In this comprehensive PLM glossary, we demystify the language you’re sure to come across in an end-to-end retail product lifecycle management conversation.
Whether you need to train a new teammate or refresh a seasoned professional, go through this PLM glossary to come to terms with the terms (see what we did there) a retail designer, merchandiser, sourcing, or supply chain professional should have on the tip of the tongue.
RETAIL INDUSTRY GLOSSARY
Quick hit definitions, A – Z:
1. Agent – Companies that act as middleman/broker to buy volume of a product
2. Big Box Store – A store that provides a large variety of products in a large physical space (i.e. Walmart)
3. Bill of Lading – Has to be attached to everything being imported into the country
4. BOM – Bill of Materials
5. Brick & Mortar – physical free-standing retail location
6. Broadlines – When a store carries a large variety of product
7. CMT – Cut, Make, Trim
8. Co-Developed Product – Not buying off a shelf but not designing from material up
9. COGS – (Cost of goods) sold is the direct cost of producing products
10. CPG – Consumer Packaged Goods
11. Designers – Design actual clothing or products
12. DTC – Direct to Consumer
13. ELC – Estimated Landing Cost (used in Sourcing)
14. ESG – Environmental, Social & Governance
15. Hardlines – furniture, appliances, sporting equipment, home hardware items etc.
16. HTS Code – US Import looks at this to determine tariffs and cost on imported goods
17. Inventory Turn – How many times a year do you turn over all inventory
18. Line Planning – How to plan towards a financial target through PLM (carryover)
19. Market Buy – Buying based on sentiment of market and as the item is on shelf
20. Material First – Business driven by Textile not Product
21. Merchant – People who buys products for companies to sell
22. Packaway – Excess product that is “packed away” and sold to retailers wholesale i.e., TJX & Marshalls
23. Pantone – universal way of categorizing color shades
24. Sample Cost – cost of samples from vendors/suppliers
25. Slot – Placeholder (space for new item)
26. Softlines – clothing, personal items, bedding, towels, footwear, accessories etc.
27. Target IMU % – Target Markup Percentage – Something to compare against when getting costs from suppliers
28. Wholesale – channel consists of selling to a buyer or distributor who will resell the product
MORE TERMS & CONTEXT:
A process where the purchase order is compared against the supplier’s invoice and the receiving report. A good 3-Way Match compares quantities, price, and terms appearing on the supplier’s invoice to the information on the purchase order and to the quantities actually received.
A technical test performed at either the supplier’s site, the buyer’s site, or both, to audit whether the equipment bought by the buyer meets its functional and technical specifications.
Agile manufacturing is the ability of the manufacturing unit to improve specific areas of responsiveness, shortened system changeover, product customization, cost and time, and efficient scaling up and down of operations. An agile manufacturing strategy integrates Just in Time (JIT) system and Total Quality Management (TQM) to respond with agility to the uncertainties in the market demand. The need to decrease lead times and be flexible in fast fashion introduced the involvement of suppliers in the process as being crucial to their ability to attain high levels of customer satisfaction.
AQL – Acceptance Quality Level
Acceptance Quality Limit/Level (AQL) is associated with statistical sampling. AQL is also abbreviated as Acceptable Quality Level. It is the “minimal standard for a satisfactory process or product average.” It represents the maximum number of defective units acceptable in a lot, beyond which the lot is a reject.
In the apparel industry, generally, for low price items and children’s wear AQL of 6.5 and 10.0 may be quite appropriate, while for higher price items appropriate AQL may be 2.5 and 4.0. Lower the AQL value, stricter is the norm.
ASN – Advanced Shipping Notice
Advanced shipping notice (ASN) is a document that provides detailed information about a pending delivery. The purpose of an ASN is to notify the customer when shipping occurs and provide physical characteristics about the shipment so the customer can be prepared to accept delivery. ASNs facilitate the rapid flow of goods across the entire retail supply chain as receiving can be planned in advance. With the ASN, it is easier to determine which trucks contain the vendor products, so staffing becomes easier. It is sent electronically through EDI transaction set 856 allowing the companies to reduce paperwork requirements.
An auditor could be internal, customer, or external. Auditors assess the quality facilities, procedures and systems providing an independent assessment of the factory’s quality systems and an independent view of the facility’s precision in producing consistent quality products.
An internal auditor is the organization’s own employee but works independently to check non-conformance issues to take corrective action, as a preparation for second party (Customer/ Buyer) or third-party audit. A customer auditor is the employee of the organization’s customer/ buyer. A third-party auditor is hired or approved by the customer to verify their process standard and certify the manufacturer for a certain period.
AWB – Air Way Bill
AWB stands for Airway Bill. It is an air freight consignment note made out by or on behalf of the shipper that evidences the contract between the shipper and carrier(s) for the carriage of goods over routes of the carriers. ABW is a contract just for transportation and does not cover the merchandise value. It is a non-negotiable export document.
Bill of Lading
A written receipt or contract, given by a carrier, showing a list of goods delivered to it for transportation. The straight bill of lading is a contract that provides for direct shipment to a consignee. The order bill of lading is negotiable; it enables a shipper to collect for a shipment before it reaches its destination (this is done by sending the original bill of lading with a draft drawn on the consignee through a bank). When the consignee receives the lading indicating that payment has been made, the lading will be surrendered to the carrier’s agent, and the carrier will then ship the goods to the consignee, and the bill of lading will be surrendered to the carrier. Note: shippers frequently consign shipments to themselves on order bills of lading so that delivery is made only upon the shipper’s order; the person or firm to be notified upon arrival of the shipment at destination must be designated.
Blanket Purchase Order
A blanket order is defined as an order the customer makes with its supplier that contains multiple delivery dates scheduled over a period of time, sometimes at predetermined prices. It is normally used when there is a recurring need for expendable goods. Hence, items are purchased under a single purchase order (P.O.) rather than processing a separate P.O. each time supplies are needed. See also Blanket Order, Standing Order.
BOM stands for ‘Bill of Materials’. This is a list showing all raw materials or components required to make a garment and make it ready for shipment as per the buyer’s requirement. A BOM normally includes items description, consumption (per piece consumption) with a defined unit of measure, projected cost per unit and total cost of each item.
Buying, which is commonly referred to as purchasing, is the process of ordering and receiving goods and services. It describes how they will be ordered, which includes request, approval, payment and purchase order record, or P.O., and the receipt of goods. Buying is a subset of procurement, meaning it is a process within procurement.
CAD (Computer Aided Design)
CAD, or computer-aided design and drafting (CADD), is a technology for design and technical documentation, which replaces manual drafting with an automated process. It is an essential tool for pattern making, marker planning, and related jobs in the garment industry.
CAD provides several advantages as it makes design changes and revisions quick and efficient, and patterns are more accurate with less chance of mistakes.
One of the important characteristics of the computer-aided marker planning process is the higher material utilization and minimal fabric wastage. The computerized pattern grading process could improve the capacity to make several garment pattern sets in a given period of time, thereby reducing the cycle time.
In a purchasing context, the replenishment cycle represents the period of time required to order and make available for required stock (e.g., the time between receipt of the requisition and delivery of the material to the requisitioner).
ERP, an enterprise-wide system that integrates the business functions and processes of an organization, typically includes manufacturing, logistics, distribution, inventory, shipping, invoicing, and accounting. The advantage of ERP is that that it combines the data of separate departments. This helps keep information in synchronization across multiple disparate systems. ERP seamlessly manages the entire apparel process – across multiple devices – from procurement to payment. It can also have business intelligence (BI) features to assist managers in all of their decision making with graphics-based up-to-the-minute data.
Ex-factory date is the date on which the supplier (here an apparel manufacturer) needs to keep the shipment ready and need to dispatch the shipment out from the factory and hand it over to the shipment forwarder. Packing and garment inspection need to be done prior to the ex-factory date. According to the ex-factory date, the garment manufacturer plans its production schedule, pre-production and material sourcing schedule.
Final Statistical Audit
Final statistical audit is conducted by the quality team once the garments are packed in the cartons. Sample cartons for inspection are randomly selected – only from boxes that are complete. Samples from the finished seal boxes are randomly obtained as well.
The final statistical audits are done following AQL 4.0. The auditor carries out the inspection in a routine fashion so that no operation is overlooked. The approved pre-production sample and approved top-of-production sample are reviewed and the consistency with the inspection sample is checked. Garment presentation, color shade, measurements, fit and balance, and workmanship and visual defects are checked, marked, and recorded in the final audit report.
Finished Goods Warehouse
The activities associated with the finished goods (FG) warehouse/ department are the last in the apparel-manufacturing unit’s VSM process. The garments in the warehouse are packed in cartons/ boxes and are waiting to be shipped on specific dates listed on the sales order or as and when called for by the customer. The FG warehouse usually is a restricted area and has limited accessibility to only related employees. It works to ensure on-time delivery of shipment and takes care of all the shipment-related documentation. The records maintained in a FG warehouse are sectionalized as ‘shipped garments’, ‘on call or waiting garments’ and ‘stock sell garments’.
A flat sketch is the technical representation of a garment illustrating the design requirements to the manufacturer. It is neatly sketched with basic solid lines such that visual guidelines can be clearly followed. Typically, a solid line on a flat sketch represents a seam line and a dashed line represents stitching. Since a flat sketch forms an essential part of the tech pack, some of the key points to consider while making it are: Include all details and don’t omit any parts of the sketch. Include views of both front and back. If needed, add sketches to show small parts or inside of the garment.
Gantt chart is a visual view of tasks scheduled over time. It is widely used in planning, scheduling, and project management. In the apparel industry, a product development (PD) calendar can be developed using a Gantt chart format. Gantt charts are also used by the production planning and control department to plan and control the sequence of operations, to show machine loading, thereby identifying idle time, and to plan operators’ deployment on various machines, or materials procurement and delivery needs. These charts are advantageous are they offer management an easily readable and visual demonstration of a work plan and the position regarding implementation at a certain date.
Global sourcing is the process of sourcing goods and services from the international market across geopolitical boundaries. It aims to exploit global efficiencies in the delivery of a product or service. These efficiencies include low-cost skilled labor, cheaper raw materials and other economic factors like tax breaks and low trade tariffs.
GRN stands for Goods Receipt Note. GRN is a unique number that is allotted to the received goods to record the delivery of items from suppliers. The record represents the confirmation of receipt of goods to issue payment. A GRN is created and approved against an issued purchase order after physical verification of goods in terms of quantity, quality, and pricing with respect to the raised PO. On approval, GRN stickers are printed and pasted on the raw materials required by the apparel manufacturer. A GRN sticker usually has the following details:
Item code, Item name, Color/ Size, PO No., Reference No., Lot No. GRN, Quantity, Batch No., Box No./ Roll No. GRN stickers may be color coded based on the month when the goods are received.
Inventory Carrying Cost
Inventory Carrying Cost (ICC) is the cost a company incurs over a certain period of time, to hold and store its inventory. ICC is expressed as the percentage of the total value of inventory. It can be given as: ICC=(Inventory holding sum)/(Total value of inventory) X 100 The inventory holding sum is the addition of the components of ICC – cost of capital, storage and warehouse space, obsolescence and shrinkage, insurance, material handling, and taxes. Slow-moving items increase the inventory cost, while just-in-time items have a low ICC. To keep the ICC the least, a merchandiser must successfully order to fulfil demand while keeping the investment low.
A list of goods or services sent to a purchaser showing information including prices, quantities, and shipping charges for payment.
Just-in-Time (JIT) is a “pull” concept or a management philosophy to control the inventory. The raw materials orders from suppliers are directly aligned with production schedules i.e., only when it is needed, and in the desired quantities. The stock is replenished in very short cycles as small and frequent orders to ensure that an acceptable inventor fill rate and a low inventory level is maintained. The JIT manufacturing is referred to as lean manufacturing, and the JIT delivery concept accommodates fast fashion.
Kanban is a visual job order card used to achieve JIT. It is a method of regulating the flow of goods both within the factory and with outside suppliers and customers. The card indicate when more goods are needed and at what time for replenishment, and thus eliminates waste from inventory and overproduction, and minimizes line downtime. In the apparel manufacturing unit, examples of use of Kanban cards used are ‘cut to sew’ Kanban (includes cutting, sewing, trim preparation) and ‘defect’ Kanban.
Lead time is the period between the confirmation of an order to the manufacturer and the dispatch of the order to the buyer. The period comprises waiting time before or after actual manufacturing and throughput time. The different lead-time referred to in an apparel-manufacturing unit are – customer lead time ( time between order confirmation and order fulfilment), material lead time (time order placement with a supplier and receiving in-house), production lead time (time taken for manufacturing the garment), delivery lead time (time between order receipt and merchandise being shipped out of the factory)
Lean manufacturing is a way of manufacturing with the goals to reduce waste in human effort and inventory, reach the market on time, and manage manufacturing stocks that are highly responsive to customer demand while producing quality products in the most efficient and in an economical manner without waste. The types of waste are waste from overproduction, waste of waiting time, transportation waste, inventory waste, processing waste, waste of motion, and waste from product defects. Some of the tools used for lean manufacturing are 5S, Kanban, Kaizen, Jidoka, Poka-Yoke, Andon, Just-in-time, Gemba.
A line is defined as a group of operators under the control of one production supervisor. In the sewing line, a number of sewing machines (including different types of sewing machines and non-sewing equipment) are placed in a line according to the process sequence requirement. Sewing lines have different arrangement of the workstations. Garment bundles are loaded at one end of the line and moved from one workstation to another, and finally stitched garments come out from the line. There are multiple sewing lines in an apparel manufacturing unit.
Line balancing is the technique of maintaining the same level of inventory at each operation at any point of time to meet the production target and to produce garments of acceptable quality. The work-study officer does line balancing by doing the product analysis, process analysis, and capacity analysis, and then allocating the available operators to the operations. The line balancing needs to be done such that target is fulfilled, priorities of operations are met, operators and machines are properly utilized, and the idle tie for operators is minimized. A well-balanced line has a smooth workflow, no bottlenecks are created, and the operators are able to work at peak performance throughout the day.
Line efficiency is the efficiency measurement for the sewing line. It is also termed line utilization. Line efficiency is expressed as a percentage and given as: Line Efficiency=(Total minutes produced)/(Total attended minutes) X 100 Where, Total minutes produced = Production (line output) X SAM of garment Total attended minutes = No. of operators X Time in working hours X 60
Line planning is scheduling and allocating of orders to production lines according to product requirements and due dates of production completion. Based on available time and production capacity of a line, a planner may have to plan for multiple lines for an order. A planner decides on which date a style to be loaded and how many lines to consider so that the style meets the production completion date. An assessment needs to be done whether a style can be loaded on to a particular line. Based on the timeline, the planner needs to decide whether to allocate one line or more than one line to the order.
The gap between final cost and selling price.
Merchandise management is the process by which a merchandiser attempts to offer the right quantity of the right merchandise in the right place at the right time and meet the company’s financial goals. The supply is matched with the demand by looking after performance objectives for sales, inventory, and other finance-related processes. There are several merchandising planning software solutions commercially available.
A merchandiser is a person with planning capability, decision-making skills, and strong communication skills, who synchronizes with the design team to successfully exhibit the product. The function of merchandising in a manufacturing unit involves the conceptualization, development, costing, procurement of raw materials, production scheduling, sample approvals, production control, bottleneck identifications, communication with buyers, and dispatch of products to buyers.
OTIF – abbreviation for ‘On-Time, In Full’. OTIF is a KPI to measure the extent to which shipments are delivered to their destination according to both the quantity and schedule specified on the order by the buyer. It is expressed as a percentage. An extension of OTIF is on-time, in-full and error-free. Equation: OTIF = Cases matching the criteria / Total number of cases Criteria: On Time= Delivery Time – Confirmed delivery time In Full= Delivered amount – Confirmed amount
Open To Buy (OTB)
A purchasing budget for future inventory orders that a company creates for a specific period. An OTB plan helps a company stock the right amount of the right products at the right time by showing the difference between how much inventory is needed and how much is available.
A packing list is a document belonging to the finishing/ shipment department. It is one of the mandatory documents for export of goods. The shipper or forwarding agent uses the packing list to determine the total shipment weight, volume and item wise list of the materials shipped to ascertain shipment of the right cargo. The customs broker or forwarder generally requires the packing list of a consignment in order to book the shipping space and to obtain the S/O and/or to prepare the shipping note.
A product is considered part of a private label when it is manufactured by a third party but sold under the brand name of the retailer. Also known as own brand, private brand, and store brand.
The selection of items to be stocked. Buyers usually work closely with designers and their designated sales representatives who attend trade fairs, wholesale showrooms and fashion shows to observe trends, and then based on sales and sentiment, they purchase the goods to be stocked.
The selection of items to be stocked. Buyers usually work closely with designers and their designated sales representatives who attend trade fairs, wholesale showrooms and fashion shows to observe trends, and then based on sales and sentiment, they purchase the goods to be stocked.
The act of acquiring materials, trimmings and/or goods for bulk production through purchase from selected or nominated vendors and suppliers.
Purchase Order (PO)
A purchase order (PO) is an official contract between a buyer and a seller, created by the buyer before their purchase is made. This document includes a variety of important order details, such as the number of products needed, product type specifications, and payment and delivery information.
Product Development Calendar
Product Development is the process of setting up collections for the season by carrying out market trend research, conceptualizing and developing a line of products using the technical design process, making proto samples of the styles with standards, identify sourcing requirements and suppliers involved, costing, and plan the manufacturing. The PD Calendar is a chart that represents these activities in a planned and scheduled manner, roles and responsibilities of the individuals initiating and achieving each task to accomplish them on time.
The PD calendar aids in coordinating, monitoring, controlling, disciplining individuals for efficient task completion. The timeline and activities in the PD calendar may vary from company to company depending on factors such as the product type, the company’s business practice.
Quality Assurance (QA)
Quality assurance (QA) can be defined as “part of quality management focused on providing confidence that quality requirements will be fulfilled.” The main purpose of quality assurance is to verify that quality control is being maintained. It includes all the planned and systematic activities implemented within the quality system that can be demonstrated to provide confidence that a product or service will fulfil requirements for quality. It serves those who are not directly responsible for conducting operations but who have a need to know such as plant, functional, or senior management; corporate staffs; regulatory bodies; customers; and the general public. Quality assurance may be provided through warranties, use of a mark or seal, through audits, etc.
Quality control refers to the process of maintaining given standards of the product such that they meet the intended requirements and achieve customer satisfaction. The primary purpose of quality control is to maintain control by evaluating the performance during operations, comparing it to the goal, and acting on the difference. A quality control checklist is used in the production floor to assess the product quality by being unbiased. Quality control in the apparel-manufacturing unit involves the following:
Pre-production quality control/ material quality control (fabric, trims, and accessories) . Quality control during production (defects during spreading, cutting, sewing, pressing, and finishing) . Final inspection (test for performance requirements, overall appearance, and sizing and fit)
Samples (Garment Samples)
Samples are a representation of the garment made as per the specifications provided by the buyer to foresee the finished product appearance, fit, production capability when produced in bulk by the manufacturer. There are various types of samples at different stages that need to be approved for proceeding with the production process. Samples also aid to determine the fabric consumption, thread consumption, and the requirement for various accessories. The different kind of samples are: Proto, Fit, Size set, Salesman, Photoshoot, Development, Pre-production, Top of production, Counter, Shipment, Showroom, GPT (tests), Gold seal/sealed, red tag, and Digital Garment.
The manufacturer carries out improvement based on the approval and comments provided after assessing the samples at their respective stages.
(Pronounced skew) SKU is short for ‘Stock Keeping Unit’. It is an alphanumeric code assigned to inventory that allows the manufacturer and buyer to track their stock/ product in inventory, and measure product sales. Another term associated with SKU is the SKU planning frequency. This relates to how frequently the production of a firm plan as a reaction to changes in the forecast or in order demand. The frequency can be monthly, biweekly, weekly, or daily.
Stock Core Merchandise
Consists of basic “core” items that people need to replace on a regular basis. Examples of core items would be a basic t-shirt that comes in 5 core colors. White, black, heather gray, charcoal, and navy.
A document that contains a sketch of the garment design and garment construction details is called specification sheet or spec sheet or simply garment spec. A designer makes the spec sheet to communicate design detailing and how the garment to be constructed. A spec sheet includes measurements of point of measures (POM) of the apparel product/design. These details (specs) should be stated with minimum words. The numbers of units of measurements with plus-or-minus tolerance limits with reference to the aesthetic features that control quality standard need to be clearly mentioned in a spec sheet. Sometimes spec sheet may be corrected after sample development and checking the sample fitting on live model or on the dress-form.
Where more than one supplier is used to buy the same item.
Supply Chain Management
The organizational structure and management function includes all facets of the acquisition and delivery of material from the supplier to the final customer. The purpose of the structure is to eliminate inefficiencies, facilitate rapid communication, to minimize inventory and to minimize delivery time throughout the structure.
Takt time is the pulse of the production system i.e., the pace of production needed to meet the customer demand. It depends on monthly production demand, if the demand increases the Takt time decreases, if the demand decreases the Takt time increases. It links production activity to actual customer demand and ensures all the production activity will be synchronized from first process to final assembly process. It also indicates to what extent the supplier is able to deliver the required number of gears to the customer.
Tech pack is a document obtained from the buyer containing all required details for execution of the order/ manufacturing a garment. It covers all the details and technical information of a particular product style such as product style design, measurement details of garment, tolerances, type of fabric and construction, style code of a product, surface ornamentation details if any etc. It provides necessary information required for various departments. For example, for the cutting department documents such as marker planning, marker consumption etc. and for the sewing department, details such as construction details, measurements etc. are provided by the tech pack.
Throughput time is the amount of time the product takes to pass through the manufacturing phase, thereby being converted from raw materials into finished goods. It includes the actual processing time and the time a style waits to be processed ahead of each operation. Throughput time may be given from when the fabric is cut to when the garment is shipped, or a lines throughput is considered as the time required “from loading first bundle to the line to get first garment out from the line”.
WIP (Work in Progress)
Work in progress (WIP) refers to the pieces of semi-finished items which are transported from one workstation to the other, waiting to be worked upon for its completion. It can be measured as the time the product is under work in progress stage as well. A reasonable level of WIP should be maintained. Higher levels of WIP add to production costs, and lead to longer lead times. A very low WIP will not give the supervisor sufficient time to react to a breakdown. WIP can be managed by production planning, trims control, production build-up, line balancing, cut-flow control.
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