Glossary

Broker

An intermediary between the shipper and the carrier.  The broker arranges transportation for shippers and represents carrier.

Capacity Planning

Assuring that needed resources (e.g., manufacturing capacity, distribution center capacity, transportation vehicles, etc.) will be available at the right time and place to meet logistics and supply chain needs.

Customs Brokerage

A Customs Brokerage clears goods through customs barriers for business imports and exports. This involves the preparation of documents and/or electronic submissions, the calculation of taxes, duties and excises (and usually the payment) on behalf of the business, and facilitating communication between the importer/exporter and governmental authorities.

Distribution

The activities associated with moving materials from source to destination.  Can be associated with movement from a manufacturer or distributor to customers, retailers or other secondary warehousing/distribution points.

Distribution Warehouse

A warehouse that stores finished goods and from which customer orders are assembled.

Export

A termed used to describe those products produced in one geography (typically a country) and shipped/sold to another.

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.

Import

Movement of products from one country into another.  The import of automobiles from Germany to the U.S. is an example.

Inbound Logistics

The movement of materials from suppliers and vendors into production processes or storage facilities.

Inspection Certificate

Required usually for import of industrialequipment, meat products, and perishable merchandise, it certifies that the item meets the required specifications and was in good condition and correct quantity when it left the port of departure. Also referred as certificate of inspection or inspection report.

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.

Inventory

The number of units and/or values of stock of goods held by a company.

Inventory Management

The process of ensuring the availability of products through inventory administration.

Item

A uniquely identifiable piece of inventory.  Also known as a part number or SKU, an item can be raw materials, fluids, component parts, subassemblies, finished assemblies, packaging, etc.  Usually differentiated by form, fit or function.  Items which are painted different colors are generally viewed as different items.

Kitting

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

Lading

The cargo carried in a transportation vehicle.

Lean

A business management philosophy that considers the expenditure of resources for any goal other than the creation of value for the end customer to be wasteful, and thus a target for elimination.

Logistics

The process of planning, implementing, and controlling procedures for the efficient and effective transportation and storage of goods including 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.

Lumping

A term applied to a person who assists a motor carrier owner-operator in the loading and unloading of property: quite commonly used in the food industry.

Manifest

A document which describes individual orders contained within a shipment.

Materials Handling

The physical handling of products and materials between procurement and shipping

Order

A type of request for goods or services such as a purchase order, sales order, work order, etc.

Order Cycle

The time and process involved from the placement of an order to the receipt of the shipment.

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 Processing

Activities associated with accepting and filling customer orders.

Outbound Logistics

The process related to the movement and storage of products from the end of the production line to the end user.

Outsource

To utilize a third-party provider to perform services previously performed in-house.  Examples include manufacturing of products and call center/customer support.

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.  Some pallets have electronic tracking tags (RFID) and most are recycled in some manner.

Pick/Pack

Picking of product from inventory and packing into shipment containers. 

Pick to Light

Pick-to-light systems consist of lights and LED displays for each pick location.  The system uses software to light the next pick and display the quantity to pick.

Pick List

A list of items to be picked from stock in order to fill an order; the pick list generation and the picking method can be quite sophisticated.

Process Optimization

The study of process adjustment in order to optimize some specified set of parameters without violating some constraint.  Some of the most common goals of process optimization are minimizing cost, and maximizing throughput and/or efficiency.

Quality

The degree to which a set of defined characteristics of a product or service fulfills know requirements.  The common element of the business definition is that the quality of a product or service refers to the perception of the degree to which the product or service meets the customer’s expectations.  Quality has no specific meaning unless related to a specific function and/or object.  Quality is perceptual, conditional and somewhat subjective attribute.

Quality Assurance (QA)

The process of verifying or determining whether products or services meet or exceed customer expectations.  This process considers design, development, production, and service.

Quality Control (QC)

The management function that attempts to ensure that the foods or services manufactured or purchased meet the product or service specifications.

Racking

The activity of placing materials onto a rack.  May also refer to hardware which is used to build racks.

Radio Frequency Identification (RFID)

The use of radio frequency technology including RFID tags and tag readers to identify objects.  Objects may include virtually anything physical, such as equipment, pallets of stock, or even individual units of product.  RFID tags can be active or passive.  Active tags contain a power source and emit a signal constantly.  Passive tags receive power from the radio waves sent by the scanner/reader.  The inherent advantages of RFID over bar code technology are:  1) the ability to be read over longer distances, 2) the elimination of requirement for “line of sight” readability, 3) added capacity to contain information, and 4) RFID tag data can be updated/changed.

Receiving

The function of taking physical receipt of material and performing initial inspection of the incoming shipment for damage and validation with respect to purchase order quantity.  Typically includes some initial data recording, but not quality assurance or stocking.

Scorecard

A performance measurement tool used to capture a summary of the key performance indicators (KPIs)/metrics of a company. Metrics dashboards/scorecards should be easy to read and usually have "red, yellow, green" indicators to flag when the company is not meeting its targets for its metrics. Ideally, a dashboard/scorecard should be cross-functional in nature and include both financial and non-financial measures. In addition, scorecards should be reviewed regularly - at least on a monthly basis and weekly in key functions such as manufacturing and distribution where activities are critical to the success of a company. The dashboard/scorecards philosophy can also be applied to external supply chain partners such as suppliers to ensure that suppliers' objectives and practices align.

Shipping

1) The act of conveying materials from one point to another. 2) The functional area which preparers the outgoing shipment for transport.

Six Sigma Quality

Six-Sigma is a term coined to stress the continuous reduction in process variation to achieve near-flawless quality.  When a Six Sigma rate of improvement has been achieved, defects are limited to 3.4 per million opportunities.

Slotting

Inventory slotting or profiling is the process of identifying the most efficient placement for each item in a distribution center.  Since each warehouse is different, proper slotting depends on a facility’s unique product, movement, and storage characteristics.  An optimal profile allows workers to pick items more quickly and accurately while reducing the risk of injuries.

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 Integration

Likely to become a key competitive advantage of selected e-marketplaces.  Similar concept to the Back-End Integration, but with greater emphasis on the moving of goods and services.

Supply Chain Management

Supply Chain Management encompasses the planning and management of all activities involved in sourcing and procurement, conversion, and all logistics management activities. Importantly, it also includes coordination and collaboration with channel partners, which can be suppliers, intermediaries, third-party service providers, and customers.  In essence, supply chain management integrates supply and demand management within and across companies. Supply Chain Management is an integrating function with primary responsibility for linking major business functions and business processes within and across companies into a cohesive and high-performing business model. It includes all of the logistics management activities noted above, as well as manufacturing operations, and it drives coordination of processes and activities with and across marketing, sales, product design, finance and information technology.

Third-Party Logistics (3PL) Provider

Outsourcing all or much of a company’s logistics operations to a specialized company.  The term "3PL" was first used in the early 1970s to identify intermodal marketing companies (IMCs) in transportation contracts. Up to that point, contracts for transportation had featured only two parties, the shipper and the carrier.  When IMCs entered the picture—as intermediaries that accepted shipments from the shippers and tendered them to the rail carriers—they became the third party to the contract, the 3PL. Definition has broadened to the point where these days, every company that offers some kind of logistics service for hire calls itself a 3PL.  Preferably, these services are integrated, or “bundled,” together by the provider.  Services they provide are transportation, warehousing, cross-docking, inventory management, packaging, and freight forwarding.  In 2008 legislation passed declaring that the legal definition of a 3PL is “A person who solely receives, holds, or otherwise transports a consumer product in the ordinary course of business but who does not take title to the product.”

Third-Party Warehousing

The act of using a contractor to provide warehousing services, and the name of the industry which is involved in providing contract warehousing operations for hire.

Total Cost of Quality

A measure that sums all costs associated with poor quality or product failure, including rework, scrap, warranty costs and other costs incurred in preventing or resolving quality problems.  Costs associated with maintenance and quality training are not included.

Total Quality Management (TQM)

A management approach in which managers constantly communicate with organizational stakeholders to emphasize the importance of continuous quality improvement.

Total Supply-Chain Management Cost

Total cost to manage order processing, acquire materials, manage inventory, and manage supply-chain finance, planning, and IT costs, as represented as a percent of revenue. 

Transportation Brokerage

A Transportation Brokerage is a company set up as a go between who acts for both the individual client and the transportation company.

Transportation Cycle Time

A performance measure of the Logistics service provider / transporter.  The lead time taken by the product to reach the final destination, The difference between the day it leaves the warehouse and the day it reaches its destination.

Transportation Management System (TMS)

A computer system designed to provide optimized transportation management in various modes along with associated activities, including managing shipping units, labor planning and building, shipment scheduling through inbound, outbound, intra-company shipments, documentation management (especially when international shipping is involved), and third party logistics management.

Voice Activated or Voice Directed

Systems which guide users such as warehouse personnel via voice commands.  Also referred as Pick to Voice.

Warehouse

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

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.

Wave Picking

A variation on zone picking where rather than orders moving from one zone to the next for picking, all zones are picked at the same time and the items are later sorted and consolidated into individual orders/shipments.  Wave picking is the quickest method for picking multi item orders however the sorting and consolidation process can be tricky.  Picking waves are often designed to isolate shipments to specific carriers, routes, etc.  A more general definition of wave picking would simply be a method where a group of orders is released to the warehouse for picking and the next group (wave) is not released until the first wave has processed through the pick area.  Also referred as Batch Picking and Zone Picking

3PL

Third-Party Logistics

B2B

Business to Business

BOL

Bill of Lading 

DC

Distribution Center 

ISO

International Standards Organization 

JIT

Just in Time 

KPI

Key Performance Indicator 

LTL

Less than Truckload 

NAFTA

North American Free Trade Agreement 

OSHA

Occupational Safety & Health Administration 

OTR

Over the Road 

QA

Quality Assurance 

QC

Quality Control 

RFID

Radio Frequency Identification 

RFI

Request for Information 

RFP

Request for Proposal 

RFQ

Request for Quote 

SCC

Supply Chain Council 

SKU

Stock Keeping Unit 

SLA

Service Level Agreement 

TL

Truckload 

TMS

Transportation Management System 

TQM

Total Quality Management 

TSA

Transportation Security Administration 

WERC

Warehouse Education and Research Council 

WCO

World Customs Organization 

WMS

Warehouse Management System