Direct Materials Cost -  Materials Management Vocabulary



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Compensation for loss or injury suffered by one party to a contract as a result of the other party's breach
Dangerous Goods
It implies the hazardous goods and is used extensively in international trade
Decentralised Purchasing
It refers to purchasing by many agencies within an organisation rather than one central agency looking after all purchasing
Declared Value
It's the value of goods stated in the shipping document while transported. It is used for achieving a lower freight rate or for obtaining insurance  Decoupling Inventories
Inventories held between processes to make possible the independent control of two processes
Delivery Receipt
A carrier document indicating that the shipment was delivered once signed by the consignee. It's also called delivery challan
Delivery Terms
Conditions in a contract relating to carrier and routing , freight charges, place and time of delivery
Delivery to point of use
Items delivered directly to the end user bypassing the inspection process / route
Delphi Method
A method of forecasting where a panel of experts is polled repetitively in writing to develop a consensus prediction of future environmental conditions
Demand Elasticity
The sensitivity of demand to price changes
A fee charged by a carrier to compensate for the detention of the carrier's equipment in excess of allowable free time for loading, unloading , reconsigning or stopping in transit
Dependent Demand
Derived from or contingent upon the demand for another component or a finished product.
Design Specifications
A complete description of an item such as size, shape , capacity ,dimensions, tolerances etc.

A decline in the value of a country's currency vis a vis the currencies of other countries
Differential Exchange Rates
Different exchange rates imposed by a country's government , depending upon the nature of the goods imported
Digital Certificate
A security attachment to an electronic message to verify the identity of the sender and enable the receiver of the message to reply. Digital certificates are issued by third parties known as certification authorities
Digital Signature
Short units of data bearing mathematical relationships to the data in the document's content that are transmitted using public key cryptography programs. These programs create a pair of keys (one public key, one private key). And what the private key encrypts only the public key can decrypt
Direct Costs
These are costs that can be identified with individual units of outputs. These costs are usually treated as variable and do not include general overhead or common cost allocations
Direct Materials Cost
Expenses for the materials that become part of finished products, i.e raw materials , components etc.
Discriminatory Price
A selling situation in which a supplier offers similar or identical items for sale, in identical quantities to different purchasers at different prices
The process of removal of inventory items from an organisation's premises
A carrier service that permits changing the destination or consignee of a shipment that is en route, either with or without an additional fee. This is performed only at the request of the owner of the goods
Dock to Stock
Goods and materials purchased from certified suppliers that skip incoming inspection and go directly into inventory upon delivery
Door to Door
Delivery of a good directly from the consignor to the consignee's specified location
Dry Lease
A lease agreement for a piece of transportation equipment that does not include the provision of fuel or crew for its operation. It's often found in the airline industry
During the fact control
Methods used to monitor and manage quality during the production process
A tariff imposed by a government on imported goods, exported goods, or the use of goods
The practice of selling a product overseas at prices below those in its home market
Demand Management
The proactive compilation of requirements information regarding demand (i.e., customers, sales, marketing, finance) and the firm's capabilities from the supply side (i.e., supply, operations and logistics management); the development of a consensus regarding the ability to match the requirements and capabilities; and the agreement upon a synthesized plan that can most effectively meet the customer requirements within the constraints imposed by supply chain capabilities
Demand Planning
The process of identifying, aggregating, and prioritizing, all sources of demand for the integrated supply chain of a product or service at the appropriate level, horizon and interval
The sales forecast is comprised of the following concepts:
1. The sales forecasting level is the focal point in the corporate hierarchy where the forecast is needed at the most generic level, i.e. Corporate forecast, Divisional forecast, Product Line forecast, SKU, SKU by Location.
2. The sales forecasting time horizon generally coincides with the time frame of the plan for which it was developed, i.e. Annual, 1-5 years, 1- 6 months, Daily, Weekly, Monthly.
3. The sales forecasting time interval generally coincides with how often the plan is updated, i.e. Daily, Weekly, Monthly, and Quarterly.
Demand Planning Systems
The systems that assist in the process of identifying, aggregating, and prioritizing, all sources of demand for the integrated supply chain of a product or service at the appropriate level, horizon and interval.
Demand Pull
The triggering of material movement to a work center only when that work center is ready to begin the next job.
It in effect eliminates the queue from in front of a work center, but it can cause a queue at the end of a previous work center.
Demand-Side Analysis
Techniques such as market research, surveys, focus groups, and performance/cost modeling used to identify emerging technologies.
Demand Supply Balancing
The process of identifying and measuring the gaps and imbalances between demand and resources in order to determine how to best resolve the variances through marketing, pricing, packaging, warehousing, outsource plans or some other action that will optimize service, flexibility, costs, assets (or other supply chain inconsistencies) in an iterative and collaborative environment.
Demand Time Fence (DTF)
1) That point in time inside of which the forecast is no longer included in total demand and projected available inventory calculations; inside this point, only customer orders are considered. Beyond this point, total demand is a combination of actual orders and forecasts, depending on the forecast consumption technique chosen.
2) In some contexts, the demand time fence may correspond to that point in the future inside which changes to the master schedule must be approved by an authority higher than the master scheduler. Note, however, that customer orders may still be promised inside the demand time fence without higher authority approval if there are quantities available-to-promise (ATP). Beyond the demand time fence, the master scheduler may change the MPS within the limits of established rescheduling rules, without the approval of higher authority. See: planning time fence, time fence.
Deming Circle
The concept of a continuously rotating wheel of plan-do-check-action (PDCA) used to show the need for interaction among market research, design, production, and sales to improve quality. Also see: Plan-Do-Check-Action
Demographic Segmentation
In marketing, dividing potential markets by characteristics of potential customers, such as age, sex, income, and education.
The carrier charges and fees applied when rail freight cars and ships are retained beyond a specified loading or unloading time. Also see: Detention, Express Denied Party List (DPL): A list of organizations that are unauthorized to submit a bid for an activity or to receive a specific













 product. For example, some countries have bans for certain products such as weapons or sensitive technology.
A physical characteristic of a commodity measuring its mass per unit volume or pounds per cubic foot; an important factor in rate making, since density affects the utilization of a carrier’s vehicle.
Density Rate
A rate based upon the density and shipment weight
Revisions or complete elimination of economic regulations controlling transportation. The Motor Carrier Act of 1980 and the Staggers Act of 1980 revised the economic controls over motor carriers and railroads, and the Airline Deregulation Act of 1978 eliminated economic controls over air carriers.
Derived Demand: Demand for component products that arises from the demand for final design products. For example, the demand for steel is derived from the demand for automobiles.
Destination-Enhanced Consolidation
Ganging of smaller shipments to cut cost, often as directed by a system or via pooling with a third party
The carrier charges and fees applied when rail freight cars and ships are retained beyond a specified loading or unloading time. 
Deterministic Models
Models where no uncertainty is included, e.g., inventory models without safety stock considerations.
A discount offered by a carrier that faces a service time disadvantage over a route.
Digital Signature
Electronically generated, digitized (as opposed to graphically created) authorization that is uniquely linkable and traceable to an empowered officer.
Direct Production Material
Material that is used in the manufacturing/content of a product (example: Purchased parts, solder, SMT glues, adhesives, mechanical parts etc. Bill-of-Materials parts, etc.)
Direct Store Delivery (DSD)/ Door Delivery
Process of shipping direct from a manufacturer’s plant or distribution center to the customer’s retail store, thus bypassing the customer’s distribution center. Also called Direct-to-Store Delivery
Discrete Available-to-Promise
A calculation based on the available-to-promise figure in the master schedule. For the first period, the ATP is the sum of the beginning inventory plus the MPS quantity minus backlog for all periods until the item is master scheduled again. For all other periods, if a quantity has been scheduled for that time period then the ATP is this quantity minus all customer commitments for this and other periods, until another quantity is scheduled in the MPS. For those periods where the quantity scheduled is zero, the ATP is zero (even if deliveries have been promised). The promised customer commitments are accumulated and shown in the period where the item was most recently scheduled. Also see: Available-to-Promise
Discrete Manufacturing
Discrete manufacturing processes create products by assembling unconnected distinct parts as in the production of distinct items such as automobiles, appliances, or computers.
Discrete Order Picking
A method of picking orders in which the items on one order are picked before the next order is picked.
The carrier activities involved with controlling equipment; involves arranging for fuel, drivers, crews, equipment, and terminal space.
Distributed Inventory
Inventory that is geographically dispersed. For example, where a company maintains inventory in multiple distribution centers to provide a higher level of customer service.
Outbound logistics, from the end of the production line to the end user. 1) The activities associated with the movement of material, usually finished goods or service parts, from the manufacturer to the customer. These activities encompass the functions of transportation, warehousing, inventory control, material handling, order administration, site and location analysis, industrial packaging, data processing, and the communications network necessary for effective management. It includes all activities related to physical distribution, as well as the return of goods to the manufacturer. In many cases, this movement is made through one or more levels of field warehouses. Synonym: Physical Distribution.
2) The systematic division of a whole into discrete parts having distinctive characteristics.
Distribution Center (DC)
The warehouse facility which holds inventory from manufacturing pending distribution to the appropriate stores.
Distribution Channel
One or more companies or individuals who participate in the flow of goods and services from the manufacturer to the final user or consumer.
Distribution On Demand (DOD)
The order fulfillment state a distribution operation achieves when it can respond, closest to real time, to changes in demand while shipping 100 percent customer compliant orders at the least cost.
Distribution Planning
The planning activities associated with transportation, warehousing, inventory levels, materials handling, order administration, site and location planning, industrial packaging, data processing, and communications networks to support distribution.
Distribution Requirements Planning (DRP)
A system of determining demands for inventory at distribution centers and consolidating demand information in reverse as input to the production and materials system.
Distribution Resource Planning (DRP II)
The extension of distribution requirements planning into the planning of the key resources contained in a distribution system: warehouse space, workforce, money, trucks, freight cars, etc.
Distribution warehouse
A warehouse that stores finished goods and from which customer orders are assembled.
A program by which specific quality and packaging requirements are met before the product is released. Pre-qualified product is shipped directly into the customer's inventory. Dock-to-stock eliminates the costly handling of components, specifically in receiving and inspection and enables product to move directly into production.
Dock receipt
A receipt that indicates an export shipment has been delivered to a steamship company by a domestic carrier.
Domestic trunk line carrier
An air carrier classification for carriers that operate between major population centers. These carriers are now classified as major carriers.
Dormant route
A route over which a carrier failed to provide service 5 days a week for 13 weeks out of a 26-week period.
Double bottoms
A motor carrier operation involving two trailers being pulled by one tractor.
Double Order Point System A distribution inventory management system that has two order points. The smallest equals the original order point, which covers demand during replenishment lead time. The second order point is the sum of the first order point plus normal usage during manufacturing lead time. It enables warehouses to forewarn manufacturing of future replenishment orders.
Referring to the demand side of the supply chain. One or more companies or individuals who participate in the flow of goods and services moving from the manufacturer to the final user or consumer. Opposite of Upstream.
Drop Ship
To take the title of the product but not actually handle, stock, or deliver it, e.g., to have one supplier ship directly to another or to have a supplier ship directly to the buyer’s customer.
Dual operation
A motor carrier that has both common and contract carrier operating authority.
Dual rate system
An international water carrier pricing system where a shipper signing an exclusive use agreement with the conference pays a lower rate (10% to %15) than non-signing shippers for an identical shipment.
Selling goods below costs in selected markets.
The packing material used to protect a product from damage during transport.
Durable Goods
Generally, any goods whose continuous serviceability is likely to exceed three years (e.g., trucks, furniture).
Dynamic Lot Sizing
Any lot-sizing technique that creates an order quantity subject to continuous re-computation.

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