Glossary
You find below is a list of common terminology used in the Supply Chain and Logistics industries. Learn more about omni-channel logistics, cloud warehousing, eCommerce fulfillment, last-mile logistics, and transportation:
General Supply Chain Terminology
3PL
A common abbreviation, stands for Third Party Logistics. See Third-Party LogisticsDCA commonplace abbreviation for a distribution center. A distribution center is the warehouse where inventory is stored and sent to fulfillment centers or retail stores as orders are placed
Distributor
Refers to clients who sell products through retail and wholesale partners
Inbound Shipment
Inventory that comes into the warehouse
Outbound Shipment
Inventory that is sent out of the warehouse
Order Fulfillment
The process of receiving an order and sending items to a customer
Forecast
Estimated volumes for inbound and outbound activity
Freight
Inventory that is moved in large quantities by road, rail, ocean, or air.
Freight Forwarder
A company that organizes inventory shipments in large quantities, either by road, rail, ocean, or air, from the supplier location to where the goods will be assembled and/or distributed. Forwarders typically take possession of the inventory and handle all aspects of the movement including customs, storage, and paperwork
Third-Party Logistics (3PL)
Commonly abbreviated to 3PL, this refers to companies that offer warehousing solutions and services for multiple customers. These services can include, but are not limited to: warehousing, trucking, VAS (value added services), labeling, cross-dock, transload, etc. These companies often require long-term contracts with customers to ensure security
Third-party warehouse
Warehouse operated by a 3PL company that houses the products of their clients
Unit of measure
Can be abbreviated to U/M. Refers to the measure of how an item will be shippedExamples: Carton, case, unit, pallet, bag, sack
Logistics Technology TerminologyAdvanced Shipment Notification (ASN)
Notifications that provide visibility on an order prior to arrival. Pertinent information for these include, but are not limited to: PO number, piece count, number of items, etc.EDIAbbreviation for Electronic Data Interchange. Refers to the interactions between multiple computer systems to expedite and streamline communication of logistics feeds. In logistics, examples of EDI feeds include shipment information, inventory documents, or to send invoices
Inventory Management System (IMS)
Tracking of inventory from inbound receiving, storage, through outbound shipping to ensure correct amounts and minimize inventory shrinkage. Provides critical information to vendors for when restocking is needed
Order Management System (OMS)
Technology that is used for order entry and processing
Platform
A group of technologies that are used as the foundation for various service offerings (e.g. WMS, IMS, OMS, TMS)
Transportation Management System (TMS)
Technology that is used for booking transportation, route planning, shipment visibility while in transit, and delivery metrics
Warehouse Management System (WMS)
Software programs designed for the specific task of tracking inventory and movement of product while in the warehouse
eCommerce & Retail Terminology
B2B
A common abbreviation for Business-to-Business. Refers to businesses that sell products to other business entities for use in running their operations. Examples of products include computer equipment, books, food goods, or machinery
B2C
A common abbreviation for Business-to-Consumer. This refers to any business that is selling to a consumer (a non-business entity) for final consumption of the product.
Brick and Mortar
Refers to a physical storefront location where consumers can purchase products
D2C
A common abbreviation for Direct-to-Consumer. This refers to clients who manufacture or assemble products then sell those products to the end user without the use of a distributor or retailer
Omnichannel
Refers to clients who sell through both eCommerce and brick-and-mortar channels and want to provide a seamless customer experience between the two
Distribution & Fulfillment Terminology
Allocations
Product in the warehouse that has been assigned to an order in a WMS (warehouse management system)
Available
All inventory that is eligible to be shipped and is not damaged, on hold, or allocated
Batch Picking
A picking method whereby one SKU is picked one time for all applicable orders and then distributed across multiple orders in a staging or packing location
Case/Carton
Units of goods are in corrugated packaging
Case Picking
Method of picking inventory where individual cases are picked then either palletized or shipped as a unit via small parcel (FedEx, Aramex, etc.)
Cycle Time
The amount of time it takes to get an order from order entry to the shipping dock
FIFO/FEFO
Abbreviation for “first in, first out” or, for perishable products, “first expired, first out”. Process in which the first unit of a given SKU received at the warehouse is the first to be sent out when an order is placed. If no other guidelines are given, the standard protocol is to ship the oldest unit of a given item first to ensure that product does not sit for too long
LIFO/LEFO
Abbreviation for “last in, first out” or, for perishable products, “last expired, first out”. The opposite of FIFO; refers to when the last unit of a given SKU received at a warehouse would be the first item to get sent out when an order is placed
Kitting
When multiple SKUs are combined in one package to create a new SKU
Picking/Mis-Picking
The process of selecting a SKU from its location in the warehouse in preparation of shipment. A mis-pick means the wrong SKU was selected
Pallet Picking
A system or operation in which full pallet quantities are ordered and shipped. Full pallet picking is also known as unit-load picking
Pick-to-Carton
Items in the warehouse are picked and placed directly into the shipping carton. This process eliminates the need to move the items to a dedicated packing station in the warehouse
Piece Picking
A picking operation where individual pieces are picked and shipped, as opposed to case or full pallet. Mail order catalog companies and repair parts distributors are good examples of piece-pick operations
Vendor Compliance/Retail Compliance
The rules put in place by the retailer for its vendors on how product will be delivered, such as how pallets are created, labels, EDI transmissions, and delivery times
Wave Picking
A feature of the Warehouse Management System (WMS) that assigns orders with similar characteristics into short intervals throughout the day in order to support labor planning and efficient warehouse operations
Warehousing & Inventory Storage Terminology
Dry Storage
Dry storage facilities offer dry, clean, well ventilated storage with no air conditioning, which is usually somewhere in the range of 30° to 40°C.
Ambient Storage
Temperature-controlled storage designed for perishable items that need to be kept at room temperature while in the warehouse. Temperatures in ambient storage typically range from 15° to 25°C.
Chilled Storage
Chilled storage designed for perishable items that need to be kept refrigerated while in the warehouse. Temperatures in chilled storage typically range from 0° to 15°C.
Frozen Storage
Frozen storage designed for perishable items that need to be kept frozen while in the warehouse. Temperatures in frozen storage typically range from -15° to -5°C.
Cross-Dock
Product or orders that are brought into the warehouse but not put-away, rather held at the dock for a short period of time before being loaded out of the warehouse onto another truck
Cycle Count
The act of physically auditing the inventory in a warehouse to maintain accurate counts against what the technology systems show
Dead Stock
Product that has been in inventory for an extended period of time without being moved or ordered
Floor Storage
Inventory is stored on the floor of the warehouse. Typically reserved for pallets or bulky items
Rack Storage
Inventory is stored on racks, similar to shelves, in the warehouse. Racks allow for inventory to be stacked vertically and still maintain easy access
Bin Storage
Inventory is stored in small bins. This is useful for small items with multiple SKUs that are being fulfilled as one-off picks, such as clothing
Pack Station
The area of a warehouse where inventory is brought to be packaged and shipped out
SFDA-approved Warehouse
A warehouse that is certified by SFDA to store food, medical equipment, cosmetics or drugs. Warehouses must maintain strict sanitation requirements to receive certification from the Saudi Food and Drug Authority.
Inventory
All of the items in stock for a given customer. Can be classified as available, allocated, on-hold, or damaged
Inventory Shrinkage
Refers to inventory that has been “lost” in the warehouse so there are fewer items in-stock than the inventory management report shows. Shrinkage can result from a multitude of reasons such as an item being placed in the wrong area of a warehouse, receiving mis-counts, or theft
Just-in-Time (JIT)
An inventory system that aims to coordinate the arrival of materials or supplies at a facility at the moment that they are needed in an effort to reduce storage and holding costs
LPN
LPN is an abbreviation for “license plate number” in the warehouse management system. An LPN is any group of items that are packed together in the warehouse (i.e. by lot, serial numbers, location, etc.). They are typically grouped by the container, such as by pallet or bin
Master Carton
The outer carton used to contain multiple smaller cartons. Generally used for wholesale distribution purposes (e.g. shipping multiple items to a retail location)
Mixing Center
A process in which the warehouse will mix products from multiple vendors into one shipment to an end customer in order to reduce shipping costs
Mixed Pallet
A pallet that contains more than one product type or SKU
Pallet
Equipment on which goods are stacked in order to be easily transported, having easy access slots for forklifts. Can be made from wood, plastic, metal, or composite materials
Pallet ID
The bar code tag that is placed on a pallet for tracking purposes
Pinwheeling
Pinwheeling is a process of arranging the direction of pallets, or product on a pallet, to maximize the amount of pallets or product that will fit in the space
Radio frequency identification (RFID)
Refers to a method of paperless scanning of inventory. RFID tags are scanned to show when items enter or leave the warehouse and allow better tracking of inventory
SKU
Abbreviation for Stock Keeping Unit. This is a unique identifier for an item down to size, color, and style (if applicable)
SLA
Abbreviation for Service Level Agreement. An SLA is made between a service provider and a client. In logistics, examples of SLAs are time to put away items, time to fulfill orders, percentage of inventory shrinkage, amount of mis-picks, etc.
SOP
Abbreviation for Standard Operating Procedure. SOPs are step-by-step instructions for how tasks should be managed in the warehouse. They can be unique for each client if needed
Stockout
A situation where there is no inventory available to sell to customers at a particular location
Transportation TerminologyBill of Lading (BOL)
Legal documentation for any load of product traveling in a truck, whether it be LTL (less than truckload) or TL (truckload). This document includes pertinent data such as PO number, unit of measure and quantity, and weight
Container
Typically used to refer to ocean shipping containers. These come in two common sizes: 40-foot and 20-foot. Intermodal containers can also be 45-foot
Cubed out
Refers to a container of trailer being at maximum capacity (or very close to it)
Dunnage
Packaging supplies used to ensure safety of cargo in transit. Can include paper, bubble wrap, air bags, etc.
Floor-Load / Loose Container
Refers to product stacked directly onto the floor of a trailer or container without pallets or slip sheets; product must be unloaded manually without the use of a forklift
Full Truck Load (FTL)
A container or trailer that is deemed as filled, or cubed out
Intermodal
Refers to using two or more forms of transportation to move products.Example: If a container is put on a train then picked up by a long haul truck to complete transit, it has used two modes of transport
Less-than-truckload (LTL)
A shipment of pallets that does not fill a trailer. Typically this refers to 10 pallets or less, though it is not a defined cut off
Load locks
Adjustable bars used to secure a load for transit
Small Package/Small Parcel
A shipment that is in the form of a package, or multiple packages, rather than a pallet. This can be shipped via a parcel service such as FedEx or UPS. A single package must be under 150lbs and no more than 165” in length and girth combined
Pricing Terminology
Chargeback
Monetary term used predominantly in cases of vendor compliance issues, where product was not shipped correctly via the given guidelines for a consignee
Handling charge or In/Out Fee
A pricing line item that is charged to the customer for the labor and time needed to handle items in the warehouse. This could refer to the inbound receiving process or the outbound picking and packing process
Storage Rate
The price charged to the customer for storing an item on a month-to-month basis
