Definitions

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

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

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 organisations ability to meet customers 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) – the 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 Thinking – adding value, 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.

Streamline – improve flow by removing non-value adding parts and managing constraints to goal achievement.

Supplier – bidder whose Tender represents ‘best 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 to highlight opportunities to create value including reduction of cycle times

Waiting – unplanned and unnecessary time spent waiting for the commencement of the next process. Underutilisation indicator

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