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Supply Chain and Logistics Terms and Glossary
S&OP: See Sales and Operations Planning.
SAE: Society of Automotive Engineers
Safety Stock: The inventory a company holds above normal needs as a buffer against delays in receipt of supply or changes in customer demand.
Salable Goods: A part or assembly authorized for sale to final customers through the marketing function.
Sales and Operations Planning (SOP): A strategic planning process that reconciles conflicting business objectives and plans future supply chain actions. S&OP Planning usually involves various business functions such as sales, operations and finance working together to agree on a single plan/forecast that can be used to drive the entire business. Some organizations include suppliers and customers in their S&OP processes.
Sales Cycle Time: Measures the time required for a product to sell out completely from the store/shelf i.e., beginning from the day itenters the floor.
Sales Mix: The proportion of individual product-type sales volumes that make up the total sales volume.
Sales Plan: A time-phased statement of expected customer orders anticipated to be received (incoming sales, not outgoing shipments) for each major product family or item. It represents sales and marketing management’s commitment to take all reasonable steps necessary to achieve this level of actual customer orders. The sales plan is a necessary input to the production planning process (or sales and operations planning process). It is expressed in units identical to those used for the production plan (as well as in sales dollars). Also see: Aggregate planning, Production Planning, Sales and Operations Planning
Sales Planning: The process of determining the overall sales plan to best support customer needs and operations capabilities while meeting general business objectives of profitability, productivity, competitive customer lead times, and so on, as expressed in the overall business plan. Also see: Production Planning, Sales and Operations Planning
Salvage material: Unused materials in the form of waste or obsolete material that has a market value and can be sold.
Saw-Tooth Diagram: A quantity-versus-time graphic representation of the order point/order quantity inventory system showing inventory being received and then used up and reordered.
SBT: See Scan-Based Trading
SCAC/SCAC Code: See Standard Carrier Alpha Code
Scalability: 1) How quickly and efficiently a company can ramp up to meet demand. See also uptime production flexibility. 2) How well a solution to some problem will work when the size of the problem increases. The economies to scale don't really kick in until you reach the critical mass, then revenues start to increase exponentially.
Scan: A computer term referring to the action of scanning bar codes or RF tags.
Scan-Based Trading (SBT): Scan-based trading is a method of using Point of Sale data from scanners and retail checkout to initiate invoicing between a manufacturer and retailer (pay on use), as well as generate re-supply orders.
Scanlon Plan: A system of group incentives on a companywide or plant-wide basis that sets up one measure that reflects the results of all efforts. The Scanlon plan originated in the 1930’s by Joe Scanlon and MIT. The universal standard is the ratio of labor costs to sales value added by production. If there is an increase in production sales value with no change in labor costs, productivity has increased while unit cost has decreased.
SCE: See Supply Chain Execution
SCEM: See Supply Chain Event Management
Scenario Planning: A form of planning in which likely sets of relevant circumstances are identified in advance, and used to assess the impact of alternative actions.
SCI: See Supply Chain Integration
SCM: See Supply Chain Management
SCOR: See Supply Chain Operations Reference Model
Scorecard: A performance measurement tool used to capture a summary of the key performance indicators(KPIs)/metrics of a company. Metrics dashboards/scorecards should be easy to read and usually have “red, yellow, green” indicators to flag when the company is not meeting its targets for its metrics. Ideally, a dashboard/scorecard should be cross-functional in nature and include both financial and non-financial measures. In addition, scorecards should be reviewed regularly – at least on a monthly basis and weekly in key functions such as manufacturing and distribution where activities are critical to the success of a company. The dashboard/scorecards philosophy can also be applied to external supply chain partners such as suppliers to ensure that suppliers’ objectives and practices align. Synonym: Dashboard.
Scrap material: Unusable material that has no market value and must generally be disposed of as a cost
Seasonality: A repetitive pattern of demand from year to year (or other repeating time interval) with some periods considerably higher than others. Seasonality explains the fluctuation in demand for various recreational products which are used during different seasons. Also see: Base Series
Secondary highways: Highways that serve primarily rural areas.
Secure Electronic Transaction (SET): In e-commerce, a system for guaranteeing the security of financial transactions conducted over the Internet.
Seiri (Sort): A Lean 5 S term which refers to the practice of sorting through all the tools, materials, etc., in the work area and keeping only essential items. Everything else is stored or discarded. This leads to increased safety and less clutter to interfere with productive work.
Seiton (Straighten): Focuses on the need for an orderly workplace. "Orderly" in this sense means arranging the tools and equipment in an order that promotes work flow. Tools and equipment should be kept where they will be used, and the process should be ordered in a manner that eliminates extra motion.
Seiso (Shine): Indicates the need to keep the workplace clean as well as neat by making cleaning a daily activity. At the end of each shift, the work area is cleaned up and everything is restored to its place. The key point is that maintaining cleanliness should be part of the daily work - not on occasional activity initiated when things get too messy.
Seiketsu (Standardise): Refers to standardized work practices. It is more than standardized cleanliness. This means operating in a consistent and standardized fashion. Everyone knows exactly what his or her responsibilities are.
Self Billing: A transportation industry strategy which prescribes that a carrier will accept payment based on the tender document provided by the shipper.
Self Correcting: A computer term for an online process that validates data and won’t allow the data to enter the system unless all errors are corrected.
Sell In: Units which are sold to retail stores by the manufacturer or distributor for re-sale to consumers. The period of time in a Product Life Cycle where the manufacture works with it’s resellers to market and build inventory for sale. Also see: Sell Through
Sell Through: Units sold from retail stores to customers. The point in a Product Life Cycle where initial consumption rates are developed and demand established. Also See: Sell In
Selling, General and Administrative (SG&A) Expenses: Includes marketing, communication, customer service, sales salaries and commissions, occupancy expenses, unallocated overhead, etc. Excludes interest on debt, domestic or foreign income taxes, depreciation and amortization, extraordinary items, equity gains or losses, gain or loss from discontinued operations and extraordinary items.
Separable cost: A cost that can be directly assignable to a particular segment of the business.
Serial Number: A unique number assigned for identification to a single piece that will never be repeated for similar pieces. Serial numbers are usually applied by the manufacturer but can be applied at other points, including by the distributor or wholesaler. Serial numbers can be used to support traceability and warranty programs.
Serial shipping container code: An 18-character identification number used to identify containers including pallats and boxes primarily for containers which are a part of a shipment covered by an Autemated Shipment Notice (ASN)
Serpentine Picking: A method used for picking warehouse orders wherein the pickers are directed to pick from racks on both sides of an aisle as they move from one end to the other. A different method would be to pick from one side (front to back) then from the opposite side (back to front). Where used, serpentine picking can halve travel time and improve traffic flow down the aisles.
Service Level: A measure (usually expressed as a percentage) of satisfying demand through inventory or by the current production schedule in time to satisfy the customer’s requested delivery dates and quantities.
Service Level Agreement (SLA): may be used in lieu of a contract to represent and document the terms of the performance based agreement for organic support
Service Oriented Architecture (SOA): A computer system term which describes an software architectural concept that defines the use of services to support business requirements. In an SOA, resources are made available to other participants in the network as independent services that are accessed in a standardized way. Most definitions of SOA identify the use of web services (using SOAP and WSDL) in its implementation, however it is possible to implement SOA using any service-based technology.
Service Parts Revenue: The sum of the value of sales made to external customers and the transfer price valuation of sales within the company of repair or replacement parts and supplies, net of all discounts, coupons, allowances, and rebates.
SET: See Secure Electronic Transaction
Setup costs: The costs incurred in staging the production line to produce a different item
SEZ: See Special Economic Zone
SG&A: See Selling General & Administrative Expense
Shared Services: Consolidation of a company's back-office processes to form a spinout (or a separate "shared services" unit, to be run like a separate business), providing services to the parent company and, sometimes, to external customers. Shared services typically lower overall cost due to the consolidation, and may improve support as a result of focus.
Shareholder Value: Combination of profitability (revenue and costs) and invested capital (working capital and fixed capital).
Shelf life: The amount of time an item may be held in inventory before it becomes unusable. Shelf life is a consideration for food and drugs which deteriorate over time, and for high tech products which become obsolete quickly.
Shewhart Cycle: See Plan-Do-Check-Action
Shingo’s Seven Wastes: Shigeo Shingo, a pioneer in the Japanese Just-in-Time philosophy, identified seven barriers to improving manufacturing. They are the: 1) waste of overproduction, 2) waste of waiting, 3) waste of transportation, 4) waste of stocks, 5) waste of motion, 6) waste of making defects, and 7) waste of the processing itself.
Ship agent: A liner company or tramp ship operator representative who facilitates ship arrival, clearance, loading and unloading, and fee payment while at a specific port.
Ship broker: A firm that serves as a go-between for the tramp ship owner and the chartering consignor or consignees
Shipper: The party that tenders goods for transportation.
Shipper-Carriers: Shipper-carriers (also called private carriers) are companies with goods to be shipped that own or manage their own vehicle fleets. Many large retailers, particularly groceries and "big box" stores, are shipper-carriers.
Shipper’s agent: A firm that acts primarily to match up small shipments, especially single-traffic piggyback loads to permit use of twin-trailer piggyback rates.
Shipper’s association: A nonprofit, cooperative consolidator and distributor of shipments owned or shipped by member firms; acts in much the same was as for-profit freight forwarders.
Shipping: The function that performs tasks for the outgoing shipment of parts, components, and products. It includes packaging, marking, weighing, and loading for shipment.
Shipping Lane: A predetermined, mapped route on the ocean that commercial vessels tend to follow between ports. This helps ships avoid hazardous areas. In general transportation, the logical route between the point of shipment and the point of delivery used to analyze the volume of shipment between two points.
Shipping Manifest: A document that lists the pieces in a shipment. A manifest usually covers an entire load regardless of whether the load is to be delivered to a single destination or many destinations. Manifests usually list the items, piece count, total weight, and the destination name and address for each destination in the load.
Shop Calendar: See Manufacturing Calendar
Shop Floor Production Control Systems: The systems that assign priority to each shop order, maintaining work-in-process quantity information, providing actual output data for capacity control purposes and providing quantity by location by shop order for work-in-process inventory and accounting purposes.
Short-haul: A short move that is usually under 1000 miles.
Short-haul discrimination: Charging more for a shorter haul than for a longer haul over the same route, in the same direction, and for the same commodity.
Short Sea Shipping: Refers to the use of coastal waters for transport of cargo between coastal port areas as an alternative to the use of the highway system between the same two areas. An example would be using roll-on, roll-off vessels and truck trailers to transport cargo from the northeast US to the southeast or gulf coast.
Short Shipment: Piece of freight missing from shipment as stipulated by documents on hand.
Shrinkage: Reductions of actual quantities of items in stock, in process, or in transit. The loss may be caused by scrap, theft, deterioration, evaporation, etc.
SIC: See Standard Industrial Classification
Sigma: A Greek letter 
commonly used to designate the standard deviation of a population. Sigma is a statistical term that measures how much a process varies from perfection, based on the number of defects per million units produced. In a process audit measurement would be of the number of times the process failed for each million time the process was run. In either case the subject is generally referred to as and “opportunity”
One Sigma = 690,000 per million units
Two Sigma = 308,000 per million units
Three Sigma = 66,800 per million units
Four Sigma = 6,210 per million units
Five Sigma = 230 per million units
Six Sigma = 3.4 per million units
Silo: Also frequently called “Foxhole” or “Stovepipe”, relates to a management / organization style where each functional unit operates independently, and with little or no collaboration between them on major business processes and issues.
Simulation: A mathematical technique for testing the performance of a system due to uncertain inputs and/or uncertain system configuration options. Simulation produces probability distributions for the behavior (outputs) of a system. A company may build a simulation model of its build plan process to evaluate the performance of the build plan under multiple scenarios on product demand.
Single Minute Exchange of Dies (SMED): A manufacturing procedure which provides for a rapid and efficient way of converting a manufacturing process from running the current product to running the next product.
Single-Period Inventory Models: Inventory models used to define economical or profit maximizing lot-size quantities when an item is ordered or produced only once, e.g., newspapers, calendars, tax guides, greeting cards, or periodicals, while facing uncertain demands.
Single sourcing: When an organization deliberately chooses to use one supplier to provide a product or service, even though there are other suppliers available.
Single source leasing: Leasing both the truck and driver from one source.
Six-Sigma Quality: A term used generally to indicate that a process is well controlled, i.e., tolerance limits are ±6 sigma {3.4 defects per million events) from the centerline in a control chart. Six Sigma’s goal is to define processes and manage those processes to obtain the lowest possible level of error—thus it can be applied to virtually any process, not just manufacturing. The term is usually associated with Motorola, which named one of its key operational initiatives Six-Sigma Quality.
Skills Matrix: A visible means of displaying people’s skill levels in various tasks. Used in a team environment to identify the skills required by the team and which team members have those skills.
SKU: See Stock Keeping Unit
Sleeper team: The use or two drivers to operate a truck equipped with a sleeper berth; while one driver sleeps in the berth to accumulate the mandatory off-duty time, the other driver operates the vehicle.
Slip seat operation: A term used to describe a motor carrier relay terminal operation where one driver is substituted for another who has accumulated the maximum driving time hours.
Slip sheet: Similar to a pallet, the slip sheet, which is made of cardboard or plastic, is used to facilitate movement of unitized loads.
Slot Based Production: A lean manufacturing term used to describe a production system which has been level loaded (Heijunka) with a few slots held open for situations where demand must be met immediately.
Slotting: Inventory slotting or profiling is the process of identifying the most efficient placement for each item in a distribution center. Since each warehouse is different, proper slotting depends on a facility’s unique product, movement, and storage characteristics. An optimal profile allows workers to pick items more quickly and accurately and reduces the risk of injuries
Slurry: Dry commodities that are made into a liquid form by the addition of water or other fluids to permit movement by pipeline.
Small Group Improvement Activity: An organizational technique for involving employees in continuous improvement activities. Also see: Quality Circle
Small Parcel Ground: Mode of transportation where the unit being transported meets all of the following descriptions: under 150 lbs, inside of 130 inches in length and girth combined, individually labeled, and can be individually handled and transported absent of a pallet. Typically broken down for rating purposes into separate categories for commercial and residential.
SMART: See Specific, Measurable, Achievable, Realistic, Time-Based
Smart and Secure Trade Lanes (SST): Private initiative of the Strategic Council on Security Technology, an assembly of executives from port operators, major logistics technology providers, transportation consultancies, and former generals and public officials. Aims to enhance the safety, security and efficiency of cargo containers and their contents moving through the global supply chain into U.S. ports.
Smart label: A label that has an RFID tag integrated into it.
SMED: See Single Minute Exchange of Dies
SOA: See Service Oriented Architecture
Social networking: Refers to systems that allow members of a specific site to learn about other members' skills, talents, knowledge, or preferences. Commercial examples include Facebook and LinkedIn. Some companies use these systems internally to help identify experts.
Social Responsibility: The continuing commitment by business to behave ethically and contribute to economic development while improving the quality of life of the workforce and their families as well as of that of the local community and society at large. It’s responsible production, socially responsible labor relations, community involvement, environmental cognizance, and sustainability.
Society of Logistics Engineers: A professional association engaged in the advancement of logistics technology and management.
Software as Services (SaS): A term which describes the use of computer systems provided by a remote third party, similar to what has traditionally been called a “Service Bureau” or “Application Service Provider (ASP)”. In this setting the service provider maintains all of the computer hardware and software at their location, while the user accesses the systems via an internet connection and is charged a rate based on access time. Sometimes also referred to as “On Demand” services.
SOP: See Sales and Operations Planning
SOO: See Statement of Objectives
SOW: See Statement of Work
Sole sourcing: When there is only one supplier for a product or service, and no alternate suppliers are available.
Sortation: Separating items (parcels, boxes, cartons, parts, etc.) according to their intended destination within a plant or for transit.
Spam: A computer industry term referring to the Act of sending identical and irrelevant postings to many different newsgroups or mailing lists. Usually this posting is something that has nothing to do with the particular topic of a newsgroup or of no real interest to the person on the mailing list.
SPC: See Statistical Process Control
Special-commodities carrier: A common carrier trucking company that has authority to haul a special commodity; there are 16 special commodities, such as household goods, petroleum products, and hazardous materials.
Special-commodity warehouses: A warehouse that is used to store products that require unique types of facilities, such as grain (elevator), liquid (tank), and tobacco (barn).
Special Economic Zone (SEZ): A geographical region that has economic laws that are more liberal than a country's typical economic laws. The category 'SEZ' covers a broad range of more specific zone types, including Free Trade Zones (FTZ), Export Processing Zones (EPZ), Free Zones (FZ), Industrial Estates (IE), Free Ports, Urban Enterprise Zones and others. Usually the goal of an SEZ structure is to increase foreign investment.
Specific, Measurable, Achievable, Realistic, Time-Based (SMART): A shorthand description of a way of setting goals and targets for individuals and teams.
SPG: See Small Parcel Ground
Splash Page: A "first" or "front" page that you often see on some websites, usually containing a "click-through" logo or message, or a fancy Flash presentation, announcing that you have arrived. The main content and navigation on the site lie "behind" this page (a.k.a. the homepage or "welcome page").
Split case order picking: A process used to fill orders for quantities less than a full case thereby requiring ordered items to be picked from a case or some similar container.
Split Delivery: A method by which a larger quantity is ordered on a single purchase order to secure a lower price, but delivery is divided into smaller quantities and spread out over several dates to control inventory investment, save storage space, etc.
Spot: To move a trailer or boxcar into place for loading or unloading.
Spot Demand: Demand, having a short lead time that is difficult to estimate. Usually supply for this demand is provided at a premium price. An example of spot demand would be when there’s a spiked demand for building materials as a result of a hurricane.
Spur track: A railroad track that connects a company’s plant or warehouse with the railroad’s track; the cost of the spur track and its maintenance is borne by the user.
SST: See Smart and Secure Trade Lanes
Stack Car: An intermodal flat car designed to place one container on top of another for better utilization and economics. Also referred to as a well car because the cars are lowered in the center to allow clearance when moving under low-lying structures..
Stable Demand: Products for which demand does not fluctuate widely at specific points during the year.
Staff functions: The support activities of planning and analysis provided to assist line managers with daily operations. Logistics staff functions include location analysis, system design, cost analysis, and planning.
Staging: 1) Pulling material for an order from inventory before the material is required. Staging is a means to ensure that all required materials are and will be available for use at time of assembly. The downside to staging is that it creates additional WIP inventory and reduces flexibility. 2) Placing trailers. Also see: Accumulation Bin
Stakeholders: People with a vested interest in a company or in a project, including managers, employees, stockholders, customers, suppliers, and others.
Stand Up Fork Lift: A forklift where the operator stands rather than sits. Most commonly used in case picking operations where the operator must get on and off the lift frequently.
Standard Carrier Alpha Code (SCAC/SCAC Code): A unique 2 to 4-letter code assigned to transportation companies for identification purposes. SCAC codes are required for EDI, and are printed on bills of lading and other transportation documents.
Standard Components: Components (parts) of a product, for which there is an abundance of suppliers. Not difficult to produce. An example would be a power cord for a computer.
Standard Cost Accounting System: A cost accounting system that uses cost units determined before production for estimating the cost of an order or product inventory. For management control purposes, the standards are compared to actual costs, and variances are computed.
Standard Deviation/Variance: Measures of dispersion for a probability distribution. The variance is the average squared difference of a distribution from the distribution’s mean (average) value. The standard deviation is defined mathematically as the square root of the variance, and is thereby expressed in the same units as the random variable that’s described by the probability distribution. A distribution that varies widely about its mean value will have a larger standard deviation/variance than a distribution with less variation about its mean value.
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Standard Industrial Classification (SIC): Classification codes that are used to categorize companies into industry groupings.
Standing Order: See Blanket Purchase Order
Start Manufacture to Order Complete Manufacture: Average lead-time from the time manufacturing begins to the time end products are ready for shipment, including the following sub-elements: order configuration verification, production scheduling, time to release order to manufacturing or distribution, and build or configure time. (An element of Order Fulfillment Lead Time)
Note: Determined separately for Make-to-Order, Configure/Package-to-Order, and Engineer-to-Order products. Does not apply to Make-to-Stock products.
Statement of Objectives (SOO): An alternative Section C document that expresses both technical and management requirements in the form of performance objectives. In these cases, the offeros are expected to prepare the Statement of Work in response to the SOO.
Statement of Work (SOW): 1) A description of products to be supplied under a contract. A good practice is for companies to have SOWs in place with their trading partners – especially for all top suppliers. 2) In projection management, the first project planning document that should be prepared. It describes the purpose, history, deliverables, and measurable success indicators for a project. It captures the support required from the customer and identifies contingency plans for events that could throw the project off course. Because the project must be sold to management, staff, and review groups, the statement of work should be a persuasive document.
Statistical Process Control (SPC): A method for achieving quality control in processes. The technique hinges on the observation that any process is subject to seemingly random variations, which are said to have common causes, and non-random variations, which are said to have special causes. SPC relies on measuring variation in output and setting control limits based on observations of variations arising solely from common causes. A process that is "in control" is expected to generate output that is within the control limits.
Steamship conferences: Collective rate-making bodies for liner water carriers.
Stevedores: Labor management companies that provide equipment and hire workers to transfer containers and cargo between ships and docks.
Stickering: Placing customer-specific stickers on boxes of product. An example would be where Wal-Mart has a request for their own product codes to be applied to retail boxes prior to shipment.
Stochastic Models: Models where uncertainty is explicitly considered in the analysis.
Stock Keeping Unit (SKU): A category of unit with unique combination of form, fit, and function (i.e. unique components held in stock). To illustrate: If two items are indistinguishable to the customer, or if any distinguishing characteristics visible to the customer are not important to the customer, so that the customer believes the two items to be the same, these two items are part of the same SKU. As a further illustration consider a computer company that allows customers to configure a product from a standard catalogue components, choosing from three keyboards, three monitors, and three CPUs. Customers may also individually buy keyboards, monitors, and CPUs. If the stock were held at the configuration component level, the company would have nine SKUs. If the company stocks at the component level, as well as at the configured product level, the company would have 36 SKUs. (9 component SKUs + 3*3*3 configured product SKUs.) If as part of a promotional campaign the company also specially packaged the products, the company would have a total of 72 SKUs.
Stock Out: A term used to refer to a situation where no stock was available to fill a request from a customer or production order during a pick operation. Stock outs can be costly, including the profit lost for not having the item available for sale, lost goodwill, substitutions, or lost customer Also referred to Out of Stock (OOS)
Stockchase: Moving shipments through regular channels at an accelerated rate; to take extraordinary action because of an increase in relative priority. Synonym: Expediting.
Stockless purchasing: A practice whereby the buyer negotiates a price for the purchases of annual requirements of MRO items and the seller holds inventory until the buyer places an order for individual items.
Stockout cost: The opportunity cost associated with not having sufficient supply to meet demand.
Stovepipe: See Silo
Straight Truck: A truck which has the driver’s cab and the trailer combined onto a single frame. Straight trucks do not have a separate tractor and trailer. The driving compartment, engine and trailer are one unit.
Strategic Alliance: Business relationship in which two or more independent organizations cooperate and willingly modify their business objectives and practices to help achieve long-term goals and objectives. Also see: Marquee Partners
Strategic planning: Looking one to five years into the future and designing a logistical system (or systems) to meet the needs of the various businesses in which a company is involved.
Strategic Sourcing: The process of determining long-term supply requirements, finding sources to fulfill those needs, selecting suppliers to provide the services, negotiating the purchase agreements and managing the suppliers' performance. Focuses on developing the most effective relationships with the right suppliers, to ensure that the right price is paid and that lifetime product costs are minimized. It also assesses whether services or processes would provide better value if they were outsourced to specialist organizations.
Strategic variables: The variables that effect change in the environment and logistics strategy. The major strategic variables include economics, population, energy, and government.
Strategy: A specific action to achieve an objective.
Stretch Hood: A form of pallet packaging similar to stretch wrap. With the stretch hood method a machine feeds a length of plastic sleeve over the pallet while at the same time stretching it wide enough to fit. After the sleeve is placed it is cut and sealed at the top creating a water tight enclosure, the stretchers release the film allowing it to shrink and hold the pallet contents.
Stretch Wrap: Clear plastic film that is wrapped around a unit load or partial load of product to secure it. The wrap is elastic.
Stores: The function associated with the storage and issuing of items that are frequently used. Also frequently seen as an alternative term for warehouse.
Sub-Optimization: Decisions or activities in a part made at the expense of the whole. An example of sub-optimization is where a manufacturing unit schedules production to benefit its cost structure without regard to customer requirements or the effect on other business units.
Subcontracting: Sending production work outside to another manufacturer. This can involve specialized operations such as plating metals, or complete functional operations. Also see: Outsource
Substitutability: The ability of a buyer to substitute the products of different sellers.
Sunk Cost: 1) The unrecovered balance of an investment. It is a cost, already paid, that is not relevant to the decision concerning the future that is being made. Capital already invested that for some reason cannot be retrieved. 2) A past cost that has no relevance with respect to future receipts and disbursements of a facility undergoing an economic study. This concept implies that since a past outlay is the same regardless of the alternative selected, it should not influence the choice between alternatives.
Surrogate [item] Driver: A substitute for the ideal driver, but is closely correlated to the ideal driver, where [item] is Resource, Activity, Cost Object. A surrogate driver is used to significantly reduce the cost of measurement while not significantly reducing accuracy. For example, the number of production runs is not descriptive of the material disbursing activity, but the number of production runs may be used as an activity driver if material disbursements correlate well with the number of production runs.
Supermarket Approach: An inventory management and picking technique used in lean enterprises. This concept was conceived by Taiichi Ohno of Toyota after a visit to the US in 1956 where he was impressed by how consumers could pick whatever they need from the shelf, and the store would simply replenish what was taken. This became the basis for the “pull system”.
Supplier: 1) A provider of goods or services. Also see: Vendor 2) A seller with whom the buyer does business, as opposed to vendor, which is a generic term referring to all sellers in the marketplace.
Supplier Certification: Certification procedures verifying that a supplier operates, maintains, improves, and documents effective procedures that relate to the customer’s requirements. Such requirements can include cost, quality, delivery, flexibility, maintenance, safety, and ISO quality and environmental standards.
Supplier Cycle Time: A Key indicator of On-Time Product Deliveries, in terms of whether the lead times are being met and product is reaching the market at the right time. Time required for a supplier to complete a single cycle, beginning with receipt of an order and ending with the fulfillment of the order
Supplier On Time Delivery: A metric which measures the performance of a supplier/vendor on his delivery commitment and to what extent he is matching with the lead times expressed in % terms. Number of orders received on time divided by number of total orders received.
Supplier-Owned Inventory: A variant of Vendor-Managed Inventory and Consignment Inventory. In this case, the supplier not only manages the inventory, but also owns the stock close to or at the customer location until the point of consumption or usage by the customer.
Supplier Service Level: A metric which Helps measure the overall performance of a supplier. It Measures the ability of the business suppliers to provide their goods at the agreed times, quantity,and quality.
Supplemental carrier: A for-hire air carrier subject to economic regulations; the carrier has no time schedule or designated route; service is provided under a charter or contract per plane per trip.
Supply Chain: 1) starting with unprocessed raw materials and ending with the final customer using the finished goods, the supply chain links many companies together. 2) the material and informational interchanges in the logistical process stretching from acquisition of raw materials to delivery of finished products to the end user. All vendors, service providers and customers are links in the supply chain.
Supply Chain Council: A non-profit organization dedicated to improving the supply chain efficiency of its members. The Supply-Chain Council's membership consists primarily practitioners representing a broad cross section of industries, including manufacturers, services, distributors, and retailers. It is the organization responsible for the SCOR standards.
Supply Chain Design: The determination of how to structure a supply chain. Design decisions include the selection of partners, the location and capacity of warehouse and production facilities, the products, the modes of transportation, and supporting information systems.
Supply Chain Execution (SCE): The ability to move the product out the warehouse door. This is a critical capacity and one that only brick-and-mortar firms bring to the B2B table. Dot-coms have the technology, but that's only part of the equation. The need for SCE is what is driving the Dot-coms to offer equity partnerships to the wholesale distributors.
Supply Chain Event Management (SCEM): SCEM is an application that supports control processes for managing events within and between companies. It consists of integrated software functionality that supports five business processes: monitor, notify, simulate, control and measure supply chain activities.
Supply Chain Integration (SCI): Likely to become a key competitive advantage of selected e-marketplaces. Similar concept to the Back-End Integration, but with greater emphasis on the moving of goods and services.
Supply Chain Inventory Visibility: Software applications that permit monitoring events across a supply chain. These systems track and trace inventory globally on a line-item level and notify the user of significant deviations from plans. Companies are provided with realistic estimates of when material will arrive.
Supply Chain Management (SCM): as defined by the Council of Supply Chain Management Professionals (CSCMP): Supply Chain Management encompasses the planning and management of all activities involved in sourcing and procurement, conversion, and all logistics management activities. Importantly, it also includes coordination and collaboration with channel partners, which can be suppliers, intermediaries, third-party service providers, and customers. In essence, supply chain management integrates supply and demand management within and across companies. Supply Chain Management is an integrating function with primary responsibility for linking major business functions and business processes within and across companies into a cohesive and high-performing business model. It includes all of the logistics management activities noted above, as well as manufacturing operations, and it drives coordination of processes and activities with and across marketing, sales, product design, finance and information technology.
Supply Chain Network Design Systems: The systems employed in optimizing the relationships among the various elements of the supply chain manufacturing plants, distribution centers, points-of-sale, as well as raw materials, relationships among product families, and other factors-to synchronize supply chains at a strategic level.
Supply Chain Operations Reference Model (SCOR): This is the model developed by the Supply-Chain Council SCC and is built around six major processes: plan, source, make, deliver, return and enable. The aim of the SCOR is to provide a standardized method of measuring supply chain performance and to use a common set of metrics to benchmark against other organizations.
Supply Chain-Related Finance and Planning Cost Element: One of the elements comprising a company's total supply-chain management costs. These costs consist of the following:
1. Supply-Chain Finance Costs: Costs associated with paying invoices, auditing physical counts, performing inventory accounting, and collecting accounts receivable. Does NOT include customer invoicing/ accounting costs (see Order Management Costs).
2. Demand/Supply Planning Costs: Costs associated with forecasting, developing finished goods, intermediate, subassembly or end item inventory plans, and coordinating Demand/Supply
Supply Chain-Related IT Costs: Information Technology (IT) costs (in US dollars) associated with major supply-chain management processes as described below. These costs should include: Development costs (costs incurred in process reengineering, planning, software development, installation, implementation, and training associated with new and/or upgraded architecture, infrastructure, and systems to support the described supply-chain management processes), Execution costs (operating costs to support supply-chain process users, including computer and network operations, EDI and telecommunications services, and amortization/depreciation of hardware, Maintenance costs (costs incurred in problem resolution, troubleshooting, repair, and routine maintenance associated with installed hardware and software for described supply-chain management processes. Include costs associated with data base administration, systems configuration control, release planning and management.
These costs are associated with the following processes:
PLAN
1. Product Data Management - Product phase-in/phase-out and release; post introduction support & expansion; testing and evaluation; end-of-life inventory management. Item master definition and control.
2. Forecasting and Demand/Supply Manage and Finished Goods - Forecasting; end-item inventory planning, DRP, production master scheduling for all products, all channels.
SOURCE
1. Sourcing/Material Acquisition - Material requisitions, purchasing, supplier quality engineering, inbound freight management, receiving, incoming inspection, component engineering, tooling acquisition, accounts payable.
2. Component and Supplier Management - Part number cross-references, supplier catalogs, approved vendor lists.
3. Inventory Management - Perpetual and physical inventory controls and tools.
MAKE
1. Manufacturing Planning - MRP, production scheduling, tracking, mfg. engineering, mfg. documentation management, inventory/obsolescence tracking.
2. Inventory Management - Perpetual and physical inventory controls and tools.
3. Manufacturing Execution - MES, detailed and finite interval scheduling, process controls and machine scheduling.
DELIVER
1. Order Management - Order entry/ maintenance, quotes, customer database, product/price database, accounts receivable, credits and collections, invoicing.
2. Distribution and Transportation Management - DRP shipping, freight management, traffic management.
3. Inventory Management - Perpetual and physical inventory controls and tools.
4. Warehouse Management - Finished goods, receiving and stocking, pick/pack.
5. Channel Management - Promotions, pricing and discounting, customer satisfaction surveys.
6. Field Service/Support - Field service, customer and field support, technical service, service/call management, returns and warranty tracking.
EXTERNAL ELECTRONIC INTERFACES
Plan/Source/Make/Deliver - Interfaces, gateways, and data repositories created and maintained to exchange supply-chain related information with the outside world. E-Commerce initiatives. Includes development and implementation costs.
Note: Accurate assignment of IT-related cost is challenging. It can be done using Activity-Based-Costing methods, or using other approaches such as allocation based on user counts, transaction counts, or departmental headcounts. The emphasis should be on capturing all costs. Costs for any IT activities that are outsourced should be included.
Supply Chain resiliency: A term describing the level of hardening of the supply chain against disasters.
Supply Chain Strategy Planning: The process of process of analyzing, evaluating, defining supply chain strategies, including network design, manufacturing and transportation strategy and inventory policy.
Supply Chain Vulnerability: Of equal importance to Variability, Velocity and Volume in the elements of the Supply Chain. The term evaluates the supply chain based on the level of acceptance of the five steps of disaster logistics being planning, detection, mitigation, response and recovery.
Supply Planning: The process of identifying, prioritizing, and aggregating, as a whole with constituent parts, all sources of supply that are required and add value in the supply chain of a product or service at the appropriate level, horizon and interval.
Supply Planning Systems: The process of identifying, prioritizing, and aggregating, as a whole with constituent parts, all sources of supply that are required and add value in the supply chain of a product or service at the appropriate level, horizon and interval.
Supply Warehouse: A warehouse that stores raw materials. Goods from different suppliers are picked, sorted, staged, or sequenced at the warehouse to assemble plant orders.
Support Costs: Costs of activities not directly associated with producing or delivering products or services. Examples are the costs of information systems, process engineering and purchasing. Also see: Indirect Cost
Supportability: The inherent quality of system – including design, technical support date, and maintenance procedures to facilitate detection, isolation, and timely repair/replacement of system anomalies. This includes factors such as diagnostics, prognostics, real-time maintenance data collection, “design for support”, and “support the design” aspects, corrosion protection and mitigation, reduced logistics footprint, and other factors that contribute to optimum environment for developing and sustaining a stable, operational system.
Surcharge: An add-on charge to the applicable charges; motor carrier have a fuel surcharge, and railroads can apply a surcharge to any joint rate that does not yield 110% of variable cost.
Sustaining Activity: An activity that benefits an organizational unit as a whole, but not any specific cost object.
Sustainability: Corporate sustainability refers to efforts a company makes related to conducting business in a socially and environmentally responsible manner. It includes elements including sustainable development, corporate social responsibility (CSR), stakeholder concerns, and corporate accountability.
SWAS: Store-Within-A-Store.
Swimlane: A row on a business process diagram type called a “Swimlane Chart” which provides a way of indicating which department or individual is responsible for a given process or activity. The responsible area or party is named on the left side of the diagram with processes organized left to right and lines of linkage between each lane to show handoffs between areas.
Switch engine: A railroad engine that is used to move rail cars short distances within a terminal and plant.
Switching company: A railroad that moves rail cars short distances; switching companies connect two mainline railroads to facilitate through movement of shipments.
SWOT: See SWOT Analysis
SWOT Analysis: An analysis of the strengths, weaknesses, opportunities, and threats of and to an organization. SWOT analysis is useful in developing strategy.
Synchronization: The concept that all supply chain functions are integrated and interact in real time; when changes are made to one area, the effect is automatically reflected throughout the supply chain.
Synchronous Process: A series of activities which are linked to each other, one to the next, and in which each preceding activity must complete before the next is started.
Syntax: The grammar or rules which define the structure of the EDI standard
System: A set of interacting elements, variables, parts, or objects that are functionally related to each other and form a coherent group.
Systems concept: A decision-making strategy that emphasizes overall system efficiency rather than the efficiency of the individual part of the system.
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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.