See: Business to Business
See: Business to Consumer
  1. A payment credited to a company's account for not performing based on contract terms.
  2. An amount charged to a contractor for materials, equipment, services, or other charges which were paid by the owner and furnished to the contractor.
Back Order:
Product ordered but out of stock and promised to ship when the product becomes available.
Back Scheduling:
A technique used to calculating activities based on a series of known activities, the time required to complete them, and the desired end date for completing the series.
A method used to relieve inventory and charge costs based on completed units. Backflushing is an alternative to processing actual issue or labor transactions related to production. Typically a bill of materials is used to determine the quantity required to build a product, and relief is based on quantity required per time units complete. It works well in environments where the time spent in WIP is short, otherwise the delay in recording book on hand can cause problems with inventory control. Also See: Pre-deduct Inventory Transaction Processing
The portion of a transport trip, typically associated with trucking, that is incurred when returning a vehicle to its point of origin. Ideally the carrier with find some sort of freight to carry back, if the trip is empty it is called deadhead. Also See: Deadhead
Backlog Customer:
Customer orders received but not yet shipped; also includes backorders and future orders.
  1. The act of retaining a quantity to ship against an order when other order lines have already been shipped. Backorders are usually caused by stock shortages.
  2. The quantity remaining to be shipped if an initial shipment(s) has been processed. Note: In some cases backorders are not allowed, this results in a lost sale when sufficient quantities are not available to completely ship and order or order line.
Also See: Balance to Ship
The process of recapturing and taking responsibility internally for processes that were previously outsourced to a contract manufacturer, fulfillment or other service provider. Backsourcing typically involves the cancellation or expiration of an outsourcing contract and can be nearly as complex as the original outsourcing process
Back Order:
Product ordered but out of stock and promised to ship when the product becomes available.
Balance of Trade:
The surplus or deficit which results from comparing a country's exports and imports of merchandise only.
Balance to Ship (BTS):
Balance or remaining quantity of a promotion or order that has yet to ship. Also see: Backorder
Balanced Operational Performance Goals:
See: Balanced Scorecard.
Balanced Scorecard:
A strategic performance management tool used for measuring whether the smaller-scale operational activities of a company are aligned with its larger-scale objectives in terms of vision and strategy By focusing not only on financial outcomes but also on the operational, marketing and developmental inputs to these, the Balanced Scorecard helps provide a more comprehensive view of a business, which in turn helps organizations act in their best long-term interests. Also see: Scorecard
See: Business Activity Monitoring
Bar Code:
A symbol consisting of a series of printed bars representing values. A system of optical character reading, scanning, and tracking of units by reading a series of printed bars for translation into a numeric or alphanumeric identification code. A popular example is the UPC code used on retail packaging.
Bar code scanner:
A device to read bar codes and communicate data to computer systems.
The cargo-carrying vehicle used primarily by inland water carriers. The basic barges have open tops, but there are covered barges for both dry and liquid cargoes.
Barrier to Entry:
Reasons that companies perceive will stop them from participating in a particular market. These include cost of entry, significant competition, limited knowledge, etc.
Base Demand:
The level of demand for a product which is based on actual history and/or known customer contracts. Synonym: Baseload Demand
Base Stock System:
An inventory system in which a replenishment order is issued each time a withdrawal is made, and the order quantity s equal to the amount of the withdrawal. This type of system is also referred to as a par-stock system (bringing stock back to par level). In this system, when an order is received for any item, it is used as a picking ticket, and duplicate copies, called replenishment orders, are sent back to all stages of production to initiate replenishment of stocks. Positive or negative orders (called base stock orders) are also used from time to time to adjust the level of the base stock of each item. In actual practice, replenishment orders are usually accumulated when they are issued and are released at regular intervals.
A basis for comparison set by monitoring the initial performance of a process. The baseline is used as a reference point to evaluate performance improvement efforts.
Baseload Demand:
See: Base Demand
Basing-Point Pricing:
A pricing system that includes a transportation cost from a particular city or town in a zone or region even though the shipment does not originate at the basing point.
Basis point BPS:
A basis point is a unit that is equal to 1/100th of 1%, and is often used instead of percentages when discussing interest rates, rates of return, and other percentage-based performance metrics that can occur as fractions of a percent. 1% change = 100 basis points, and 0.01% = 1 basis point.
Batch Control Totals:
The result of grouping transactions at the input stage and establishing control totals over them to ensure proper processing. These control totals can be based on document counts, record counts, quantity totals, dollar totals, or hash (mixed data, such as customer AR numbers) totals.
Batch Number:
A sequence number associated with a specific batch or production run of products and used for tracking purposes. Synonym: Lot Number.
Batch Picking:
An order picking method where orders are grouped into small batches, an order picker will pick all orders within the batch in one pass. Batch picking is usually associated with pickers with multi-tiered picking carts moving up and down aisles picking batches of usually 4 to 12 orders, however, batch picking is also very common when working with automated material handling equipment such as carousels. Also See: Discrete Order Picking, Order Picking, Zone Picking
Batch Processing:
A computer term which refers to the processing of computer information after it has been accumulated in one group, or batch. This is the opposite of “real-time” processing where transactions are processed in their entirety as they occur.
Batch Release:
Orders are released to be fulfilled or picked at specific times during the course of a day. Accumulation of the orders before release results in a batch. See: Batch Picking
A computer term describing the rate of transmission over a channel or circuit. The baud rate is equal to the number of pulses that can be transmitted in one second, often the same as the number of bits per second. Common rates are now 1200, 2400, 4800, 9600 bits and 19.2 and 56 kilobytes (Kbs) for “dial-up” circuits, and may be much higher for broadband circuits.
See Business Continuity Plan
Beginning Available Balance:
See: Available Inventory
Belly Cargo:
Air freight carried in the belly of passenger aircraft.
A measured, "best in class" achievement; a reference or measurement standard for comparison; this performance level is recognized as the standard of excellence for a specific business process. Any metric which is being used to compare actual performance against.
The process of comparing performance against the practices of other leading companies for the purpose of improving performance. Companies also benchmark internally by tracking and comparing current performance with past performance. Benchmarking seeks to improve any given business process by exploiting "best practices" rather than merely measuring the best performance. Best practices are the cause of best performance. Studying best practices provides the greatest opportunity for gaining a strategic, operational, and financial advantage.
Benefit-cost ratio:
An analytical tool used in public planning; a ratio of total measurable benefits divided by the initial capital cost.
An individual or custom-made product or service. Traditionally applied to custom-tailored clothing, the term has been extended to information technology, especially for custom-designed software as an alternative to commercial (COTS) software
An organization, usually within a specific industry, recognized for excellence in a specific process area.
Best Practice:
A specific process or group of processes which have been recognized as the best method for conducting an action. Best Practices may vary by industry or geography depending on the environment being used. Best practices methodology may be applied with respect to resources, activities, cost object, or processes.
Beta Release:
A pre-released version of a product that is sent to customers for evaluation and feedback.
See: Business Intelligence
Bilateral Contract:
An agreement in which each of the parties to the contract makes a promise or promises to the other party.
Bill of Activities:
A listing of activities required by a product, service, process output or other cost object. Bill of activity attributes could include volume and or cost of each activity in the listing.
Bill of Lading (BOL):
A transportation document that is the contract of carriage containing the terms and conditions between the shipper and carrier.
Bill of Lading, Through:
A bill of lading that covers goods from point of origin to final destination when interchange or transfer from one carrier to another is necessary to complete the journey.
Bill of Materials (BOM):
A structured list of all the materials or parts and quantities needed to produce a particular finished product, assembly, subassembly, or manufactured part, whether purchased or not.
Bill of Material Accuracy:
Conformity of the list of specified items contained in a Bill of Material to administrative specifications, with all quantities correct.
Bill of Resources:
A listing of resources required by an activity. Resource attributes could include cost and volumes.
An inventory location which is typically a box or tray used to hold quantities of smaller parts.
A computer term referring to a system of numerical notation that assumes only two possible states or values, zero (0) and one (1). Computer systems use a binary technique where an individual bit or “Binary Digit” of data can be “on” or “off” (1 or 0). Multiple bits are combined into a “Byte” which represents a character or number.
A computer term referring to a communication protocol whereby messages are sent as blocks of characters. The blocks of data are checked for completeness and accuracy by the receiving computer.
Bitmap Image (BMP):
The standard image format on Windows-compatible computers. Bitmap images can be saved for Windows or OS/2 systems and support 24-bit color.
Blanket Order:
See: Blanket Purchase Order
Blanket Purchase Order:
A blanket order is defined as an order the customer makes with its supplier which contains multiple delivery dates scheduled over a period of time, sometimes at predetermined prices. It is normally used when there is a recurring need for expendable goods. Hence, items are purchased under a single purchase order (P.O) rather than processing a separate P.O. each time supplies are needed. Synonym: Blanket Order, Standing Order.
Blanket Purchasing Agreement (BPA):
A US Government Service Administration buying schedule for buyers and sellers which denotes not only that prices have already been determined to be fair and reasonable but goes a step further by determining the terms under which goods and services will be provided and possibly establishing a single source to deliver them over a period of time.
Blanket Release:
An authorization, similar to a purchase request, which is used to confirm a customer’s agreement to produce or deliver products identified in an earlier blanket P.O. agreement or contract.
Blanket Rate:
A rate that does not increase according to the distance the commodity is shipped.
Bleeding Edge:
An unproven process or technology so far ahead of its time that it may create a competitive disadvantage.
Block Diagram:
A diagram of a system, in which the principal parts or functions are represented by blocks connected by lines that show the relationships of the blocks. The block diagram is typically used for a higher level, less detailed description aimed more at understanding the overall concepts and less at understanding the details of implementation.
Block Stacking:
A storage method which uses no formal racking or shelves to contain the products. Items to be stored (pallets, cases or cartons) are stacked upwards from the floor surface to whatever height is practical.
Blocking Bug:
A defect that prevents further or more detailed analysis or verification of a functional area or feature, or any issue that would prevent the product from shipping.
Blow Through:
An MRP process which uses a “phantom bill of material” and permits MRP logic to drive requirements straight through the phantom item to its components. The MRP system usually retains its ability to net against any occasional inventories of the item. Also see: Phantom Bill of Material
Body of Knowledge (BOK):
The prescribed aggregation of knowledge in a particular area an individual is expected to have mastered to be considered or certified as a practitioner.
See:Bill of Lading
See: Body of Knowledge
See: Bill of Materials
Bona Fide Need Rule:
Requires funds to be used only for needs or services in the year of the appropriations obligation period.
Book Inventory:
An accounting term used to refer to the value or quantity of inventory shown in the company’s accounting ‘books” such as an inventory control database or the general ledger. Book inventory is compared to physical inventory during audit processes for validation and to determine any variances.
The sum of the value of all orders received (but not necessarily shipped), net of all discounts, coupons, allowances, and rebates.
Bonded Warehouse:
Warehouse approved by the Treasury Department and under bond/guarantee for observance of revenue laws. Used for storing goods until duty is paid or goods are released in some other proper manner.
A constraint, obstacle or planned control that limits throughput or the utilization of capacity.
Bottom-up Replanning:
A manual technique of resource planning that allows the user to interact with the system at much low levels of detail using disaggregated demand and supply orders and tracing the demand of a lower level component to higher level assemblies and products.
Bounce Back T
he practice of sending another identical (or similar) catalog back to someone who has just ordered something from one of your catalogs.
Box-Jenkins Model:
In time series analysis, the Box–Jenkins methodology applies autoregressive moving average models to find the best fit of a time series to past values of this time series, in order to make forecasts. See: Forecast
An enclosed rail car typically 40 to 50 feet long; used for packaged freight and some bulk commodities.
See: Bitmap Image
See: Business Performance Measurement
See: Business Process Outsourcing
See: Business Process Reengineering
See: Business Reviews
Securing a shipment inside a carrier’s vehicle to prevent damage.
Bracketed Recall:
A method of performing product recalls where a range of known lot numbers is expanded on the front and back end in order to capture any risk.
The act of assigning a name or image to a product in such a way that consumers will associate one with the other. Branding typically includes doing background research to ensure that the name can be trademarked and is not currently in use by another company for a similar product.
A specific application of Kanban, used in coordinating vendor replenishment activities. In making bread or other route type deliveries, the deliveryman typically arrives at the customer's location and fills a designated container or storage location with product. The size of the order is not specified on an ongoing basis, nor does the customer even specify requirements for each individual delivery. Instead, the supplier assumes the responsibility for quantifying the need against a prearranged set of rules and delivers the requisite quantity.
The separation of a single consolidated bulk load into smaller individual shipments for delivery to the ultimate consignees. This is preceded by a consolidation of orders at the time of shipment, where many individual orders which are destined for a specific geographic area are grouped into one shipment in order to reduce cost.
Break-Even Chart:
A chart which graphically represents the point at which cost or expenses and revenue are equal: there is no net loss or gain, and one has "broken even". Also See: Total Cost Curve
Break-Even Point:
The level of production or the volume of sales at which operations are neither profitable nor unprofitable. The break-even point is the intersection of the total revenue and total cost curves. Also see: Total Cost Curve
Bricks and Mortar:
The act of selling through a physical location. The flip side of clicks and mortar, where selling is conducted via the Internet. An informal term for representing the old economy versus new economy or the Industrial economy versus information economy.
A high-speed, high-capacity transmission channel. Broadband channels are carried on radio wave, coaxial or fiber-optic cables that have a wider bandwidth than conventional telephone lines, giving them the ability to carry video, voice, and data simultaneously.
Broken Case:
An open case. The term is often used interchangeably with "repack" or "less-than-full-case" to name the area in which materials are picked in that form.
An intermediary between the shipper and the carrier. The broker arranges transportation for shippers and represents carriers.
Brokered Systems:
Independent computer systems, owned by independent organizations or entities, linked in a manner to allow one system to retrieve information from another. For example, a customer's computer system is able to retrieve order status from a supplier's computer.
A utility that allows an internet user to look through collections of things. For example, Netscape Navigator and Microsoft Explorer allow you to view contents on the World Wide Web.
See: Balance to Ship
Bucket-Brigade Picking:
A way of organizing workers on an pick line so that the line balances itself. Each worker starts down a pick line, at the speed they can accomplish given their skill and the difficulty of the next pick. When the last worker finishes his pick at the end of the pick line, he or she walks back upstream to take over the work of their predecessor, who walks back and takes over the work of his or her predecessor and so on.
Bucketed System:
A technique used in requirements planning where available resources are represented in buckets, typically weekly or monthly periods showing a beginning balance, anticipated supply and demand for the period and the calculated forecast availability.
Bucketless System:
A technique used in requirements planning where available resources are calculated on demand using a beginning balance and known or planned supply and demand for the period.
The level of merchandise / goods to be stocked as needed to accommodate regular sales orders, taking into consideration low and peak periods.
Buffer Management:
A technique used in theory of constraints (TOC) based management systems to overcome shortages and idle constraints.
Buffer Stock:
See Buffer, Safety Stock.
Bulk Area:
A storage area for large items which at a minimum are most efficiently handled by the pallet load.
Bulk Storage:
The process of housing or storing materials and packages in larger quantities, generally using the original packaging or shipping containers or boxes.
Bulk Packing:
The process or act of placing numbers of small cartons or boxes into a larger single box to aid in the movement of product and to prevent damage or pilferage to the smaller cartons or boxes.
Bulletin Board:
An electronic forum that hosts posted messages and articles related to a common subject.
Bullwhip Effect:
Also known as “Whiplash Effect” it is an observed phenomenon in forecast-driven distribution channels. The oscillating demand magnification upstream a supply chain is reminiscent of a cracking whip. The concept has its roots in J Forrester's Industrial Dynamics (1961) and thus it is also known as the Forrester Effect.
A group of products that are shipped together as an unassembled unit.Bundling: An occurrence where two or more products are combined into one transaction for a single price.
Burn Rate:
The rate of consumption of cash in a business. Burn rate is used to determine cash requirements on an on-going basis. A burn-rate of $50,000 would mean the company spends $50,000 a month above any incoming cash flow to sustain its business. Entrepreneurial companies will calculate their burn-rate in order to understand how much time they have before they need to raise more money, or show a positive cash flow.
Business Activity Monitoring (BAM):
A term which refers to capturing operational data in real-time or close to it, making it possible for an enterprise to react more quickly to events. This is typically done through software and includes features to provide alerts / notifications when specific events occur. See also: Supply Chain Event Management
Business Application:
Any computer program, set of programs, or package of programs created to solve a particular business problem or function.
Business Continuity Plan (BCP):
A contingency plan for sustained operations during periods of high risk, such as during labor unrest or natural disaster. CSCMP provides suggestions for helping companies do continuity planning in their Securing the Supply Chain Research. A copy of the research is available on the CSCMP website.
Business Intelligence (BI):
The set of skills, technologies, applications and practices used to help a business acquire a better understanding of its commercial context to make better business decisions.
Business Logistics:
The systematic and coordinated set of activities required to provide the physical movement and storage of goods (raw materials, parts, finished goods) from vendor/supply services through company facilities to the customer (market) and the associated activities—packaging, order processing, etc.—in an efficient manner necessary to enable the organization to contribute to the explicit goals of the company.
Business Plan:
A formal statement of a set of business goals, the reasons why they are believed attainable, and the plan for reaching those goals. It may also contain background information about the organization or team attempting to reach those goals.
Business Performance Measurement (BPM):
A technique which uses a system of goals and metrics to monitor performance. Analysis of these measurements can help businesses in periodically setting business goals, and then providing feedback to managers on progress towards those goals. A specific measure can be compared to itself over time, compared with a preset target or evaluated along with other measures.
Business Process Outsourcing (BPO):
The practice of outsourcing non-core internal functions to third parties. Functions typically outsourced include logistics, accounts payable, accounts receivable, payroll and human resources. Other areas can include IT development or complete management of the IT functions of the enterprise.
Business Process Reengineering (BPR):
The fundamental rethinking and oftentimes, radical redesign of business processes to achieve dramatic organizational improvements.
Business Reviews (BRs):
A periodic assessment of the commercial context of a business—its mission statement, goals, and strategic plan. Reviews are typically held each quarter and are attended by senior managers of functional areas from both supplier and customer organizations.
Business-to-Business (B2B):
As opposed to business-to-consumer (B2C). Many companies are now focusing on this strategy, and their sites are aimed at businesses (think wholesale) and only other businesses can access or buy products on the site. Internet analysts predict this will be the biggest sector on the Web.
Business-to-Consumer (B2C):
The hundreds of e-commerce Web sites that sell goods directly to consumers are considered B2C. This distinction is important when comparing Websites that are B2B as the entire business model, strategy, execution, and fulfillment is different.
Business Unit:
A part of an organization which is managed like a separate business with its own profit and loss financial reporting. For example, in the General Motors group Chevrolet is a business unit.
Buyer Behavior:
The mannerisms inherent in how a business or individual acts during the purchasing process.
Buying Cards (P-Cards):
Basically these are a form of credit card used to make maintenance, repair, and operating (MRO) inventory type purchases verses using a purchase order (PO) that can cost more to process for small purchases. Companies using these cards typically work with card issuers to develop guidelines for use—sometimes by value limits and type of expense—which provide control over authorized purchases at the point of sale
A computer term used to define a string of 7 or 8 bits, or binary digits. The length of the string determines the amount of data that can be represented. The 8-bit byte can represent numerous special characters, 26 uppercase and lowercase alphabetic characters, and 10 numeric digits, totaling 256 possible combinations.