Inventory Buffers

The products or supplies of an organization are maintained on hand or in transit to stabilize variations in supply, demand, production, or lead time.

Inventory Carrying Cost

One of the elements comprising a company's total supply chain management costs are as follows: Opportunity Cost: The opportunity cost of holding inventory should be based on your company's own cost of capital standards using the following formula: Calculation Cost of Capital x Average Net Value of Inventory. Shrinkage: The costs associated with breakage, pilferage, and deterioration of inventories usually pertain to the loss of material through handling damage, theft, or neglect. Insurance and Taxes: The cost of insuring inventories and taxes associated with the holding of inventory. Total Obsolescence for Raw Material, WIP, and Finished Goods Inventory: Inventory reserves taken due to obsolescence and scrap, including products exceeding the shelf life (i.e., spoils) and those that are no longer suitable for their original purpose (do not include reserves taken for Field Service Parts). Channel Obsolescence Aging: Allowances paid to channel partners, provisions for buy-back agreements, etc. This includes all material that becomes obsolete while in a distribution channel. Usually, a distributor will demand a refund for material that goes bad (shelf life) or is no longer needed due to changing needs. Field Service Parts Obsolescence: Reserves taken due to obsolescence and scrap. Field Service Parts are the inventory kept at locations outside the four walls of the manufacturing plant, such as a distribution center or warehouse.

Inventory Days of Supply (for RM, WIP, PFG, and FFG)

Total gross value of inventory for the category (raw materials, work in process, partially finished goods, or fully finished goods) at standard cost before reserves for excess and obsolescence, divided by the average daily usage. It includes only inventory that is on the books and currently owned by the business entity. Future liabilities, such as consignments from suppliers, are not included. Calculation: [5-Point Annual Average Gross Inventory] / [Calendar Year Value of Transfers / 365].

Inventory Deployment

A technique for strategically positioning inventory to meet customer service levels while minimizing inventory and storage levels is known as logistics. Excess inventory is replaced using information derived through monitoring supply, demand, and inventory at rest and in motion.

Inventory Management

The process of ensuring the availability of products through inventory administration.

Inventory management system (IMS)

This is a software tool that organizations use to track and manage their inventory across their supply chains.

Inventory Planning Systems

The systems that help in strategically balancing the inventory policy and customer service levels throughout the supply chain are called logistics systems. These systems calculate time-phased order quantities and safety stock using selected inventory strategies. Some inventory planning systems conduct a 'what-if' analysis and compare the current inventory policy with simulated inventory scenarios to improve the inventory return on investment (ROI).

Inventory Turns

This ratio measures how many times a company's inventory has been sold (turned over) during a period of time: the cost of goods sold divided by the average level of inventory on hand. Operationally, inventory turns are measured as total throughput divided by the average level of inventory for a given period - how many times a year the average inventory for a firm changes over or is sold.

Inventory Velocity

The speed with which inventory moves through a defined cycle (i.e., from receiving to shipping.)

Invoice

A detailed statement showing goods sold and amounts for each is called an invoice. The invoice is prepared by the seller and acts as the document that the buyer will use to make payment.

IP

Intellectual Property

IPT

Integrated Product Team

IRR

Internal Rate of Return

Irregular Route Carrier

A motor carrier that is permitted to provide service utilizing any route.

IS

Information Systems

ISDN

Integrated Services Digital Network

ISI

In-Store Implementation

ISO

International Organization for Standardization

ISO 14000 Series Standards

A standard for environmental management systems should be implemented in any business, regardless of size, location, or income. The aim of the standard is to reduce the environmental footprint of a business and decrease the pollution and waste it produces.

ISO 9000

A series of quality assurance standards compiled by the Geneva, Switzerland-based International Organization for Standardization. In the United States, ISO is represented by the American National Standards Institute based in Washington, D.C.

ISPS

International Ship and Port Facility Security Code

IT

Information Technology

Item

A uniquely identifiable piece of inventory, also known as a part number or SKU, an item can be raw materials, fluids, component parts, subassemblies, finished assemblies, packaging, etc. It is usually differentiated by form, fit, or function. Items that are painted different colors are generally viewed as different items.

ITL

International Trade Logistics

IWLA

International Warehouse Logistics Association

Java

A computer term for a general-purpose programming language created by Sun Microsystems, Java can be used to create Java applets. A Java program is downloaded from the web server and interpreted by a program running on the computer running the web browser.

Java Applet

A computer term for a short program written in Java that is attached to a web page and executed by the computer on which the web browser is installed.

JavaScript

A computer term for a cross-platform, World Wide Web scripting language developed by Netscape Communications, JavaScript code is inserted directly into an HTML page.

Jidoka

The concept of adding an element of human judgment to automated equipment is known as autonomation. By doing this, the equipment becomes capable of discriminating against unacceptable quality, making the automated process more reliable. Sakichi Toyoda pioneered this concept at the turn of the twentieth century when he invented automatic looms that would instantly stop when any thread broke. This innovation allowed one operator to oversee many machines without the risk of producing large amounts of defective cloth. Over time, the term autonomation has been expanded to include any means of stopping production to prevent scrap. For example, the andon cord allows assembly-plant workers to stop the line, even if this capability is not built into the production machine itself.

JIT

Just-in-Time

JIT II

Just-In-Time II

JIT/QC

Just-in-Time/Quality Control

Joint cost

A type of common cost where products are produced in fixed proportions, and the cost incurred to produce one product necessarily entails the production of another. The backhaul is an example.

Joint Depot Maintenance Activities Group (JDMAG)

A U.S. DoD group that provides advice and support to the JG-DM maintains a website (www.jdmag.wpafb.af.mil) that shows the Depot Maintenance Source of Repair decisions.

Joint Group on Depot Maintenance (JG-DM)

The U.S. DoD flag-level officers and civilians from each service are responsible for depot maintenance. This group is responsible for reviewing the depot maintenance function to achieve effective and affordable support for the nation's weapon systems.

Joint rate

A rate over a route that involves two or more carriers to transport the shipment.

Joint Supplier Agreement (JSA)

Indicative of Stage 3 sourcing practices, the JSA includes terms and conditions, objectives, process flows, performance targets, flexibility, balancing, and incentives.

JPEG

Joint Photographic Experts Group

JSA

Joint Supplier Agreement

Just-in-Time II (JIT II)

Vendor-managed operations take place within a customer's facility. JIT II was popularized by the Bose Corporation. The supplier representatives, called 'inplants', place orders to their own companies, relieving the customer's buyers from this task. Many also become involved at a deeper level, such as participating in new product development projects and manufacturing planning (concurrent planning).

Just-in-time (JIT)

This supply chain concept promotes the receipt of inventory just before it is needed, rather than keeping inventory in storage for longer periods of time. This approach can significantly reduce storage costs, particularly for products known to have a brief shelf life, but it also requires careful planning to accurately forecast demand.

Just-in-Time (JIT)

An inventory control system controls the material flow into assembly and manufacturing plants by coordinating demand and supply to the point where desired materials arrive just in time for use. It is an inventory reduction strategy that feeds production lines with products delivered 'just in time'. Developed by the auto industry, it refers to shipping goods in smaller, more frequent lots.

Kaizen

Taken from the Japanese words 'kai' (change) and 'zen' (good), the popular meaning is continual improvement of all areas of a company, not just quality. It is a business philosophy of continuous cost, quality problem, and delivery time reductions through rapid, team-based improvement activities. Also, see Continuous Process Improvement.

Kaizen Blitz

A rapid improvement is a focused activity on a particular process or activity. The basic concept is to identify and quickly remove waste.

Kanban

The Japanese word for 'visible record', loosely translated, means card, billboard, or sign. Popularized by Toyota Corporation, it uses standard containers or lot sizes to deliver needed parts to the assembly line 'just in time' for use. Empty containers are then returned to the source as a signal to resupply the associated parts in the specified quantity.

KD

A flat, unformed cardboard box or tray, knock-downs, also known as KDs, are constructed and glued in the re-coup or packaging areas and used for repacked products. Many KDs are provided by the customer for their re-couped products.

Key performance indicator (KPI)

Metrics that organizations track to help evaluate supply chain performance and determine where improvements are required.

Kitting

Light assembly of components or parts into defined units ahead of production issue or customer shipment is known as kitting. Kitting reduces the need to maintain an inventory of pre-built completed products but increases the time and labor consumed at shipment. Also, see Postponement.