Glossary:  Omnichannel Logistics for a Modern Enterprise

Supply Chain Terminology

A 3PL (Third-party logistics) provider offers outsourced logistics services, which encompass anything that involves the management of one or more facets of procurement and fulfillment activities. A 3PL service may be a single provider, such as transportation or warehouse storage, or it can be a systemwide bundle of services capable of handling supply chain management.

A commonplace abbreviation for a distribution center. A distribution center is a warehouse where inventory is stored and sent to fulfillment centers or directly to retail stores as orders are placed.

Refers to an agent who supplies goods to retail or other businesses that sell to consumers.

Inventory that comes into the warehouse.

Inventory that is sent out of the warehouse.

To calculate (A future event or trend) usually by study and examination of data.

Inventory that is moved in large quantities by road, rail, ocean, or air.

In simple terms, is a company or individual that connects the manufacturer and the transporter.

A third party who helps organize and coordinate shipments on behalf of businesses by contracting with one or more carriers to transport goods.

Warehouse operated by a 3PL company that stores the products of their clients.

Can be abbreviated to U/M. Refers to the measure of how an item will be shipped.

Example: Carton, case, unit, pallet, bag, or sack.

Logistics Technology Terminology

Notification that provides visibility on an order prior to arrival. Pertinent information for these items, but not limited to P.O. number, piece count, and number of items.

Electronic data exchange is the electronic interchange of business information using a standardized format. A process that allows one company to send information to another company electronically rather than with paper.

Is a management system that helps maintain an optimal inventory level, track goods during transport between locations, receive new items, manage warehouse processes such as picking, packing, and shipping, prevent product obsolescence and spoilage, and ensures your products are never out of stock.

An order management system is a digital way to manage the lifecycle of an order. It tracks all information and processes, including order entry, inventory management, fulfillment, and after-sales service. An OMS offers visibility to both the business and the buyer.

A group of technologies that are used as a foundation for various service offerings (e.g., WMS, IMS, OMS, TMS).

Technology that is used for booking transportation, route planning, shipment visibility while in transit, and delivery metrics.

A warehouse management system is software that helps companies manage and control daily warehouse operations, from the moment goods and materials enter a warehouse, distribution center, or fulfillment center until the moment they leave.

eCommerce & Retail Terminology

Business-to-business is a situation where one business makes a commercial transaction with another business. For example: When a business is sourcing materials for its production process output.

A common abbreviation for business-to-consumer. This refers to any business that is selling directly to consumers for the final consumption of a product.

Refers to a physical storefront where consumers can go to purchase products.

Direct-to-consumers is a type of retail sales strategy where a business will build, market, sell and ship a product directly to the customer.

The process of when a retailer sells an item and then has the manufacturer or re-seller ship the item directly to the end consumer without the retailer taking possession.

Refers to clients that sell through both eCommerce and brick-and-mortar channels and want to provide a seamless customer experience between the two.

A company that only sells online via eCommerce channels and does not have a brick-and-mortar location or a physical sales force.

Distribution & Fulfillment Terminology

Product in a warehouse that has been assigned to an order in a WMS (Warehouse Management System).

All inventory that is eligible to be shipped and is not damaged, on hold, or allocated.

An order of a product that is temporarily out of stock with the supplier.

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.

Units of goods in corrugate packaging.

A method of picking inventory where individual cases are picked and then either palletized or shipped as a unit via small parcel via FedEx for example.

The amount of time it takes to get an order from order entry to the shipping dock.

Abbreviation for “first in, first out” or, for perishable products, “last 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 the product does not sit in inventory too long.

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.

When multiple SKUs are combined in one package to create a new SKU.

The process of selecting a SKU from its location in the warehouse in preparation for shipment. A mis-pick means the wrong SKU was selected.

Pallet picking is when an entire pallet of products is picked and sent to the packing and shipping area together.

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.

Items in the warehouse are packed into a container and then moved to a dedicated packing station.

Piece picking is an order-picking process in which the individual items of an order are picked and then placed in a container or carton before shipping them to a customer.

Vendor compliance is all about setting up requirements for the vendors your company deals with in an attempt to have perfect order and be able to resolve issues effectively and promptly if they arise.

Retail compliance also referred to as vendor compliance, refers to vendors or vendor partners meeting requirements set by their retail trading partner. Each retailer has a different set of processes and expectations for their distribution infrastructure.

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

A bonded warehouse is a warehouse operated by a private company under the regulatory supervision of a country’s customs agency. Its main advantage is to defer the payment of customs duties.

Refers to shipment volume (Length X Width X Height), and most commonly means cubic foot or cubic meter.

Temperature-controlled storage is designed for perishable items that need to be refrigerated while in the warehouse. It is also referred to as Refrigerated storage.

Products that are brought into the warehouse but not put away, rather held at the dock for a short time before being loaded out of the warehouse and loaded onto a truck.

The purpose of cycle counting is to keep tabs on inventory by counting a specific subset of inventory at regularly- scheduled intervals. Cycle counting offers business owners a helpful and effective alternative to costly and time-consuming inventory counts.

Inventory that doesn’t turn over i.e., that doesn’t sell is often referred to as dead stock. For businesses that don’t use inventory management software, dead stock can remain on warehouse shelves, forgotten and useless. Dead stock costs businesses money.

Inventory is stored on the floor of the warehouse. Typically reserved for pallets or bulky items.

Inventory is stored on racks, like shelves, in the warehouse. Racks allow for inventory to be stacked vertically and still maintain easy access.

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.

The area of the warehouse where inventory is brought to be packed and shipped out.

A warehouse that is certified to store food or other products that are consumed orally. These warehouses must maintain strict sanitation requirements to receive certification as food-grade. This certification is subject to frequent audits.

A special zoning designation wherein goods can be brought in, stored, reworked, and shipped out again without being subject to customs regulations. This can be an entire warehouse or a portion of one.

A material or substance that poses a danger to life, property, or the environment if improperly stored, shipped, or handled.

The situation that occurs when a lot is partially depleted and the remaining space is wasted because it cannot be utilized.

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 the warehouse, receiving miscounts, or theft.

JIT is a form of inventory management that requires working closely with suppliers so that raw materials arrive a production is scheduled to begin, but no sooner. The goal is to have the minimum amount of inventory on hand to meet demand. This effort is to reduce storage and holding costs.

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 number, location). They are typically grouped by containers, such as by pallets or bins.

A group of products with the same run or manufacturing date. Often used for consumables that have expiration dates or potential product recalls that the warehouse needs to manage.

A master carton contains multiple units, and sometimes also includes inner packs, which is another level of packaging. A pallet is a shipping platform on which multiple master cartons are shipped.

A process in which the warehouse will mix products from multiple vendors into one shipment to an end customer to reduce shipping costs.

A pallet that contains more than one product type or SKU.

A barcode tag is placed on a pallet for tracking purposes.

Pinwheeling is a process of arranging the direction of pallets, or products on a pallet, to maximize the number of pallets or products that will fit in the space.

RFID refers to a wireless system comprised of two components: Tags and readers. The reader is a device that has one or more antennas that emit radio waves and receives signals back from the RFID tag.

Abbreviation for stock keeping unit. This is a unique identifier for an item down to size, color, and style.

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, number of mis-picks, etc.

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.

A situation where there is no inventory available to sell to customers at a particular location.

Pricing Terminology

Monetary terms are used predominantly in cases of vendor compliance issues, where the product was not shipped correctly via the given guidelines for a consignee.

A pricing line item that is charged to the customer for 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.

The price charged to the customer for storing an item on a month-to-month basis.