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Glossary of Manufacturing - Manufacturing terms Category: Agriculture and Industry Date & country: 27/04/2011, USA Words: 2096

COS:
Class of Service.

Cosco Ningbo:
the world's largest container ship (2006), being 9,449 tue, 109,149 gross tonnage, 351m length and 42.8m width.

COSHH:
The Control of Substances Hazardous to Health Regulations (1988) - 19 regulations and 4 codes of practice passed by the HSC (qv) in 1988, setting out principles to be followed in occupational health, including medicine and hygiene. The main requirements of the regulations are that the employer must take account of the properties of substances and ...

Cost (Direct):
A cost which is unequivocally incurred in the manufacture of a specific product, such as the cost of flour and the cost of yeast in the manufacture of a loaf of bread.

Cost (Fixed):
A cost incurred in the manufacture of a product which is relatively fixed regardless of the number of items made. An example is the cost of supervision of a bakery as a component of the cost of loaves of bread.

Cost (Fully Absorbed):
A product's production cost, plus additional cost elements associated with it due to general company overheads, such as R&D, distribution, administration etc.

Cost (Imputed):
synonymous with Standard Cost.

Cost (Indirect):
A cost which is indirectly incurred in manufacture, but which cannot be directly attributed to a specific product. If a bakery made Loaf A and Loaf B, the costs of the bakery supervision must be allocated to the production of the two loaves in an indirect way (eg by estimating the time the supervisor spent in dealing with problems involved in the ...

Cost (Normal):
Synonymous with Cost (Standard), qv.

Cost (Notional):
Synonymous with Cost (Standard), qv.

Cost (Prime):
That part of an item's product cost which is directly incurred. That is, the sum of direct materials costs, direct labour costs and direct expenses. See sub-section 4.2 of the free on-line course on purchasing at this site.

Cost (Product):
The financial resources calculated to have been incurred in the manufacture of one unit of a manufactured product. Two stages are involved in the calculation: (I) all manufacturing costs and expenditures are assigned to the production cost centres where they are incurred, and (II) the cost in each production cost centre from Stage I is allocated t...

Cost (Production):
A product cost made up of the sum of the production overhead and the prime cost. The production cost excludes any element attributable to general company overheads such as R & D, sales and marketing etc..

Cost (Standard):
A product cost calculated before the start of the company's financial year based on production forecasts (qv), standard assumed materials costs, standard assumed labour costs, standard assumed expense costs and assumed or estimated production efficiency. A standard cost, estimated or otherwise, is deemed to be an essential requirement before setti...

Cost (Sunk):
an irrecoverable cost.

Cost (Variable):
A cost incurred in the manufacture of a product which varies in accordance with the number of items made. An example is the cost of electricity in running a machine.

Cost Centre:
An area of operating activity where the manager in charge has control of, and responsibility for, costs and expenditures incurred. The notion of a cost centre is central to product costing, since a budget can be set for the area and the manager's (cost) performance monitored.

Cost Driver:
The specific means by which indirect costs incurred in a cost centre are allocated to the various products made there. The "allocation basis". See "cost driver", mentioned in the entry for indirect costs. Also, for an example in use, see the free on-line course on purchasing at this site (sub-section 4.2.1).

Cost Pool:
Synonymous with Cost Centre. Cost pool is the preferred term in the US.

Cost/Benefit Analysis:
The setting out of the estimated future costs of acquiring and operating an asset over time, usually year by year, alongside the estimated financial benefits likely to be gained year by year in doing so. The sums each year of cost less benefit is set out for each year. In evaluating the year by year totals, careful account must be taken of the &qu...

Cost/Quantity/Price Analyses:
Cost analyses centred round the CQP Equation, as follows: Q (s - v) + F + P , where Q = quantity sold, s = selling price, v = variable cost, F = fixed overheads and P = profit. As an example of its use, suppose that s =

Costing (Absorption):
A method of ascribing a cost to a product in which cost centre overheads and other indirect costs are ascribed to the products made using a Cost Driver. See also Cost (Fully Absorbed). In absorption costing, profit is proportional to both sales and production, and may appear erratic due to fluctuating stocks.

Costing (Batch):
The identification and assignment of those costs incurred in completing the manufacture of a specified batch of components. Having arrived at the batch cost, the unit cost is simply derived by dividing it by the number of components in the batch.

Costing (Contract):
Mainly associated with civil engineering works, although sometimes also with the manufacture of a major engineering structure over a considerable time (for example, a contract to manufacture a turbine generator).

Costing (Contribution):
Synonymous with Costing (Variable), qv..

Costing (Direct):
Synonymous with Costing (Variable).

Costing (Job):
The identification and assignment of those costs incurred in completing a specified, individual works order on behalf of a customer commissioning it.

Costing (Marginal):
Synonymous with Costing (Variable).

Costing (Period):
see Process Costing immediately below.

Costing (Variable):
A problem with Absorption Costing (See Costing (Absorption)) is that the costs calculated depend on assumptions as to output, sales and stockholding that are most unlikely to prevail in practice. As a consequence, and in the event, misleading financial results are likely to result. To obtain a cleaner, clearer picture, an alternative to absorption...

Costs (Direct Expenses):
The costs of services and sundries (not labour or materials) directly incurred in physical production (eg the cost of electricity consumed during the production run).

Costs (Direct Labour):
The cost of labour directly undertaking the physical work of manufacture - eg the wages of machine operators.

Costs (Direct Materials):
The cost of materials directly going into manufacture itself - ie taking part in physical production.

Costs (Indirect Expenses):
The costs of services, utilities or other sundry items (everything except materials and labour) associated with manufacture but not directly incurred in the manufacture itself. Examples are cleaning services and the cost of regular planned equipment maintenance.

Costs (Indirect Labour):
The cost of personnel not directly involved in literal manufacture, such as the cost of management, supervision and so on.

Costs (Indirect Materials):
Materials costs incurred in manufacture, where the materials do not directly contribute to the manufacture itself. Examples are the cost of tote trucks and other apparatus needed in the general running of the plant.

Costs (Indirect):
Costs associated with the manufacture of a product but which are not directly incurred in the product's literal manufacture. (For example, the shop supervisor's wages.) A problem with the treatment of indirect costs is that while they must be taken account of, their allocation to the costs of the products made must be accomplished somewhat artific...

COTS:
Commercial Off The Shelf.

Count Chart:
When a single major structure is manufactured, such as an engine or an aircraft wing, there are likely to be many undesirable quality attributes, such as burrs, scratches or paint flecks. The total number of such attributes can be plotted on a count chart(with time on the horizontal axis and the number of undesirable attributes on the vertical axi...

Counteroffer (legal):
A counteroffer is an alternative offer, or rather, an offer of alternative contractual conditions, made in response to an original offer by the other party. The counteroffer in effect rejects the original offer. For example, A offers to sell something to B for

Counterpurchase:
An aspect of countertrade in which a supplier undertakes to purchase from a country a specified quantity of goods or to engage services offered by the country as a condition of securing business.

Countertrade:
A general term for deals between companies in which payment for suppliers is made through the further exchange of goods, services or favours, rather than by cash. Countertrading includes barter, buyback , direct and indirect offset etc..

Counting Scales:
see Weigh Counting and Scale.

Court of Chancery
: the UK court dealing with matters involving companies.

CP:
(1) Cost Performance (see seven entries under "Costs" above); (2) critical path - see PERT.

CPA:
(1) Contract Price Adjustment. A contract between supplier and buyer may provide for the prices and costs to be paid to be varied between the contract date and the completion date. This is usually done to take account of inflation and/or changes in foreign exchange rates over the duration of the work. It is vital for the two parties to specify exa...

CPD:
Continuing Professional Development, often jargon for study for examinations and diplomas set by such institutions as CIPS, the IOM etc..

CPG:
Consumer Packaged Goods.

CPI:
Continuous Process Improvement.

CPIM:
Certified in Production and Inventory Management (a certificate issued by APICS, similar to the diploma issued by the Institute of Operations Management in the UK).

CPM:
Critical Path Method - see PERT.

CPU:
Central Processing Unit.

CQP Analysis:
Cost/Quantity/Price Analysis, qv.

Cr:
Credit or creditor (qv) - the right hand side of an account (UK, not US, where it is on the left).

CRC:
Cyclic Redundancy Test.

Credit Card:
When a credit card is used for payment by a buyer, the invoice and amount charged have VAT included, and the "VAT invoice" is therefore needed by the buyer to claim back the tax paid. When a debit card is used, VAT is paid direct by the supplier to HM Revenue and Customs, so if an invoice is raised, it should be clearly marked "not ...

Credit:
A major term used if financial accounting, being a benefit received by the company - ie the supply by others of value to our company. Thus a supplier who has delivered raw materials to our factory is a creditor.

Critical Path Analysis (CPA)
- the analysis of the durations and interdependencies of the tasks and jobs anticipated as being necessary to complete a project in order to determine which particular continuous sucession of tasks from the starting point to final completion will be the l

Critical Ratio:
A shop floor prioritisation rule in which jobs are prioritised according to the quotient: (time due minus time now) / (leadtime remaining). The lower the CR, the higher the priority. A critical ratio of 1.0 means the job is exactly on time. The merit of CR is that the priorities tend to restore the leadtime element of jobs, and consequently to res...

Critical Resource:
Any reasonable definition of this term is acceptable - say, a piece of equipment or a work centre or specialised skill group the continued operation of which is central to the achievement of the company's master plan.

CRM:
Customer Relationship Management - the establishment of a way of servicing, helping, influencing and interacting with a customer contributed to by the whole company. Whole company includes master scheduling, order processing/despatch and any relevant technical function, all working together for the good of the relationship, not simply Sales & ...

Crossdocking:
A crossdocking facility within a distribution network will typically comprise a large enclosed area with many receiving docks on one side and many despatching docks on the other. Incoming loads made up of many diverse SKUs from many suppliers are broken up and the materials then reassembled into new groupings for forward despatch to various destin...

CRP:
Capacity Requirements Planning, qv.

CRT:
Cathode Ray Tube, usually used in the US for the British "VDU".

CSM:
Component Supplier Management. Software used for the management and control of a company's suppliers, especially with respect to a supplier reduction programme. See the free on-line purchasing course at this site (sub-sections 1.3.3, 1.4 and 5.1).

CSR:
Corporate Social Responsibility - the notion that a company has responsibility not only to its shareholders, but to its staff (health and safety, pensions) and to society itself in such matters as environmental issues, waste management, pollution, global warming, immigration etc.. Policies must be formulated and a balance struck.

CTE:
Coefficient of Expansion.

CTO:
Configure to Order.

CTQ Tree:
An hierarchical tree diagram used to identify CTQ (qv) aspects of a service or manufactured item. For example, a motoring organisation might place at the top of a CTQ Tree the goal "Response to members' breakdown calls". Branching from this might be the two measures (1) "Breakdowns fixed per day", and (2) Time to effect the bre...

CTQ:
Critical to Quality - an aspect of a service or manufactured item that is regarded by the customer as a quite essential attribute thereof, a sine qua non. For example, a roadside rescue and repair service would be a CTQ aspect of a driver's membership of a motoring organisation. Also CTQC - critical to quality characteristic. See as we...

Cube:
Volume - the term is frequently used in transport planning.

Cumulative Available to Promise:
The future master scheduling effort which is "available to promise" (qv) is usually set down showing the available effort in each period, one after the other (say 0, 6, 20, 25 ...). However, the figures can also be displayed by accumulating the effort period by period (0, 6, 26, 51 ... in the preceding example). It is usually a software-...

Current Asset:
See Asset (Current).

Custom and Practice (legal):
Provided they can be shown to be the case, the customs and practices of a business or trade will be assumed to be included in the implied terms of a contract. It will usually be held that both parties should be aware of custom and practice, and, if one is not, he is nevertheless bound by them. However, in the express terms of the agreement itself,...

Customer Order:
A request by an external party for goods or services supplied by the company. The request may not be a legal offer ... the legal offer may come in response to the customer order (request), setting out the terms of the supply of the goods, including their price. If this is the case, agreement by the customer constitutes acceptance of the offer, res...

Customer Service Target:
A quantitatively expressed goal set by the Sales & Marketing Manager for the satisfaction of customer orders. The goal may be set in quality terms (say, % conforming parts), delivery date and quantity (on-time, in full, or "OTIF") or, in the context of safety stocks, in terms of stock availability. A stock availability target might be...

CVA:
Company Voluntary Arrangement, the management of a company unable to pay its debts, and often the first step to administration or receivership.

Cycle Counting:
(Also known as PI Checking - perpetual inventory checking). A technique for organising the physical counting of a group of products and the subsequent reconciliation of the quantities counted with the stock records of the items concerned. Instead of counting all of the products in the group over a very short period of time, with the high concentra...

Cycle Stock:
see Stock (Cycle).

Cycle:
In sales forecasting, a period over which sales demand assumes a particular pattern of highs and lows. Although cyclicality therefore seem similar to seasonality (qv), a major difference is that cycles are not of a fixed duration. Consequently, a first task of forecasting is to detect the start and finish of the cycle. Well known cycles in the UK ...

DAF (followed by a named place*):
Delivered at Frontier - see Incoterms (Group D "Arrival"). The seller has fulfilled his obligations when the goods are placed at the disposal of the buyer on the arriving means of transport, not unloaded, cleared for export from whence they have come, but not cleared for import at the named point and place at the frontier, but before the...

DAMA:
Design Anywhere, Manufacture Anywhere.

Damage Limitation Clause (legal):
A supplier may attempt to insert into a contract a statement limiting his liability for potential non-performance of the agreed terms. It is not as easy for him to do so as he might think - see Exclusion Clause and Liquidated Damages. For a full description of these matters, visit the free on-line course on-line on purchasing, at this site (sub-sec...

Dangling Dependency:
An alarming term for an activity that has been incorrectly created or added to a project flowchart such that the activity does not link in with a next stage or later activity. Dangling dependencies can be inadvertently created when a project flowchart is being updated by reporting completed activities. (As the activities are duly reported, they ar...

Date (Due):
The date a manufacturing order is intended to be finally completed according to the factory's materials plan.

Date (Effectivity):
See Effectivity Date.

Date (Need):
The date a manufacturing order is needed so as to prevent a shortage arising in the stock of the product in question (as determined by materials planning).

Date (Start):
The date a manufacturing order is planned to be started in accorance with the materials plan. With standard materials planning, the start date + the leadtime (in days) = the need date.

Dawn Raid:
Stock Exchange Jargon - when Company A wishes to acquire the shares of Company B, Company A begins the vigorous, unannounced purchase of B's shares before the market gets wind of the takeover and therefore before the shares begin to rise in price.

Day Book:
Synonymous with Journal (qv).

Days Cover:
the number of days that stock on hand will last before running out, based on past average daily demand.

DBERR:
The Department for Business, Enterprise and Regulatory Reform, a UK government department carrying out functions previously the responsibility of the now defunct DTI.

DBMS:
Data Base Management System.

DC:
Distribution Centre. US logistics terminology for what is usually referred to in the UK as a depot.

DCE:
Distributed Computing Environment.

DCF:
Discounted Cash Flow (synonymous with IRR - Internal Rate of Return). The rate of interest that would need to prevail in order for a stream of costs over time to have the same net value as a stream of benefits. The calculation of the DCF rate of return only became feasible with the advent of computers. Because the DCF is standard and does not pres...

DCM:
see Demand Chain Management.

DCS:
Distributed Control System, or Digital Cellular System.

DDT:
otherwise 'dichloro diphenyl trichloroethane', being an insecticide that was/is highly effective in eradicating malaria in Europe and North America, until one Rachel Carson made a name for herself with a most unfortunate book The Silent Spring in 1962, documenting the harm excessive use of DDT caused certain wildlife, and falsely alleging that it ...

De kit:
On the abandonment of a works order, the break up of the kitted components and their individual return to stores.