Advanced Planning and Scheduling (APS): Techniques that deal with analysis and planning of logistics and manufacturing over the short, intermediate, and long-term time periods. APS describes any computer program that uses advanced mathematical algorithms or logic to perform optimization or simulation on finite capacity scheduling, sourcing, capital planning, resource planning, forecasting, demand management, and others. These techniques simultaneously consider a range of constraints and business rules to provide real-time planning and scheduling, decision support, available-to-promise, and capable-to-promise capabilities. APS often generates and evaluates multiple scenarios. Management then selects one scenario to use as the official plan. The five main components of an APS system are demand planning, production planning, production scheduling, distribution planning, and transportation planning.
Advanced Shipment Notice (ASN): An EDI term referring to a transaction set (ANSI 856) where the supplier sends out a notification to interested parties that a shipment is now outbound in the supply chain. This notification is list transmitted to a customer or consignor designating items shipped. The ASN may also include the expected time of arrival.
Advanced Shipping Notice (ASN): Detailed shipment information transmitted
to a customer or consignee in advance of delivery, designating the
contents (individual products and quantities of each) and nature
of the shipment. May also include carrier and shipment specifics,
including time of shipment and expected time of arrival.
Also see: Assumed Receipt
Assemble to Order: A production environment where a good or service can be assembled after receipt of a customer's order. The key components (bulk, semi finished, intermediate, sub-assembly, fabricated, purchased, packing, and so on) used in the assembly or finishing process are planned and usually stocked in anticipation of a customer order. Receipt of an order initiates assembly of the customized product. This strategy is useful where a large number of end products (based on the selection of options and accessories) can be assembled from common components.
ATA: Actual time of arrival, or also known as the American Trucking Associations.
ATD: Actual time of departure
B2B: See Business-to-Business.
B2C: See Business-to-Customer.
Back Order: Product ordered but out of stock and promised to ship when
the product becomes available.
Backhaul: The process of a transportation vehicle returning from the original destination point to the point of origin. The 1980 Motor Carrier Act deregulated interstate commercial trucking, thereby allowing carriers to contract for the return trip. The backhaul can be with a full, partial, or empty load. An empty backhaul is called deadheading.
Also see: Deadhead
Bale: A large compressed, bound, and often wrapped bundle of a commodity, such as cotton or hay.
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.
Bar Code Scanner: A device to read bar codes and communicate data to computer systems.
Bar Coding: A method of encoding data for fast and accurate readability. Bar codes are a series of alternating bars and spaces printed or stamped on products, labels, or other media, representing encoded information which can be read by electronic readers called bar.
Benefit-Cost Ratio: An analytical tool used in public planning; a ratio
of total measurable benefits divided by the initial capital cost.
Also see: Cost Benefit Analysis.
Best in Class: An organization, usually within a specific industry, recognized for excellence in a specific process area.
Best Practice: A specific process or group of processes, which have been recognized as the best method for conducting an action. Best practices may vary by industry or geography depending on the environment being used. Best-practices methodology may be applied with respect to resources, activities, cost object, or processes.
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 Lading, Through: A bill of lading to cover goods from point of origin to final destination when interchange or transfer from one carrier to another is necessary to complete the journey.
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.
Booking: The act of requesting space and equipment aboard a vessel
for cargo, which is to be transported.
Booking Number: The number assigned to a certain space reservation by the carrier or the carrier's agent.
Bracing: To secure a shipment inside a carrier's vehicle to prevent damage.
Bracketed Recall: Recall from customers of suspect lot numbers, plus a specified number of lots produced before and after the suspect ones.
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.
Break-Even Point: The level of production or the volume of sales at which
operations are neither profitable nor unprofitable. The break-even point
is the intersection of the total revenue and total cost curves.
Broker: There are 3 definitions for the term "broker":
Bulk Cargo: Unpacked dry cargo such as grain, iron ore or coal. Any commodity shipped in this way is said to be in bulk.
Bundle: A group of products that are shipped together as an unassembled unit.
Bundling: An occurrence where two or more products are combined into one transaction for a single price.
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.
Business-to-Business (B2B): As opposed to business-to-consumer (B2C).
Many companies are now focusing on this strategy, and their web sites are
aimed at businesses (think wholesale) and only other businesses can access
or buy products on the site. Internet analysts predict this will be the
biggest sector on the web.
Business-to-Consumer (B2C): The hundreds of e-commerce web sites that sell goods directly to consumers are considered B2C. This distinction is important when comparing web sites that are B2B as the entire business model, strategy, execution, and fulfillment is different.
Business Unit: A division or segment of an organization generally treated as a separate profit-and-loss center.
Caged: Referring to the practice of placing high-value or sensitive products in a fenced off area within a warehouse.
Calendar Days: The conversion of working days to calendar days is based
on the number of regularly scheduled workdays per week in your manufacturing
Calculation: To convert from working days to calendar days: if work week = 4 days, multiply by 1.75; = 5 days, multiply by 1.4; = 6 days, multiply by 1.17
Carrier: A firm that transports goods or people via land, sea, or air.
Carrier Assets: Items that a carrier owns (technically or outright) to facilitate the services they provide.
Carrier Certificate and Release Order: Used to advise customs of the shipment's details. By means of this document, the carrier certifies that the firm or individual named in the certificate is the owner or consignee of the cargo.
Carrier Liability: A common carrier is liable for all shipment loss, damage, and delay with the exception of that caused by act of God, act of a public enemy, act of a public authority, act of the shipper, and the goods' inherent nature.
Cartage: There are two definitions for this term:
Carton Flow Rack: A storage rack consisting of multiple lines of gravity flow conveyors.
Central Dispatching: The organization of the dispatching function into one central location. This structure often involves the use of data collection devices for communication between the centralized dispatching function which usually reports to the production control department and the shop manufacturing departments.
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.
Change Management: The business process that coordinates and monitors all changes to the business processes and applications operated by the business, as well as to their internal equipment, resources, operating systems, and procedures. The change management discipline is carried out in a way that minimizes the risk of problems that will affect the operating environment and service delivery to the users.
Change Order: A formal notification that a purchase order or shop order must be modified in some way. This change can result from a revised quantity, date, or specification by the customer; an engineering change; a change in inventory requirement data; etc.
Chassis: A specialized framework that carries a rail or marine container
Chock: A wedge usually made of hard rubber or steel that is firmly placed under the wheel of a trailer, truck, or boxcar to stop it from rolling.
City Driver: A motor carrier driver who drives a local route as opposed to a long-distance, intercity route.
Claim: A charge made against a carrier for loss, damage, delay, or overcharge.
Collect Freight: Freight payable to the carrier at the port of discharge or ultimate destination. The consignee does not pay the freight charge if the cargo does not arrive at the destination.
Consignee: The party to whom goods are shipped and delivered. The receiver
of a freight shipment.
Consignment: Also see: Consignment Inventory.
Consignor: The party who originates a shipment of goods (shipper). The
sender of a freight shipment, usually the seller.
Consolidation: Combining two or more shipments in order to realize lower transportation rates. Inbound consolidation from vendors is called make-bulk consolidation; outbound consolidation to customers is called break-bulk consolidation.
Consolidation Point: The location where consolidation takes place.
Consolidator: An enterprise that provides services to group shipments, orders, and/or goods to facilitate movement.
Container Chassis: A vehicle built for the purpose of transporting a container so that, when a container and chassis are assembled, the produced unit serves as a road trailer.
Container Depot: The storage area for empty containers.
Container Freight Station (CFS): The location designated by carriers for receipt of cargo to be packed into containers/equipment by the carrier. At destination, CFS is the location designated by the carrier for unpacking of cargo from equipment/containers.
Containerization: A shipment method in which commodities are placed in containers, and after initial loading, the commodities, per se, are not rehandled in shipment until they are unloaded at the destination.
Container on Flat Car (COFC): A container that is transported on a rail flatcar. It can be shipped via tractor/trailer using a chassis as the wheel section.
Container Terminal: An area designated to be used for the stowage of cargo
in containers that may be accessed by truck, rail, or ocean transportation.
Container Vessel: A vessel specifically designed for the carriage of containers.
Container Yard: The location designated by the carrier for receiving, assembling, holding, storing, and delivering containers, and where containers may be picked up by shippers or redelivered by consignees.
Continuous Process Improvement (CPI): A never-ending effort to expose
and eliminate root causes of problems; small-step improvement as opposed
to big-step improvement.
Synonym: Continuous Improvement.
Also see: Kaizen.
Continuous Replenishment: Continuous replenishment is the practice of
partnering between distribution channel members that changes the traditional
replenishment process from distributor-generated purchase orders based
on economic order quantities to the replenishment of products based on
actual and forecasted product demand.
Continuous Replenishment Planning (CRP): A program that triggers the manufacturing and movement of product through the supply chain when the identical product is purchased by an end user.
Contract: An agreement between two or more competent persons or companies to perform or not to perform specific acts or services or to deliver merchandise. A contract may be oral or written. A purchase order, when accepted by a supplier, becomes a contract. Acceptance may be in writing or by performance, unless the purchase order requires acceptance in writing.
Core Competency: Bundles of skills or knowledge sets that enable a firm
to provide the greatest level of value to its customers in a way that's
difficult for competitors to emulate and that provides for future growth.
Core competencies are embodied in the skills of the workers and in the
organization. They are developed through collective learning, communication,
and commitment to work across levels and functions in the organization
and with the customers and suppliers. A core competency could be the capability
of a firm to coordinate and harmonize diverse production skills and multiple
To illustrate: advanced casting processes for making steel require the integration of machine design with sophisticated sensors to track temperature and speed, and the sensors require mathematical modeling of heat transfer. For rapid and effective development of such a process, materials scientists must work closely with machine designers, software engineers, process specialists, and operating personnel. Core competencies are not directly related to the product or market.
Crane: A materials handling device that lifts heavy items. There are two types: bridge and stacker.
Credit Level: The amount of purchasing credit a customer has available. Usually defined by the internal credit department and reduced by any existing unpaid bills or open orders.
Credit Terms: The agreement between two or more enterprises concerning the amount and timing of payment for goods or services.
Cross-dock: Cross-dock operations in a warehouse involve moving goods
between different trucks to consolidate loads without intermediate storage.
Cross Docking: A distribution system in which merchandise received at the warehouse or distribution center is not put away, but instead is readied for shipment to retail stores. Cross docking requires close synchronization of all inbound and outbound shipment movements. By eliminating the put-away, storage, and selection operations, it can significantly reduce distribution costs.
Cross Sell: The practice of attempting to sell additional products to a customer during a sales call. For example, when the CSR presents a camera case and accessories to a customer that is ordering a camera.
Cube Out: The situation when a piece of equipment has reached its volumetric capacity before reaching the permitted weight limit.
Cube Utilization: In warehousing, a measurement of the utilization of the total storage capacity of a vehicle or warehouse.
Cubic Capacity: The carrying capacity of a piece of equipment according to measurement in cubic feet.
Cubic Space: In warehousing, a measurement of space available, or required, in transportation and warehousing.
Customer Driven: The end user, or customer, motivates what is produced or how it is delivered.
Customer Order: An order from a customer for a particular product or a
number of products. It is often referred to as an actual demand to distinguish
it from a forecasted demand.
Customer/Order Fulfillment Process: A series of customers' interactions with an organization through the order-filling process, including product/service design, production and delivery, and order stats reporting.
Customer Relationship Management (CRM): This refers to information systems that help sales and marketing functions as opposed to the ERP (Enterprise Resource Planning), which is for back-end integration.
Customer Service Representative (CSR): An individual who provides customer support via telephone in a call-center environment.
Customization: Creating a product from existing components into an individual
Synonym: Build to Order.
Customs: The authorities designated to collect duties levied by a country on imports and exports.
Customs Broker: A firm that represents importers/exporters in dealings with customs. Normally responsible for obtaining and submitting all documents for clearing merchandise through customs, arranging inland transport, and paying all charges related to these functions.
Customs Clearance: The act of obtaining permission to import merchandise from another country into the importing nation.
Customs House Broker: A business firm that oversees the movement of international shipments through Customs, and ensures that the documentation accompanying a shipment is complete and accurate.
CWT: The abbreviation for hundredweight, which is the equivalent of 100
CY/CY: See: Container Yard to Container Yard.
Cycle Inventory: An inventory system where counts are performed continuously, often eliminating the need for an annual overall inventory. It is usually set up so that A items are counted regularly (i.e., every month), B items are counted semi-regularly (every quarter or six months), and C Items are counted perhaps only once a year.
Cycle Time: The amount of time it takes to complete a business process.
Dashboard: A performance measurement tool used to capture a summary of
the key performance indicators/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 metrics targets. Ideally, a dashboard/scoreboard
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 dashboards/scorecards philosophy can also be applied to external supply
chain partners like suppliers to ensure that their objectives and practices
Deadhead: The return of an empty transportation container to its point of origin.
Dedicated Contract Carriage: A third party service that dedicates equipment (vehicles) and drivers to a single customer for its exclusive use on a contractual basis.
Delivery Appointment: The time agreed upon between two enterprises for goods or transportation equipment to arrive at a selected location.
Destination: The location designated as a receipt point for goods/shipment.
Detention: The carrier charges and fees applied when rail freight cars
and ships are retained beyond a specified loading or unloading time.
Also see: Demurrage, Express.
Devanning: The unloading of cargo from a container or other piece of equipment.
Discharge Port: The name of the port where the cargo is unloaded from the export vessel. This is the port reported to the U.S. Census on the Shipper's Export Declaration, Schedule K, which is used by U.S. companies when exporting. This can also be considered the first discharge port.
Distribution: Outbound logistics, from the end of the production line to the end user.
Distribution Center (DC): The warehouse facility, which holds inventory from manufacturing pending distribution to the appropriate stores.
Dock Receipt: A document used to accept materials or equipment at an ocean pier or accepted location. Provides the ocean carrier with verification of receipt and the delivering carrier with proof of delivery.
Doubles: Double trucks are two 28-foot trailers that are pulled by one tractor. Doubles also are known as "double bottoms."
Drayage: The service offered by a motor carrier for pick-up and delivery of ocean containers or rail containers. Drayage agents usually handle full-load containers for ocean and rail carriers.
EDI: See Electronic Data Interchange.
EDI Interchange: Communication between partners in the form of a structured set of messages and service segments starting with an interchange control header and ending with an interchange control trailer. In the context of X.400 EDI messaging, the contents of the primary body of an EDI message.
Electronic Data Interchange (EDI): Intercompany, computer-to-computer transmission of business information in a standard format. For EDI purists, computer to computer means direct transmission from the originating application program to the receiving or processing application program. An EDI transmission consists only of business data, not any accompanying verbiage or free-form messages. Purists might also contend that a standard format is one that is approved by a national or international standards organization, as opposed to formats developed by industry groups or companies.
Ergonomic: The science of creating workspaces and products, which are human friendly to use.
Field Warehouse: A warehouse that stores goods on the goods' owner's property while the goods are under a bona fide public warehouse manager's custody. The owner uses the public warehouse receipts as collateral for a loan.
First In First Out (FIFO): In inventory control and financial accounting,
this refers to the practice of using stock from inventory on the basis
of what was received first and is consumed first.
Antonym: Last In First Out.
Fixed Costs: Costs which do not fluctuate with business volume in the short run. Fixed costs include items such as depreciation on buildings and fixtures.
Flatbed: A flatbed, also called a haul brite, is a type of trailer on a truck that consists of a floor and no enclosure.
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."
See: Free on Board.
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.
Forecast: An estimate of future demand. A forecast can be constructed using quantitative methods, qualitative methods, or a combination of methods, and can be based on extrinsic (external) or intrinsic (internal) factors. Various forecasting techniques attempt to predict one or more of the four components of demand: cyclical, random, seasonal, and trend.
Forecasting: Predictions of how much of a product will be purchased by
customers. Relies upon both quantitative and qualitative methods.
Also see: Forecast.
Foreign Trade Zone (FTZ): An area or zone set aside at or near a port or airport under the control of the US Customs Service, for holding goods duty-free pending Customs clearance.
Forklift Truck: A machine-powered device used to raise and lower freight and to move freight to different warehouse locations.
Four-Wall Inventory: The stock which is contained within a single facility
Fourth Party Logistics (4PL): Differs from third party logistics in the following ways:
Free on Board (FOB): Contractual terms between a buyer and a seller that define where title transfer takes place.
Free Time: The period of time allowed for the removal or accumulation of cargo before charges become applicable.
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
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.
Full Container load (FCL): A term used when goods occupy a whole container.
Full-Service Leasing: An equipment-leasing arrangement that includes a variety of services to support the leased equipment; a common method for leasing motor carrier tractors.
Gain Sharing: A method of incentive compensation where supply chain partners share collectively in savings from productivity improvements. The concept provides an incentive to both the buying and supplier organizations to focus on continually reevaluating, reenergizing, and enhancing their business relationship. all aspects of value delivery are scrutinized, including specification design, order processing, inbound transportation, inventory management, obsolescence programs, material yield, forecasting and inventory planning, product performance, and reverse logistics. The focus is on driving out limited value cost while protecting profit margins.
Goods: A term associated with more than one definition: 1) Common term indicating movable property, merchandise, or wares. 2) All materials, which are used to satisfy demands. 3) Whole or part of the cargo received from the shipper, including any equipment supplied by the shipper.
Handling Costs: The cost involved in moving, transferring, preparing, and otherwise handling inventory.
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.
Hazardous Material: A substance or material, which the Department of Transportation has determined to be capable of posing a risk to health, safety, and property when stored or transported in commerce.
Hostler: An individual employed to move trucks and trailers within a terminal or warehouse yard area.
Hundredweight (CWT): a pricing unit used in transportation (equal to 100 pounds).
Import: Movement of products from one country into another. The import of automobiles from Germany into the US is an example.
Intermodal Transportation: Transporting freight by using two or more transportation modes, such as by truck and rail or truck and oceangoing vessel.
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.
Inventory Accuracy: When the on-hand quantity is equivalent to the perpetual balance (plus or minus the designated count tolerances).
Inventory Turns: The cost of goods sold divided by the average level of inventory on hand. This ratio measures how many times a company's inventory has been sold during a period of time. Operationally, inventory turns are measured as total throughput divided by average level of inventory for a given period. How many times a year the average inventory for a firm changes over or is sold.
Just In Time (JIT): An inventory control system that controls material flow into assembly and manufacturing plants by coordinating demand and supply to the point where desired materials arrive just in time for use. An inventory reduction strategy that feeds production lines with products delivered just in time. Developed by the auto industry, it refers to shipping goods in smaller, more frequent lots.
Kaizen: A Japanese term for improvement - continuing improvement involving
everyone - managers and workers. In manufacturing, kaizen relates to finding
and eliminating waste in machinery, labor, or production methods.
Also see: Continuous Process Improvement.
Kanban: Japanese word for visible record, loosely translated means card, billboard, or sign. Popularized by Toyota Corporation, it uses standard containers or lot sizes to deliver needed parts to the assembly line just in time for use.
Key Performance Indicator (KPI): A measure, which is of strategic importance
to a company or department. For example, a supply chain flexibility metric
is Supplier On-Time Delivery Performance, which indicates the percentage
of orders that fulfilled on or before the original requested date.
Also see: Scorecard.
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.
Also see: Postponement
KPI: See Key Performance Indicator.
Last In First Out (LIFO): In inventory control and financial accounting, this refers to the practice of using stock from inventory on the basis of what was received last is consumed first. This has limited use in stock keeping and is primarily a cost-accounting method.
Load Tender (Pick-Up Request): An offer of cargo for transport by a shipper. Load tender terminology is primarily used in the motor industry.
Load Tendering: The practice of providing a carrier with detailed information and negotiated pricing (the tender) prior to scheduling pickup. This practice can help assure contract compliance and facilitate automated payments (self-billing).
Logbook: A daily record of the hours an interstate driver spends driving, off duty, sleeping in the berth, or on duty but not driving.
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.
Also see the Council of Logistics Management's definition of Logistics.
Lot Control: A set of procedures (e.g., assigning unique batch numbers and tracing each batch) used to maintain lot integrity from raw materials, from the supplier through manufacturing to consumers.
Lumping: When a driver assists with loading and unloading the trailer contents.
Net Weight: The weight of the merchandise, unpacked, exclusive of any containers.
Operating Ratio: A measure of operating efficiency defined as Operating expenses divided by the Operating revenues x 100.
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.
Pick/Pack: Picking and packing immediately into shipment containers.
Picking: The operations involved in pulling products from storage areas to complete a customer order.
Pro Number: Any progressive or serialized number applied for identification of freight bills, bills of lading, etc.
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.
Public Warehouse receipt: The basic document a public warehouse manager issues as a receipt for the goods a company gives to the warehouse manager. The receipt can be either negotiable or nonnegotiable.
Put Away: Removing the material from the dock (or other location of receipt), transporting the material to a storage area, placing that material in a staging area, and then moving it to a specific location and recording the movement and identification of the location where the material has been place.
Radio Frequency (RF): A form of wireless communications that lets users relay information via electromagnetic energy waves from a terminal to a base station which is linked, in turn, to a host computer. The terminal can be placed at a fixed station, mounted on a forklift truck, or carried in a worker's hand. The base station contains a transmitter and receiver for communication with the terminal. RF systems use either narrow-band or spread-spectrum transmissions. Narrow-band data transmissions move along a single limited radio frequency, while spread-spectrum transmissions move across several different frequencies. When combines with a bar code system of identifying inventory items, a radio frequency system can relay data instantly, thus updating inventory records in so-called real time.
Radio Frequency Identification (RFID): The use of radio frequency technology such as 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.
Request for Information (RFI): A document used to solicit information about vendors, products, and services prior to a formal RFQ/RFP process.
Request for Proposal (RFP): A document, which provides information concerning needs and requirements for a manufacturer. This document is created in order to solicit proposals from potential suppliers. For example, a computer manufacturer may use an RFP to solicit proposals from suppliers of third party logistics services.
Request for Quote (RFQ): A document used to solicit vendor responses when a product has been selected and price quotations are needed from several vendors.
Return Material Authorization or Return Merchandise Authorization (RMA): A number usually produced to recognize and give authority for a faulty (perhaps) good to be returned to a distribution center or manufacturer. A form generally required with a warranty/return, which helps the company identify the original product and the reason for the return. The RMA number often acts as an order form for the work required in repair situations, or as a reference for credit approval.
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:
Safety Stock: The inventory a company holds above normal needs as a buffer against delays in receipt of supply or changes in customer demand.
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 metrics targets. 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 like suppliers to ensure that their objectives and practices
Seasonality: A repetitive pattern of demand from year to year (or other repeating time interval), with some periods considerably higher than others. Seasonality explains the fluctuation in demand for various recreational products, which are used during different seasons.
Serial Number: A unique number assigned for identification to a single piece that will never be repeated for similar pieces. Serial numbers are usually applied by the manufacturer but can be applied at other points by the distributor or wholesaler. Serial numbers can be used to support traceability and warranty programs.
Short Shipment: Piece of freight missing from shipment as stipulated by documents on hand.
Shrinkage: Reductions of actual quantities of items in stock, in process, or in transit. The loss may be caused by scrap, theft, deterioration, evaporation, etc.
SKU: See Stock-Keeping Unit
Stock-Keeping Unit (SKU): A category of unit with a unique combination
of form, fit, and function (i.e., unique components held in stock).
To illustrate: If two items are indistinguishable to the customer, or if any distinguishing characteristics visible to the customer are not important to the customer so that the customer believes the two items to be the same, these two items are part of the same SKU.
As a further illustration: consider a computer company that allows customers to configure a complete computer from a selection of standard components. For example, they can choose from three keyboards, three monitors, and three CPUs. Customers may also individually buy keyboards, monitors, and CPUs. If the stock were held at the configuration component level, the company would have nine SKUs. If the company stocks at the component level, the company would have 36 SKUs. (9 component SKUs + 3*3*3 configured product SKUs.) If, as part of a promotional campaign, the company also specially packaged the products, the company would have a total of 72 SKUs.
Straight Truck: Straight trucks do not have a separate tractor and trailer. The driving compartment, engine and trailer are one unit.
SWOT: See SWOT Analysis.
SWOT Analysis: An analysis of the strengths, weaknesses, opportunities, and threats of and to an organization. SWOT analysis is useful in developing strategy.
24/7/365: Referring to operations that are conducted 24 hours a day, 7 days a week, 365 days per year, with no breaks for holidays, etc.
24/7: Referring to operations that are conducted 24 hours a day, 7 days a week.
Tare Weight: The weight of a substance obtained by deducting the weight of the empty container from the gross weight of the full container.
Third Party Logistics: Outsourcing all or much of a company's logistics operations to a specialized company.
Third Party Logistics Provider (3PL): A firm, which provides multiple logistics, services for use by customers. Preferably, these services are integrated or bundled together, by the provider. These firms facilitate the movement of parts and materials from suppliers to manufacturers, and finished products from manufacturers, and finished products from manufacturers to distributors and retailers. Among the services they provide are transportation, warehousing, cross docking, inventory management, packaging, and freight forwarding.
Third Party Warehousing: The outsourcing of the warehousing function by the seller of the goods.
Throughput: A measure of warehousing output volume (weight, number of units). Also, the total amount of units received, plus the total amount of units shipped divided by two.
Tractor: The tractor is the driver compartment and engine of the truck. It has two or three axles.
Trailer: The part of the truck that carries the goods.
Value Added: Increased or improved value, worth, functionality, or usefulness.
Variable Cost: A cost that fluctuates with the volume or activity level of business.
Velocity: Rate of product movement through a warehouse.
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, put away, 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 put away process