Supply Chain Logistics Glossary
P
PARETO'S LAW
Inventory classification method (ABC Classification or 20/80 Classification) used to distinguish the products with high value, for which strict monitoring is enforced, from products of lesser value whose monitoring will be more flexible.
PERIODIC INVENTORY
Regular updating (usually manually) of stock levels of one or more items. This regular count for all or part of inventory is used to correct the variance between the stock levels provided by the Perpetual Inventory and the actual levels.
PERPETUAL INVENTORY
Continual updating of stock levels based on real-time entering (computerized or manual) of all stock item movements. Various problems (theft, breakage, input errors, etc.) explain the variance between the theoretical stock levels provided by this information and the reality, thus requiring Periodic Inventories.
POST-MANUFACTURING
Handling by the Logistics Service Provider of productive operations related to the assembly of finished products.
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POSTPONEMENT
Production method that standardizes manufacturing operations as much as possible (to reduce unit production costs, stock volumes and work in process) by postponing the differentiation of products as long as possible. When the product differentiation operations are assigned to a Logistics Service Provider it can be called Post-Manufacturing.
PRE-MANUFACTURING
Handling by the Logistics Service Provider of productive operations related to the assembly of intermediate production goods.
PRODUCT MOVEMENT COST
Set of charges related to the movement of products between the different entities of the Logistics Chain (example: inbound transport, internal transport to the production site, handling, etc.).
PRODUCTION LOGISTICS
Set of activities with the goal of making available the desired items and quantities of raw materials and work in process, at the time desired by the different production and/or assembly units at the best pricing terms. This process involves the definition of management policies (flow management model, inventory management of work in process, transfer and handling system, transport management between storage sites and production units, etc.).
PULL SYSTEM
Flow management model in which quantities are produced or assembled in order to immediately satisfy demand (firm orders). The main objective of a pull system is to eliminate carrying costs at all points of the Logistics Chain and can be more or less direct according to the margin of safety set by the company.
PUSH SYSTEM
Flow management model that establishes a production plan to respond to forecast demand for a company's products. Based on this production plan, the Master Production Schedule and Material Requirements Plan are defined to require the least inventory possible (minimum stocks) and to avoid stock-outs.
