The Terms

Operations Terms Every Owner and Student Should Know

Each term below is taught by its real textbook name in Operations for Small Businesses, Book 3 of Dr. Paul's Fabled Forest Business School Series. The tag under each definition shows the chapter that teaches it. Click it to see the full foundation on the small business operations guide.

Backup Supplier
A second place to buy something you cannot operate without, set up before you need it.
Chapter 10: Supply Risk and Backup Suppliers →
Booking Limit
The most you will sell of any one time slot, tour, or appointment. When it is full, it is full.
Chapter 8: Capacity Planning and Booking →
Bottleneck
The slowest step in a process. The whole process can only move as fast as this step. Also called the constraint.
Chapter 18: The Bottleneck →
Capacity
The most your business can produce or deliver in a set time with the people, hours, and equipment it has.
Chapter 7: Capacity →
Capacity Constraint
Whatever sets your capacity: hours, hands, or the time each unit takes.
Chapter 7: Capacity →
Capacity Gap
The difference between what customers want and what you can actually deliver.
Chapter 7: Capacity →
Capacity Planning
Working out ahead of time how much you can deliver, then planning work and bookings around that number.
Chapter 8: Capacity Planning and Booking →
Change Cycle
A steady rhythm for improvement: set a standard, try one change, test it fairly, keep it or drop it, then hold still again.
Chapter 6: Process Discipline →
Checklist
A short written list of what must happen every time, clear enough that anyone can follow it and anyone can check it.
Chapter 4: Service Standards →
Complaint Handling
The set steps a business follows when a customer complains: who hears it, what they say first, and what they can offer.
Chapter 16: Service Recovery →
Custom vs. Standard
Custom work changes every time. Standard work is the same every time. Most jobs are mostly standard, with a custom piece in the middle.
Chapter 1: Standard Work →
Cycle Time
How long one unit or order takes from start to finish.
Chapter 17: Operational Metrics →
Defect Rate
The share of work that has to be fixed, redone, or returned.
Chapter 17: Operational Metrics →
Delivery Schedule
A regular, set day for each customer's delivery.
Chapter 9: Supplier Management →
Delivery Zones
Sections of a service area, each served on a set day or time, so vehicles do not cover the same ground twice.
Chapter 12: Routing and Load Planning →
Demand vs. Capacity
How much customers want compared with how much you can deliver well.
Chapter 8: Capacity Planning and Booking →
Downtime
Time a machine, or a whole business, cannot work because something is broken.
Chapter 20: Preventive Maintenance →
Due Date
The date the customer needs the work finished.
Chapter 5: Lead Time and Due Dates →
Flow
How smoothly work moves from one step to the next. Wherever work piles up, flow is blocked.
Chapter 18: The Bottleneck →
Follow-Up
Contacting a customer after the sale, every time, not only when something went wrong.
Chapter 16: Service Recovery →
Fuel per Delivery
Fuel cost divided by the number of deliveries. One number that shows whether your routes are working.
Chapter 12: Routing and Load Planning →
Hand-Off
The moment work passes from one person or team to another. The most common place for mistakes.
Chapter 15: Hand-Offs and Order Tracking →
Hazard
Anything at work that could cause harm.
Chapter 19: Workplace Safety →
Inventory Count
Physically counting everything on the shelves, item by item.
Chapter 11: Inventory Management →
Inventory Management
Keeping track of what you have, what you use, and when to order more.
Chapter 11: Inventory Management →
Job Ticket
One page that travels with a job from start to finish and gets signed at every hand-off.
Chapter 15: Hand-Offs and Order Tracking →
Lead Time
How long it really takes from the moment a customer orders until they have what they ordered.
Chapter 5: Lead Time and Due Dates →
Load Plan
How a vehicle is packed: last stop in first, first stop in last.
Chapter 12: Routing and Load Planning →
Maintenance Schedule
A list of each machine, the parts that wear out, and how often each part gets checked.
Chapter 20: Preventive Maintenance →
Mise en Place
French for everything in its place. The kitchen habit of preparing everything before service starts.
Chapter 3: Workflow and Prep →
Near Miss
Something that almost caused an injury and did not, this time. A warning worth writing down.
Chapter 19: Workplace Safety →
On-Time Rate
The share of orders delivered on the date you promised.
Chapter 17: Operational Metrics →
Operational Metrics
Numbers that show how well the work itself is going day to day, separate from the money.
Chapter 17: Operational Metrics →
Order Confirmation
Telling a customer you received their order: what it is, how much, and when it will arrive.
Chapter 9: Supplier Management →
Order Tracking
Knowing where every open order stands at every moment.
Chapter 15: Hand-Offs and Order Tracking →
Output per Day
What a business actually produces in one day.
Chapter 7: Capacity →
Overbooking
Selling more than you can deliver and hoping enough customers cancel.
Chapter 8: Capacity Planning and Booking →
Owner per Task
One name beside every line of a plan, so nothing becomes everyone's job and therefore no one's.
Chapter 13: The Run Sheet →
Par Level
The amount you refill an item to, counting what is on the shelf plus what is already on order.
Chapter 11: Inventory Management →
Portion Control
Making every serving the same size, every time, for every customer.
Chapter 2: Product Consistency →
Prep
Doing the steps that do not need the customer before the customer arrives.
Chapter 3: Workflow and Prep →
Prep List
A list of everything that must be ready before service: how much, by when, and who owns it.
Chapter 3: Workflow and Prep →
Preventive Maintenance
Checking and servicing equipment on a schedule, before it breaks.
Chapter 20: Preventive Maintenance →
Process Discipline
Setting one standard way to do the work and sticking to it, on purpose, until there is a reason to change.
Chapter 6: Process Discipline →
Product Consistency
A customer gets the same thing every time they order it.
Chapter 2: Product Consistency →
Promise Date
The date you commit to, built from your real lead time, adjusted for the job, plus a buffer.
Chapter 5: Lead Time and Due Dates →
Quality Standard
A written description of what a good finished product looks like, clear enough for anyone to check.
Chapter 4: Service Standards →
Quality vs. Speed
The trade-off every operation manages. The goal is not to rush, but to know how long good work takes and be honest about it.
Chapter 5: Lead Time and Due Dates →
Recipe Card
One page with the ingredients, amounts, steps, and a description of the finished item.
Chapter 2: Product Consistency →
Reorder Point
The amount of an item that means order now: enough to last until new stock arrives, plus a cushion.
Chapter 11: Inventory Management →
Routing
Deciding which stops a vehicle makes, and in what order, to cover the fewest miles.
Chapter 12: Routing and Load Planning →
Run Sheet
One page that lays out an event or busy day in time order: what happens, when, who owns it, and what must happen first. Also called a run of show.
Chapter 13: The Run Sheet →
Run-to-Failure
Using equipment until it breaks, then fixing it. Fine for cheap items, costly for anything your busiest hours depend on.
Chapter 20: Preventive Maintenance →
Safety Checklist
A short list of things checked every day before work starts.
Chapter 19: Workplace Safety →
Safety Stock
A small extra supply kept on hand and rotated oldest first, used only when a delivery does not come.
Chapter 10: Supply Risk and Backup Suppliers →
Schedule Lead Time
How far ahead a work schedule gets posted.
Chapter 14: Staff Scheduling →
Scheduling Authority
Who is allowed to make and change the schedule. It works best with one person.
Chapter 14: Staff Scheduling →
Service Recovery
How a business responds when something goes wrong for a customer, whether or not it was the business's fault.
Chapter 16: Service Recovery →
Service Standard
A written description of what every customer receives, every time, from anyone on the team.
Chapter 4: Service Standards →
Shift Coverage
Making sure every role is filled on every shift.
Chapter 14: Staff Scheduling →
Single Source
Buying an important item from only one supplier.
Chapter 10: Supply Risk and Backup Suppliers →
Single Source of Truth
One place, like one board or one system, where everyone checks the current status of the work.
Chapter 15: Hand-Offs and Order Tracking →
Specification
A description of a finished product clear enough that anyone could check it.
Chapter 2: Product Consistency →
Staff Scheduling
Deciding who works when, ahead of time, based on how busy the business will be.
Chapter 14: Staff Scheduling →
Standard Work
The part of a job done the same way every time, written down once, so anyone trained can do it.
Chapter 1: Standard Work →
Standardization
The habit of finding the standard part of every job and locking it in.
Chapter 1: Standard Work →
Station Setup
Arranging a workspace so each worker has what they need within reach and the work moves in one direction.
Chapter 3: Workflow and Prep →
Supplier Management
Handling the relationships between a business and the businesses it buys from or sells to, so both sides can plan.
Chapter 9: Supplier Management →
Supply Risk
The chance that something your business needs will not be there when you need it.
Chapter 10: Supply Risk and Backup Suppliers →
Throughput
How much finished work comes out the end of a process in a set time.
Chapter 18: The Bottleneck →
Timeline
Every task for an event or project, in the order it has to happen.
Chapter 13: The Run Sheet →
Workflow
The path work takes from start to finish: every step, in order, and where it happens.
Chapter 3: Workflow and Prep →
Workplace Safety
Making sure the people who do the work go home unhurt, every day.
Chapter 19: Workplace Safety →
Operations for Small Businesses book cover

A term is a label. A system is what fixes the problem.

Every term here shows up in the book inside a real breakdown: a kitchen in the rush, a truck running empty, a line out the door. 20 foundations, a Nutshell for each, and the Owner's Scorecard. Book 3 of Dr. Paul's Fabled Forest Business School Series.

Get the Book →

Put the Terms to Work

Start With the Foundation You Need

Knowing the word helps you name the problem. A foundation helps you fix it. These are the ones owners ask about most.

Foundation 18The BottleneckFoundation 07CapacityFoundation 01Standard WorkFoundation 11Inventory ManagementFoundation 14Staff SchedulingFoundation 05Lead Time and Due DatesFoundation 17Operational MetricsFoundation 20Preventive MaintenanceFoundation 08Capacity Planning and BookingFoundation 03Workflow and PrepFoundation 15Hand-Offs and Order TrackingFoundation 16Service Recovery

All 20 are on the small business operations guide, with a free self-check and a sample chapter. More subjects are in the Small Business Education Center.

Written by Dr. Paul Borosky, DBA, MBA, business consultant and author who helps owners build businesses that run on systems. Want help building yours? See Dr. Paul's fractional COO services.

This page is for general educational purposes only. It is not legal, safety, employment, or other professional advice. For decisions about your own business, consult a qualified professional.