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Definitions compiled by:
Kate Vitasek
Supply Chain Visions
www.scvisions.com
Bellevue, Washington
Please note: The Council of Supply Chain Management Professionals (CSCMP) does not take responsibility for the content of these definitions,
nor does CSCMP endorse these as official definitions except as noted.
Page 115 of 167
SUPPLY CHAIN and LOGISTICS
TERMS and GLOSSARY
Updated October 2006
Procurement: The business functions of procurement planning, purchasing, inventory control, traffic,
receiving, incoming inspection, and salvage operations. Synonym: Purchasing
Procurement Services Provider (PSP): A services firm that integrates procurement technologies
with product, sourcing, and supply management expertise, to provide outsourced procurement
solutions. A PSP serves as an extension of an organization's existing procurement infrastructure,
managing the processes and spending categories and procurement processes that the organization
feels it has opportunities for improvement but lacks the internal expertise to manage effectively.
Product: Something that has been or is being produced.
Product Characteristics: All of the elements that define a product s character, such as size, shape,
weight, etc.
Product Configurator: A system, generally rule-based, to be used in design-to-order, engineer-to-
order, or make-to-order environments where numerous product variations exist. Product
configurators perform intelligent modeling of the part or product attributes and often create solid
models, drawings, bills of material, and cost estimates that can be integrated into CAD/CAM and MRP
II systems as well as sales order entry systems.
Product ID: A method of identifying a product without using a full description. These can be different
for each document type and must, therefore, be captured and related to the document in which they
were used. They must then be related to each other in context (also known as SKU, Item Code or
Number, or other such name).
Product Family: A group of products with similar characteristics, often used in production planning
(or sales and operations planning).
Production Calendar: See Manufacturing Calendar
Production Capacity: Measure of how much production volume may be experienced over a set
period of time.
Production Forecast: A projected level of customer demand for a feature (option, accessory, etc.) of
a make-to-order or an assemble-to-order product. Used in two-level master scheduling, it is calculated
by netting customer backlog against an overall family or product line master production schedule and
then factoring this product s available-to-promise by the option percentage in a planning bill of
material. Also see: Assemble-to-Order, Planning Bill of Material, Two-Level Master Schedule
Production Line: A series of pieces of equipment dedicated to the manufacture of a specific number
of products or families.
Production Planning and Scheduling: The systems that enable creation of detailed optimized plans
and schedules taking into account the resource, material, and dependency constraints to meet the
deadlines.
Production-Related Material: Production-related materials are those items classified as material
purchases and included in Cost of Goods Sold as raw material purchases.
Productivity: A measure of efficiency of resource utilization; defined as the sum of the outputs
divided by the sum of the inputs.
Definitions compiled by:
Kate Vitasek
Supply Chain Visions
www.scvisions.com
Bellevue, Washington
Please note: The Council of Supply Chain Management Professionals (CSCMP) does not take responsibility for the content of these definitions,
nor does CSCMP endorse these as official definitions except as noted.
Page 116 of 167
SUPPLY CHAIN and LOGISTICS
TERMS and GLOSSARY
Updated October 2006
Profit Ratio: The percentage of profit to sales that is, profit divided by sales.
Profit Before Interest and Tax (PBIT): The financial profit generated prior to the deduction of
taxes and interest due on loans. Also called operating profit.
Profitability Analysis: The analysis of profit derived from cost objects with the view to improve or
optimize profitability. Multiple views may be analyzed, such as market segment, customer, distribution
channel, product families, products, technologies, platforms, regions, manufacturing capacity, etc.
Profitable to Promise: This is effectively a promise to deliver a certain order on agreed terms,
including price and delivery. Profitable-to-Promise (PTP) is the logical evolution of Available-to-Promise
(ATP) and Capable-to-Promise (CTP). While the first two are necessary for profitability, they are not
sufficient. For enterprises to survive in a competitive environment, profit optimization is a vital
technology.
Pro-Forma: A type of quotation or offer that may be used when first negotiating the sales of goods or
services. If the pro-forma is accepted, then the terms and conditions of the pro-forma may become
the request.
Pro Forma Invoice: An invoice, forwarded by the seller of goods prior to shipment, that advises the
buyer of the particulars and value of the goods. Usually required by the buyer in order to obtain an
import permit or letter of credit.
Pro Number: Any progressive or serialized number applied for identification of freight bills, bills of
lading, etc.
Profitability Analysis: The analysis of profit derived from cost objects with the view to improve or
optimize profitability. Multiple views may be analyzed, such as market segment, customer, distribution
channel, product families, products, technologies, platforms, regions, manufacturing capacity, etc.
Promotion: The act of selling a product at a reduced price, or a buy one - get one free offer, for the
purpose of increasing sales.
Proof of Delivery (POD): Information supplied by the carrier containing the name of the person who
signed for the shipment, the time and date of delivery, and other shipment delivery related
information. POD is also sometimes used to refer to the process of printing materials just prior to
shipment (Print on Demand).
Proportional Rate: A rate lower than the regular rate for shipments that have prior or subsequent
moves; used to overcome competitive disadvantages of combination rates.
Protocol: Communication standards that determine message content and format, enabling uniformity
of transmissions.
Pseudo Bill of Materials: See Phantom Bill of Materials
PSP: See Procurement Services Provider
Definitions compiled by:
Kate Vitasek
Supply Chain Visions
www.scvisions.com
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