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Finance for the Uninitiated

Logistics Management
- Mary Thomas
Logistics Management is that part of Supply Chain Management that plans,
implements, and controls the efficient, effective forward and reverse flow and storage
of goods, services, and related information between the point of origin and the point
of consumption in order to meet customers requirements. This month, lets look at
some terms commonly used in Logistics Management.
ABC Model: In cost management, this model is
used as a representation of resource costs, during a

categories of information or enter specific areas of a

facility. This process involves matching machine-

time period, that are consumed through activities.

These costs are traced to products, services, and

readable code with a predetermined list of authorised

end users. 2) A practice of establishing the validity of

customers or to any other object that creates a demand

for the activity to be performed.
ABC System: In cost management, this system

a message or device, which was designed to provide

protection against fraudulent transmissions.
Authentication Key: A short string of characters

maintains financial and operating data on an

organisations resources, activities, drivers, objects

used to authenticate transactions between trading

partners.

and measures. ABC models are created and

maintained within this system.
Abnormal Demand: Demand in any period

Application Service Provider (ASP): A company

that offers access over the Internet to applications
(examples of applications include word processors,

outside the limits established by management policy.

This demand may come from a new customer or from

database programs, Web browsers, development

tools, communication programs) and related services

existing customers whose own demand is increasing

or decreasing.
Accounts payable (A/P): The value of goods and

that would otherwise have to be located on their own

computers. Sometimes referred to as apps-on-tap,
ASP services are expected to become an important

services acquired for which payment has not yet been

made.

alternative, especially for smaller companies with low

budgets for information technology. The purpose is

Accounts receivable (A/R): The value of goods

shipped or services rendered to a customer from
whom payment has not yet been received. Usually

to try to reduce a companys burden by installing,

managing, and maintaining software.
Appraisal Costs: These are costs associated with

includes an allowance for bad debts.

Accreditation: Certification by a recognised body

the formal evaluation and audit of quality in the firm.

Typical costs include inspection, quality audits,

of the facilities, capability, objectivity, competence,

and integrity of an agency, service, operational group,
or individual to provide a specific service or

testing, calibration, and checking time.

Aggregate Planning: A process to develop tactical
plans to support the organisations business plan.

operation.
Accuracy: In quality management, the degree of

Aggregate planning usually includes the

development, analysis, and maintenance of plans for

freedom from error or the degree of conformity to a

standard. Accuracy is different from precision.
Authentication: 1) The process of verifying the

total sales, total production, targeted inventory, and

targeted customer backlog for families of products.
The production plan is the result of the aggregate

eligibility of a device or individual to access specific

planning process. Two approaches to aggregate

Advanc'edge MBA / January 2004

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planning existproduction planning and sales and

operations planning.

Activity-Based Planning (ABP): Activity-based

planning is an ongoing process to determine activity

Agility: The ability to successfully manufacture

and market a broad range of low-cost, high quality
products and services with short lead times and

and resource requirements (both financial and

operational). It is based on the ongoing demand of
products or services by specific customer needs.

varying volumes, thus providing enhanced value to

customers through customisation. Agility merges the

Resource requirements are compared to resources

available and capacity issues are identified and

four distinctive competencies of cost, quality,

dependability, and flexibility.
After-Sale Service: Services provided to the

managed. Activity-Based Budgeting (ABB) is based

on the outputs of ABP.
Activity-Based Management (ABM): A discipline

customer after products have been delivered. This can

include repairs, maintenance and/or telephone

focusing on the management of activities within

business processes as the route to continuously

support. [Synonym: Field Service.]

Aggregate Forecast: An estimate of sales, often
time-phased, for a grouping of products or product

improve both, the value received by customers and

the profit earned in providing that value.
Acknowledgment: A communication by a supplier

families produced by a facility or firm. Stated in terms

of units, rupees, or both, the aggregate forecast is used

to advise a purchaser that a purchase order has been

received. It usually implies acceptance of the order

for sales and production planning (or for sales and

operations planning) purposes.
Actual Costs: The labour, material, and associated

by the supplier.
Acquisition Cost: In cost accounting, the cost
required to obtain one or more units of an item. It is

overhead costs that are charged against a job as it

moves through the production process.

order quantity times unit cost.

Advanc'edge MBA / January 2004