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Terms
& Definitions
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| Activity-Based Cost Accounting (ABC) | A cost
accounting system that accumulates costs based on activities performed
and then uses cost drivers to allocate these costs to products or other
bases, such as customers, markets, or projects. It is an attempt to allocate
overhead costs on a more realistic basis than direct labor or machine
hours. Source: http://www.apics.org/ (10th ed.) |
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| Activity-Based Management (ABM) | The use
of activity-based costing information about cost pools and drivers, activity
analysis, and business processes to identify business strategies; improve
product design, manufacturing, and distribution; and remove waste from
operations. Source: http://www.apics.org/ (10th ed.) |
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| Agreements | An agreement
should clearly state what you are buying and its cost. Delivery terms
and responsibility, Installation related issues, if applicable, an acceptance
provision detailing how and when the buyer will accept the products, warranty
issues, and your remedial actions should be clearly spelled out in the
agreement. Arbitration and conflict resolution mechanisms should also
be included in the contract because even the best written agreements are
subject to misinterpretation. A well-developed agreement can provide adequate
protection against economic opportunism between parties and lead to a
positive relationship. Effective long-term agreements generally have specific,
measurable objectives stated in them, including pricing mechanisms, delivery
and quality standards and improvements, cost savings sharing, evergreen
clauses, and termination of the relationship. Sources: Monczka, R., Trent, R., & Handfield, R. (1998). Purchasing and Supply Chain Management. Cincinnati, OH: South Western College Publishing. |
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| Business-to-Business Commerce (B2B) | Business being conducted over the Internet between businesses. The implication is that this connectivity will cause businesses to transform themselves via supply chain management to become virtual organizations, reducing costs, improving quality, reducing delivery lead time, and improving due-date performance. |
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