ERP Glossary - C

cafeteria plan- A human resource benefits plan where enrolled members can select and accumulate predefined medical, investment and other options. 

call center- A customer contact function that fields incoming service and help requests and may conduct outgoing marketing and telemarketing activities.  

campaign- A discrete set of production or marketing activities with established goals, time parameters and performance measurements. 

capable to promise (CTP)- A system that combines available to promise inventory availability with current capacity capabilities when calculating customer order schedule dates. 

capacity requirements planning (CRP)- A process using demand from open production orders and MRP planned orders, and work center/production line rate and capacity data to determine over or under capacity conditions. A short- term, detailed view of capacity that verifies the feasibility of firming up planned orders and releasing them to the floor. CRP systems normally function as a capacity status report, without generating exception messages that recommend order reschedules or moving production to alternate work centers or lines. 

capitalize- The act of classifying an expenditure as an asset, which allows the asset to be allocated (depreciated) over multiple time periods where benefit is derived. 

carousel- A rotating or movable warehouse device used to store multiple, small parts for picking in a high usage volume environment. 

carrying cost- A measure, usually expressed as a percentage, of the costs incurred to hold inventory as a result of the cost of the item itself, insurance, obsolescence, theft, damage, use of storage facilities and other causes.  

cascading receipts- A feature in which a purchase order receipt quantity is applied to multiple open line items, beginning with the oldest open line and continuing to succeeding lines until the receipt quantity is consumed. 

cash burn rate- The monthly rate of negative cash flow; when measured against current positions it indicates the date an organization will run out of cash unless a new or one-time source is found. 

cash flow- The flow of liquid assets in and out of an organization over a period of time, where inflow is normally composed of cash sales receipts and outflow is composed of payments and cash expenditures. Net cash flow is the difference when subtracting cash outflow from cash inflow.

cash-to-cash cycle- The average elapsed time between payment to a vendor for materials or services and the receipt of payment from a customer for shipments. 

cell- A manufacturing layout that arranges workstations performing the different functions required to produce a product or subassembly in the same, often U-shaped area, rather that arranging machines by similar functions. Operators are usually trained to perform and complete all cell manufacturing functions. 

centralized- Systems where decision making, flow of data or goods and services, or the beginning of activities are initiated at the same central point and disseminated to remote points in the chain or organization. 

certificate of compliance- The certification of goods or services by a third party or trusted supplier to a specification or agreement.  

chaku-chaku- In lean manufacturing, a work cell or line in which single parts are automatically offloaded that allows operators to directly move the part between successive machines without wait time.

channel- The distribution or marketing segmentation of products, customers and geographic areas into common groups that are supplied, serviced and measured in similar ways. 

chart of accounts- A structured set of general ledger accounts that fills an organization's requirements in gathering, reporting and analyzing financial entries. Detail G/L accounts are normally rolled-up, or summarized at higher levels for reporting purposes. 

child- A component, raw material or other item used in the production of the next-level assembly (parent) item. 

chi square test- A quality test measuring the assumption that the distribution characteristics of a set of data is reasonable (similar to expected). 

closed-loop MRP- The system extending the original single function of material requirements planning (MRP) by including higher-level, long term production planning, master production scheduling (MPS), capacity requirements planning (CRP), production control and purchasing. Where the original MRP function strictly generated a materials plan by exploding bills of material, closed-loop MRP creates feedback and interaction by measuring the proposed material plan against longer term production and sales goals, verifying that capacity is available to complete the proposed production, and incorporating date and quantity changes to original plans required by vendors or the production floor. 

closed period- An accounting period (general ledger, AP, AR, etc.) for which a manual or system-generated close has been performed. Once closed, final reports are generated and any new transactions for the module must be done in the next open period.

code 128- An alphanumeric bar code consisting of 3 bars and 3 spaces that represents the full ASCII 128 character set. 

code 39- A variable length, bi-directional bar code standard in many industries that consists of a total of nine bars, three of which are wide. 

coefficient of variation- The ratio of standard deviation divided by the mean for a given sample used to measure spread.

collaborative- Systems and software that enable group participation in a problem or process. Collaboration systems supply methods for group definition, common technology, interaction and followup, and present a common situation view to all participants while enabling faster problem resolution.

combined demand- Demand for an item composed of both dependent demand (the item is required by an upper-level assembly) and independent demand (the item is required on its own for a sales or interplant order). 

complex manufacturing- Manufacturing processes characterized by high mix variation, long design/production cycles, many component items and deep bills of material, and use of multiple production departments or facilities. 

computer-aided design (CAD)- The use of software and computer hardware in developing engineering drawings and designs and accessing stored product and engineering data and history. CAD systems allow for multiple iterations, views and comparisons of proposed designs. 

computer-aided engineering (CAE)- The use of software and computer hardware in creating process and material engineering specifications. CAE systems can access stored specification and cost data, create proposed bills of materials and routings, and can sometimes interface or upload new part numbers, engineering changes, bills and routings to the base ERP system. 

computer-aided manufacturing (CAM)- The use of computer systems to program, setup, control, monitor and generate reports for manufacturing equipment and processes. 

computer-based training (CBT)- Software programs that provide self-paced student instruction, tests and learning feedback with no or only periodic involvement by an instructor.  

computer-integrated manufacturing (CIM)- The use of computer systems 
in manufacturing that fulfill specific functional requirements and are integrated with the base ERP and supporting systems. CIM may involve the use of automatic data collection, CAD/CAM, automated storage and retrieval systems (AS/RS), robotics, machine vision, automated test equipment and many other systems.  

computerized maintenance management system (CMMS)- Computer systems that schedule, track and monitor maintenance activities and provide cost, component item, tooling, personnel and other reporting data and history. CMMS systems can often be interfaced with production scheduling and cost systems, and may be used to follow preventive maintenance policies.

concurrent engineering- A product and process design methodology that includes simultaneous participation by engineering, operations, accounting, planning, customers, vendors and other functions. The goal is to reduce engineering design/introduction lead time and reduce or eliminate later changes and quality problems by involving cross-functional teams at the outset. 

concurrent users- A software licensing specification for the number of users allowed to simultaneously access a system. The definition may be based on users that are merely signed on, or are actively accessing system programs and files. 

conference room pilot (CRP)- A key project implementation strategy that tests normal business case scenarios in a proposed new system to uncover people, process and system issues, generate resolutions, and define action steps needed to complete the implementation. The pilot is normally done after initial vendor or in-house education using a test database of representative data.  

configuration management- The lifecycle management of a product and/or process that includes design, ordering, shipping, customer usage and service or warranty repair history to ensure conformance to the desired configuration. It includes history and documentation on the materials, production facilities, manufacturing process and engineering changes over the product lifecycle. 

configurator- A final item description tool used in assemble-to-order (ATO) environments that defines the available product options and accessories, and builds product cost and sales price information from the options chosen. Rules may be defined to require options to be chosen from certain categories, to allow more than one choice from a given category, to not allow certain combinations of options, and other considerations that ensure product performance and safety. The configured product is identified by a base product number and an additional code that describes the option chosen for a given order. 

consigned inventory- Inventory physically at a customer site that remains the financial possession of the vendor. The inventory is considered transferred when agreements specify it is physically recounted by the vendor, when it is used in production by the customer, by a customer self-billing process, or other method.  

consolidated pick slip - A pick slip that combines requirements for production components based on a set of multiple orders, date range, production facility, destination or other method. Material issued to a consolidated pick slip is sometimes moved to production using a transfer to a new stock location and is not considered issued to work in process at that point. 

consolidation- The combination of shipments from multiple points at an intermediate facility, reducing the number of individual shipments to end locations. 

consumables- Supply items such as liquids and specialized types of tooling that are consumed in the production process. 

consumer packaged goods- A vertical market segment based on requirements for mass-produced, retail item manufacturing and distribution. 

contact management- Systems that track interaction between a sales force and customers or prospects, supply chain partners, or other relationships. Functions usually include call date tracking, notes files, followup reminders, birthday or anniversary date reminders, and other methods to provide systematic ways to initiate and track interaction over time. 

containerization- The system and process of placing cargo material in a standard- size container, in which the contents are not rehandled as the container is moved between ship, rail, truck or other transportation modes.

context-sensitive help- Help text associated with the specific part of the system a user is currently involved with, and the method with which it is being used. 

continuous flow process- A manufacturing process of gas, liquid or other form that is not broken into individual batches or lots as it moves from one status or stocking point to another. 

continuous replenishment- A method typically used between retailers and distributors or manufacturers that uses point-of-sale inventory and sales data to trigger automatic replenishments, with the vendor assuming responsibility for initiation and fulfillment. 

contract manufacturing- A third party that performs one or more production operations for a manufacturer who will market the final item under their own name. They often charge on a per-piece or per-lot basis for the labor required for their services while using components or materials supplied and owned by the final item manufacturer.  

contract MRP- MRP planning and reporting for items and orders specifically pegged to a single contract or project. 

control group- A cycle counting procedure that establishes a given set of parts that will be counted each time a cycle count is performed, usually daily, until each item attains 100% accuracy. Done to uncover procedural and system problems that lead to inventory errors for that family or type of part.

control limit- A process specification that measures the point a process is considered no longer acceptable, or is designed to serve as a warning signal before an out-of-bounds condition occurs.  

control point- Planning, production and logistics points that initiate or limit connected points. Control points receive more attention and help focus priorities when detailed review of all points is not practical. 

copacker- A third party contract manufacturer that produces and packs items for another company. A term most often used in the food processing industry.

co-product- A product scheduled at the same time as like products due to setup, facility constraints or process optimization considerations. 

core bank- In remanufacturing, the balance of the customer credit assigned to returned, salvageable units or assemblies that is netted against the costs of future activities and shipments for that customer. 

core competencies- Skills that provide the main competitive differentiation and overall base of knowledge for an organization. They may be the result of enhanced performance in a given department, such as engineering or marketing, or cross- functional such as the ability of a company to efficiently assemble the multiple skill sets needed to bid and complete large projects. Systems and departments that do not form a core competency are often candidates for outsourcing (ex.- a firm with exceptional semiconductor design engineering skills that chooses to outsource all production to a fab facility).

core problem- In the theory of constraints, a major or primary cause of the undesirable effects (UDE) in a system, as identified by entry points that link to majority of points on a current reality tree (CRT). 

cost accounting- The discipline of estimating, tracking and controlling product and service costs. Accurate cost analysis helps provides the basis for make/buy decisions, market entry and exit, product and process changes, and many other 
measures and factors involved in organizational success. 

cost center- The smallest organizational entity where budget and actual cost activities take place, and which has both characteristics pertinent in cost generation and the ability to track and control those costs.  

cost driver- A factor related to an activity that changes the volume or characteristics of that activity, and in doing so changes its costs. Activities can have multiple cost drivers. 

cost factor- The fixed dollar amount or percentage rate used to allocate
overhead costs to a specific product.

cost object- In activity-based costing, the beneficiary or reason for performing an activity. The object itself (a product, service, department or other entity) does not directly create the cost but requires an activity that has an associated cost. 

cost of goods sold (COGS)- The costs associated with the design and manufacture of a product such as direct material, direct labor and allocated overhead. They do not include selling and general administrative costs. 

cost of quality- Costs that would be eliminated if quality were perfect which often include: incoming raw material inspection, corrective engineering change orders, scrap, in-process control systems, downtime, material and labor rework charges, quality personnel labor costs, field service repair personnel, returned goods processing, customer warranty claims and many others.  

cost of sales- Cost of good sold (COGS) for a given sales period, or used in place of COGS in service industries. 

cost-plus pricing- Pricing goods or services at the documented cost plus an agreed-upon fixed percentage or dollar amount. 

cost pool- A group of specific indirect costs created by the same cost drivers; the total cost pool amount is usually allocated to specific products or cost centers on the basis of estimated production over a period of time. 

cost roll- The manual or system-generated process of calculating product cost based on the individual components and cost types (material, labor, overhead) included. Usually done for a complete assembly but may also be done for a single level, or the material or routing (production) portion only. 

cost/schedule control systems criteria (C/SCSC)- Government standards defined in 1967 that describe the management and reimbursement criteria for projects performed by private contractors. 

covariance- The tendency of two elements (variables) to exhibit similar variances, while not necessarily establishing a cause and effect relationship.

C_p- A process capability index measuring the ratio between actual spread (upper control limit minus lower control limit) divided by allowable or expected spread as measured by standard deviation.  

crew- A predefined labor group that works as a whole at a given operation or on a specific job. Used instead of reporting the individual personnel who did the work. 

critical path- The consecutive sequence of activities in a project whose cumulative time requirements determine the minimum total project time. Delay in  critical path activities delay the entire project if other steps are not compressed. 

critical ratio- A production prioritization rule that divides the time remaining until a job due date by the amount of time required to perform the remaining work. A ratio of one indicates the job is exactly on time, greater than one that the job is ahead of schedule, and less than one that the job is behind schedule. Negative values indicate a job already past the due date (as opposed to merely behind schedule).

cross docking- A logistics activity that attempts to reduce costs and total lead time by breaking down received items on the loading dock and immediately matching them with outgoing shipment requirements, instead of stocking the items in warehouse locations and returning to pick for orders at a later time. 

cross functional- An activity, system or team that contains more than one 
functional area within an organization and may involve balancing conflicting 
objectives. 

cross selling- Sales activities that identify and suggest related items to a prospect or customer, such as accessories or services when an initial item is purchased. 

Croston Model- A forecast model useful for low volume, intermittent demand that may include zero demand in some periods. 

cumulative capacity- A running sum for consecutive periods of capacity capabilities for a given resource that indicates total availability over those periods, and aids in determining whether rescheduling will resolve intermittent problems. 

cumulative lead time- Total lead time for an end item, calculated by taking the individual lead times for all items on the critical path through all levels of the bill of material. The cumulative lead time describes the lead time required to finish an end item if no raw materials, components or intermediate levels were on hand and had to be ordered and produced to create the final item. 

current asset- Assets normally expected to be converted to cash or consumed during the normal operating business cycle (or one year), which usually includes cash, marketable securities, accounts receivable and inventory. 

current cost (standard)- The cost standard for the current product configuration and process, as opposed to the base (frozen) cost estimated at the start of the fiscal year. 

current Good Manufacturing Practices (cGMP)- Regulations as specified by the U.S. FDA or other regulatory body that describes the methods, equipment and control procedures required for food processing, medical device manufacturing and related industries.

current liability- Cash obligations due within the current business cycle (or one year), including accounts payable, short-term notes and accrued expenses.

current ratio- A financial liquidity measure that divides current assets by current liabilities, with higher ratios indicating a more stable short-term position.

current reality tree- In the theory of constraints, a cause and effect diagram that links problems, or undesirable effects (UDE). 

current state map- The graphical representation of the current status of a system or process that defines its inputs, data flow and outputs and provides the  starting point for identifying changes required to reach a desired future state.

curve fitting- The creation of a curved line, often based on a nonlinear regression model, that best represents a set of data points.

custom- Products and services created for specific orders or events that require nonstandard material, engineering or process resources and may incur extra cost. 

customer- An internal or external person, department or organization that purchases or receives goods and services. Identifying the true customer and the product or service attributes that will satisfy them is a key task in defining value added and non-value added activities. 

customer relationship management (CRM)- The processes and systems that combine sales, marketing, contact management and support activities in managing customer interaction. They provide tools to analyze customer/product sales history and profitability, campaign tracking and management, contact and call center management, order status information, and returns and service tracking.  

cutover- The point in time a new system is implemented and the old system is discontinued.  

cycle count- An inventory verification method that uses periodic, scheduled counts of inventory and associated locations to determine accuracy. Count schemes may be designed based on usage volume, all parts in specific warehouse rows, or other methods and normally involve the use of trained count personnel. In addition to verifying on-hand quantities, cycle count programs are designed to help uncover the reason for inventory inaccuracies, which is usually not possible with the traditional yearly physical inventory.

cycle redundancy check- A software feature that verifies that a given assembly item number is not produced from the same item number, which creates an error condition in many systems.

cycle stock- The portion of inventory incrementally consumed by demand and periodically replenished when a resupply is triggered by reaching a predetermined level. The portion of total inventory over and above safety stock.

cycle time- The total time required to complete a transformation from one status to another. Total cycle time is composed of many elements, often broken into active (running or operating) time and idle (queue or wait) time.