Definitions
Advanced Planning and Scheduling (APS) – use of mathematical algorithms or logic to optimise finite capacity, rostering, scheduling, sourcing, capital & resource planning, forecasting & demand management
Agile – iterative project management methodology that adapts to change to produce better outcomes in a shorter time through human engagement and willingness to embrace feedback
Agile Digital Workforce – retention, recruitment, and development of a capable and motivated workforce who embrace digital transformation and cross-functional collaboration to implement change using business intelligence
Agreement – agreed terms and conditions of purchase and supply
As-Is – agreement on the current value stream including quality, quantity, waste, errors, and variance
Baseline – current measurement taken before any action is taken to adjust it e.g. improve or reduce
Benchmark – a standard or point of reference or measurement for comparison or as a target
Best Practice – commercial procedures judged by peers as the most effective in that industry or market segment
Best Value – evaluation of tenders to deliver an outcome with clearly identifiable cost-benefit including quality, service, price, expertise, integration, innovation, and ‘fit’ criteria. Cost is important for its contribution to value.
Bidder / Tenderee – qualified supplier invited to submit a response to tender (EOI/RFT/RFQ/RFP)
Bottleneck- – an impediment slowing or blocking progress
Budget – forecast of demand, revenue, and expenses over a specified period. A budget based on assumptions made before the financial year or before the pandemic becomes an Anchor if incorrectly assuming the past reflects future demand, revenue and expenses.
Business intelligence (BI) – the combination of measurement, data mining, analytics, reporting including dashboards to assist more informed data-driven decisions
Business Process Management – mapping, analysing and continuously improving end-to-end business processes to streamline flow and add value
Cancer of Silos – individuals, departments, or divisions failure to share information or reconcile different views undermining customer value, reducing efficiency and adding unnecessary cost
Capacity – the maximum amount that can be contained/produced/loaded/received/stored over a specific time
Cashflow – net cash and cash equivalents transferred into and out of a business enabling a company’s to create shareholder value and meet its financial obligations (debts) as and when they fall due
Competitive Tendering – an invitation to the supply market generally or to qualified suppliers to supply goods or services. The objective is to optimise value on key evaluation criteria including service, quality, price, expertise, information, innovation integration, ‘and fit’. Other than an EOI, the tender (RFI, RFP, RFQ, RFT) leads to supply.
Constraints Management – methodology to identify and manage the major constraint (i.e. bottleneck) to achieving a goal to match throughput to demand (the goal)
Contingent Workforce – all staff including employed, contingent, contract, freelance, and gig workers contributing to an organisation’s ability to meet customer expectations, meet budget, and improve performance
Cost-Benefit – comparative measure of the benefits of a decision/action minus the associated costs
Covid-19 (Coronavirus) Economy – economic impact on employment, activity, demand, supply and travel
Critical Success Factor – specific indicators essential to a positive outcome (business, role, project)
Cross-Functional Collaboration – diverse functional expertise working in partnership to achieve common goals across a business value stream e.g. problem-solving
Customer Experience (CX) – product of customers perception of the quality & value of transactions over time
Data Science – the combination of programming skills, mathematics, and statistics to extract insight from data.
Debtor Days – number of days customers take to pay compared with agreed credit terms (Debtor Days Ratio)
Demand Planning – forecasting demand for products and services to balance staffing/inventory levels and meet customer needs and budget without undue waiting, unproductive staff or inventory as a non-liquid asset when cash is needed. Answers the WHY in:
– workforce planning and labour management, – revenue /effective full-time staff member
– revenue targets by customer and product, – revenue management/risk
– production capacity and utilisation – costing, pricing, and profitability
Digital Marketing – marketing of a business, person, product, or service using online channels, electronic devices, and technology through Search Engine Optimization (SEO), social media, email, pay-per-click (PPC) etc.
Digital Transformation – embracing digital technologies to create value in meeting changing customer expectations and improving the customer experience and organisational performance
Economies of Scale – unit cost advantages from spreading all cost over a large number of goods. Scale does not deliver economies. Volume, productivity, efficiency and effectiveness can!
EOI – Expression of Interest. Invitation to the market to respond. Procurement may result but is not a firm intent
Enterprise Project – a project across the entire value stream to deliver value and improve cashflow, ROI & profit
Evaluation Criteria – specific criteria with weighting to reflect the importance of criteria relative to each other
Forecasting – use of historical data, plus known variance, to inform estimates of the future. A budget is a forecast of demand for goods and services and estimated revenue and expenses over a period of time
FTE – Full-time equivalent staff. Labour hours expressed in units of 38 hours in Australia
Human resource management (HRM) – recruiting, hiring, deploying, developing, and managing employees as the human capital assets of a business
Incumbent Supplier – current supplier of goods or services that are the subject of the Tender
Information Technology (IT) – use of computers to store, retrieve, transmit, and manipulate data or information. A subset of information and Communications Technology (ICT).
Inventory – goods in various stages of development prior to sale including Finished goods (ready for sale), Work-in-progress (in the process of being made) & Raw materials (used to produce more finished goods)
IoT – Internet of Things. System of interrelated computing devices, mechanical and digital machines with unique identifiers (UIDs) capable of transferring data without human-to-human or human-to-computer interaction
Key Performance Indicator – specific and timely performance measures (organisation, employee, project)
Labour Management – management of the work of others including workforce composition (In House & Contractors), rosters, absences, roles, performance, productivity, responsibility, reporting relationships and tenure
Lean Six Sigma – combines Six Sigma and Lean. A fact-based, data-driven improvement methodology that values defect prevention over defect detection to drive customer satisfaction and performance improvement by reducing variation, waste, and cycle time for competitive advantage. Six Sigma focuses on standardization and flow to reduce process variation. Lean minimises waste (non-value-added processes and procedures).
Lean Thinking – creatng value by minimising waste, reducing error and managing variance
Management Accounting – identifying, measuring, analyzing, interpreting, and communicating financial information to assist managers in performance measurement and decision making.
Market Testing – identifying suppliers who can deliver Tender objectives based on defined evaluation criteria
Organisational Development – strategies and tactics building capacity to embrace change to improve organisational and operational performance through cultural enhancement and applied business intelligence
Operations – tasks and processes transforming inputs into goods or services which deliver customer value
Part Order – only part of what was ordered is provided with the balance is on backorder or was cancelled
PAR Levels – Periodic Automatic Replacement (PAR) of inventory levels
Predictive Analysis – forecasting at a more detailed level of granularity
Process Excellence -process design/improvement/re-engineering/transformation along the value stream to deliver a consistent quality customer experience with minimum waste, reduced error and managed variance
Quality – fitness for purpose in meeting or exceeding customer requirements
Ratio – quantitative relationship between 2 numbers indicating the number of times 1 value contains or is contained within the other
Revenue Generation – market and selling products and services to generate income. Digital revenue generation techniques significantly increase revenue at a lower cost.
Reverse Supply Chain – customer return of goods purchased adding significant cost with no additional revenue.
Rework – Correcting of defective, failed, or non-conforming items which are not fit for purpose
ROI – a measure of return – how well an investment is performing based on a formula, baseline or benchmark
RFT/RFP/RFQ – Request for Tender/Proposal/Quote. Invitation to the market with the intent is to procure
Selective Tender – closed, not a public, process where the Tenderer determines who is invited to Bid/Tender
Service Level Agreement (SLA) – documentation of the level of service required, metrics by which the service is measured and remedies or penalties when agreed service levels are not achieved
Strategy – a plan of action chosen from various options to achieve the desired outcome e,g, a goal or solution
Stock Turnover – ratio showing how many times stock has been sold and replaced during a given period.
Strategic Cost Management – focussed action, with staff engagement in timely and accurate business intelligence, to improve the strategic and operational performance of a business by increasing net profit, improving revenue, and reducing cost.
Streamline – improve flow by removing non-value adding parts and managing constraints to goal achievement.
Supplier – bidder whose Tender represents better value under a Service Level Agreement
Systems Thinking – holistic analysis of how a system’s constituent parts work overtime within larger systems and the behaviour resulting from reinforcing and balancing processes
Target Costing – defining product life-cycle cost based on functionality, quality, and profit. Target cost is achieved by subtracting profit from a competitive market price
Tender – process (public or selective) inviting bids for the supply of goods or services – agreement – quantification – documentation – issue – Q&A – recommendation – decision – implementation
Tenderer – organisation on whose behalf the tender for goods or services is conducted
To Be – agreement on the change required to achieve a specific outcome based on qualitative and quantitative objectives incl. customer experience, cashflow, ROI and profit
Trend – general direction of results over a period of time. A pattern is a set of data in a recognisable form
Utilisation – the percentage of capacity being used at a point in time or over time
Value Stream – process flow creating value in and between each fulfilment process and in the receipt of payment
Value Stream Map – a flow chart of every process from order to payment to identify waste/error/variance and highlight opportunities to create value including increased revenue and reduction of cycle times
Waiting – unplanned and unnecessary time spent waiting for the commencement of the next process. Often ignored underutilisation indicator. ‘It’s the way we do things around here’ despite visual clues and known bottlenecks.
Workforce Planning – identifying workforce capacity and capability to meet its current and future objectives
For further information, contact Cost Management Specialists on +61 411 522 521 or email roi1@costmanagementspecialists.com.au