GLOSSARY

Fundamentals of Digital Production

All A B C D E F G H I J K L M O P R S T V Y

A

Advanced Planning and Scheduling (APS)
An Advanced Planning and Scheduling (APS) system is a software solution designed to plan, schedule, and control processes in industrial production and logistics. By providing a realistic representation of the entire value chain, ...

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Artificial Intelligence (AI)
Artificial Intelligence (AI) refers to the simulation of human intelligence in machines that are programmed to think, learn, and perform tasks that typically require human intelligence. These machines are designed to process large amounts of data, ...

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Assemble to Order (ATO)
Assemble to Order (ATO) is a production and manufacturing strategy that lies between make-to-order (MTO) and make-to-stock (MTS) approaches. In the ATO model, products are partially assembled in advance, ...

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Available to Promise (ATP)
Available to Promise (ATP) is a critical concept in inventory and order management that enables businesses to provide accurate and reliable delivery date commitments to customers. ATP refers to the quantity of a product that a company can promise to deliver to customers on a specific date ...

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B

Bill of Materials (BOM)
A Bill of Materials (BOM) is a comprehensive list of all the materials, components, subassemblies, and quantities required to manufacture a product. It serves as a foundational document in manufacturing and production processes, ...

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Bottleneck Analysis
Bottleneck analysis is a systematic process used to identify constraints or limitations that impede the flow of processes, operations, or systems. In various contexts, a bottleneck refers to the point where the capacity of a particular resource becomes constrained, ...

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Bullwhip Effect
The Bullwhip Effect, also known as the Whiplash Effect, refers to the phenomenon of demand fluctuations magnifying as they move up the supply chain. It describes the amplified variance in demand signals experienced by suppliers, ...

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C

Complete Vertical Integration (CVI)
Complete Vertical Integration (CVI) is a business strategy in which a company owns and controls all stages of the supply chain for a particular product or service. This integration encompasses the entire production process, ...

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Continuous Improvement Process (CIP)
The Continuous Improvement Process (CIP), also known as Continuous Improvement (CI) or Kaizen, is a systematic approach used by organizations to continuously enhance their operations, products, and services. CIP is founded on the philosophy of incremental and ongoing improvements, ...

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Cycle Time
Cycle Time is a critical performance metric used in various industries to measure the time it takes to complete one full cycle of a process or task. It serves as a valuable indicator of process efficiency, ...

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D

Detailed Scheduling
Detailed Scheduling is a critical aspect of production and operations management that involves planning and coordinating the specific tasks and activities required to execute a project or production process. It focuses on breaking down larger production plans ...

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Digital Factory
The Digital Factory is a concept that integrates advanced digital technologies into the manufacturing process, revolutionizing the way products are designed, produced, and delivered. It represents the convergence of the physical and digital worlds, ...

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Digital Twin
A Digital Twin is a virtual representation of a physical object, process, or system. It combines real-time data, sensor information, and modeling capabilities ...

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Discrete Manufacturing
Discrete Manufacturing is a type of production process where individual, distinct items are produced through assembly or fabrication. In this method, each product unit is separate and easily identifiable, ...

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E

Effectiveness
Effectiveness is a measure of how well a task, process, or system achieves its intended goals and objectives. It focuses on the degree to which desired outcomes are accomplished. In various contexts, ...

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Efficiency
Efficiency is a measure of how well resources, time, and effort are utilized to achieve a specific goal or desired outcome. It focuses on accomplishing tasks or processes with minimal waste and maximum productivity. In various contexts, ...

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Enterprise Resource Planning (ERP)
Enterprise Resource Planning (ERP) is a comprehensive and integrated software solution that facilitates the management of core business processes and resources across an entire organization. It serves as a centralized database ...

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F

Factory Automation
Factory Automation refers to the use of advanced technology and computerized systems to control and operate machinery, equipment, and processes within a manufacturing facility. The goal of factory automation is to streamline production, ...

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Finite Capacity Scheduling (FCS)
Finite Capacity Scheduling (FCS) is an essential production planning and scheduling technique that considers the limited capacity of resources within a manufacturing environment. Unlike infinite capacity scheduling, which assumes an abundance of resources,...

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First In – First Out (FIFO)
First In – First Out (FIFO) is a method of inventory management and asset valuation, where the first items added to a stock or inventory are the first ones to be used, sold, or consumed. It follows the principle that the oldest items in inventory are the ones to be used or sold first, ...

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Forecast
Forecasting is a systematic process of making predictions or estimates about future events, trends, or outcomes based on historical data, patterns, and relevant information. Businesses and organizations use forecasting to anticipate future demand, ...

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G

Gap Analysis
Gap Analysis is a systematic process that helps organizations identify and understand the discrepancies or "gaps" between their current state and the desired future state. It involves comparing the existing performance or capabilities of a business or project ...

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Gemba
Gemba is a Japanese term that translates to "the real place" or "the actual place." In the context of business and management, Gemba refers to the physical location where value is created, ...

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H

Heijunka
Heijunka is a Japanese term that translates to "production smoothing" or "production leveling." It is a lean manufacturing technique used to balance and distribute production across different products or product variants evenly ...

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Heuristics
Heuristics are problem-solving strategies or mental shortcuts that people use to make decisions, find solutions, or reach conclusions quickly and efficiently. Derived from the Greek word "heuriskein," meaning "to discover" or "to find," ...

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I

Industry 4.0
Industry 4.0, also known as the Fourth Industrial Revolution, is a term that refers to the ongoing transformation of traditional industries through the integration of advanced digital technologies, automation, data exchange, and artificial intelligence. It represents a paradigm shift in the way manufacturing and other industries operate, ...

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Interface
An interface is a point of interaction or communication between two different systems, components, or entities. In various fields, interfaces act as bridges that enable seamless information exchange, ...

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J

Jidoka
Jidoka, a Japanese term that translates to "automation with a human touch," is a foundational principle of the Toyota Production System (TPS) and a key component of Lean Manufacturing. Jidoka emphasizes the importance of building quality into the production process ...

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Just-in-Sequence (JIS)
Just-in-Sequence (JIS) is a production and supply chain management concept that extends the principles of Just-in-Time (JIT) manufacturing. JIS is specifically applied in scenarios where different parts or components of a product need to be delivered to the production line in a precise sequence, ...

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Just-in-Time (JIT)
Just-in-Time (JIT) is a production and inventory management philosophy that focuses on delivering the right quantity of products or components at the right time, precisely when they are needed for production, assembly, or distribution. JIT aims to eliminate waste, ...

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K

Kaizen
Kaizen is a Japanese term that translates to "continuous improvement" or "change for better." It is a fundamental concept in lean management ...

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Kanban
Kanban is a visual management tool and a lean manufacturing technique that originated in Japan as part of the Toyota Production System (TPS). The term "Kanban" translates to "visual signal" ...

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Key Performance Indicator (KPI)
A Key Performance Indicator (KPI) is a quantifiable metric used to evaluate the success or performance of an organization, department, process, or individual in achieving specific objectives or goals. KPIs are essential tools in performance management, ...

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L

Last In – First Out (LIFO)
Last In – First Out (LIFO) is a method of inventory management and asset valuation, commonly used in accounting and financial reporting. LIFO operates on the principle that the most recent inventory items or assets acquired ...

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Lead Time
Lead time is a critical metric used in supply chain management and manufacturing to measure the time it takes for a product or service to be delivered from the initial order placement to its completion and delivery to the customer. It is an essential aspect of production scheduling ...

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Lean Management
Lean Management is a systematic approach to business operations that focuses on maximizing value to customers while minimizing waste and inefficiencies. Originating from the Toyota Production System (TPS) in Japan, ...

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M

Maintenance
Maintenance is the set of activities and processes aimed at preserving, restoring, and ensuring the optimal functioning of assets, equipment, or systems. It is a critical aspect of asset management ...

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Maintenance Schedule
A maintenance schedule is a systematic plan that outlines the timing and frequency of maintenance activities for assets, equipment, or systems. It serves as a roadmap for conducting regular inspections, ...

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Make-to-Order (MTO)
Make-to-Order (MTO) is a manufacturing strategy where products are produced only after an order is received from a customer. In this approach, products are not produced in advance ...

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Make-to-Stock (MTS)
Make-to-Stock (MTS) is a manufacturing strategy where products are produced based on sales forecasts and placed into inventory before customer orders are received. In this approach, production is not directly tied to specific customer demand ...

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Manufacturing Execution System (MES)
A Manufacturing Execution System (MES) is a software-based solution that plays a crucial role in managing and optimizing manufacturing operations. MES acts as a bridge between the enterprise resource planning (ERP) system and the shop floor, ...

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Manufacturing Order
A Manufacturing Order (MO) is a formal document used in the production planning and control process to initiate and track the manufacturing of a specific quantity of a product. It serves as a set of instructions that guide the production team on the materials, ...

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Manufacturing Resource Planning II (MRP II)
Manufacturing Resource Planning II (MRP II) is an extension and enhancement of the original Material Requirements Planning (MRP) system that emerged in the 1980s. MRP II takes a more comprehensive approach to production planning and control ...

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Material Requirements Planning I (MRP I)
Material Requirements Planning I (MRP I) is a computer-based inventory management and production planning system that emerged in the 1960s. It was one of the first versions of Material Requirements Planning (MRP) systems designed to help manufacturers manage their inventory levels, ...

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Milk Run
Milk Run, also known as a milkman delivery system or shuttle run, is a logistics concept used in supply chain management to optimize the transportation and delivery of goods. The term "Milk Run" originates from the historical practice ...

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Muda
Muda is a Japanese term that translates to "waste" or "futility" and is a concept commonly associated with Lean Manufacturing. It refers to any activity or process that consumes resources ...

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O

Order Network
An Order Network is a digital platform or system that facilitates the management and coordination of orders and transactions within a supply chain. It serves as a central hub for various trading partners, ...

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Overall Equipment Effectiveness (OEE)
Overall Equipment Effectiveness (OEE) is a key performance metric used in manufacturing and production industries to measure the efficiency and productivity of equipment or machinery. It provides valuable insights into how effectively a machine or process is utilized ...

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P

PDCA Cycle (Deming Cycle)
The PDCA Cycle, also known as the Deming Cycle or Deming Wheel, is a continuous improvement methodology used to achieve excellence in various processes and systems. Developed by Dr. W. Edwards Deming, a renowned statistician, and quality management guru, ...

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Poka-yoke
Poka-yoke is a Japanese term that translates to "mistake-proofing" or "error-proofing." It is a quality management concept and technique developed by Shigeo Shingo, ...

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Predictive KPIs
Predictive KPIs (Key Performance Indicators) are a set of metrics or indicators that provide insights into future performance trends and potential outcomes. Unlike traditional KPIs that measure historical data, ...

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Predictive Maintenance
Predictive Maintenance is a proactive maintenance strategy that uses advanced data analytics, sensor technology, and machine learning algorithms to predict when equipment or machinery is likely to fail. By monitoring the real-time condition and performance of assets, ...

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Production Planning and Control (PPC)
Production Planning and Control (PPC) is a comprehensive process that encompasses the planning, coordination, and management of all activities involved in the production process. It aims to ensure the efficient and effective utilization of resources ...

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Pull Production
Pull Production is a production method in which the initiation of work and the movement of materials through the production process are driven by actual customer demand. In contrast to traditional push production, where items are produced based on forecasts and pushed through the production process, ...

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Push Production
Push Production is a traditional production method where items are manufactured based on forecasts or predetermined schedules regardless of actual customer demand. In this approach, production is "pushed" through the production process, ...

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R

Return on Investment (ROI)
Return on Investment (ROI) is a financial metric used to evaluate the profitability and efficiency of an investment or business initiative. It measures the return or gain generated from an investment ...

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Routing
Routing is a critical concept in production and operations management that involves determining the most efficient path or sequence for the movement of materials, information, or tasks through a production or business process. It ensures that products or services follow a predefined path from the beginning to the end of the production process, ...

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S

Sawtooth Chart
The Sawtooth Chart is a powerful graphical tool extensively utilized in inventory management to visualize and understand the cyclical nature of inventory levels over time. As its name suggests, ...

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Semifinished Product
A semifinished product, also known as a semi-processed product or a work-in-progress (WIP), is an intermediate stage in the production process. It is a partially completed item that has undergone some processing or manufacturing ...

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Setup Matrix
A Setup Matrix, also known as a Setup Time Matrix or Changeover Matrix, is a visual tool used in production and manufacturing to optimize changeover or setup times between different tasks, processes, or product runs. It provides valuable insights into the time required for equipment or machines ...

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Setup Time
Setup time, also known as changeover time or preparation time, refers to the duration required to prepare a machine, equipment, or production line for a new task, process, or product run. It is the time taken to transition from the completion of one activity ...

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Shop Floor
The shop floor is the physical area within a manufacturing facility or factory where the actual production and assembly of goods take place. It is the operational core of the manufacturing process, where workers, machines, and materials come together ...

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Smart Factory
A Smart Factory, also known as an intelligent factory or Industry 4.0 factory, is a highly automated and technologically advanced manufacturing facility that utilizes cutting-edge technologies and data-driven processes to optimize production, improve efficiency, and enhance decision-making. In a Smart Factory, various interconnected devices, machines, and systems collaborate seamlessly ...

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Supply Chain Management (SCM)
Supply Chain Management (SCM) is the process of overseeing and optimizing the flow of goods, services, information, and finances from the initial sourcing of raw materials to the final delivery of products to end customers. It involves the coordination and integration of various activities across different stages of the supply chain ...

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T

Time to Market (TTM)
Time to Market (TTM) is a critical business metric that measures the time taken by a company to develop and launch a new product or service from the initial concept or idea to its availability in the market for customers. TTM is a key performance indicator (KPI) used by businesses to assess their speed and agility in responding to market demands, ...

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Total Cost of Ownership (TCO)
Total Cost of Ownership (TCO) is a financial concept that calculates the entire cost associated with owning and operating an asset or investment over its entire lifecycle. TCO goes beyond the initial purchase price and takes into account various direct and indirect costs incurred throughout the asset's lifetime, ...

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Total Productive Maintenance (TPM)
Total Productive Maintenance (TPM) is a comprehensive approach to equipment maintenance and management aimed at maximizing machine availability, improving overall equipment effectiveness, and eliminating production losses. TPM is based on the principle that all employees, ...

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Toyota Production System (TPS)
The Toyota Production System (TPS) is an integrated manufacturing philosophy and management system developed by the Toyota Motor Corporation. It is renowned for its lean principles, ...

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Turnover Rate
Turnover rate, in the context of inventory management, refers to the number of times a company sells and replaces its inventory over a specific period. It is a crucial financial metric that assesses how efficiently a company manages its inventory levels ...

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V

Value Stream Mapping
Value Stream Mapping (VSM) is a lean management technique and visual tool used to analyze, map, and optimize the flow of materials, information, and activities required to produce a product or deliver a service. It provides a clear and holistic view of the current state of a process or value stream ...

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Value-Added Chain
The value-added chain, also known as the value chain, is a concept that describes the series of activities and processes through which a company adds value to a product or service from the initial raw materials stage to the final delivery to the customer. It is a strategic tool used by businesses to understand the sources of value creation, ...

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Value-Added Time
Value-Added Time refers to the portion of the total time spent on a process or activity that directly contributes value to the final product or service from the customer's perspective. It is a critical concept in lean management and process improvement, ...

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Visualization
Visualization refers to the use of graphical representations, charts, diagrams, or images to convey information, data, or ideas in a visually engaging and easily understandable manner. It is a powerful communication tool that enables individuals to grasp complex concepts, ...

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Y

Yield Management
Yield Management in the context of production is a process optimization strategy used by manufacturing companies to maximize the quantity and quality of output from their production processes. It focuses on identifying and reducing sources of waste, ...

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