Logistics and Warehousing Glossary

3PL: (also known as 3rd Party Logistics) Third-party logistics refers to a company’s use of a third-party business to outsource distribution and fulfillment services. These companies typically specialize in warehousing and distribution, which streamlines the supply chain and makes distribution more efficient. M&W Logistics is a 3PL company that provides a wide range of customized supply chain solutions such as public warehousing, asset based truckload transportation, food grade warehousing, distribution, and logistics management.

Accounts Payable (AP or A/P): An accounting entry that represents an entity’s obligation to pay off a short-term debt to its creditors.

Accounts Receivable (AR or A/R): Money owed by customers (individuals or corporations) to another entity in exchange for goods or services that have been delivered or used, but not yet paid for.

Advance Shipment Notice (ASN): A document transmitted (by courier, fax, or email) to a consignee in advance of delivery detailing the contents and particulars of a shipment.

Attributes: A label used to provide additional classification or information about a resource, activity, or cost object.

Audit: In reference to freight bills, the term audit is used to determine the accuracy of freight bills.

AutoID: Referring to an automated identification system. This includes technology such as bar coding and radio frequency tagging (RFID).

Automated Clearing House (ACH): The primary electronic funds transfer (EFT) system used by agencies to make payments for financial transactions in the United States. ACH processes large volumes of credit and debit transactions in batches.

Available to Promise (ATP): The uncommitted portion of a company’s inventory and planned production maintained in the master schedule to support customer-order promising. The ATP quantity is the uncommitted inventory balance in the first period and is normally calculated for each period in which an MPS receipt is scheduled. In the first period, ATP includes on-hand inventory less customer orders that are due and overdue. Three methods of calculation are used: discrete ATP, cumulative ATP with look ahead, and cumulative ATP without look ahead.

B2B: Business-to-business

B2C: Business-to-consumer

Backsourcing: Pulling a function back in house as an outsourcing contract expires.

Bar Code: A symbol consisting of a series of printed bars representing values. A system of optical character reading, scanning, tracking of units by reading a series of printed bars for translation into a numeric or alphanumeric identification code. A popular example is the UPC code used on retail packaging.

Benchmarking: The process of comparing performance against the practices of other leading companies for the purpose of improving performance. Companies also benchmark internally by tracking and comparing current performance with past performance.

Benefit-Cost Ratio: An analytical tool used in public planning; a ratio of total measurable benefits divided by the initial capital cost.

Billing: A carrier terminal activity that determines the proper rate and total charges for a shipment and issues a freight bill.

Bill of Activities: A listing of activities required by a product, service, process output, or other cost object. Bill of activity attributes could include volume and/or cost of each activity in the listing.

Bill of Lading (BOL): A transportation document that is the contract of carriage containing the terms and conditions between the shipper and carrier.

Bill of Lading Number: The number assigned by the carrier to identify the bill of lading.

Bill of Material (BOM): A structured list of all the materials or parts and quantities needed to produce a particular finished product, assembly, subassembly, or manufactured part, whether purchased or not.

Bill of Material Accuracy: Conformity of a list of specified items to administrative specifications, with all quantities correct.

Bill of Resources: A listing of resources required by an activity. Resource attributes could include cost and volumes.

Break-Bulk: The separation of a consolidated bulk load into smaller individual shipments for delivery to the ultimate consignee. The freight may be moved intact inside the trailer, or it may be interchanged and rehandled to connecting carriers.

Break Bulk Cargo: Cargo that is shipped as a unit or package (for example: palletized cargo, boxed cargo, large machinery, trucks) but is not containerized.

Bulk Area: A storage area for large items which at a minimum are most efficiently handled by the palletload.

Bulk Cargo: Unpacked dry cargo such as grain, iron ore or coal. Any commodity shipped in this way is said to be in bulk.

Bullwhip Effect: An extreme change in the supply position upstream in a supply chain generated by a small change in demand downstream in the supply chain. Inventory can quickly move from being backordered to being in excess. This is caused by the serial nature of communicating orders up the chain with the inherent transportation delays of moving product down the chain. The bullwhip effect can be eliminated by synchronizing the supply chain.

Bundle: A group of products that are shipped together as an unassembled unit.

Business Logistics: The process of planning, implementing, and controlling the efficient, effective flow and storage of goods, services, and related information from the point of origin to the point of consumption for the purpose of conforming to customer requirements.

Cage: (1) A secure enclosed area for storing highly valuable items (2) A pallet-sized platform with sides that can be secured to the tines of a forklift and in which a person may ride to inventory items stored well above the warehouse floor.

Capacity Management: The concept that capacity should be understood, defined, and measured for each level in the organization to include market segments, products, processes, activities, and resources. In each of these applications, capacity is defined in a hierarchy of idle, nonproductive, and productive views.

Carmack Amendment: An Interstate Commerce Act amendment that delineates the liability of common carriers and the bill of lading provisions.

Cargo: Goods or produce transported by ship, aircraft, or other intermodal vehicles such as trains, vans or trucks.

Cargo Control Number (CCN): Identifies both the carrier and shipment to the CBSA at the time of reporting and when release documents are presented.

Carrier: A firm that transports goods or people via land, sea, or air.

Certificate of Compliance: A supplier’s certification that the supplies or services in question meet specified requirements.

Certificate of Insurance: A negotiable document indicating that insurance has been secured under an open policy to cover loss or damage to a shipment while in transit.

Certificate of Origin: A document containing an affidavit to prove the origin of imported goods. Used for customs and foreign exchange purposes.

Certificate of Public Convenience and Necessity: The grant of operating authority that common carriers receive. A carrier must prove that a public need exists and that the carrier is fit, willing, and able to provide the needed service. The certificate may specify the commodities the carrier may haul, and the routes it may use.

Certificated Carrier: A for-hire air carrier that is subject to economic regulation and requires an operating certification to provide service.

Closed Loop MRP: A system built around material requirements planning that includes the additional planning processes of production planning (sales and operations planning), master production scheduling, and capacity requirements planning. Once this planning phase is complete and the plans have been accepted as realistic and attainable, the execution processes come into play.

Co-Destiny: The evolution of a supply chain from intra-organizational management to inter-organizational management.

Co-Packer: A contract co-packer produces goods and/or services for other companies, usually under the other company’s label or name. Co-packers are more frequently seen in consumer packaged goods and foods.

Co-Managed Inventory (CMI): A form of continuous replenishment in which the manufacturer is responsible for replenishment of standard merchandise, while the retailer manages the replenishment of promotional merchandise.

Cold Chain: A temperature-controlled supply chain. An unbroken cold chain is an uninterrupted series of storage and distribution activities which maintain a given temperature range. It is used to help extend and ensure the shelf life of products such as fresh agricultural produce, seafood, frozen food, photographic film, chemicals and pharmaceutical drugs.

Commercial Invoice (C/I or CI): A commercial invoice is a document used in foreign trade. It is used as a customs declaration provided by the person or corporation that is exporting an item across international borders. Although there is no standard format, the document must include a few specific pieces of information such as the parties involved in the shipping transaction, the goods being transported, the country of manufacture, and the Harmonized Tariff System codes for those goods. A commercial invoice must also include a statement certifying that the invoice is true, and a signature.

Common Carrier: Transportation available to the public that does not provide special treatment to any one party and is regulated as to the rates charged, the liability assumed, and the service provided. A common carrier must obtain a certificate of public convenience and necessity from the Federal Trade Commission for interstate traffic. Antonym: Private Carrier.

Consolidation: Cargo shipping method in which a freight forwarder at the port of origin combines several individual consignments to make up a full container load. This arrangement allows the goods to be shipped as containerized-cargo that offers greater security at lower shipping rates. At the port of destination, the consolidated shipment is separated (deconsolidated or ungrouped) back into the original individual consignments for delivery to their respective consignees.

Contract Warehousing: Handles the shipping, receiving and storage of goods on a contract basis.

Customs Bonded Warehouse: A building or other secured area in which imported dutiable merchandise may be stored, manipulated, or undergo manufacturing operations without payment of duty for up to 5 years from the date of importation.

Dead Heading: Operating a motor vehicle or vessel without a load of cargo. The term most commonly applies to the trucking industry and refers to either the return trip from delivering a cargo, or driving empty to a location in order to pick up cargo.

Declared Value: The value of goods declared to the carrier by the shipper for the purposes of determining charges, or of establishing the limit of the carrier’s liability for loss, damage, or delay.

Delivery Appointment: An agreement between two companies whereby goods are scheduled to arrive at a specified time and location.

Demurrage: a) The detention of a freight car or ship by the shipper beyond time permitted (grace period) for loading or unloading; b) The extra charges a shipper pays for detaining a freight car or ship beyond time permitted for loading or unloading.

Distributor: A person or company that supplies stores or businesses with goods.

Distribution Center (DC): Is a warehouse or other specialized building, often with refrigeration or air conditioning, which is stocked with products (goods) to be redistributed to retailers, to wholesalers, or directly to consumers. A distribution center is a principal part, the order processing element, of the entire order fulfillment process.

Drayage: The transportation of goods over short distances, often as part of a longer overall move and is typically completed in a single work shift.

Drop Shipment: A shipment of goods from a manufacturer directly to a dealer or consumer, avoiding shipment to the wholesaler (dropshipper). The wholesaler, however, is compensated for taking the order.

Edge Protector: An angel piece fitted over the edge of boxes, crates, bundles, and other packages to prevent the pressure from metal bands or other types from cutting into the package.

Exempt Carrier: A for-hire carrier that is free from economic regulation. Trucks hauling certain commodities are exempt from Interstate Commerce Commission economic regulation. By far, the largest portion of exempt carriers transports agricultural commodities or seafood.

Expediting: (1) Moving shipments through regular channels at an accelerated rate. (2) To take extraordinary action because of an increase in relative priority.

Final Destination: The last stopping point for a shipment.

Flow Rack: A storage method where product is presented to picking operations at one end of a rack and replenished from the opposite end.

Flow-Through Distribution: A process in a distribution center in which products from multiple locations are brought into the D.C. and are re-sorted by delivery destination and shipped in the same day. Also known as a “cross-dock” process in the transportation business. See Cross Docking.

FOB: A term of sale defining who is to incur transportation charges for the shipment, who is to control the shipment movement, or where title to the goods passes to the buyer; originally meant “free on board ship.”

FOB Destination: Title passes at destination, and seller has total responsibility until shipment is delivered.

FOB Origin: Title passes at origin, and buyer has total responsibility over the goods while in shipment.

Food Grade Warehousing: These warehouses are focused on maintaining proper health and sanitation in order to protect the food and consumers.

Food Safety Inspection Service (FSIS): The public health agency in the U.S. Department of Agriculture responsible for ensuring that the nation’s commercial supply of meat, poultry, and egg products is safe, wholesome, and correctly labeled and packaged.

For-Hire Carrier: A carrier that provides transportation service to the public on a fee basis.

Freight Carriers: Companies that haul freight, also called “for-hire” carriers. Methods of transportation include trucking, railroads, airlines, and seaborne shipping.

Freight Charge: The rate established for transporting freight.

Freight Consolidation: The grouping of shipments to obtain reduced costs or improved utilization of the transportation function. Consolidation can occur by market area grouping, grouping according to scheduled deliveries, or using third party pooling services such as public warehouses and freight forwarders.

Freight Forwarder: An organization which provides logistics services as an intermediary between the shipper and the carrier, typically on international shipments. Freight forwarders provide the ability to respond quickly and efficiently to changing customer and consumer demands and international shipping (import/export) requirements.

Fulfillment: The act of fulfilling a customer order. Fulfillment includes order management, picking, packaging, and shipping.

Full Container Load (FCL): A term used when goods occupy a whole container.

Groupage: A consolidation service, putting small shipments into containers for shipment.

Haulage: The inland transport service which is offered by the carrier under the terms and conditions of the tariff and of the relative transport document.

Hazardous Goods: Articles or substances capable of posing a significant risk to health, safety, or property, and that ordinarily require special attention when transported. Also called Dangerous Goods.

Hi-Low: Usually refers to a forklift truck on which the operator must stand rather than sit.

Import: A good brought into a jurisdiction.

Inspection Certificate: A document certifying that merchandise (such as perishable goods) was in good condition immediately prior to shipment.

Integrated Logistics: A comprehensive, system-wide view of the entire supply chain as a single process, from raw materials supply through finished goods distribution. All functions that make up the supply chain are managed as a single entity rather than managing individual functions separately.

Intermodal Transportation: Transporting freight by using two or more transportation modes, such as by truck and rail or truck and oceangoing vessel.

Interstate Commerce: The transportation of persons or property between states; in the course of the movement, the shipment crosses a state boundary.

Inventory: Raw materials, work in process, finished goods, and supplies required for creation of a company’s goods and services. The number of units and/or value of the stock of goods held by a company.

Invoice: A detailed statement showing goods sold or shipped and amounts for each. The invoice is prepared by the seller and acts as the document that the buyer will use to make payment.

Kitting: Light assembly of components or parts into defined units, Kitting reduces the need to maintain an inventory of pre-build, completed products, but increases the time and labor consumed at shipment.

Lading: The cargo carried in a transportation vehicle.

Last Mile: It was originally used in the telecommunications field but has since been applied to supply chain management. Transporting goods via freight rail networks and container ships is often the most efficient and cost-effective manner of shipping. However, when goods arrive at a high-capacity freight station or port, they must then be transported to their final destination. This last leg of the supply chain is often less efficient, comprising up to 28% of the total cost to move goods. This has become known as the last-mile problem.

Less Than Container Load: is a shipment that is not large enough to fill a standard cargo container

Less-Than-Truckload (LTL) Carriers: Trucking companies that consolidate and transport smaller (less than truckload) shipments of freight utilizing a network of terminals and relay points.

Line Sequencing: Also known as in-line vehicle sequencing. This service allows manufacturers make better use of plant floor space because it organizes parts and components in the order they will be used.

Logistics: The process of planning, implementing, and controlling procedures for the efficient and effective storage of goods, services, and related information from the point of origin to the point of consumption for the purpose of conforming to customer requirements. This definition includes inbound, outbound, internal, and external movements.

Materials Handling: The physical handling of products and materials between procurement and shipping.

Multimodal: is the transportation of goods under a single contract, but performed with at least two different means of transport; the carrier is liable (in a legal sense) for the entire carriage, even though it is performed by several different modes of transport (i.e. air, rail, sea, or road/land).

Negotiable BOL: Provides for the delivery of goods to a named enterprise or to their order (anyone they may designate), but only upon surrender of proper endorsement and the bill of lading to the carrier or the carrier’s agents. Also known as an order bill of lading.

Order: A type of request of goods or services

Order Cycle: The time and process involved from the placement of an order to the receipt of the order.

Order Cycle Time: The time that elapses from placement of order until receipt of order. This includes time for order transmittal, processing, preparation, and shipping.

Order Entry and Scheduling: The process of receiving orders from the customer and entering them into a company’s order processing system. Orders can be received through phone, fax, or electronic media. Activities may include “technically” examining orders to ensure an orderable configuration and provide accurate price, checking the customer’s credit and accepting payment (optionally), identifying and reserving inventory (both on hand and scheduled), and committing and scheduling a delivery date.

Order Fill: A measure of the number of orders processed without stockouts, or the need to backorder, expressed as a percentage of all orders processed in the distribution center or warehouse.

Order Management: The planning, directing, monitoring, and controlling of the processes related to customer orders, manufacturing orders, and purchase orders. Regarding customer orders, order management includes order promising, order entry, order pick, pack and ship, billing, and reconciliation of the customer account.

Order Picking: Assembling a customer’s order from items in storage.

Order Processing: Activities associated with filling customer orders.

Ordering Cost: The cost of placing an inventory order with a supplier.

Origin: The place where a shipment begins its movement.

Outbound Logistics: The entire process of planning and controlling the flow of products from the end of a production line to the end user. This includes both transportation and intermediate storage.

Over-the-Road: A motor carrier operation that reflects long-distance moves; the opposite of local operations.

Packing List: A document containing information about the location of each Product ID in each package. It allows the recipient to quickly find the item he or she is looking for without a broad search of all packages. It also confirms the actual shipment of goods on a line item basis.

Pallet: The platform which cartons are stacked on and then used for shipment or movement as a group. Pallets may be made of wood or composite materials.

Peak Demand: The time period during which customers demand the greatest quantity.

Poka Yoke (mistake proof): The application of simple techniques that prevent process quality failure. A mechanism that either prevents a mistake from being made or makes the mistake obvious at a glance.

Pooling: [shipping] A term used to describe the practice of combining shipments from multiple shippers into a truckload in order to reduce shipping charges. [Logistics] An agreement among a group of carriers to share freight, customers, revenues and/or profits.

Proof of Delivery (POD): Information supplied by the carrier containing the name of the person who signed for the shipment, the time and date of delivery and other shipment delivery-related information. POD is also sometimes used to refer to the process of printing materials just prior to shipment (Print on Demand).

Public Warehouse: The warehouse space that is rented or leased by an independent business providing a variety of services for a fee or on a contract basis.

Public Warehousing: The storage of goods by a firm that offers storage service for a fee to the public.

Pull Ordering System: A system in which each warehouse controls its own shipping requirements by placing individual orders for inventory with the central distribution center. A replenishment system where inventory is “pulled” into the supply chain (or “demand chain” by POS systems, or ECR programs). Associated with “build to order” systems.

Purchase Order (PO): The purchaser’s authorization used to formalize a purchase transaction with a supplier. The physical form or electronic transaction a buyer uses when placing an order for merchandise.

Quality Control (QC): Process by which entities review the quality of all factors involved in production

Quality Inspections: The quality inspection occurs so that a company can verify that the product is within certain prescribed tolerances in order for the product to be useful.

Radio Frequency Identification (RFID): A small integrated circuit (microprocessor) connected to an antenna, which can respond to an interrogating radio frequency (RF) signal with simple identifying information, or with more complex information depending on the size and complexity of the integrated circuit. Unlike barcodes which assign a number to a product or package, RFID tags attach a unique electronic code to each product, carton of products, pallet or shipping container.

Receiving: The physical receipt of material, the inspection of the shipment for conformance with the purchase order (quantity and damage) , the identification and delivery to destination, and the preparation of receiving reports.

Receiving Dock: Distribution center location where the actual physical receipt of the purchased material from the carrier occurs.

Reefer: A Refrigerated Container is an intermodal container (shipping container) used in intermodal freight transport that is refrigerated for the transportation of temperature-sensitive cargo.

Reverse Logistics: A specialized segment of logistics focusing on the movement and management of products and resources after the sale and after delivery to the customer. Includes product returns for repair and/or credit.

Routing or Routing Guide: (1) Process of determining how shipment will move between origin and destination. Routing information includes designation of carrier(s) involved, actual route of carrier, and estimated time en route. (2) Right of shipper to determine carriers, routes, and points for transfer shipments. (3) In manufacturing, this is the document which defines a process of steps used to manufacture and/or assemble a product.

Seal Number: A number located on the plastic or metal tamper seal or tag affixed to a loaded container or truck. Seals and seal numbers are not reused. A new seal and therefore a new seal number are used each time a container or truck is sealed.

Slotting: Warehouse slotting is defined as the placement of products within a warehouse facility. Its objective is to increase picking efficiency and reduce warehouse handling costs through optimizing product location and balancing the workload.

Split Delivery: A method by which a larger quantity is ordered on a purchase order to secure a lower price, but delivery is divided into smaller quantities and is spread out over several dates to control inventory investment, save storage space, etc.

Spot Demand: Demand with a short lead time that’s difficult to estimate. Usually supply for this demand is provided at a premium price. An example of spot demand would be when there’s a spiked demand for building materials as a result of a hurricane.

Staging: Pulling material for an order from inventory before the material is required. This action is often taken to identify shortages, but it can lead to increased problems in availability and inventory accuracy.

Stickering: Placing customer-specific stickers on boxes of product. An example would be where Wal-Mart has a request for their own product codes to be applied to retail boxes prior to shipment.

Supply Chain: (1) Starting with unprocessed raw materials and ending with the final customer using the finished goods, the supply chain links many companies together. (2) The material and informational interchanges in the logistical process, stretching from acquisition of raw materials to delivery of finished products to the end user. All vendors, service providers, and customers are links in the supply chain.

Supply Chain Design: The determination of how to structure a supply chain. Design decisions include the selection of partners, the location and capacity of warehouse and production facilities, the products, the modes of transportation, and supporting information systems.

Supply Chain Execution (SCE): The ability to move the product out of the warehouse door. This is a critical capacity and one that only brick-and-mortar firms bring to the B2B table.

Supply Chain Strategic Planning: The process of analyzing, evaluating, and defining supply chain strategies, including network design, manufacturing and transportation strategy, and inventory policy.

Supply Planning: The process of identifying, prioritizing, and aggregating, as a whole with constituent parts, all sources of supply that are required and add value in the supply chain of a product or service at the appropriate level, horizon, and interval.

Supply Warehouse: A warehouse that stores raw materials. Goods from different suppliers are picked, sorted, staged, or sequenced at the warehouse to assemble plant orders.

Temperature Recorder: A device to record temperature in a container while cargo is en route.

Third Party Logistics: Outsourcing all or much of a company’s logistics operations to a specialized company.

Tracking: A carrier’s system of recording movement intervals of shipments from origin to destination.

Uniform Warehouse Receipts Act: The act that sets forth the regulations governing public warehousing. The regulations define a warehouse manager’s legal responsibility and define the types of receipts he or she issues.

Value Chain: A series of activities, when combined, define a business process; the series of activities from manufacturers to the retail stores that define the industry supply chain.

Value Chain Analysis: A method of identifying all the elements in the linkage of activities a firm relies on the secure the necessary materials and services starting from their point of origin to manufacture, and to distribution of their products and services to an end user.

Variable Cost: A cost that fluctuates with the volume or activity level of business.

Warehouse: Storage place for products. Principal warehouse activities include receipt of product, storage, shipment, and order picking.

Warehousing: The storage (holding) of goods.

Warehouse Management System (WMS): The systems used in effectively managing warehouse business processes and direct warehouse activities, including receiving, putaway, picking, shipping, and inventory cycle counts. Also includes support of radio frequency communications, allowing real-time data transfer between the system and warehouse personnel. they also maximize space and minimize material handling by automating putaway processes.

Waybill: A document issued by a carrier giving details and instructions relating to the shipment of a consignment of goods. Typically it will show the names of the consignor and consignee, the point of origin of the consignment, its destination, and route.

Zone Picking: A method of order picking that involves dividing stock-keeping units (SKUs) into a series of different zones with each warehouse employee trained to pick within an assigned zone. An order may be moved down a conveying system from zone to zone to have items added. The goal is to create greater speed in the picking process.