Manufacturing Resource Center

Terms Glossary

Definition

21 CFR Part 11 Compliance

The Food & Drug Administration has specific rules related to the legal use of electronic signatures in industries regulated by the FDA. These industries include pharmaceuticals, life sciences, medical equipment and more. The term relates specifically to Part 11 of Title 21 of the Code of Federal Regulations (CFR).

Activity Based Costing (ABC)

A cost accounting method which allocates activity costs (as opposed to direct labor or machine hours) to products, customers, projects, or other groups.

Actual Costing

Actual labor, material, and overhead costs associated with a production run (job). Lot tracking is often used capture the actual cost of the material).

Advanced Planning & Scheduling (APS)

APS is a process that typically takes place during sales order entry where the system runs MRP, schedules the parts and related subassemblies) based on current on-hand materials.

Assemble To Order (ATO)

A manufacturing philosophy whereby components are manufactured to stock and then pulled for manufacturing when a specific customer order is received.

Available To Promise (ATP)

ATP calculates inventory that is available to promise to fulfill a customer order on a specific date. Available inventory is that which is not already committed for existing orders or for manufacturing.

Average Costing

The average cost of an item including labor, material, and overhead. Cost accounting systems calculate the average cost of an item by averaging the actual costs each time the item is made.

Terms Glossary

Definition

Backflush

A process where materials are automatically moved from inventory into Work In Process based on the standard quantity required. Backflushing can also be used to allocate overhead and labor costs based on standard production quantities.

Bill of Materials

The list and quantity of raw materials and components required to produce a finished good. Some manufacturing systems include labor and outside services in the bill of material. Bill of Material is a used mainly for discrete manufacturers and is synonymous with formulas for process manufacturers.

Burden

A cost added to standard costs to cover overhead expenses.

By-Product

A material that results from the manufacture of another item. By-products have value and can be sold as-is, used in the manufacture of other products, or recycled. E.g., regrind in injection molding or chips in machining operations.

Terms Glossary

Definition

Capable To Promise (CTP)

CTP is sometimes used as an alternate term for Available To Promise. However, CTP typically includes not only the availability of uncommitted materials on a specific date but also the capacity (labor resources, machine availability, etc.) required to make the required quantity of an item. Therefore, CTP is often linked to MRP and APS to determine material availability as it relates to manufacturing capacity constraints.

Capacity Requirements Planning (CRP)

CRP is a method used to evaluate the quantity of material that can be processed on a specific machine or in a specific work center. E.g., a machine may be able to produce 200 units in one hour. Therefore, the maximum capacity of the machine is 2,400 units per day. CRP is a critical part of most modern MRP and APS systems.

Component

A raw material or subassembly used in the manufacture of a higher level finished good.

Computer Aided Design (CAD)

A software application used by product engineers to design new products.

Computer Aided Manufacturing (CAM)

Software used to control equipment used to manufacture products. E.g., CAM software can be used to specify the temperature of an oven used to dry a product or the dimensions of a product on a CNC machine.

Computer Integrated Manufacturing (CIM)

The integration of computer systems for manufacturing. These may include some or all of the following: ERP, MRP, CAD, CAM, SPC, and other software applications.

Computerized Maintenance Management System (CMMS)

Software for managing and scheduling maintenance-related activities. CMMS may include fixed asset accounting, asset depreciation, as well as machine, facility, and tool maintenance schedules.

Computer Numerical Control (CNC)

CNC software provides a machine with instructions describing how to manufacture an item. This is similar to CAM but is specific to each machine. CNC machines are most often used for precision cutting, drilling, or shaping of metal products.

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Concentration

The percentage of an active ingredient within a specific unit of measure. E.g., 20% chlorine.

Configure To Order (CTO)

Defining the routing and/or bill of materials to manufacture an item based on features and options such as color, size, etc.

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Co-Product

When more than one unique part results from a production run. E.g., multiple parts from a progressive die in stamping or multi-cavity mold in injection molding.

Core

Cores are items that are refurbished or remanufactured. Specific requirements relate to the shipments, receipt, costing, and tracking of the core. Remanufacturing industries include engine overhaul and repair, ink/toner cartridge recharging, refurbishment of cylinders and rolls, and more.

Crew

The number of people required to perform a manufacturing operation. Crew definitions typically affect labor schedules and allocated labor costs.

Critical Ratio

A popular scheduling rule whereby the amount of time between the current date and the due date is divided by the amount of work remaining. E.g. A job that has 4 days before its due date and 2 days of remaining work would have an index number of 2. Work orders with the smallest (often fractional) index numbers are scheduled before work orders with larger index numbers. A ratio of 1.0 indicates the job is on schedule, less than 1.0 shows late jobs, and more than 1.0 represents jobs that are ahead of schedule.

Cycle Time

The amount of time it takes to complete one unit or batch. E.g., if 20 parts are made per hour the cycle time is 3 minutes. If 1 batch is made per hour the cycle time is 60 minutes. Cycle times are typically reported in units per hour, hours per unit, or batch.

Terms Glossary

Definition

Discrete Manufacturing

Manufacturing items based on a definitive bill of material or recipe as opposed to batch formulas. The bill of material or recipe is typically expressed in quantities per each as opposed to percentage per batch.

Down Time

Time that a resource such as labor, machines, or tools are unavailable for production.

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Drum-Buffer-Rope

Part of the Theory of Constraints by Eliyahu Goldratt. This analogy shows that the bottleneck in manufacturing determines the output from the supply chain. The bottleneck (the "drum beat") must operate at maximum output in order to maintain an adequate stock of material (the buffer) from the supply chain (the rope). The bottleneck dictates the amount of stock that needs to be on-hand and the respective demands on the supplier (e.g., how much to buy, when to buy, etc.).

Terms Glossary

Definition

Engineering Change Order (ECO)

A change management system designed to track changes made to production standards (routing and bill of material). Also called Engineering Change Requests (ECR) and Engineering Change Notifications (ECN) or Engineering Change Management (ECM). ECO systems typically affect material planning, inventory, purchasing and other departments within an organization.

Engineer To Order (ETO)

A manufacturing philosophy whereby finished goods are designed and produced for specific customer orders. Assemblies and raw materials may be stocked but are not assembled into the finished good until a customer order is received and the part is designed by engineering.

Enterprise Asset Management (EAM)

Asset management software designed to help companies track, depreciate, and maintain their fixed assets and capital equipment. EAM software is often integrated with ERP software for preventative maintenance planning as well as asset accounting.

Enterprise Resources Planning (ERP)

ERP is an extension of MRP II and MRP. ERP software provides integration between all aspects of a company's business - accounting, distribution, manufacturing, human resources, customer relationship management, and more. One of the fundamental differences between MRP II and ERP is the use of relational databases and fourth generation programming languages. ERP software originally defined manufacturing software but is now used to define the main business management system used across industries.

Terms Glossary

Definition

Gantt Chart

The graphical display of scheduled operations by work center or machine along a time horizon.

Terms Glossary

Definition

Infinite Scheduling

A production scheduling system that schedules production to resources regardless of capacity (overloading). Resources include machines, work centers, tools, and/or labor.

Ingredient

A raw material contained in a formula or recipe.

Terms Glossary

Definition

Job Costing

A manufacturing costing system that show actual cost per job (work order) compared to the standard and/or estimated cost. Note that job costing systems can be used in FIFO/LIFO, Actual, Standard and Average costing environments.

Job Shop

Job shops typically have minimal raw materials and finished goods inventory. Materials are purchased and manufactured specifically for a customer order. Job shops are also make to order.

Just In Time (JIT)

A manufacturing technique based on a pull system such as kanban.

Also known as Lean MAnufacturing