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supply chain. The list is not exhaustively complete, some terms will be described as they
are employed.
Assembly plant:
used here as manufacturing entity, transforming a set of components into a
product. The term manufacturing plant or simply plant are also used in the same
meaning.
Demand Forecast:
An estimation of the future quantity demanded of a product (in a market).
BOM:
Bill of Materials. A description of the components (often referred to as parts) that
go into the assembly of a product.
Customer:
User of the products from an assembly plant. The assembly plant will be the
customer's supplier.
Distribution Center (DC):
Entity receiving, stocking and shipping products on their way from suppliers to
customer.
Downstream:
or downstream the supply chain. The direction in which materials flow, e.g. a
Supply chain with entities on several levels. Fig. shows a multi echelon
supply chain, with five levels from left to right.
On-Order Materials:
1
(or materials on-order) Materials that are ordered from suppliers, but not yet
delivered.
Order Backlog:
Customer orders received but not shipped. (Often referred to as backlog.)
Part:
Used for both a part type (say a certain button is part number E-45 in a shirt
factory) and an instances of this type (a physical buttons of type E-45). The
context will show the meaning.
Product Life Cycle:
The time from first till last customer order for a product. The order volume will in
general increase, level off, and decrease through the life cycle of a product.
Production Planning:
A decision of the future quantity to produce. This is based on orders from
customers, production capacities, often a demand forecast, and the diverse
inventory levels in the supply chain.
RPI:
Raw Product Inventory. The area of an assembly plant designated for components.
Safety Stock:
The level of inventory desired at any time to counterbalance the many
uncertainties met in a supply chain.
Stock-out:
When at a given moment in a given inventory there is not the quantity of a part or
a product that is demanded. A stock-out occurs in a distribution center when there
are orders that can not be filled within their due date. A stock-out of a part in an
RPI means that production of products containing the part will be interrupted.
Supplier:
Delivering entity, here usually delivering materials to an assembly plant. In that
case the assembly plant will be the supplier's customer.
WIP:
Work in Process. The inventory under assembly in an assembly plant.
Upstream:
or upstream the supply chain, the direction in a supply chain opposite to the flow
of materials, e.g. a supplier will always be upstream from its customers.
(Illustrated in fig. .)
Vertically Integrated:
Where the same company owns several levels (echelons) of the supply chain.