Glossary
Supply-chain terms, defined plainly.
- ABC / XYZ analysis
- Segmentation of items by value contribution (ABC) and demand variability (XYZ), used to set differentiated policies.
- Bias (forecast)
- The tendency of a forecast to be consistently above or below actual demand.
- Bill of materials (BOM)
- The structured list of components and quantities required to make one unit of a product.
- Cash-to-cash cycle
- Days between paying suppliers and collecting from customers: DIO + DSO − DPO.
- Chase list
- The short list of open purchase orders a buyer follows up today. Ranked by days of cover, it puts first the late orders that would leave a part short before they arrive.
- Control tower
- A layer that consolidates supply chain data across systems to provide visibility, detect exceptions and support decisions.
- Cover (days of)
- How many days current inventory will last at expected demand.
- Days inventory outstanding (DIO)
- Average inventory divided by cost of goods sold, times days in the period.
- Excess inventory
- Stock above the level needed to meet expected demand plus safety stock over a defined horizon.
- Expedite
- Any premium action to accelerate supply: faster freight, overtime, spot purchase.
- FEFO
- First-expired, first-out: stock rotation by expiry date, common in food and pharma.
- Fill rate
- Share of demand fulfilled from stock at first attempt, by line, unit or value.
- Forecast value added (FVA)
- The improvement a forecasting step delivers over a naïve baseline.
- Lead time
- Time between placing an order and receiving it. Its variability matters as much as its average.
- Lead-time drift
- The gap between the lead time set in the ERP and the lead time a supplier actually quotes or delivers. Reorder points set on the old lead time trigger orders too late.
- MOQ
- Minimum order quantity set by a supplier.
- MRP
- Material requirements planning: calculates what to buy or make, and when, from demand and BOMs.
- Obsolete stock
- Inventory with no expected future demand.
- OTIF
- On time, in full: share of orders delivered on the promised date with the complete quantity.
- Past-due purchase order
- An open purchase order whose promised date has passed without a full receipt. Its urgency depends on stock cover, not on how many days late it is.
- Promised date
- The delivery date the supplier confirmed for a purchase order line. Once it has passed, it is no longer a reliable arrival date; a blank promised date means the arrival is unknown.
- Reorder point
- Stock level that triggers replenishment: demand over lead time plus safety stock.
- S&OP
- Sales and operations planning: monthly process aligning demand, supply and finance plans.
- Safety stock
- Buffer inventory held to absorb variability in demand and lead time.
- Service level
- Probability of not stocking out during a replenishment cycle (cycle service level), or fill rate.
- Shortage risk
- A part whose usable stock will run out before the next open order for it arrives, or whose next arrival is unknown while cover is short.
- Single source
- A material with only one qualified supplier.
- Supply chain audit (WERISCO)
- WERISCO's starting point: a company sends two file exports it already runs, stock by item and open purchase orders, and a 20-minute call shows the result on its own data: the inventory and order value exposed. No integration, no savings estimate, NDA available.
- TMS
- Transportation management system: plans, executes and settles freight.
- Value above target
- The inventory value held above a company's own target stock levels, item by item. It is a value held, not a saving, and it depends on how the targets were set.
- wMAPE
- Weighted mean absolute percentage error: total absolute error divided by total actual demand.
- WMS
- Warehouse management system: controls locations, receipts, picking and shipping.
- Working capital
- Current assets minus current liabilities; in operations, driven mainly by inventory, receivables and payables.
Supply chain audit
See where your supply chain is exposed.
A 20-minute call and two file exports: stock by item and open orders. You see the inventory and order value exposed. No integration, no savings estimate, and an NDA if you need one.