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Supply Chain and Logistics Terms and Glossary

P & D: Pickup and delivery.

Pack out: In a fulfillment environment this refers to the operations involved in packaging and palletizing individual units of product for introduction into the warehouse distribution environment. For example, a contract 3PL may received or assemble units of product which need to be placed into retail packaging, then overpacked with a carton and then palletized.

Package to Order: A production environment in which a good or service can be packaged after receipt of a customer order. The item is common across many different customers; packaging determines the end product.

Packaging Indicator (PI): Tthe first digit of the U.P.C. shipping container (EAN/UCC128) code that identifies the packaging level.

Packing and Marking: The activities of packing for safe shipping and unitizing one or more items of an order, placing them into an appropriate container, and marking and labeling the container with customer shipping destination data, as well as other information that may be required.

Packing List: List showing merchandise packed and all particulars. Normally prepared by shipper but not required by carriers. Copy is sent to consignee to help verify shipment received, it may be inside of the box or attached to the outside in a clear envelope. The physical equivalent of the electronic Advanced Ship Notice (ASN).

Pallet: The platform which cartons are stacked on and then used for shipment or movement as a group. Pallets may be made of wood or composite materials. Some pallets have electronic tracking tags (RFID) and most are recycled in some manner.

Pallet Jack : Material handling equipment consisting of two broad parallel pallet forks on small wheels used in the warehouse to move pallets of product, but not having the lifting capability of a forklift. It may be a motorized unit guided by an operator who stands on a platform; or it may be a motorized or manual unit guided by an operator who is walking behind or beside it. Comes as a "single" (one pallet) or "double" (two pallets).

Pallet Rack: A single or multi-level structural storage system that is utilized to support high stacking of single items or palletized loads.

Pallet Tag: The bar coded sticker that is placed on a unit load or partial load, typically at receiving. The pallet tag can be scanned with an RF gun.

Pallet Ticket: A label to track pallet-sized quantities of end items produced to identify the specific sub lot with specifications determined by periodic sampling and analysis during production.

Pallet wrapping machine: A machine that wraps a pallet’s contents in stretch-wrap to ensure safe shipment.

Parcel Shipment: Parcels include small packages like those typically handled by providers such as UPS and FedEx.

Pareto: A means of sorting data for example. For example, number of quality faults by frequency of occurrence. An analysis that compares cumulative percentages of the rank ordering of costs, cost drivers, profits or other attributes to determine whether a minority of elements have a disproportionate impact. Another example, identifying that 20 percent of a set of independent variables is responsible for 80 percent of the effect. Also see: 80/20 Rule

Part Period Balancing (PPB): In forecasting, a dynamic lot-sizing technique that uses the same logic as the least total cost method, but adds a routine called look ahead/look back. When the look ahead/look back feature is used, a lot quantity is calculated, and before it is firmed up, the next or the previous period’s demands are evaluated to determine whether it would be economical to include them in the current lot. Also see: Discrete Order Quantity, Dynamic lot sizing.

Part standardization: A program for planned elimination of superficial, accidental, and deliberate differences between similar parts in the interest of reducing part and supplier proliferation. A typical goal of part standardization is to reduce costs by reducing the number of parts that the company needs to manage.

Passenger-mile: A measure of output for passenger transportation; it reflects the number of passengers transported and the distance traveled; a multiplication of passengers hauled and distance traveled.

Password: A private code required to gain access to a computer, an application program, or service.

Past Performance Automated Information System (PPAIS): A U.S. DoD central database that allows program managers and contracting officials to review the past performance records of potential bidders. This Web page, available at http://dodppais.navy.mil, provides users with access to more than 8,600 past-performance report cards, which embody more than $300 billion in defense contracts

Path to Profitability (P2P): The step-by-step model to generate earnings.

Pay-on-Use: Pay-on-Use is a process where payment is initiated by product consumption, i.e., consignment stock based on withdrawal of product from inventory. This process is popular with many European companies.

Payment: The transfer of money, or other agreed upon medium, for provision of goods or services.

Payroll: Total of all fully burdened labor costs, including wage, fringe, benefits, overtime, bonus, and profit sharing.

PBIT: See Profit Before Interest and Tax

PBL: See Performance Based Logistics

P & D: Pickup and delivery.

PDA: See Personal Digital Assistant

PDCA: See Plan-Do-Check-Action

PDM: See Product Data Management

Peak demand: The time period during which the quantity demanded is greater than during any other comparable time period.

Peer to Peer (P2P): A computer networking environment which allows individual computers to share resources and data without passing through an intermediate network server.

Pegged Requirement: An MRP component requirement that shows the next-level parent item (or customer order) as the source of the demand.

Pegging: A technique in which a ERP system traces demand for a product by date, quantity, and warehouse location.

Percent of Fill: Number of lines or quantity actually shipped as a percent of the original order. Synonym: Customer Service Ratio.

Per diem: 1) The rate of payment for use by one railroad of the cars of another. 2) A daily rate of reimbursement for expenses.

Perfect Order: The definition of a perfect order is one which meets all of the following criteria:

Delivered complete, with all items on the order in the quantity requested
Delivered on time to customer’s request date, using the customer’s definition of on-time delivery
Delivered with complete and accurate documentation supporting the order, including packing slips, bills of lading, and invoices
Delivered in perfect condition with the correct configuration, customer ready, without damage, and faultlessly installed (as applicable)

Perfect Order Index (POI): A value which is calculated by cross-multiplying the criteria which are a part of the perfect order. To calculate use % on time X % complete X % damage free X % complete documentation=POI

Performance-Based Logistics (PBL): Originally a U.S. Government program, PBL describes the purchase of assets with a complete package of services and support as an integrated, affordable, performance package designed to optimize system readiness and meet performance goals through long-term support arrangements with clear lines of authority and responsibility.

Performance and Event Management Systems: The systems that report on the key measurements in the supply chain -- inventory days of supply, delivery performance, order cycle times, capacity use, etc. Using this information to identify causal relationships to suggest actions in line with the business goals.

Performance Measures: Indicators of the work performed and the results achieved in an activity, process, or organizational unit. Performance measures should be both non-financial and financial. Performance measures enable periodic comparisons and benchmarking. For example, a common performance measure for a distribution center is % of order fill rate. Also see: Performance Measurement Program

Attributes of good performance measurement include the following:

1. Measures only what is important: The measure focuses on key aspects of process performance

2. Can be collected economically: Processes and activities are designed to easily capture the relevant information

3. Are visible: The measure and its causal effects are readily available to everyone who is measured

4. Is easy to understand: The measure conveys at a glance what it is measuring and how it is derived

5 Is process oriented: The measure makes the proper trade-offs among utilization, productivity and performance

6. Is defined and mutually understood. The measure has been defined and mutually understood by all key parties (internal and external)

7. Facilitates trust: The measure validates the participation among various parties and discourages “game playing”

8. Are usable: The measure is used to show progress and not just data that is “collected”. Indicated performance vs. data

Performance Measurement Program: A performance measurement program goes beyond just having performance metrics in place. Many companies do not realize the full benefit of their performance metrics because they often do not have all of the necessary elements in place that support their metrics. Also see: Performance Measures, Dashboard, Scorecard, Key Performance Indicator

Typical characteristics of a good performance measurement program include the following:

Metrics that are aligned to strategy and linked to the “shop floor” or line level workers
A process and culture that drives performance and accountability to delivery performance against key performance indicators.
An incentive plan that is tied to performance goals, objectives and metrics
Tools/technology in place to support easy data collection and use. This often includes the use of a “dashboard” or “scorecard” to allow for ease of understanding and reporting against key performance indicators.

Performance Measurement Units: Specific measurements such as time, cost, error rates, accuracy rates, and milestones.

Period Order Quantity: A lot-sizing technique under which the lot size is equal to the net requirements for a given number of periods, e.g., weeks into the future. The number of periods to order is variable, each order size equalizing the holding costs and the ordering costs for the interval. Also see: Discrete Order Quantity, Dynamic Lot Sizing

Periodic Review System: See Fixed Reorder Cycle Inventory Model

Permit: A grant of authority to operate as a contract carrier

Perpetual Inventory: An inventory record keeping system where each transaction in and out is recorded and a new balance is computed. Perpetual inventory records may be kept manually on paper logs or stock cards, or in a computer database.

Personal Digital Assistant (PDA): A computer term for a handheld device that combines computing, telephone/fax, and networking features. PDA examples include the Palm and Pocket PC devices. A typical PDA can function as a cellular phone, fax sender, and personal organizer. Unlike portable computers, most PDAs are pen-based, using a stylus rather than a keyboard for input. This means that they also incorporate handwriting recognition features. Some PDAs can also react to voice input by using voice recognition technologies. Some PDAs and networking software allow companies to use PDAs in their warehouses to support wireless transaction processing and inquiries.

Personal discrimination: Charging different rates to shippers with similar transportation characteristics, or vice versa.

Phantom Bill of Material: A bill-of-material coding and structuring technique used primarily for transient (non-stocked) subassemblies. For the transient item, lead time is set to zero and the order quantity to lot-for-lot. A phantom bill of material represents an item that is physically built, but rarely stocked, before being used in the next step or level of manufacturing. This permits MRP logic to drive requirements straight through (blowthrough) the phantom item to its components, but the MRP system usually retains its ability to net against any occasional inventories of the item. This technique also facilitates the use of common bills of material for engineering and manufacturing. Synonym: Pseudo Bill of Material. Also see: blowthrough

Physical distribution: The movement and storage functions associated with finished goods from manufacturing plants to warehouses and to customers; also, used synonymously with business logistics.

Physical supply: The movement and storage functions associated with raw materials from supply sources to the manufacturing facility.

PI: See Packaging Indicator

Pick-by-Light: A laser identifies the bin for the next item in the rack; when the picker completes the pick, the bar code is scanned and the system then points the laser at the next bin.

Pick/Pack: Picking of product from inventory and packing into shipment containers.

Pick List: A list of items to be picked from stock in order to fill an order; the pick list generation and the picking method can be quite sophisticated.

Pick Module: A dedicated area specifically designed to enhance pick operations, usually supported by a belt conveyor to move picked products to a packaging / shipping area. Pick modules are often multi-level rack structures using pallet or case flow storage and pick-to-light systems.

Pick on Receipt: Product is receipted and picked in one operation (movement); therefore the product never actually touches the ground within the warehouse. It is unloaded from one vehicle and re-loaded on an outbound vehicle. Related to Cross Docking.

Pick-to-clear: A method often used in warehouse management systems that directs picking to the locations with the smallest quantities on hand.

Pick-to-carton: Pick-to-carton logic uses item dimensions/weights to select the shipping carton prior to the order picking process. Items are then picked directly into the shipping carton.

Pick-to-light: Pick-to light systems consist of lights and LED displays for each pick location. The system uses software to light the next pick and display the quantity to pick.

Pick-to-trailer: Order-picking method where the order picker transports the materials directly from the pick location to the trailer without any interim checking or staging steps.

Pick-Up Order: A document indicating the authority to pick up cargo or equipment from a specific location.

Picking: The operations involved in pulling products from storage areas to complete a customer order.

Picking by aisle: A method by which pickers pick all needed items in an aisle regardless of the items’ ultimate destination; the items must be sorted later. A component of Wave Picking.

Picking by source: A method in which pickers successively pick all items going to a particular destination regardless of the aisle in which each item is located.

Piece Count: Number of individual cases, packages or bundles in an intermodal trailer or container.

Piggyback: Terminology used to describe a truck trailer being transported on a railroad flatcar.

Pin lock: A hard piece of iron, formed to fit on a trailer’s pin, that locks in place with a key to prevent an unauthorized person from moving the trailer.

Place utility: A value created in a product by changing its location. Transportation creates place utility.

Plaintext: Data before it has been encrypted or after it has been decrypted, e.g., an ASCII text file.

Plan Deliver: The development and establishment of courses of action over specified time periods that represent a projected appropriation of supply resources to meet delivery requirements.

Plan-Do-Check-Action (PDCA): In quality management, a four-step process for quality improvement. In the first step (plan), a plan to effect improvement is developed. In the second step (do), the plan is carried out, preferably on a small scale. In the third step (check), the effects of the plan are observed. In the last step (action), the results are studied to determine what was learned and what can be predicted. The plan-do-check-act cycle is sometimes referred to as the Shewhart cycle (because Walter A. Shewhart discussed the concept in his book Statistical Method from the Viewpoint of Quality Control) and as the Deming circle (because W. Edwards Deming introduced the concept in Japan; the Japanese subsequently called it the Deming circle). Synonyms: Shewhart Cycle. Also see: Deming Circle

Plan Make: The development and establishment of courses of action over specified time periods that represent a projected appropriation of production resources to meet production requirements.

Plan Source: The development and establishment of courses of action over specified time periods that represent a projected appropriation of material resources to meet supply chain requirements.

Plan Stability: The difference between planned production and actual production, as a percentage of planned production.

Calculation: [(Sum of Monthly Production Plans) + (Sum of the absolute value of the difference between planned and actual)]/[Sum of Monthly Production Plans]

Note: Base Production Plan is the three month removed plan

Planned Date: The date an operation, such as a receipt, shipment, or delivery of an order is planned to occur.

Planned Order: A suggested order quantity, release date, and due date created by the planning system’s logic when it encounters net requirements in processing MRP. In some cases, it can also be created by a master scheduling module. Planned orders are created by the computer, exist only within the computer, and may be changed or deleted by the computer during subsequent processing if conditions change. Planned orders at one level will be exploded into gross requirements for components at the next level. Planned orders, along with released orders, serve as input to capacity requirements planning to show the total capacity requirements by work center in future time periods. Also see: Planning Time Fence, Firm Planned Order

Planned Receipt: An anticipated receipt against an open purchase order or open production order.

Planning Bill: See Planning Bill of Material

Planning Bill of Material: An artificial grouping of items or events in bill-of-material format used to facilitate master scheduling and material planning. It may include the historical average of demand expressed as a percentage of total demand for all options within a feature or for a specific end item within a product family and is used as the quantity per in the planning bill of material. Synonym: Planning Bill. Also see: Hedge Inventory, Production Forecast, Pseudo Bill of Material

Planning Calendar: See Manufacturing Calendar

Planning Fence: See Planning Time Fence

Planning Horizon: The amount of time a plan extends into the future. For a master schedule, this is normally set to cover a minimum of cumulative lead time plus time for lot sizing low-level components and for capacity changes of primary work centers or of key suppliers. For longer term plans the planning horizon must be long enough to permit any needed additions to capacity. Also see: Cumulative Lead Time, Planning Time Fence

Planning Time Fence: A point in time denoted in the planning horizon of the master scheduling process that marks a boundary inside of which changes to the schedule may adversely affect component schedules, capacity plans, customer deliveries, and cost. Outside the planning time fence, customer orders may be booked and changes to the master schedule can be made within the constraints of the production plan. Changes inside the planning time fence must be made manually by the master scheduler. Synonym: Planning Fence. Also see: Cumulative Lead Time, Demand Time Fence, Firm Planned Order, Planned Order, Planning Horizon, Time Fence.

Planogram: The end result of analyzing the sales data of an item or group of items to determine the best arrangement of products on a store shelf. The process determines which shelf your top-selling product should be displayed on, the number of facings it gets, and what best to surround it with. It results in graphical picture or map of the allotted shelf space along with a specification of the facing and deep.

Plant Finished Goods: Finished goods inventory held at the end manufacturing location.

PLU: See Price Look-Up

PM: See Preventative Maintenance

PO: See Purchase Order

POD: See Proof of Delivery

Point-of-Purchase (POP): A retail sales term referring to the area where a sale occurs, such as the checkout counter. POP is also used to refer to the displays and other sales promotion tools located at a checkout counter.

Point of Sale (POS): 1) The time and place at which a sale occurs, such as a cash register in a retail operation, or the order confirmation screen in an on-line session. Supply chain partners are interested in capturing data at the POS, because it is a true record of the sale rather than being derived from other information such as inventory movement. 2) Also a national network of merchant terminals, at which customers can use client cards and personal security codes to make purchases. Transactions are directed against client deposit accounts. POS terminals are sophisticated cryptographic devices, with complex key management processes. POS standards draw on ABM network experiences and possess extremely stringent security requirements.

Point of Sale Information: Price and quantity data from retail locations as sales transactions occur.

Point-of-use inventory: Material used in production processes that is physically stored where it is consumed.

Poka Yoke (mistake-proof): The application of simple techniques that prevent process quality failure. A mechanism that either prevents a mistake from being made or makes the mistake obvious at a glance.

Police powers: The United States constitutionally granted right or the states to establish regulations to protect the health and welfare of its citizens; truck weight, speed, length, and height laws are examples.

Pooling: A shipping term for the practice of combining shipment from multiple shippers into a truckload in order to reduce shipping charges.

POP: See Point-of-Purchase

Port: A harbor where ships will anchor.

Port authority: A state or local government that owns, operates, or otherwise provides wharf, dock, and other terminal investments at ports.

Port of Discharge: Port where vessel is off loaded.

Port of Entry: A port at which foreign goods are admitted into the receiving country.

Port of Loading : Port where cargo is loaded aboard the vessel.

Portal: Websites that serve as starting points to other destinations or activities on the Internet. Initially thought of as a "home base" type of web page, portals attempt to provide all Internet needs in one location. Portals commonly provide services such as e-mail, online chat forums, shopping, searching, content, and news feeds.

POS: See Point of Sale

Possession utility: The value created by marketing’s effort to increase the desire to possess a good or benefit from a service.

Post-Deduct Inventory Transaction Processing: A method of inventory bookkeeping where the book (computer) inventory of components is reduced after issue. When compared to a real-time process, this approach has the disadvantage of a built-in differential between the book record and what is physically in stock. Consumption can be based on recorded actual use, or calculated using finished quantity received times the standard BOM quantity (backflush). Also see: Backflush

Postponement: The delay of final activities (i.e., assembly, production, packaging, etc.) until the latest possible time. A strategy used to eliminate excess inventory in the form of finished goods which may be packaged in a variety of configurations, and to maximize the opportunity to provide a customized end product to the customer.

Power-By-the-Hour (PBH): Under PBH, an hourly rate is negotiated and the contractor is paid in advance based on the forecasted operational hours for the system. Actual hours are reconciled with projected hours and overages and shortfalls are either added to or credited from the next period’s forecasted amounts. Since the contractor receives funding independent of failures he is then incentivized to overhaul the asset the first time it fails so it stays in operation as long as possible. Bottom line: under the PBH concept, the fewer times the contractor touches a unit, the more money he makes.

PPAIS: See Past Performance Automated Information System

PPB: See Part Period Balancing

PPP: See Public Private Partnering

Pre-Deduct Inventory Transaction Processing: A method of inventory bookkeeping where the book (computer) inventory of components is reduced before issue, at the time a scheduled receipt for their parents or assemblies is created via a bill-of-material explosion. When compared to a real-time process, this approach has the disadvantage of a built-in differential between the book record and what is physically in stock.

Pre-Expediting: The function of following up on open orders before the scheduled delivery date, to ensure the timely delivery of materials in the specified quantity.

Prepaid: A freight term, which indicates that charges are to be paid by the shipper. Prepaid shipping charges may be added to the customer invoice, or the cost may be bundled into the pricing for the product.

Present Value: Today's value of future cash flows, discounted at an appropriate rate.

Preventative Maintenance (PM): Regularly scheduled maintenance activities and practices that seek to prevent unscheduled machinery downtime by collecting and analyzing data on equipment conditions. The analysis is then used to predict time-to-failure, plan maintenance, and restore machinery to good operating condition. Predictive maintenance systems typically measure parameters on machine operations, such as vibration, heat, pressure, noise, and lubricant condition. In conjunction with computerized maintenance management systems (CMMS), predictive maintenance enables repair-work orders to be released automatically, repair-parts inventories checked, or routine maintenance scheduled.

Price Erosion: The decrease in price point and profit margin for a product or service, which occurs over time due to the effect of increased competition or commoditization.

Price Look-Up (PLU): Used for retail products sold loose, bunched or in bulk (to identify the different types of fruit, say). As opposed to UPC (Universal Product Codes) for packaged, fixed weight retail items. A PLU code contains 4-5 digits in total. The PLU is entered before an item is weighed to determine a price.

Primary-business test: A test used by the ICC to determine if a trucking operation is bona fide private transportation; the private trucking operation must be incidental to and in the furtherance of the primary business of the firm.

Primary highways: Highways that connect lesser populated cities with major cities.

Primary Manufacturing Strategy: Your company’s dominant manufacturing strategy. The Primary Manufacturing Strategy generally accounts for 80-plus % of a company’s product volume. According to a study by Pittiglio Rabin Todd & McGrath (PRTM), approximately 73% of all companies use a make-to-stock strategy.

PRIME QR: Product Replenishment and Inventory Management Edge for Quick Response.

Private carrier: A carrier that provides transportation service to the firm and that owns or leases the vehicles and does not charge a fee. Private motor carriers may haul at a fee for wholly-owned subsidiaries.

Private Label: Products that are designed, produced, controlled by, and which carry the name of the store or a name owned by the store; also known as a store brand or dealer brand. An example would be Wal-Mart's "Sam's Choice" products.

Private Warehouse: A warehouse that is owned by the company using it.

Pro Number: Any progressive or serialized number applied for identification of freight bills, bills of lading, etc.

Proactive: The strategy of understanding issues before they become apparent and presenting the solution as a benefit to the customer, etc.

Process: A series of time-based activities that are linked to complete a specific output.

Process Benchmarking: Benchmarking a process (such as the pick, pack, and ship process) against organizations known to be the best in class in this process. Process benchmarking is usually conducted on firms outside of the organization’s industry. Also see: Benchmarking, Best-in-Class, Competitive Benchmarking

Process Improvement: Designs or activities, which improve quality or reduce costs, often through the elimination of waste or non-value-added tasks.

Process Manufacturing: Production that adds value by mixing, separating, forming, and/or performing chemical reactions. It may be done in a batch, continuous, or mixed batch/continuous mode. Products in this manufacturing group include: foods, petrochemicals, bottling, chemicals, etc. Process manufacturing frequently generates co-products and by-products as an outcome in addition to the primary product being manufactured. An example would be the manufacture of petroleum products, where multiple grades of lubricants and fuels are produced from a single run as well as non-usable by-products such as sludge.

Process Yield: The resulting output from a process. An example would be a quantity of finished product output from manufacturing processes.

Procurement: The business functions of procurement planning, purchasing, inventory control, traffic, receiving, incoming inspection, and salvage operations. Synonym: Purchasing.

Procurement Services Provider (PSP): A services firm that integrates procurement technologies with product, sourcing, and supply management expertise, to provide outsourced procurement solutions. A PSP serves as an extension of an organization's existing procurement infrastructure, managing the processes and spending categories and procurement processes that the organization feels it has opportunities for improvement but lacks the internal expertise to manage effectively.

Product: Something that has been or is being produced.

Product Characteristics: All of the elements that define a product’s character, such as size, shape, weight, etc.

Product Configurator: A system, generally rule-based, to be used in design-to-order, engineer-to-order, or make-to-order environments where numerous product variations exist. Product configurators perform intelligent modeling of the part or product attributes and often create solid models, drawings, bills of material, and cost estimates that can be integrated into CAD/CAM and MRP II systems as well as sales order entry systems.

Product Data Management (PDM): A technology solution which provides for a single, centralized data repository that enables authorized users throughout a company to access and update current product information, while ensuring they follow specific procedures. These systems typically link and consolidate information from multiple enterprise areas which control various aspects of product data such as engineering, manufacturing, finance and sales. Product ID: A method of identifying a product without using a full description. These can be different for each document type and must, therefore, be captured and related to the document in which they were used. They must then be related to each other in context (also known as SKU, Item Code or Number, or other such name).

Product Family: A group of products with similar characteristics, often used in production planning (or sales and operations planning).

Product Support Integrator (PSI): An entity performing as a formally bound agent (e.g. contract, MOA, MOU) charged with integrating all source of support, public and private, defined within the scope of the PBL agreements to achieve the documented outcome. Activities coordinated by support integrators can include, as appropriate, functions provided by organic organizations, private sector providers, or a partnership between organic and private sector providers.

Product Support Manager (PSM): An overarching term characterizing the Various service function title, (i.e. Assistant PM for Logistics, System Support Manager, etc.) who leads the development and implementation of the product support and PBL strategies and ensure achievement of desired support outcomes during sustainment. The PSM employs a PSI, or a number of PSIs as appropriate, to achieve those outcomes.

Product Support Provider (PSP): Anyone who provides products or services in the sustainment of and acquisition system.

Production Calendar: See Manufacturing Calendar

Production Capacity: Measure of how much production volume may be experienced over a set period of time.

Production Forecast: A projected level of customer demand for a feature (option, accessory, etc.) of a make-to-order or an assemble-to-order product. Used in two-level master scheduling, it is calculated by netting customer backlog against an overall family or product line master production schedule and then factoring this product’s available-to-promise by the option percentage in a planning bill of material. Also see: Assemble-to-Order, Planning Bill of Material, Two-Level Master Schedule

Production Line: A series of pieces of equipment dedicated to the manufacture of a specific number of products or families.

Production Planning and Scheduling: The systems that enable creation of detailed optimized plans and schedules taking into account the resource, material, and dependency constraints to meet the deadlines.

Production-Related Material: Production-related materials are those items classified as material purchases and included in Cost of Goods Sold as raw material purchases.

Productivity: A measure of efficiency of resource utilization; defined as the sum of the outputs divided by the sum of the inputs.

Profit ratio: The percentage of profit to sales—that is, profit divided by sales.

Profit Before Interest and Tax (PBIT): The financial profit generated prior to the deduction of taxes and interest due on loans. Also called operating profit.

Profitability Analysis: The analysis of profit derived from cost objects with the view to improve or optimize profitability. Multiple views may be analyzed, such as market segment, customer, distribution channel, product families, products, technologies, platforms, regions, manufacturing capacity, etc.

Profitable to Promise: This is effectively a promise to deliver a certain order on agreed terms, including price and delivery. Profitable-to-Promise (PTP) is the logical evolution of Available-to-Promise (ATP) and Capable-to-Promise (CTP). While the first two are necessary for profitability, they are not sufficient. For enterprises to survive in a competitive environment, profit optimization is a vital technology.

Pro-forma: A type of quotation or offer that may be used when first negotiating the sales of goods or services. If the pro-forma is accepted, then the terms and conditions of the pro-forma may become the request.

Pro Forma Invoice: An invoice, forwarded by the seller of goods prior to shipment, that advises the buyer of the particulars and value of the goods. Usually required by the buyer in order to obtain an import permit or letter of credit.

Pro Number: Any progressive or serialized number applied for identification of freight bills, bills of lading, etc.

Promotion: The act of selling a product at a reduced price, or a buy one - get one free offer, for the purpose of increasing sales.

Proof of Delivery (POD): Information supplied by the carrier containing the name of the person who signed for the shipment, the time and date of delivery, and other shipment delivery related information. POD is also sometimes used to refer to the process of printing materials just prior to shipment (Print on Demand).

Proportional rate: A rate lower than the regular rate for shipments that have prior or subsequent moves; used to overcome competitive disadvantages of combination rates.

Protocol: Communication standards that determine message content and format, enabling uniformity of transmissions.

Pseudo Bill of Materials: See Phantom Bill of Materials

PSP: See Procurement Services Provider

Public Private Partnering (PPP): An agreement between a government entity and one ormore private industry, or other, entities to perform work or utilize facilities and equipment. The Public-Private Partnerships initiative is directed toward improving the output and performance of DoD organic activities through increased participation by the private sector via industrial partnering.

Public warehouse: A business that provides short or long-term storage to a variety of businesses usually on a month-to-month basis. A public warehouse will generally use their own equipment and staff however agreements may be made where the client either buys or subsidizes equipment. Public warehouse fees are usually a combination of storage fees (per pallet or actual square footage) and transaction fees (inbound and outbound). Public warehouses are most often used to supplement space requirements of a private warehouse. See also Contract warehouse and 3PL.

Public warehouse receipt: The basic document issued by a public warehouse manager that is the receipt for the goods given to the warehouse manager. The receipt can be either negotiable or nonnegotiable.

Pull Signal: A signal from a using operation that triggers the issue of raw material.

Pull or Pull-through distribution: Supply-chain action initiated by the customer. Traditionally, the supply chain was pushed; manufacturers produced goods and "pushed" them through the supply chain, and the customer had no control. In a pull environment, a customer's purchase sends replenishment information back through the supply chain from retailer to distributor to manufacturer, so goods are "pulled" through the supply chain.

Pull Ordering System: A system in which each warehouse controls its own shipping requirements by placing individual orders for inventory with the central distribution center. A replenishment system where inventory is "pulled" into the supply chain (or "demand chain" by POS systems, or ECR programs). Associated with "build to order" systems.

Pup: A 28-foot trailer, used mostly in less than truckload business.

Purchase Order (PO): The purchaser’s authorization used to formalize a purchase transaction with a supplier. The physical form or electronic transaction a buyer uses when placing order for merchandise.

Purchase price discount: A pricing structure in which the seller offers a lower price if the buyer purchases a larger quantity.

Purchasing: The functions associated with buying the goods and services required by the firm.

Pure raw material: A raw material that does not lose weight in processing

Push back rack: Utilizing wheels in the rack structure, this rack system allows palletized goods and materials to be stored by being pushed up a gently graded ramp. Stored materials are allowed to flow down the ramp to the aisle. This rack configuration allows for deep storage a each rack level.

Push Distribution: The process of building product and pushing it into the distribution channel without receiving any information regarding requirements. Also see: Pull or Pull-Through Distribution

Push Ordering System: A situation in which a firm makes inventory deployment decisions at the central distribution center and ships to its individual warehouses accordingly.

Push Technology: Webcasting (push technology) is the prearranged updating of news, weather, or other selected information on a computer user's desktop interface through periodic and generally unobtrusive transmission over the World Wide Web (including the use of the Web protocol on Intranet). Webcasting uses so-called push technology in which the Web server ostensibly “pushes” information to the user rather than waiting until the user specifically requests it.

Put Away: Removing the material from the dock (or other location of receipt), transporting the material to a storage area, placing that material in a staging area, and then moving it to a specific location and recording the movement and identification of the location where the material has been placed.

Put-to-light: A method that uses lights to direct the placement of materials. Most often used in batch picking to designate the tote to place picked item into.

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Definitions compiled by Supply Chain Visions, Bellevue, WA, www.scvisions.com. Updated May 2009.
Please note: The Center for Value Chain Research (CVCR) does not take responsibility for the content of these definitions, nor does the CVCR endorse these as official definitions except as noted.