Supply Chain Management main glossary

This is a glossary of key terms used throughout the site.

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ABC classification

The ABC classification (also called the 80/20 rule or the Pareto analysis) is a method of classifying inventory according to their relative importance. The items are classified as either A, B or C as follows: A -Very important; B -Moderately important; C -Least important. This approach enables the organisation to concentrate on high value or otherwise important items, while not neglecting the other categories.


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Active pharmaceutical ingredient

An Active Pharmaceutical Ingredient (API) is the key substance of a medicine which provides pharmacological activity or therapeutic effect in the diagnosis, treatment or prevention of a disease.

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Aircon storage

Aircon storage refers to facilities or containers where medicines or health products are stored below a certain temperature with the help of airconditioning. The temperature range is normally under 23 °C. Aircon storage contrasts with cold storage where temperature stays between 2-8 °C or with ambient storage where products are stored at room temperature.

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Allopathic medicine

Allopathic medicine refers to the mainstream system of medical practice in Western countries. Also called Western medicine, bio-medicine, evidence-based medicine or modern medicine.

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Ambient storage

Ambient storage refers to facilities or containers where medicines or health products are stored at room temperature. Ambient storage contrasts with cold storage where temperature stays between 2-8 °C and with aircon storage where products are stored under 23 °C.

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An audit is an independent, objective inspection of the accounts, statutes or performance of an organisation, designed to add value and improve its operations, governance processes, and the effectiveness of its risk management.

A regulatory audit will obtain independent verification of financial and other information reported to regulators. A performance audit is concerned with relevance, economy, efficiency and effectiveness. Internal auditing provides an assessment of internal controls undertaken by a unit which reports to management, while external auditing is conducted by an independent outside organisation.

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Average monthly consumption

The average monthly consumption (AMC), also known as average monthly use is a measure of how much a consumable product, such as a medicine, has been used on average per month. It is calculated by dividing the total annual consumption of a medicine by the number of months in stock.

$$AMC = \frac{total\ annual\ consumption}{N^{o}\ of\ months\ in\ stock}$$

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A batch or a lot is a defined quantity of products (with its packaging) which went through a single production process and thus is expected to be homogeneous. The size of a batch depends on a fixed quantity, or the amount produced in a fixed time interval.

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Batch number

A batch number or lot number is a unique combination of numbers and/or letters given to a batch and its corresponding labels, certificate of analysis, and other documentation.

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Batch release

A batch release or lot release is a procedure by which different batches are tested to assess if they meet all the required product specifications as defined by the relevant standards.

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