100% inspected, and (b) the acceptance criterion c, or the number of non-conforming units allowed in the sample in order for the incoming lot to be accepted.
Sampling Tables (AQL, or Military): These are sampling tables devised in the 1940s and 1950s, and are intended to give a high probability of acceptance of incoming lots which are at a designated level of quality. Since 1959,the tables have been modified so as to give a 95% probability that a lot at a declared quality level will be accepted.
Sampling Tables (Dodge-Romig): These sampling tables were devised by Harold Dodge and Harry Romig of AT&T in 1959, and are geared to the LQL - ie they are geared to providing a high probability to the consumer that an incoming lot that he accepts will be equal to or better than the quality level he aims for. See "Acceptable Quality Level".
Savings Criterion: A principle used in route planning software by which it can be shown that the greatest savings in total journey distance will be made by taking elongated routes of a "petal" shape (see Petal), rather than a "stem-and-cluster" routes (qv).
Scale: Scales, used in weighing and measuring, can be stand-alone or incorporated into materials and handling equipment (for example, into the forks of a fork lift truck). Scales come in a variety of configurations determined by the required capacity, required accuracy, specific process and the characteristics of the load to be weighed - all the way from small bench scales up to those used to weigh railway carriages. The five factors to condider in choosing a scale are: (1) capacity - the accuracy of the scale relative to its capacity (always choose the smallest scale to meet your needs); (2) accuracy - design of the scale (less expensive scales tend to be less accurate); (3) maintenance and calibration - what are the requirements in this regard (this generally needs to be done at regular intervals); (4) operating conditions - scales are designed to be operated in stated environments (for example, hot/cold/ wet/dry, vibration, air movement); and (5) tare. Note that the the difference between a counting scale and any other scale is merely that the counting scale has such features as the ability to store the tare weight of a package and record the number of items in a sample of items being weighed. The sensitivity of a scale relates to the lightness of weight that the scale can accurately weigh and record. Some scales will give an error message if their sensitivity cannot deal with what is being weighed (if a diversity of objects is being weighed, it is not uncommon to require to employ different scales with different sensitivities). In particular, see weigh counting.
Scheduled Customer Order: see customer order.
Scheduled Receipt: See Open Planned Order.
Schwundgeld: German, for a monetary script or specie. Most often, the term is used for a form of money that has originated locally (ie not nationally) from highly local, social needs. Perhaps the first modern emergence of a type of schwungeld was in Germany during the hyperinflation of the 1920s. Nowadays, several schwungelden have arisen in Europe as a result of the imposition of the Euro.
Scientific Management: see Taylorism.
SCOR: Supply Chain Operations Reference model.
SCR: Synchronised Customer Response.
Scrap Factor: The percentage of ruined components created during the operation of a process. Note the adjective "ruined" - the implication of the term is that the process failed, either due to machine malfunction or operator error, rather than that the process is inherently incapable of producing 100% conforming output. It is said that a 10% scrap rate will increase factory cycle time by 40% and create a 50% increase in work-in-progress (in the second case, partly due to excessive production and safety stocks, caused by uncertainty). Things are rarely as bad as 10%, however, although a survey in the December 2000 issue of Industry Week (US) revealed, at least in US manufacturing, that scrap and rework costs exceeded 1% of sales revenue in 77% of companies. See also Spoilage, Yield and Rework.
S-Curve: S curves are often associated with the variation observed in product demand (or sales) over time. That is, plotting demand on the vertical axis of a graph and time on the horizontal axis, after the launch of a new product, demand begins at a low level with a small upwards trend month by month. After many months, the level and growth rate of demand begin to sweep upwards in a steep climb. Some time afterwards, level and rate flatten out and, later still, begin to decline. Pictorially, the illustration of the curve on the graph somewhat resembles the letter 'S', lying flat on its side. Mathematically, two types of S-curve are the Gompertz curve and the Pearl-Reed curve.
Season: In sales forecasting, a fixed known period such as the 12 months of the year or the 7 days of the week. Seasonality is important because, as we all know, the sales of certain goods are more pronounced at certain points in the season due to the cycle of weather, social holidays etc. Contrast a "cycle"and also remember Easter.
Seasonal Factors: When applied to a season of one calendar year, ie a twelve month "season", the 12 seasonal factors are a set of twelve dimensionless numbers totalling 12.0, and therefore averaging 1.0. Each number is assigned to each of the months depending on the degree to which the phenomenon of seasonality affects it (eg weather). Thus suppose after analysis that a factor of 2.0 has been assigned to November with regard to sales demand for warm clothing. This means sales demand in November will be 2.0 times higher than average simply because it is November. So, before analysis of the actual demand data for November is carried out, in order to discern and analyse the underlying product sales trend, the purely seasonal element of the demand must be removed. This is done by dividing the actual demand by 2.0 (ie the sales demand is deseasonalised). Analysis and forecasting are then carried out on the deseasonalised data. When the forecast has been duly made, the forecast amount must be seasonalised for the month(s) to which it applies by multiplying it by the corresponding seasonal factor. Thus if sales in Novenber were 800 units, we first deseasonalise this figure using the seasonal factor of 2.0 quoted above, to give deseasonalised "sales" of 400 units. Suppose then that the forecast turns out to be 500 units for the forthcoming month (December), and that the seasonal factor for December happens to be is 2.5. Then the 500 units must be seasonalised, to give a final forecast for December of 1250 units (500 x 2.5).
Seasonality: The phenomenon whereby the period by period sales demand over a season assumes a pattern of rises and falls (highs and lows) depending only on the period in question. For example in a twelve month season, the demand for warm clothing is likely to be highest in the winter months of the year and lowest in the summer months. Seasonality is represented in demand forecasting either by a set of seasonal factors (see above) or by a set of sine equations (ie harmonics - see Fourier analysis). A particular problem in dealing with seasonality can be the effect of Easter, a period of time which can fall in one particular month in one year, and yet fall in a another, different month the next year.
Sectional Picking: See Picking (Zonal).
Security (of a stores/warehouse): For a stores or warehouse, the building should be of substantial construction, with windows capable of being locked so as to be capable of resistance to forced entry. It should be laid out with a minimum number of access points to buildings, perhaps by reducing the number of extra doors which have been provided as amenities simply to cut staff walking time. Staff access should be arranged so that they are "covered" by formal reception areas. Goods arrival and removal doors should similarly be covered if possible by supervision. Entry to the stores must be restricted to those with the express permission of the stores supervisor. A good system should be in place with regard to keys, with no duplicates allowed. (A system of computer controlled electronic keys can be installed with separate security passes for personnel whose jobs require access.) Naturally, a major point in the provision of security is the installation of alarms. Often, however, the alarm system is poorly matched to the premises and the environment in which it must operate. This can then be compounded by inadequate training of guards and staff (the majority of false alarms occur at the start and finish of shifts, when the system is being switched on/off). The police will downgrade their response to an alarm if there are more than two false alarms in a year. Modern alarm equipment can now incorporate verification analysis ... for example, is an external alarm signal then shortly followed by an internal alarm signal...? Equipment can also be fitted with an analysis of the type of intruder (a cat or a man ..?) and the precise location of the intrusion. For a little more on security, visit sub-section 5.4 of the free on-line 'course' on Stores & Warehouse operations at this site.
Security Guards in the UK: see SIA.
Security Watchdog: A UK organisation based in Liphook, Hampshire providing advice relating to all matters concerning security, and which conducts on-site audits of company security arrangements ('Silver Fox'). Visit www.securitywatchdog.org.uk
Seiketso: ... means participating - see SSSSS.
Seiri: .... clearing and removing clutter - see SSSSS.
Seiso: .... means cleaning - see SSSSS.
Seiton: .... means standardising locations - see SSSSS.
Selection: In human resource management, the selection of a preferred applicant from those applying for a job vacancy within the company. Selection will involve the scrutiny of candidates' application forms, the conduct of interviews and, perhaps, the administration of tests of aptitude. Contrast recruitment (qv).
SEMA: Storage Equipment Manufacturers' Association, a UK body (visit www.sema.org.uk). SEMA have 26 publications and "codes of practice" on racking safety and similar topics, and also hold courses on such subjects - contact via their web site, or phone 0121- 200-2100 (UK).
SEMI: Semiconductor Equipment Materials International.
Semi Frozen Zone: Also referred to as the trading zone - see Time Fence (2nd).
Sensitivity (of a scale): see scale.
Service Facility: See Queue (2)
Service Part: Peferred, and often US, terminology for a spare ("If they were spare, we wouldn't have them").
Severable/Non Severable Agreements: A severable agreement is one that can be severed into a number of separate sub-contracts, or sub agreements. For convenience, the overall (severable) agreement may have been expressed in a single document, but, because it is severable, it is held to consist of a number of separate parts. For the buyer, the consequence of this arises if one of the individual sub-contracts goes wrong - for example, if the supplier on a particular occasion sends bad quality. In these circumstances, the buyer cannot terminate the overall contract. All that is affected is the sub-contract concerned. The overall severable agreement continues. A non-severable agreement is one that consists of an indivisible, single contract that cannot be sub-divided. If there is a failure by the supplier in fulfilling any part of his obligations in the non-severable contract, the whole contract is put in jeopardy - but see quantum meruit. Alse see Stage Deliveries.
SFO: Serious Fraud Office - in the UK, a division of Scotland Yard law enforcement. (Scotland Yard is the location of the Metropolitan (ie London) police HQ).
SFC: Shop Floor Control - the day to day management of that area in a factory where production itself takes place. Management (ie Control) activities include short term work scheduling; the deployment and general management of work operators; and seeing to the good order of equipment.
SFP: single factor productivity - see productivity.
SGA: Selling, General and Administrative expenses (a US acronym).
Shares (in a company): on its foundation, a company issues and sells shares of ownership, the revenue from the sale yielding the capital it needs to to start the business and the share ownership of those purchasing them representing their investment in the company. There are two main types of share. (1) An ordinary share carries a vote at a shareholders' meeting and the shareholder is entitled to a dividend decided by the directors of the company. (2) A preference share does not carry a vote, and the shareholder receives a fixed percentage dividend. As well as the issue of shares on the company's foundation, shares can be created by rights issues and by capitalisation issues. Note that in stock exchange jargon, a share option is a right to buy (or right to call) shares at a future date or a right to sell (or right to put) at a future date.
Shelf Life: The maximum time an item can be stored until it becomes unfit for use. The implication of unfit for use is that the item has physically deteriorated. In fact, many items which reside too long in the stores because of poor inventory control become scrap because the bill of materials has changed and they are no longer current!
Sherman Antitrust Act (1890): An American Act of Congress prohibiting the operation of cartels and other arrangements in restriction of free trade.
Shewhart, Walter (1891 - 1967): The originator of statistical process control in 1924 at Bell Telephone Laboratories, NJ..
Shift: "A relay or change of workers organised to take over from others in the performance of certain duties - " (OED) In manufacturing, a shift is the particular assembly of employees directed to work certain proscribed hours of the 24-hour day, such that the shift may be superseded by a following shift, of different workers, required to work other hours of the day. For example, in a factory there may be a "day shift" of employees working during the day (say, 8am to 5pm), followed by a "night shift" of other employees taking over and working 5pm to 1am. The advantages of shift working are that capital machinery is kept in use for a longer overall period and that the flow of production is not disrupted. Problems with shift working are communication of working decisions between consecutive shifts, the provision of effective management in other than the "prime" shift (*) and the provision of general, non-production factory services in other than the prime shift. (* The prime shift is usually normal office hours, say 8am to 5pm, which managers would prefer to work. Employees working in non-prime shift times are usually paid a shift allowance - a premium per hour on the normal rate of pay.) The well-known US logistics consultant Roy Harmon has contended that, if cleverly and imaginatively organised, shift working can be of great benefit to employees, such as in avoiding traffic rush hours to work etc. His suggestion is to have 3-shift working comprising overlapping "management shifts" and "worker shifts" as follows: Management/Supervision Shift 1: 6.30am - 2.30pm; M/S Shift 2: 2.30pm - 10.30pm; M/S Shift 3: 10.30pm - 6.30am; Worker Shift 1: 11am - 7.00pm; W Shift 2: 7pm - 3am, W Shift 3: 3am - 11am. Different companies devise different shift hours, and invest a great deal of care and time in arriving at them.
Shill Bidding: a disreputable and, in the UK, illegal practice associated with auctions, including Ebay, in which the sellers of goods make offers for their own goods during the auction in order to boost the price.
Shipping Conference: A group of shipping companies acting together and controlling the shipment of goods between two specified ports (eg Sydney and Vancouver, New York and Southampton). The conference operators act in collusion to fix prices (ie they constitute a cartel), basing charges on the value of the cargo. Conference operators take aggressive commercial action against non-conference shippers attempting to intrude on their routes. In their own defence, they state, correctly, that they provide regular sailings and an efficient and effective service. By regular sailings is meant that the operators publish a schedule of sailings and stick by it, regardless of whether or not their vessels are full.
Shitsuke: .... means standardising work habits - see SSSSS.
Shockley, William: The inventor of the transistor (1947), at Bell Laboratories.
Shojinka: (Japanese) a lean term denoting variation of the production process so as to fit into changed demand patterns. Shojinka is encountered with nagara.
Shop Calendar: Literally, a calendar in which the work days of the year are consecutively numbered without regard to month and ignoring/skipping weekends and public holidays. The shop calendar is useful in scheduling and tracking consecutive jobs over time. For example, on what date will a job be finished if it starts on February 22nd and has a leadtime of 33 days? If February 22nd is Shop Calendar Day 37, the answer is Shop Calendar Day 70. Now we can look up the real date of Shop Calendar Day 70 on the shop calendar!
Shop Order: A Works Order (qv).
Shop Packet: the bundle of documents typically accompanying a shop floor manufacturing order, used for planning, authorisation and control. The packet may variously include: an official manufacturing order; an operations sheet; engineering blueprints; picking lists; move and inspection tickets; and so on.
Short Hedge: A company that sells a commodity future is said to "go short" on the material concerned. If the company takes this action so as to protect the income it will eventually receive when the futures date is reached, the action is said to be a "hedge". See commodity and see future. Also, visit the "Investor Words" Internet site.
Shortage: The unavailability of a quantity of component needed to manufacture a works order. It is rightly regarded as bad practice in manufacturing to release jobs onto the shop floor with shortages, since the incomplete kits disrupt current operations (ie the components, waiting for the missing parts, get in the way) and are often forgotten if the missing parts fail to turn up at all.
Shortest Processing Time Rule: See SPT.
Shrinkage Factor: In manufacture, the percentage by which the actual output falls short of what it should theoretically be - see Scrap Factor and Yield. In retail, the shrinkage factor is stock written off due to its physical deterioration (ie becoming shop soiled), or lost due to its misplacement or due to its theft by shoppers and staff.
SIA: (1) Semiconductor Industry Association (a US body); (2) Security Industry Authority - a UK body authorised since March 2006 to manage a licencing scheme for security guards. Licensing is mandatory. A licence may be either "Frontline" (for actual guards) or "Non-Front Line" (for managers etc). To qualify for a licence, a guard must submit an application, photograph, other supporting documentation and a fee of £190. There are various criteria, including evidence of training and a clean record.
Sigma: The Greek letter for "s", customarily used in statistics to denote the standard deviation of a distribution, qv.
Sigma, Six: Six sigma is a formal set of procedures that enables a company to put into effect the quality lessons taught at the shop floor level by Walter Shewhart and W. Edwards Deming. Six sigma is highly focussed on maximum financial return and the satisfaction of external customers. It is currently being widely applied to very great effect in the USA by large and small companies alike. Using the DMAIC methodology (qv),the successful application of six sigma typically results in the delivery to the customer of near perfect products and near perfect service (in fact, with non-conformities down to 3.7 per million, and minimum variation of output). Six sigma was so named in the 1980s by Bob Galvin, CEO of Motorola Inc., and led to the institution by that company at that time of a number of very highly profitable initiatives. The technique was boosted further in 1993 by its adoption as a required means of process improvement and management procedure by Allied Signal Inc.. In 1998, Jack Welch, then CEO of General Electric, described six sigma as the most challenging and potentially rewarding initiative we have ever undertaken. As implied above, six sigma is not reserved for the giants of international manufacturing, however. It is a simple technique centred on financial return and sound data that requires no software to install; instead, six sigma is the application of long-established, well proven methods to both manufacturing and commercial processes. See also DPMO. For a glossary of six sigma statistical terms, visit http://www.isixsigma.com. A recommended book on SS is The Six Sigma Fieldbook, by Pande, Neuman and Cavanagh (McGraw Hill, 2002). These authors have also written The Six Sigma Way, which covers similar ground, but if one wants only one book, the "Fieldbook" is better. For specialist UK courses on six sigma, visit www.smallpeice.co.uk.
Silicon Valley: An amusing nickname for an area round Palo Alto, California, renowned for its conglomeration of hi-tech electronics companies. Palo Alto is near to Stamford University, a famous institution that was, at one time, America's leading academic centre in radio engineering.
The Silk Road: the name given to the world's oldest and most famous trading route, connecting Southern Europe, Arabia, Egypt, Iran, India and China. The Silk Route was the means from ancient times whereby goods and ideas might be traded between East and West. From 2008, a 'new Silk Route' was opened, in so far that a 6000 mile route between Hamburg and Peking (Beijing) was connected by a rail service, reducing transit time to just 15 days (less than half the time taken by sea.) The success of the new route is vitally dependent on the co-operation of the many national authorities involved in avoiding hold-ups at border crossings
Simulation: The building and manipulation of a so-called computer model, usually to examine the potential behaviour or effectiveness of some development under consideration. A 'computer model' is a mathematical representation of whatever is being simulated, such as its speed or acceleration. Although the model is in reality a set of equations and rules incorporated as programs and data within the computer, use of the model is quite analogous to the use of a 3D model built to show a client what a building will look like after it is completed. Nowadays, easy-to-use simulation models, sometimes incorporating interactive animation, can easily to built by anyone. The completed models should enable people at all levels to quickly grasp what is being proposed, and input their own ideas or get detailed information about what is being shown on the VDU. For example, in the simulation of a warehouse, by clicking on a 'fork lift truck' pictured in an animation, statistics might be obtained about its percentage use, distance travelled etc, in operating the warehouse over, say, a specified hour. The training needed to use a simulation package sufficiently well to obtain good results is just a few days. In reality, users must spend most of the time fact finding, discussing alternatives with colleagues and deciding objectives. (As a hint, if the reader of this glossary engages the service of a simulation consultancy, perhaps paying fees in accordance with the time spent, it is essential he or she should find out beforehand precisely what data needs to be provided, and to have such data readily to hand.)
Simultaneous Engineering: The design of a new product in parallel with the design of the process by which it is to be manufactured. Two advantages of designing the product and process in tandem are (1) the considerable shortening which results in the leadtime elapsing to the final product launch, and (2) the early detection made of any difficult production problems likely which stem from some peculiarity of design.
Single Exponential Smoothing: A naive method of forecasting (qv) in which greater weight is given to the most recent sales demand, and proportionally less weight to increasingly old demand. The exponential decline in the weighting applied may be, say, 0.2, so that the forecast is derived by (Latest Demand) x 0.2 + (Next Oldest Demand) x 0.2 x 0.2 + (Third Oldest Demand) x 0.2 x 0.2 x 0.2 + ......
Single Factor Productivity: see productivity.
Single Moving Average: A naive method of forecasting (qv) in which a forecast is prepared by taking a simple average of a number of past data points - for example, if the past three demand quantities were 6, 7 and 5, the single moving average forecast is (6 + 7 + 5) / 3 = 6.0.
SIOP: Sales. inventory and operations planning. synonymous with S&OP.
SIPOC Model: SIPOC is an acronym for Suppliers; Inputs; Process; Outputs; Customer, as these phenomena relate to the overall business of a company. Sometimes the letter R is inserted, meaning Requirements (as they relate to Input and Output), to make the fuller term SIRPORC. The SIPOC or SIPORC model is intended to be a fairly high level map of the major processes and interactions which constitute the business and its principal operations, perhaps to be used in overall strategic planning. It is widely used in the initiation of Six Sigma work, especially at the Project Selection stage.
SIV: Signal Integrity Verification.
Six Sigma: See Sigma, Six.
SKU ( Stock keeping unit): A product qualified by the location at which it is stored. The term is widely used in distribution to enable the logistician to distinguish between identical items stored at different depots. Thus Electric Kettle Model A1 at Birmingham is a different SKU from Electric Kettle Model A1 at Manchester. The accepted pronunciation of SKU is as three separate syllables - ess - kay - you.
Slack: In the context of jobs on the shop floor, the extent to which the progress of a job is ahead of schedule.That is, the number of hours (or days) early it will be completed. In project management, slack is the difference between an activity's earliest start date and its latest possible (critical) start date; if the slack on an activity is zero, that activity is on the critical path. The critical path is the succession of tasks such that if any one of them is completed X days late, the project itself will be X days late, and if any one of them is completed earlier than scheduled, the whole project will similarly be correspondingly early.
Slack Time Despatching Rule: A shop floor prioritisation rule in which jobs are prioritised in accordance with: (the time due minus the time now) minus (the processing time still remaining). The greater the amount of slack time, the lower the relative priority.
Slack Time per Operation: A shop floor prioritisation rule in which jobs are prioritised in accordance with their slack time (qv), but the slack time being divided by the number of operations remaining. (Each operation is an opportunity for delay.) The lower the Slack Time per Operation, the higher the job's priority.
SLICE: Simple Low Cost Innovative Engine.
Sliced Bread: Invented in 1927 by Otto Frederick Rohwedder of Iowa, US, and marketed from 1928 by the Chillicothe Baking Company Inc of Missouri, US. Within five years, sliced bread accounted for 80% of the US market.
Slotting: the determination of the locations to be assigned to specific items in a fixed location storage facility.
SLS: Selective Laser Sintering, or Sears Logistics Services.
Smart Label: A term often used to describe an RFID tag. The tag comprises two, and possibly three, components: a silicon microprocessor, a lithium battery (optional) and an antenna. The antenna is able to pick up electric fields when the tag comes within range of an RFID interrogator (ie a tag reader). Smart labels are paper thin and able to survive very harsh environments (*). If a battery is present (to boost range and power), it is an active smart label; if there is no battery (to save cost), it is a passive label. Note that RFID tags themselves do not have to be labels. For example, tags for animals are encased in glass beads. Of vital importance in choosing a tag is its ability to be read by the RFID reader ... a particular tag design may be poor at picking up the electronic signal from a tag reader, and in addition, specific individual tags from a given manufacturer may vary considerably from one to another in terms of reliability and quality. It is necessary therefore in designing an RFID system physically to test the (electronic) suitability of the tags that are to be attached and the environment in which the RFID network is to operate (see particularly AEN.) (* Nevertheless, a chip embedded in a label can be damaged and rendered inoperable by a direct blow, and the connection between a chip and its antenna can be damaged by twisting - the likely physical environment in which smart labels are to be employed must be properly tested in setting up the RFID system.)
SMED: Single Minute Exchange of Die - the three stage methodology devised by the late Shigeo Shingo to effect a machine changeover in a very short time. It was Shigeo's claim that any changeover could be reduced to 9 minutes or fewer (hence "single minute"). The two purposes of achieving very short machine changeovers are: (1) to reduce the minimum size of an "economic" manufacturing lot - if changeover times are lengthy, it may be necessary for financial/costing reasons to make a large lot of material (see EOQ ... although this entry relates to the size of lots ordered from suppliers). A large lot of material creates stock keeping problems and results in unnecessary investment costs; And (2) to fulfil Shigeo Shingo's original purpose of manufacturing in small, even quantities so that manufactured material flow matched the demand for product in the market, as explained under the Glossary entries for Just-in-Time and Lean Manufacture. See also OTED. Also see Internal Set Up and External Set Up.
Smith, Adam (1723 - 1790): Author of the influential and world famous book, published in five volumes in 1776 An Enquiry into the Nature and Causes of the Wealth of Nations. The Wealth of Nations is held by many to be one of "the books that changed the world". It is readily available from Amazon, although an edited version might be easier going for the modern reader (such as that by Kathryn Sutherland, price £7.19). See also Manufacture of Pins.
SMME: Small to Medium Manufacturing Enterprise (see SME).
Smoking, Passive: In their campaign against smoking (ie active smoking - ie the smoking of tobacco by people), sanctimoneous zealots have claimed that so-called passive smoking (ie breathing in smoke in the air caused by active smokers) is medically harmful and have invented phony statistics to support their case. In 1998 and 2003, however, the results of two major studies, conducted by the International Agency for Research on Cancer (part of the World Health Orginisation) and by Enstrom and Kabat on behalf of the American Cancer Society* showed definitely that there was no link between passive smoking and cancer and no signicant risk to people in contact with smoke. The link between active smoking and cancer is not, of course, disputed; it was "discovered" (ie a link was statistically deduced) in 1954 by Sir Richard Doll (1912 - 2005). Sir Richard, however, asserted from his study and statistics at his disposal that there was no risk from passive smoking. The 'no smoking' law that came into effect in England in July 2007 is one step in a government inspired attempt to abolish active smoking entirely. Such a goal is doubtless justified in view of the long-term danger of active smoking to health. It is a pity that those conducting this campaign feel it is morally acceptable to put out the outrageous lie of harm from passive smoking in order to do so. (* A 40-year study of 35,000 non-smokers living with smokers. Glossary readers who Google "Enstrom and Kabat" will get some feeling of the extent to which statistics have been politicised in any discussion of this subject.)
SMT: Surface Mount Technology.
SO: Syllabus Order, an old term for a cost centre, qv..
SOA: Semiconductor Optical Amplifier.
SOC: Silicon On Chip.
SOGAT: Society of Graphical and Allied Trades, a printing / newspaper trade union.
SOI: Silicon On Insulator.
Sole Trader: The appellation given to a person in business merely on his own account - for example: a plumber; a person who has set up as a printer; a person running a taxi or fleet of taxis. The implication is that the sole trader has not formed a limited company and that he is therefore personally responsible for the debts of his enterprise - for example, unpaid creditors will enforce their bankrupcy. It is a fundamental right of a citizen in the West that he can freely set up as a sole trader without let or hindrance by government (although there are grievious regulatory obstacles placed in his way in Europe by the much despised European Union.)
SONET: Synchronous Optical Network.
SOP: (1) Sales Order Processing, or (2) Standard Operating Procedure. See also S&OP.
S&OP: see above.
Soroptomy: A single customer (and no prospect of new ones) served by many suppliers. That is, if the suppliers wish to sell, they must accept the customer's terms. The small number of supermarkets bullying and squeezing their suppliers are virtual soroptomists. As far as the poor consumer is concerned, the supermarkets are also virtual monopolists of the areas they serve.
Sources and Sinks: Terms used in the operation of the transportation algorithm.
Sourcing: The process of finding companies capable of supplying goods or services required by the buyer. Sources of information include: directories (for example Kompass and Kelly's); magazines; sales representatives; exhibitions; and the ubiquitous Internet. For a complete exposition on sourcing, see the free on-line 'course' on purchasing at this site.
South Sea Bubble: A disastrous investment folly originating in London, culminating, in 1720, in the loss of considerable amounts of money by very many investors. As a result, parliament passed legislation requiring the flotation of any joint stock company to be approved prior to the issue of stock. Compared to some of the dot.com follies of 2000, the South Sea Bubble looks pretty rock solid. Enron, which relied on lies and deceipt, was, perhaps, a different matter.
SOW: Statement of Work.
Space: The emptyness of space! - according to the late Sir James Jeans, if one were to empty Waterloo Station of everything except for six specks of dust, it would still be more crowded with dust than space is wth stars.
Spare: A manufactured component typically needed to replace a similar worn or broken component in a machine assembly. The sales demand for spares for 'wearing parts', such as exhaust pipes and tyres, are usually significant and can readily be forecast. The demand for spares for non-wearing parts (say, steering wheels and axles) often assume intermittent demand. A spare in US terminology is often a service part ("If they were spare, we wouldn't have them!")
Spares for Discontinued Machines: See All Time Supply.
SPC: See Statistical Process Control, qv.
Special Causes of Variation: A cause of variation in output from a manufacturing process or system of procedures may not be due to the inherent operation of the process or system itself (see Common Causes). Instead, it may be due to the intrusion into the system of a one-off external cause of variation. One-off causes do not spring from the system, and so are preventable - ie their future occurrence can be blocked. Consequently, the reason for each special cause must be investigated and steps then taken to see that it does not occur again. The presence of a special cause of variation must be determined statistically. This is done by knowing that variation in output due to common causes follows a regular pattern corresponding to the Normal curve - ie with an average and a deviation on either side of the average within three standard deviations. Variation due to a special cause results in a performance outside these statistically determined limits. The term "special cause" variation was introduced by W Edwards Deming - the alternative term originally used by Walter Shewhart was "assignable variation".
Specific Goods: Goods individually and specifically identified and agreed to be bought or sold, at the time a contract is made. Thus a machine tool identified by its serial number is a specific good. A good being made to order but not yet complete is a specific future good. See also unascertained goods.
Speculator: A trader in the futures market hoping to outperform the market by buying cheap and selling dear. Speculators have no direct interest whatsoever in the commodities, bonds and so on that they buy and sell. They are, however, absolutely essential to the market's operation since they keep it "liquid" and efficient. That is, someone wanting 10 tonnes of raspberries on December 19th can immediately buy futures for this amount, and does not have to wait several days until he finds a raspberry grower who expects to havr that amount of the fruit to sell. See also hedging.
Split Batch: When a shop floor job is behind schedule and some, but not all, of the components involved are very urgently needed in a next stage of production, the batch of components involved may be "split" - ie the urgently needed ones sent ahead and the remaining ones left behind to be processed at a later date. Unfortunately, the units left behind are all too often forgotten and lost: as a consequence the practice of batch splitting may be banned on some factory floors. Also see Operation Splitting.
Spoilage: The degree to which units manufactured are rendered unfit due to the maloperation of the process. (Rarely, spoilage might mean the percentage of non-conforming items produced by a process not inherently capable of manufacturing 100% conforming parts.) See Scrap Factor.
Spoiled Work Order: A manufacturing job which is having to be reworked to correct errors made in the original machining - see Rework.
Sporadic Demand - see Intermittent Demand.
SPS: Standard Procurement System.
SPT (Shortest Processing Time): A job despatching rule in which the highest priority is given to jobs with the shortest expected processing time (*). Thus of two jobs A and B with respectively 5 hours of processing time and 12 hours, Job A would be prioritised over Job B. SPT is a static despatching rule (qv) and has only two merits: (1) it wins computer simulation competitions involving other rules, and (2) it ensures the greatest number of jobs are despatched. Its disadvantages are that the despatch order bears no relation to the jobs' real urgency, and that jobs with long processing times become increasingly late. Nevertheless, it is a useful rule when things are not going smoothly. (* Note that processing time = run time + set-up time, and excludes queue, waiting and moving time.)
SQC: See Statistical Quality Control.
Squeaky Wheel, The: If one is riding in a vehicle and one of the wheels is squeaky, he stops and fixes the wheel with a drop or two of oil. The analogy is used in manufacturing to mean that when a problem becomes readily and obviously apparent, the manager gives it his attention. In other words, the manager is reactive. But he should be positive and methodical. The squeaky wheel may need attention, but fixing it distracts from the need to set up a regular maintenance programme for the company's vehicles.
Square Mile: synonymous with the City of London (qv).
SRM: Supplier Relationship Management, qv.
SSAP: Statement on Standard Account Practice, these being issued from time to time by the Accounting Standards Committee. An example is SSAP9, issued in 1975 relating to stock valuation.
SSSSS(The 5 Ss): The Japanese and lean manufacturing philosophies are insistent on the need for order and cleanliness in the workplace. The 5 Ss are derived from transliterations of Japanese words as follows: (1) Seiri (clearing out unwanted material and simplifying); (2) Seiton (locate material in its place correctly - a place for everything and everything in its place); (3) Seiso (ensuring the workplace is scrupulously clean); (4) Seiketso (involving everyone - that is, ensuring that managers and staff not on the shop floor, but whose actions impact it, also participate in the 5S's); and (5) Shitsuke (proceduralise the first four S's to ensure all actions are on-going). A translation of SSSSS more memorable to the English speaker however, is (1) sort; (2) set in order; (3) shine; (4) standardise; and (5) sustain. For a witty book on this subject, see Clutter's Last Stand by Don Aslett (1984). See also Cando.
Staff Department: a company department providing ancilliary or support services, but which does not generate revenue or handle materials. See Line Department.
Stag: see under bear.
Stage Deliveries: A buyer is not obliged to accept the delivery of material in stages unless he has agreed beforehand. If stage deliveries are made, a question then is, as to whether the contract is severable or non-severable. Stage deliveries made under a severable contract are usually those where the buyer must pay for each delivery separately; if so, and if a specific delivery is refused (eg because of quality), the contract nevertheless continues. When stage deliveries are made under a non-severable contract, one single payment is usually made as a lump sum (at a time specified in the contract). If any delivery is then refused, the whole contract can be terminated (but see Quantum Meruit).
Stage Payments: Where large structures are to be purchased, such as major items of plant or substantial buildings, both contractor and purchaser may wish to arrange stage payments. The contractor may require the staging of payments for cash flow reasons and the purchaser may prefer the arrangement so that he is able to withhold payment until the undertaking has proved satisfactory in use. In the contract beforehand, therefore, the two parties may specify a schedule of stage payments to be made by purchaser to supplier. It is important that each payment is linked to a specific date or event, and that, before payment is authorised, a separate invoice relating to that particular payment is submitted. For both parties, but for the purchaser especially, in compiling the schedule of payments, it is wise to involve finance department so that taxation and government grant matters can be taken into account. A contractual agreement that a final payment (of, say, 5%) is not to be made until many months after completion of the work is referred to as a retention clause (see retention). See also Stage Deliveries and Severable/non-severable.
Staging: Either assembing materials on the despatch dock to check its readiness, prior to its distribution to an external customer, or accumulating material in a temporary holding area to ensure that sufficient of it physically exists to begin a manufacturing job (and that it is thereby kept safe from allocation to other jobs which might need similar items). In this second context, staging is synonymous with kitting - see Kitting Area. "Staging Time" is synonomous with Queue Time (see Queue).
Standard Cost: See Cost (Standard).
Standard Deviation: a mathematical measure of the dispersion (ie degree of spread) of a group of numbers. The standard deviation of a frquency distribution is customarily denoted by the symbol sigma (small Greek s). It is the square root of the variance, qv.
Standard Hours: The number of standard hours is any standard that can be used as a yardstick when assessing the actual circumstances of the moment. Example 1: it is presumed by the shop supervisor that under normal conditions, an operator will complete a job in 50 hours. 50 hours is now regarded as the number of "standard hours", so that if the operator actually completes the job in 40 clock hours, he may obtain a bonus if a bonus scheme is in operation. Example 2: if standard hours are the same as the demonstrated capacity, then with a load factor of 1.33 and with standard hours available at a work centre of 100, the actual available (clock) hours are 100/1.33 = 75 hours. Finally, remember if you always have enough people for the days tasks, you're probably overstaffed!
Standard Oil ('Esso'): the company began as the Standard Oil Company of Ohio in 1869 with $1m of capital put up by John Davison Rockefeller with fellow co-founders Andrews and Fagler. By 1900, Standard Oil controlled over 75% of the US petroleum industry, a position largely achieved through a policy of acquiring rival companies. 1892 Standard Oil was forced to dissolve the Standard Oil Trust, which had been formed in 1882, under US anti trust legislation, and in 1911 was further forced to break up other parts of the business. In terms of corporate success, besides its spectacular trading achievements, Standard Oil laid the foundations for the legal and functional organisation of the modern company. During his lifetime (1839 - 1937) Rockefeller gave away the vast majority of his personal fortune to charitable foundations, especially medical ones.
Standing Capacity: Jargon for the maximum capacity of a machine or work centre.
Start Date: See Date (Start).
Stars: see space.
Static Despatching Rule: A rule whereby the priority of a job is calculated based purely on the factors inherent in the job itself, rather than on its current timeliness of progress through the shop. A prime example of a static despatching rule, or static priority rule, is Johnson's Rule. Johnson's Rule dictates that jobs in a queue should be released for manufacture in the order of the shortest jobs first. Note, however, if this is done in practice, it may result in a few lengthy jobs becoming "stuck". To prevent this happening, some failsafe mechanism needs to be applied to rescue them! It is said that Black & Decker in the US once had a scheme whereby the shortest jobs were released in order from Monday to Thursday, and FIFO was applied on Friday. In contrast to a Static Despatching Rule, see dynamic despatching rule Also see despatching rules.
Stationarity: The pattern of sales demand in which the level of demand is constant from period to period. (The consultant of this Glossary may protest that demand is never constant from month to month! If however the only deviations from level demand are random fluctuations, the pattern of demand is stationary and that should be the basis of the forecast. The fact that in reality the forecast will be in error due to the random fluctuations is a matter for safety stocks.)
Statistical Process Control 1: When a manufacturing process is stable and under control, the units of output produced show tiny variations one from another due to the "common causes" of variation inherent in the process' operation. The central limit theorem now states that, so long as the process remains stable and under control (with only common causes of variation present), so that the statistical distribution of these variations also remains stable, then, regardless of what their actual statistical distribution is (*), if samples of 4 or 5 parts are taken of them from time to time, the statistical distribution of the means, or averages, of the samples will follow the familiar pattern of the Normal distribution. By plotting the extent of the variation of the sample averages on a chart over time, the process operator can track whether the population of the parts from which the samples are drawn remains stable - ie whether the process giving rise to them continues to operate in a stable, unchanging way. If it does so remain stable, only common causes are at work in the process, and the manufacture of good quality parts can continue. If the control chart limits are broken however, something has happened to disrupt the process: it must be stopped and the problem fixed. (* Note that the actual statistical distribution of the individual parts themselves does not have to be Normal - in fact, it doesn't even have to known. The truly remarkable central limit theorem applies to the averages of samples of 4 or 5 parts, not to the individual parts themselves. Glossary readers are especially urged to read the entry under The Central Limit Theorem.
Statistical Quality Control 2: The assurance by statistical means that manufactured parts will conform to requirements . When the parts are actually under manufacture, statistical process control (SPC) is used. When parts have already been made and are being sent out to a customer, statistical methods include breakeven point analysis (qv) and sampling (qv). Also see section 5.1 of the free on-line 'course' on purchasing at this site.
Statistics: Statistics has been defined as applied probability theory, but also as the art of obtaining a quart of information from a pint of numbers!
Steering Committee: A group of middle or higher managers, perhaps even including one or more company directors, responsible for monitoring in a broad way the activities of a project team and giving general strategic guidance where necessary. The steering committee is likely to meet only infrequently.
Stem and Cluster: A transport route made up of a single long haul to a particular point, followed by a number of short journeys from the point to various local delivery/collection destinations. Often preferred by drivers in contrast to a petal route.
STEP: Standard for The Exchange of Product model data, an international standard for the communication of product data by EDI.
Step Change: In sales demand, the sudden rise or fall in the level of demand to a new level, such a change being permanent. Strictly, if the change takes place over one or two periods, the phenomenon should be referred to as slope change.
Stepping Stone: A term used in the transportation algorithm.
Sterntaler: a type of schwundgeld originating in April 2004 in Ainring, southern Germany.
Stillage: a metal cage, usually tall, used for the temporary storage and movement of materials within a factory and between manufacturing sites. Originally, stillages were used in brewing as stands for casks and to keep materials off the ground. Stillages are used in their hundreds of thousands within motor car manufacturing - there may be 300 stillages in the loop per component between component suppliers and the main plant. It is reported that over seven years, a manufacturer can "lose" 20% of his stillages, and at a cost of several hundred pound each, great expense is clearly thereby incurred (including particularly expense in production hold-ups due to non-availability of materials). To put an end to the problem of loss, Ford UK in conjunction with the Warwick Manufacturing Group have begun the RFID tagging of individual stillages.
Stochastic Model: Synonymous with Probabilistic Model, qv.
Stock: Material usually held in readiness for some future use. Also, material undergoing transformation of its physical form (ie being processed). The circumstances in which the material has been made or the reasons for its retention give rise to very many alternative stock categorisations - see many entries below.
Stock, Cost of Holding: (Cost of carrying stock etc): The cost imputed to the holding in storage of one unit of inventory. The individual costs making up the total fall into two categories. (1) Operating and administrative costs including insurance, housing, general stock management and obsolescence, and (2) capital costs, relating to the fact that the stock which has been made has cost money to manufacture or buy, and that this investment should have ascribed to it a rate of return on the capital so represented. Note that the value of the stock must be considered to be its standard cost, not its selling price or disposal value. Note also that the the company and the MD will have set a target for the % return on any corporate financial investment - say, 20% pa - and that it is this figure which should be used to arrive at the capital cost of stockholding, not the everyday bank interest rate. As a guideline, inventory holding costs are considered to be some 25% per annum of the value of the stock.
Stock (Active): Any product or component which is currently in regular use (used, say, at least once in the past six months).
Stock (Allocated): That part of stocked material which has been set aside (whether physically or merely by categorisation on the stock record) on behalf of specified, identified works orders. Stock so allocated may be either (i) a standard allocation (or soft/normal allocation), or it may be (ii) a firm (or specific/hard/frozen allocation). Standard allocated stock is general stock from the quantity on hand, whereas firm allocated stock is material physically identified by lot number or other id for the specific works order or customer order concerned. Contrast Stock (Free).
Stock (Anticipation): Stock manufactured or acquired well before it is actually needed, in order to overcome otherwise likely later problems of insufficient manufacturing capacity. For example, stock may be made in Autumn ahead of the Christmas selling rush.
Stock (Average): In an order point system, or Min/Max, system, the average stock holding. This level is encountered half way between the arrival of each replenishment, and is calculated as (R/2 + S), where R = replenishment lot size and S is the safety stock amount.
Stock (Build): Synonymous with Stock (Anticipation).
Stock (Co-Managed): A variation of a consignment stock arrangement, but where stock replenishments from the supplier must be specifically agreed or placed by the buyer.
Stock (Consignment): A large quantity of stock agreed to be consigned by a supplier into the custody of a purchasing company, to enable the purchaser to make small individual withdrawals from it from his own premises as it is needed. That is, consignment stock is paid for and owned by the supplier, with the buyer financially responsible only for housing and insurance. Payments for stock withdrawals by the buyer are made only when the withdrawals actually take place. The waste inherent in this practice includes the holding of excess stock for a long period and the possibility of loss of control of quality. There is also waste in the form of stock housing, stock management, insurance and so on, which would not be incurred if the material were made available by individual deliveries and manufactured just before the time it was actually needed. The buyer perhaps believes he does not bear the actual stock holding cost (which necessarily must be incurred in a consignment stock arrangement), presumably believing that these are nobly borne by the supplying company's shareholders. Consignment stock is not quite the same as VMI (Vendor Managed Inventory), since VMI arrangements usually require the buyer to pay for the stock at the supplier's premises, the supplier merely being the manager thereof.
Stock (Cover): Either (1) the current stock divided by the average weekly demand or (2) the number of days the stock on hand will last, based on past average weekly demand. (This last is clearly days cover.)
Stock (De-Coupling): When the output from one manufacturing process is dependent on the demand of a second process, production planning and control can be very complex if both processes must be planned as if they were operating simultaneously- see Make-and-Pack and Co-Products. However, if output from the first product can be planned in isolation and can be assumed to be held in stock before its further use at the next stage, both planning and actual plant operation is clearly far easier. If this is done, the stock from the first process is said to have "de-coupled" the two processes.
Stock (Economic): Within the company, the sum of the stock actually present plus raw materials ordered but not yet delivered, less the stock of goods sold but not yet despatched.
Stock (Effective): Synonymous with Stock (On-Hand).
Stock (Fluctuation): An old term meaning working stock to provide against uneven rates of demand.
Stock (Free): That part of stocked material which is able to be allocated as the occasion arises for any purpose including future works orders. Stock which has not been reserved. See also Stock (Allocated).
Stock (Inactive): Stocked items which have not been sold or used in production for so-many months (or weeks).
Stock (Maximum): In an order point system, or Min/Max system, the maximum stock level is theoretically reached just after the arrival into stock of a new replenishment. The quantity is then R + S (where R is the replenishment lot size and S is safety stock).
Stock (Minimum): In an order point system, or Min/Max system, the minimum stock level occurs theoretically just before the arrival of a new replenishment. The quantity is then S (ie the safety level).
Stock (MRO): Maintenance, Repair and Operating stock - inventory carried to maintain equipment, including spare parts. Other items of stock connected with housekeeping operations may also be included in this category. MRO stock may be entered on the balance sheet as current assets, rather than fixed assets. It is likely to be disregarded in considering such matters as the elimination of waste and the calculation of stock turns.
Stock (Negative): see Negative Stock.
Stock (Obsolescent): Stocked items which are shortly destined to become obsolete, unless they can be used up or sold beforehand, or items which will become obsolete after a certain date in the future. Reasons for obsolescence include an impending bill of materials change (for example, the introduction by the company of a new model); the expiry of a "best before" date; or imminent legislation.
Stock (Obsolete): Stocked items which are no longer used in the company, and which will have to be disposed of. Stock may have become obsolete because the bill of materials was changed without proper inventory planning, or because of poor record keeping (ie not knowing it was there). See SLOB.
Stock (On-Hand): Stock of a given product recorded as being present in the stores or complete and available on the shop floor. In planning, the stock of the product currently being manufactured on the shop floor and expected to be completed in the next so-many days will be considered to be "on hand".
Stock (Pipeline): Pipeline stock is stock in a distribution chain, and is usually taken to mean stock actually in transit or waiting to be loaded for despatch, or unloaded. For a distribution operation covering a particular area (say, the UK), the quantity of pipeline stock is virtually independent of the number of depots in the area. It should be noted, however, that it takes one barrel of oil about one year to make the journey through the Baku-Ceyhan oil pipeline. The Baku-Ceyhan pipeline, the world's longest, was opened in 2006 between Azerbaijan and southern Turkey, on the Mediterranean, and is 1100 miles long. (The longest sub-marine pipeline is the Langelad pipeline.)
Stock (Policy): Material provided for to protect its availability, and safeguard the company's position, in the event of a defined disaster. For example, policy stock may be held by a pharmaceutical company manufacturing a unique, life-saving drug in order to guard against the destruction of its factory by fire or earthquake. As the name says, policy stock is not related to ordinary sales demand or logistics ... whether it to be held at all, and, if it is, the amount so to be held, are matters of business judgment that can be decided only by senior management. See also Stock (Strategic).
Stock, POU: Point-of-Use Stock. Stock which is held at the place it will be consumed (eg in the plant, on the shop floor, or, perhaps, in the assembly shop), rather than in stores. POU stock can create a problem in cycle counting and general control. For example, on the stock record, its manufacturing location must be correctly held. It is important to distinguish POU stock from Work-in-Progress.
Stock (Quarantine): Usually, on-hand stock from a supplier, or the shop floor, which has been set to one side until it can be inspected with regard to quality. (An example of waste.)
Stock (Safety): Safety Stock is material planned for over and above what is forecast to be required, so as to provide stock availability (and hence customer service) despite forecast requirements being less than actual customer demand. The need for a safety stock arises self-evidently because the forecast of product demand is in error - ie the forecast on which the stock replenishment needs are calculated is too small. The key to determining the amount of safety stock to be provided, therefore, is the analysis of forecast errors occurring over the period of time needed to obtain a re-supply of the product. In most circumstances in industry, the statistical distribution of forecast errors is Normal, or bell shaped. Note, however, that in operations involving warehouses and distribution, the distribution of forecast errors is not likely to be Normal - it is likely to be Poisson or exponential. This fact must be specifically taken into account in any calculations performed by the user's software. The principal element in arriving at a formula, therefore, for calculating a safety stock is the statistical probability of a forecast error over the product's replenishment leadtime. A second vital factor that must also be taken into account is the protection of stock availability by working stock - ie the protection of customer service provided by the size of the manufacturing lot or replenishment lot. For example, a given product replenished 12 times per year will have 12 times more opportunities of stocking out than if it were to have been replenished once per year (with 12 times more stock, of course). Yet a further factor that might be considered is the cost of rescheduling production or resupply. The definition of customer service, or stock availability, used in most safety stock software packages, is p = (Quantity of sales demand for a product filled from stock over the year) / (Total sales demand for the product per year) x 100%. The formula is E = (1 - p)/s x A/N where E is the partial expectation of the forecast errors, p is the stock availability, s is the standard deviation of the forecast errors, A is annual demand and N is the number of replenishments per year. The calculations clearly are too complex to be attempted manually - the use of a proprietory safety stock software module usually associated with forecasting software will typically not only improve a company's level of service but at the same time reduce its safety stock holdings by some 30%. Incidentally, having calculated the (new) safety stocks through the system, it is essential that they should first be applied in simulation - it is imposible for the sales & marketing manager to tell by examining them himself whether they are "correct", because of the complexity of the calculations, and the IT expert may have made a mistake in applying the software. So better sure than sorry by the use of simulation, to see what would have happened if the new values had been applied! As a final footnote to this lengthy Glossary entry, note that safety stock cannot be set by the means described here for retail operations - the pattern of demand is too erratic. In some retail outlets selling big-ticket items such as washing machines, stock provision can be calculated using queuing theory, assuming the provision of "service" to a Poisson distributed queue. Otherwise, in retail, service is based on forecasting and rapid replenishment. Also see Negative Stock (entry (2)).
Stock (Slow Moving): Stock which has not been the subject of a withdrawal or deposit for more than a specified number of days. The time period must be decided on by the inventory controller. Slow moving stock is singled out since it may be liable to physical deterioration or may be in the process of becoming obsolete. If its circumstances are considered in good time, it may be possible to sell it before matters get any worse. See SLOB.
Stock (Strategic): Stock from a vital but vulnerable source, held in a large quantity in case supply is disasterously curtailed or terminated - eg raw material produce from a sub-Saharan country. See also Stock (Policy).
Stock (Transit): In distribution, stock in transit on vehicles or waiting to be loaded on / off vehicles.
Stock (Vendor Managed): Usually simply termed "vendor managed inventory". Stock held by a supplier (vendor) on behalf of a buyer in which the schedule of replenishment is directly determined by the supplier himself. Usually, the stock so held is paid for by the buyer, even though it has not yet been delivered. In this respect, it contrasts with consignment stock - qv.
Stock (Work in Process): Preferred US terminology for the British Work in Progress.
Stock (Work in Progress): There are two definitions of WIP - financial and operational. Neither of them are straightforward - see importantly WIP.
Stock Exchange: The City of London market dealing in company stocks and shares.
Stock Out: Having no stock. During a stock out, demand for a product must either be turned away or, if the customer will agree, put on backorder. Alternatively, with an available-to-promise capability, the customer's order can be accepted for future delivery in accordance with the ATP rules. (It is true that available-to-promise is normally associated with make-to-order, but it can be appliied to make-to-stock just as readily, giving the company a completely new level of service.)
Stock Out Percentage: The total number of orders which were either lost or placed on backorder, due to stock-outs, divided by the total number of orders actually received, as a percentage. Stock out percentage might be used as a measure of achieved customer service in a make-to-stock company.
Record (see also Stock Records Accuracy
below): A data record, usually held on a computer disk, relating
to a particular product or SKU and holding certain basic information (name,
cost etc). In particular, the data also include the quantity of stock being
held. (The quantity may be subdivided into such categories as free stock (ie
available for use); allocated stock; stock awaiting disposal; sub-standard
stock ... Maintenance of the correct figure for the quantity of stock is a
vital matter in planning, but difficult to achieve to the levels of accuracy
needed - -see below.
Stock Records Accuracy: The accuracy of a single record relates to the quantity of stock recorded as being present apropos the quantity of stock which is actually physically present in store or in the warehouse. Thus the accuracy of a group of records is usually defined as a percentage, as follows: (number of records correct) / (number of records in the group) x 100% (this is referred to as the good count/bad count method). The accuracy goal in manufacture has been variously put as: 95% (the late Oliver Wight), 97.0% (most authorities nowadays) and 97.0% ± 1% (GMCS). The GMCS notion of a variance about a mean figure is suggested since the system through which accuracy is maintained is a human centred one subject to common causes of error. A second definition of accuracy preferred by auditors and accountants is the net piece variance method. Here, the sum of the piece variances (ie the sum of the differences between the counts of the physical stock and the stock records) is compared to the sum of the stock on the stock records. Yet a further definition is the absolute financial net piece variance - here, the plusses and minuses from the previous method are not allowed to cancel each other out (hence "absolute"), and the differences between the physical stock and the stock record are expressed in terms of the financial value of the stocked items concerned. For an exposition on the problems of maintaining stock records accuracy and how it can be achieved, visit the free, comprehensive on-line course on Stock Records Accuracy at this site. Also see Control Group. Also see Negative Stock (entry (1)).
Stock Rotation (FIFO): The practice of "first in, first out" (FIFO) - ie of ensuring that stock which has been in a stores or warehouse for the longest time is despatched first, in preference to newer stock. LIFO (last in, first out) is sometimes the practice when goods are non-perishable and it is convenient to stack recently arrived units on top of those already present (bricks, concrete slabs etc).
Stock Turns: There are a number of definitions, so that it is important to discover which is meant when a figure is produced. Four such definitions are as follows, of which the last is probably the most common: (1) (the number of working days in the year) / (the number of days of forward stock cover); (2) (annual sales valued at cost price) / (the cost value of WIP, raw materials and finished goods, all at cost price); (3) speed of stock throughput/ average stock holding (this can be calculated by (units received + units despatched)/( starting stock + ending stock); and (4) (sales revenue in a particular period)/(average inventory held during that period). Stock turns is a good, quick indicator of the "velocity" of stock through the company, and hence, usually, of the efficiency of materials planning and the tightness of control of manufacturing operations. Self evidently also, stock with high inventory turns is less costly to store than slow moving stock. See also slow moving stock and SLOB.
Stockyard: (1) An outdoor storage area, usually used for storing building materials, but sometimes for storing dangerous chemicals in drums or large metal structures (such as pumps). Issues in the management of a stockyard include the requirement for a one-way traffic system, because of the size of vehicles; a good surface (concrete, with drainage, rather than asphalt); and for a conscientious programme of maintenance. The latter must include prompt repair to fencing and boundaries, since, apart from the matter of theft, the company is responsible for harm befalling children who trespass. To avoid complaints from neighbours, stockyards are best located well away from private housing. (2) In Chicago and other cities of the American MidWest, stockyard is likely to mean a large area for keeping cattle which have arrived by train from prairie farms prior to their sale and despatch to local abatoirs. Also see sub-section 1.10.1 of the free on-line 'course' stores/warehouse operations at this site.
Stores (see also Warehouse): An area or room furnished with racks, shelves, bins and so on, for holding stock needed to support the operations of a factory. The stores is a service function, and the services provided include : the acceptance of deliveries from suppliers (ie the receipt of bought-in parts); the receipt and timely issue of material for the factory floor (ie kits of components); the preparation of loads for despatch to customers (finished goods); and the timely issue of tools and fixtures for engineering and maintenance staff. A dominant task also performed is the maintenance of high levels of stock records accuracy - qv. Company departments dependent on the stores for accuracy include planning, finance and sales. See also General Stores.
Strangers: Parts which are found in the production schedule only rarely - contrast "runners".
Strategic Management: The operation and control of a company with regard to its resources, capabilities and energy so as to attain a sustainable advantage over its competitors in one or more areas of business.
Strategic Stock: see Stock (Strategic).
Streaming: the broadcast of audio and video data over the Internet, in real-time and on demand by a customer.
Stretch Goal: a target beyond what is generally agreed as being realistic. Stretch goals are set by management perhaps to encourage staff to put in extra effort but also to gain an edge in achievement. They appear, however, to be in conflict with planning and the acceptance that one should "work to the numbers". The conflict is resolved by pointing out that the difference in outcome between the stretch goal and the realistic target makes clear to the company what additional resources must be provided and how the plans should be modified. An example of stretch goals are the corporate sales plans/forecasts issued in Autumn and their modification each month of the following year in sales & operations planning.
Structured Walkthrough: Following the tentative design of a computer system by IT staff, it is prudent and necessary that the design should be explained to potential users and others having operational expertise in the area concerned and who will be impacted by its installation, so that they can examine and criticise it. One method of explaining the design being mooted is to describe it by way of a data flow diagram (see DFD) - that is, describe it first through a top level overview, and then in increasingly fine levels of detail.
Student's t test: a statistical test performed to determine whether or not one set of continuous data is statistically independent of or dependent on another set of continuous data. The workings out hinge on whether the distributions of the populations of the two sets of data from which samples are drawn are normal or not. The test is one of many that might be used at the Analyse stage of DMAIC in Six Sigma. Of some interest also is the origin of the the name Student's t test. The statistics were developed by one William S.Gosset in 1908 in Ireland. Gosset was employed by Guinness Breweries in Dublin, and throughout his life published all his valuable statistical articles under the pseudonym "Student". It has been romantically suggested, however, that the reason for this cloak of secrecy was the prohibition by his employer of the publication of scientific research by its employees, and that Gosset used the pseudonym to get round this ban. It is certainly true that a number of valuable contributions to science were made by Guinness scientists, including very famously the discovery of indigo by Perkin at the Park Royal (Guinness) Brewery in north London. What a pity that young Guinness marketing staff today have not discovered how vastly superior is their brew when served at ambient temperature, instead of cold with half the life expunged from it.
Sub-Assembly: See Assembly.
Suez Canal: the waterway located in Egypt connecting the Mediterranean Sea and the Red Sea (Gulf of Suez). The canal is 100 miles long; it has no locks, and was opened in 1869. The structure was planned by the French engineer Ferdinand de Lessops, and financed through The Suez Canal Company, the principal shareholder originally being the UK. Under the Convention of Constantinople in 1888 it was agreed that the Canal should be considered "neutral territory". The canal was nationalised by Egypt in July 1956, breaking the treaty, causing war involving UK, France, Egypt and Israel, and leading to its closure for six months. The canal's capacity has been increased at frequent intervals; it is now capable of dealing with the largest vessels. See also The Panama Canal.
Suggestion Scheme, Employee: see Kaizen Teian.
Sunk Costs: costs which have been incurred and are utterly unable to be recovered.
Super Bill of Materials: A planning bill of materials having (1) an entry at the top (ie at level 0) which is a single representative of a very large number of alternative configurations of the final product able to be specified by customers, and (2) lower level option variants with usages, or "quantities per", given as decimal fractions. Such usages are based on the split of customer preferences between the different option variants. An example is a super bill for a Ford Focus having a single entry at the top called simply "Focus", even though this car can be made in many hundreds of thousands of combinations of engine sizes, colours, gear boxes etc. Then, at lower levels in the super bill, the various alternative options are entered as usages with decimal fractions. Thus, since a Focus is available in any one of 10 colours, at a lower level in the super bill, under the option variant "colour", there may be, say, "Blue 0.07", "Red 0.20) ... meaning some 7% of customers for Focusses choose the colour blue and 20% choose the colour red. See also Super Super Bill.
Super Item: The product at the top of the super bill of materials is merely a representation, present for planning and conceptualisation purposes, of all the combinations of option variants which can be assembled at the final assembly stage. For example, a Ford Focus is a single representation of all possible Focuses, each with its particular engine specification, body colour, radio specification, gear specification etc..
Super Super Bill of Materials: It may be convenient where there are many "not relevant" entries in a super bill of materials to restructure the bill so as to create families within the total structure. An example is the restructuring of a previous super bill for "lawnmowers", to create a lawnmower super super bill containing three 3 super bill families: (1) electric lawn mowers, (2) small petrol lawn mowers, and (3) ride-on lawn mowers. The three super items at the top of the three super bills are now all subservient to a single "super super item" called simply "lawn mower".
Super Super Item: The entry at the top of a super super bill. See Super Item.
Supplier: See Vendor for a discussion of the terms vendor and supplier.
Supplier Accrediation Scheme: In the management of a supplier relationship (qv), the buyer expects the supplier to send in 100% conforming product. In order to do so, the supplier must practice SPC (statistical process control) and operate a process for any given product with process technical limits narrower than the allowed product specification limits. Proof of the capability of his process in this respect may be submitted by the supplier to the buyer on a periodic basis in order to gain and maintain formal, documented "accreditation" as a quality supplier. Following initial inspection and approval, the on-going conduct of any such scheme will typically involve the submission of hard evidence (for filing on the buyer's database). The scheme will also typically include surprise visits by the buyer from time to time to the supplier's premises. See sub-section 5.3 (Supply Partnerships) at the free on-line purchasing 'course' at this site.
Supplier Base Reduction: see VBR.
Supplier, First Tier: A first tier supplier is responsible for the actual physical delivery of material to a Just-in-Time customer. The 1st Tier supplier must ensure that deliveries are made on the specified dates and at the specified times of day to the nominated factory entry points, and that the goods delivered are physically arranged for use on the customer's production line in the order specified. A second tier supplier to a Just-in-Time customer does not deliver the goods directly. Instead, the second tier supplier is so called because he delivers to a nominated 1st Tier supplier, the 1st Tier supplier then making the material ready in the prescribed manner and effecting actual delivery. There is no such thing as a third tier supplier.
Supplier Relationship Management (SRM): Any purchase by a buyer from a supplier naturally gives rise to a relationship between the two parties (for example, a contractual one). Since the advent of Just-in-Time, however, "supplier relationship" has come to mean especially close involvement in the following areas: (1) Quality - the buyer seeks 100% conforming products through the supplier's use of SPC, and may institute "supplier accreditation certificates" (qv) to certify compliance. (2) Communications - the buyer seeks instant communication with, and response from, the supplier as his own manufacturing plans change in accordance with market demand (*). (3) Product Improvement - the buyer will wish to see evidence of constant technical endeavour by the supplier through value analysis to improve the materials supplied, and if possible reduce their cost. SRM is the ongoing management by the buyer of these three activities, and others. One instrument used in management is sure to be a formal supplier evaluation scheme, to record delivery and quality performance. (* The reason for perhaps reducing the number of suppliers is simply to reduce the costs and time involved in establishing relationships, especially in regard to communications, There is, of course, a great danger that in doing so, valuable refinements of choice built up over the years will be destroyed - see VBR.) See also Customer Relationship Mananagement (CRM).
Supplier, Second Tier: See Supplier, First Tier.
Supplier to Government: the UK government has instituted a website to assist suppliers to (and buyers from) government involved in small contracts under £100,000. Registration is necessary. Visit http://www.supply2.gov..uk
Supply Chain: To give an example, one link in a chain may be the commercial procedures and agreement between a supplying company, Company C and a buying company, Company D, including the means provided for the exchange of goods and money. Now, first, suppose that another company, Company B, supplies goods to Company C. Next, suppose that Company D supplies goods to a further company, Company E. In this situation, the supply chain is extended to three links B - C - D - E. And so on. Because of the interdependency of members of the supply chain, and especially recognising (in the foregoing example) the interdependency of supplier B and the final customer, Company E, the logistician looks for improvements that might be made in data and physical communications between all participants in the chain. An example of the interdependency of B and E is seen in the matter of quality - if B has made a defective part, this part may go undetected and be eventually incorporated in the final product used or made by E.
Supply Chain Simulator: A tentative name for computer software capable of exploding a bill of materials extremely quickly (in seconds) to enable fast analyses to be obtained, such as load reports, RCCP etc, making the use of these techniques practical and easier than hitherto. The best known of the Simulators is webPLAN - visit webplan.com.
Survival Rate: Because of what they are and their operating environment, manufactured components are liable to fail after some time in actual use. (Failure might mean burning up, wearing away, cracking open ...) The survival rate is defined as the number of surviving units after a certain time, as a fraction of the original number. If the survival rate is R(t), it is related to the failure rate F(t) as follows: R(t) = 1 - F(t). See also Product Availability.
Sutoma, Yamaguchi T. : a Japanese citizen who was present in Hiroshima on 6th August, 1945, but survived and was able to make his way home to Nagasaki, arriving on August 9th.
SVF: Simple Vector Format.
SVGA: Super Video Graphics Adaptor.
Swap Bodies: Trailers on vehicles that can be demounted onto small wheels, enabling (say) the loaded trailer to be left at a customer's premises one week, while the driver returns to base with the now-empty trailer he left last week.
SWAT (team): The acronym SWAT (Special Weapons And Tactics) originated in the Los Angeles Police Department in the 1960s, and is occasionally used in industry to mean a one-off problem solving group similar to a Six Sigma project team.
SWIFT: Simulated Work Input and Flow Time.
Switch Trading: A type of countertrading (qv) in which goods destined for one country are diverted on the high seas to another country, in order to balance trade.
Switching Rules (Sampling): Important defined rules whereby incoming lots may be sampled either by a normal sampling plan or by a more stringent, or "tightened", sampling plan, depending on the experience of acceptances or rejections up to a given point. (That is, if there have been so-many lot rejections, the quality manager switches to a tightened plan.)
SWOT Analysis: Strengths, Weaknesses, Opportunities and Threats analysis.
Symbology: The pattern of black and white stripes which form the basis of a particular bar coding system.
Syndicated Research: the conduct of market research surveys by a group of companies selling a particular type of consumer item (for example, shoes, light bulbs).
Synthetic Product: synonymous with super item, qv.
Systems Thinking: the big idea of management expert Russ Ackoff, who teaches that the company must be seen as a whole and as a system, in order to make changes to it and improve it. Divisional or departmental thinking may lead to a detriment in overall performance if it fails to take into account wider goals. Ackoff has promulgated a number of f-laws, in his book Management -f-Laws - How Organisations Really Work (by R.L.Ackoff and H.J.Addison, Triarchy Press, £20). Six f-laws are as follows:
1. There is no point in asking customers, who do not know what they want, to say what they want;
2. The only thing more difficult than starting something new in an organisation is stopping something old;
3. The less managers understand their business, the more variables they require to run it. Consequently, they suffer much more from an oversupply of irrelevant information than from a shortage of relevant information;
4. Managers who don't know how to measure what they want, settle for wanting what they can measure;
5. The morality that many managers espouse in public is inversely proportional to the morality they practise in private;
6. The higher their rank, the less managers perceive a need for continuing education, but the greater their need for it.