ERP Glossary - L: Lean Manufacturing to lot Size

Lean Manufacturing

Lean manufacturing is a manufacturing strategy that aggressively attempts to minimize waste in a system, where waste is defined as anything which does not create value to the end customer.

Legacy Systems (or Applications)

Legacy systems refer in general, to computer programs written specifically for a single organizational function, before the days of integrated software or ERP systems. Legacy systems tend to be highly customized, somewhat difficult to maintain, and are strongest where administrative labor was replaced: payroll, accounts payable, accounts receivable, order entry, etc. Legacy systems almost always have to talk to each other by means of limited data interfaces.

Letter of Credit

A letter of credit is a financial document issued by the bank of a foreign buyer as a means of ensuring payment for a commercial transaction. The letter of credit make the buyer’s bank a guarantor, thus reducing the risk of payment default between the buyer and seller.

Life Cycle Cost

The total cost of a product from cradle to grave, starting with research and development expenses, including any and all maintenance costs, and ending with any landfill, disposal, or recycling costs. As environmental concerns increase, non -biodegradable products are likely going to require more and more special and more costly disposal costs.

LIFO

LIFO is an acronym for "Last In First Out", normally associated with an inventory strategy. LIFO means that you always consume your most recently purchased raw materials first (which requires that the raw materials can be stored indefinitely without deteriorating). The normal advantages of LIFO are (a) the inventory is often easier to get to (tends to be toward the front of an aisle or storage bay and (b) it tends to reduce the financial value of inventory (inflationary pressures drive prices up, so directionally, older raw materials are cheaper than current raw materials).

Liquidity

The degree to which assets can be turned rapidly into cash. Financial instruments, like stock, can be turned into cash in a few minutes, and are more liquid than inventory, which can be turned into cash in a few days, which is more liquid than raw materials, which can be turned into cash in a few weeks, and so on.

List Price

List price is the published and publicly available price of a product or service. Customers might negotiate a reduction to the list price based on volume, service concessions, ancillary costs, or other mitigating business factors.

Lot Number

Lot number is a numeric or alphanumeric name assigned to a given quantity of a material which was processed at the same time or within the same manufacturing run.

Lot Size

The preferred quantity of a production run, either because of cost, quality, equipment requirements, or raw material availability reasons.

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Richard Barker

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Richard Barker