Just in case you need to know what it all means!

A3 Method
The A3 system is a means of describing a business process in a compact form. It was originally created by the Toyota Motor Corporation and was named for the paper size on which it was printed: A3 (11” x 17”). Toyota used the A3 methodology to help develop its famed Toyota Production System (TPS).
1) The decision of a carrier to give up or to discontinue service over a route. Railroads must k ICC permission to abandon routes. 2) As in the phrase "call abandonment". This refers to people who, being placed on hold in an incoming call, elect to hang up ("abandon") the call. Call centers monitor closely the "abandonment rate" as a measure of their inefficiency.
ABC Classification
A method of classifying inventory items relative to their impact on total control. ABC typically uses movement and cost data to calculate the value of stock usage over the prior period, and uses the result as an element in ranking items under an 80/20 Pareto rule for cycle counting purposes. The group is divided into classes called A, B, and C (and sometimes D) with The A group represents the highest value with 10 to 20% by number of items. The B, C and D (if used) groups are each lower values but typically higher populations. Items with higher usage value are (the 20%) are counted more frequently. Specific bars to be used in setting ABC levels will vary by organization as they will impact the financial control applied to inventory and the level of effort spent counting.
ABC Inventory Control
A method of inventory control which divides items into categories based on value of usage, something like a Pareto division where the items which constitute the highest dollar value are tracked more closely than those with lower value movement. In this method an item with high volumes of movement, but low cost, such as a small cheap fastener, would likely be counted less frequently than a slower mover which has a very high cost. Items are typically divided by a company defined set of values into “A”, “B” and “C” groups, and sometimes even a “D” group. The count frequencies are then applied to the groups. For example “A” class items may be counted weekly, “B” monthly, “C” quarterly, etc. as a part of a cycle counting program.
ABC Model
In cost management, a representation of resource costs during a time period that are consumed through activities and traced to products, services, and customers or to any other object that creates a demand for the activity to be performed.
ABC System
In cost management, a system that maintains financial and operating data on an organization's resources, activities, drivers, objects and measures. ABC models are created and maintained within this system.
Acquisition Cost
The net price plus other costs needed to purchase the item and get it to the point of use. These other costs can include: the item's purchasing costs (closing, research, accounting, commissions, legal fees), transportation, preparation and installation costs.
Activity Analysis
The process of identifying and cataloging activities for detailed understanding and documentation of their characteristics. An activity analysis is accomplished by means of interviews, group sessions, questionnaires, observations, and reviews of physical records of work.
Advance Material Request
A request for materials which is created in advance of formal need due to long lead times for components, etc.
Advanced Planning and Scheduling (APS)
Refers to a manufacturing management process by which raw materials and production capacity are optimally allocated to meet demand. APS is especially well-suited to environments where simpler planning methods cannot adequately address complex trade-offs between competing priorities.
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. In EDI data standards this is referred to as an 856 transaction. May also include carrier and shipment specifics including time of shipment and expected time of arrival.
Agency tariff
A publication of a rate bureau that contains rates for many carriers.
An enterprise authorized to transact business for, or in the name of, another enterprise.
Aggregate Tender Rate
A reduced rate offered to a shipper who tenders two or more class-rated shipments at one time and one place.
Agile Manufacturing
Tools, techniques, and initiatives that enable a plant or company to thrive under conditions of unpredictable change. Agile manufacturing not only enables a plant to achieve rapid response to customer needs, but also includes the ability to quickly reconfigure operations-and strategic alliances-to respond rapidly to unforen shifts in the marketplace. In some instances, it also incorporates "mass customization" concepts to satisfy unique customer requirements. In broad terms, it includes the ability to react quickly to technical or environmental surprises.
The ability to rapidly and cost effectively adapt to market changes with no significant negative impact on quality or dependability.
Air Cargo Containers
Containers designed to conform to the inside of an aircraft. There are many shapes and sizes of containers. Air cargo containers fall into three categories: 1) air cargo pallets 2) lower deck containers 3) box type containers.
Air Taxi
An exempt for-hire air carrier that will fly anywhere on demand: air taxis are restricted to a maximum payload and passenger capacity per plane.
Air Waybill (AWB)
A bill of lading for air transport that serves as a receipt for the shipper, indicates that the carrier has accepted the goods listed, obligates the carrier to carry the consignment to the airport of destination according to specified conditions.
Airport and Airway Trust Fund
A federal fund that collects passenger ticket taxes and disburses those funds for airport facilities.
All-cargo carrier
An air carrier that transports cargo only.
Alternate Routing
In a production environment this is an optional process for manufacturing or assembly of a product, which may be employed due to unavailability of a primary work center, or choice of non-standard components. May also refer to a transportation route which is different than what would normally be taken, perhaps due to weather.
American Customer Satisfaction Index (ACSI)
Released for the first time in October 1994, an economic indicator and cross industry measure of the satisfaction of U.S. household customers with the quality of the goods and services available to them-both those goods and services produced within the United States and those provided as imports from foreign firms that have substantial market shares or dollar sales. The ACSI is co-sponsored by the University of Michigan Business School, ASQ and the CFI Group.
American National Standards Institute (ANSI)
A non-profit organization chartered to develop, maintain, and promulgate voluntary U.S. national standards in a number of areas, especially with regards to setting EDI standards. ANSI is the U.S. representative to the International Standards Organization (ISO).
American Standard Code for Information Interchange (ASCII)
ASCII format -simple text based data with no formatting. The standard code for information exchange among data processing systems. Uses a coded character set consisting of 7-bit coded characters (8 bits including parity check).
American National Standards Institute Accredited Standards Committee X12. The committee of ANSI that is charted with setting EDI standards.
ANSI Standard
A published transaction set approved by ANSI. The standards are reviewed every six months.
Anti-Deficiency Act [Title 31, U.S. Code, Sec1341 & 1517]
Prohibits making or authorizing an obligation in excess of the amount available; forbids obligation to pay money from the US Treasury in advance of the appropriation; requires agency to fix responsibility for violations of the Act.
Anti-Dumping Duty
An additional import duty imposed in instances where imported goods are priced at less than the normal price charged in the exporter's domestic market and cause material injury to domestic industry in the importing country.
Any-quantity Rate (AQ)
The same rate applies to any size shipment tendered to a carrier; no discount rate is available for large shipments.
Application Service Provider (ASP)
A company that offers access over the Internet to application (examples of applications include word processors, database programs, Web browsers, development tools, communication programs) and related services that would otherwise have to be located in their own computers. Sometimes referred to as "apps-on-tap", ASP services are expected to become an important alternative, especially for smaller companies with low budgets for information technology. The purpose is to try to reduce a company's burden by installing, managing, and maintaining software.
Approved Vendor List (AVL)
List of the suppliers approved for doing business. The AVL is usually created by procurement or sourcing and engineering personnel using a variety of criteria such as technology, functional fit of the product, financial stability, and past performance of the supplier.
Arrival Notice
A notice from the delivering carrier to the Notify Party indicating the shipment's arrival date at a specific location (normally the destination).
A distribution of costs using causal relationships. Because cost causal relationships are viewed as more relevant for management decision-making, assignment of costs is generally preferable to allocation techniques.
Refers to the lowest level of division for a process, product structure, network, etc. Atomic elements cannot typically be sub-divided. In a process this refers to a unique activity, in a product structure this would be a single part component, in a network this could represent a single warehouse or location.
A characteristic of modern information systems, gauged by the ease with which data can be substantiated by trading it to source documents and the extent to which auditors can rely on pre-verified and monitored control processes.
1) The process of verifying the eligibility of a device, originator, or individual to access specific categories of information or to enter specific areas of a facility. This process involves matching machine-readable code with a predetermined list of authorized end users. 2) A practice of establishing the validity of a transmission, message, device, or originator, which was designed to provide protection against fraudulent transmissions.
Automated Broker Interface (ABI)
The U.S. Customs program to automate the flow of customs-related information among customs brokers, importers, and carriers.
Automated Clearinghouse (ACH)
A nationwide electronic payments system, which more than 15,000 financial institutions use, on behalf of 100,000 corporations and millions of consumer in the U.S. The funds transfer system of choice among businesses that make electronic payments to vendors, it is economical and can carry remittance information in standardized, computer processable data formats.
Automated Commercial Environment (ACE)
Update of outmoded Automated Commercial System (ACS). It is intended to provide automated information system to enable the collection, processing and analysis of commercial import and export data, allowing for moving goods through the ports faster and at lower cost, as well as detection of terrorist threats.
Automated Manifest System (AMS)
A multi-modular cargo inventory control and release notification system through which carriers submit their electronic cargo declaration 24 hours before loading.
Automated Storage/Retrieval System (AS/RS)
An inventory storage system which uses un-manned vehicles to automatically perform stock put-away and picking actions.
Avoidable Cost
part of the cost of any activity associated with an output, that could be saved by not performing that activity.
Award Fee
Based on subjective assessment by Government on how well contractor meets/exceeds performance standards.
Back Scheduling
A technique used to calculating activities based on a series of known activities, the time required to complete them, and the desired end date for completing the series.
A method used to relieve inventory and charge costs based on completed units. Backflushing is an alternative to processing actual issue or labor transactions related to production. Typically a bill of materials is used to determine the quantity required to build a product, and relief is based on quantity required per time units complete. It works well in environments where the time spent in WIP is short, otherwise the delay in recording book on hand can cause problems with inventory control
The portion of a transport trip, typically associated with trucking, that is incurred when returning a vehicle to its point of origin. Ideally the carrier will find some sort of freight to carry back, if the trip is empty it is called deadhead.
The process of recapturing and taking responsibility internally for processes that were previously outsourced to a contract manufacturer, fulfillment or other service provider. Backsourcing typically involves the cancellation or expiration of an outsourcing contract and can be nearly as complex as the original outsourcing process.
Balanced Scorecard
A strategic performance management tool used for measuring whether the smaller-scale operational activities of a company are aligned with its larger-scale objectives in terms of vision and strategy By focusing not only on financial outcomes but also on the operational, marketing and developmental inputs to these, the Balanced Scorecard helps provide a more comprehensive view of a business, which in turn helps organizations act in their best long-term interests.
Barrier to Entry
Reasons that companies perceive will stop them from participating in a particular market. These include cost of entry, significant competition, limited knowledge, etc.
Base Demand
The level of demand for a product which is based on actual history and / or known customer contracts.
Basing Point Pricing
A pricing system that includes a transportation cost from a particular city or town in a zone or region even though the shipment does not originate at the basing point.
Batch Control Totals
The result of grouping transactions at the input stage and establishing control totals over them to ensure proper processing. These control totals can be based on document counts, record counts, quantity totals, dollar totals, or hash (mixed data, such as customer AR numbers) totals.
Batch Picking
An order picking method where orders are grouped into small batches, an order picker will pick all orders within the batch in one pass. Batch picking is usually associated with pickers with multi-tiered picking carts moving up and down aisles picking batches of usually 4 to 12 orders, however, batch picking is also very common when working with automated material handling equipment such as carousels.
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. Benchmarking ks to improve any given business process by exploiting "best practices" rather than merely measuring the best performance. Best practices are the cause of best performance. Studying best practices provides the greatest opportunity for gaining a strategic, operational, and financial advantage.
Benefit-cost ratio
An analytic tool used in public planning; a ratio of total measurable benefits divided by the initial capital cost.
An individual or custom-made product or service. Traditionally applied to custom-tailored clothing, the term has been extended to information technology, especially for custom-designed software as an alternative to commercial (COTS) software.
Bill of Lading (BOL)
A transportation document that is the contract of carriage containing the terms and conditions between the shipper and carrier.
Blanket Purchase Order
A blanket order is defined as an order the customer makes with its supplier which contains multiple delivery dates scheduled over a period of time, sometimes at predetermined prices. It is normally used when there is a recurring need for expendable goods. Hence, items are purchased under a single purchase order (P.O) rather than processing a separate P.O. each time supplies are needed.
Blanket Purchasing Agreement (BPA)
A US Government Service Administration buying schedule for buyers and sellers which denotes not only that prices have already been determined to be fair and reasonable but goes a step further by determining the terms under which goods and services will be provided and possibly establishing a single source to deliver them over a period of time.
An intermediary between the shipper and the carrier. The broker arranges transportation for shippers and represents carriers.
Brokered Systems
Independent computer systems, owned by independent organizations or entities, linked in a manner to allow one system to retrieve information from another. For example, a customer's computer system is able to retrieve order status from a supplier's computer.
Bullwhip Effect
Also known as “Whiplash Effect” it is an observed phenomenon in forecast-driven distribution channels. The oscillating demand magnification upstream a supply chain is reminiscent of a cracking whip. The concept has its roots in J Forrester's Industrial Dynamics (1961) and thus it is also known as the Forrester Effect.
Business Activity Monitoring (BAM)
A term which refers to capturing operational data in real-time or close to it, making it possible for an enterprise to react more quickly to events. This is typically done through software and includes features to provide alerts / notifications when specific events occur.
Business Continuity Plan (BCP)
A defined operational plan which is designed to be implemented in the event of disruption of normal operations. Disruptions may be the result of natural disasters, civil or labor unrest, etc. CSCMP provides suggestions for helping companies do continuity planning in their Securing the Supply Chain Research.
A federal law that requires coastal and inter-coastal traffic to be carried in U.S.-built and -registered ships.
The Commercial and Government Entity code is a 5 character (number and letters) code used to identify contractors doing business with the U.S. Government.
Carbon Footprint
A measure of the total carbon emissions for a given person, organization, building, operation etc. and the impact their carbon emissions have on the environment by relating the amount of greenhouse gases produced to such activities as burning fossil fuels for electricity, heating transportation, etc.
Carbon Trade
The process of buying and selling credits to emit carbon. Companies and organizations are assigned emission permits that stand for the amount of carbon they are allowed to emit. If a company or organization emits less carbon, then it can sell its emissions permits. If emissions are more than its current permits, then it will need to buy emission permits from other companies or organizations that produce less carbon.
Carload Lot
A shipment of not less than five tons of one commodity.
Carmack Amendment
An Interstate Commerce Act amendment that delineates the liability of common carriers and the bill of lading provision.
Center-of-Gravity Approach
A supply chain planning methodology for locating distribution centers at approximately the location representing the minimum transportation costs between the plants, the distribution centers, and the markets.
Certificate of Analysis (COA)
A document, often required by an importer or governmental authorities, attesting to the quality or purity of commodities.
Certificate of Compliance
A document, often required by an importer or governmental authorities, attesting to the quality or purity of commodities. The origin of the certification may be a chemist or any other authorized body such as an inspection firm retained by the exporter or importer.
Cloud Computing
An emerging computing paradigm where data and services reside in massively scalable data centers and can be ubiquitously accesses from any connected devices over the internet. Similar to the “on demand” concept of SaaS or ASP computing services with the exception of the broad nature of the network of computers.
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.
Commercial Invoice
A document created by the seller. It is an official document which is used to indicate, among other things, the name and address of the buyer and seller, the product(s) being shipped, and their value for customs, insurance, or other purposes.
Commodity Code
A code describing a commodity or a group of commodities pertaining to goods classification. This code can be carrier tariff or regulating in nature.
Complete & On-Time Delivery (COTD)
A measure of customer service. All items on any given order must be delivered on time for the order to be considered as complete and on time
Consular Declaration
A formal statement made to the consul of a country describing merchandise to be shipped to that consul's country. Approval must be obtained prior to shipment.
Consular Invoice
A document, required by some foreign countries, describing a shipment of goods and showing information such as the consignor, consignee, and value of the shipment. Certified by a consular official of the foreign country, it is used by the country's custom.
Container Security Initiative (CSI)
U.S. Customs program to prevent global containerized cargo from being exploited by terrorists. Designed to enhance security of sea cargo container.
A combination of cooperation and competition that offers the counter intuitive possibility for rivals to benefit from each other's mingly competitive activities. In short, there are circumstances where having more players to cut the pie means bigger pieces of pie for everyone. An example would be found in the group buying setting where its use refers to the activity of multiple, normally competitive buying group members leveraging each other's buying power to gain reduced pricing.
Cross Dock / Cross Docking (XDK)
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.
Customs-Trade Partnership against Terrorism (C-TPAT)
A joint government/business initiative to build cooperative relationships that strengthen overall supply chain and border security. The voluntary program is designed to share information that will protect against terrorists' compromising the supply chain.
Cycle Counting:
An inventory control and management practice that refers to a process of regularly scheduled inventory counts (usually daily) that "cycles" through your inventory. Users determine how often certain items or locations are counted using frequency or dollar values segregated into “ABC” categories. Cycle counting can eliminate the need for wall to wall physical counts and can maintain a higher level of on-going accuracy.
Cycle Inventory:
An inventory system where counts are performed continuously often eliminates 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.
Customs House Broker:
A business firm that overs the movement of international shipments through customs and ensures that the documentation accompanying a shipment is complete and accurate.
Customs and Border Protection (CBP):
Formed during the creation of the Department of Homeland Security in 2003, CBP consists primarily of the customs inspection function formerly performed by the U.S. Customs Service as part of the Department of Treasury, the immigration inspection function formerly performed by the Immigration and Naturalization Service (INS), and the Border Patrol, formerly part of the Department of Justice.
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/Order Fulfillment Process:
The typical business process which includes receipt and processing of a customer order through delivery.
Cubic Space:
The measurement of total space or volume available or required in transportation and warehousing. Calculation: floor space x height
Cost of Goods Sold (COGS):
The amount of direct materials, direct labor, and allocated overhead associated with products sold during a given period of time, determined in accordance with Generally Accepted Accounting Principles (GAAP)
Cost, Insurance, Freight (CIF):
A trade term requiring the seller to arrange for the carriage of goods by sea to a port of destination, and provide the buyer with the documents necessary to obtain the goods from the carrier.
Cash-to-Cash Cycle Time:
The time it takes for cash to flow back into a company after it has been spent for raw materials.
Cellular manufacturing:
A manufacturing approach in which equipment and workstations are arranged to facilitate small-lot, continuous-flow production. In a manufacturing "cell," all operations necessary to produce a component or subassembly are performed in close proximity, thus allowing for quick feedback between operators when quality problems and other issues arise. Workers in a manufacturing cell typically are cross-trained and, therefore, able to perform multiple tasks as needed.
Center-of-Gravity Approach:
A supply chain planning methodology for locating distribution centers at approximately the location representing the minimum transportation costs between the plants, the distribution centers, and the markets.
Change Order:
A document or digital record which authorizes and provides notification of a modification to a product or order.
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.
Class Rate:
A rate constructed from a classification and a uniform distance system. A class rate is available for any product between any two points.
Collaborative Planning, Forecasting and Replenishment (CPFR®):
A concept that aims to enhance supply chain integration by supporting and assisting joint practices. CPFR ks cooperative management of inventory through joint visibility and replenishment of products throughout the supply chain. Information shared between suppliers and retailers aids in planning and satisfying customer demands through a supportive system of shared information. This allows for continuous updating of inventory and upcoming requirements, essentially making the end-to-end supply chain process more efficient. Efficiency is also created through the decrease expenditures for merchandising, inventory, logistics, and transportation across all trading partners.
Commercial Zone:
The area surrounding a city or town to which rates quoted for the city or town also apply; the area is defined by the ICC.
Joint work and communication among people and systems -including business partners, suppliers, and customers - to achieve a common business goal.
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.
Commercial Invoice:
A document created by the seller. It is an official document which is used to indicate, among other things, the name and address of the buyer and seller, the product(s) being shipped, and their value for customs, insurance, or other purposes.
Common Carrier:
Any carrier engaged in the interstate transportation of persons/property on a regular schedule at published rates, whose services are for hire to the general public.
Corrective Action:
A change implemented to address a weakness identified in a management system, usually brought to the company’s attention by a customer complaint of nonconformities identified during an internal audit or adverse or unstable trends in product and process monitoring identified by the statistical process control (SPC).
A materials handling device that moves freight from one area to another in a warehouse. Roller conveyors make sue of gravity, whereas belt conveyors use motors.
Contract Manufacturing:
A relationship where a third party manufactures products that are packaged under another company's label.
Contract Carrier:
Carrier engaged in interstate transportation of persons/property by motor vehicle on a for-hire basis, but under continuing contract with one or a limited number of customers to meet specific needs.
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 Process Improvement (CPI):
Continuous Process Improvement is a strategic approach for developing a culture of continuous improvement in the areas of reliability, process cycle times, costs in terms of less total resource consumption, quality, and productivity.
Continuous Move:
A practice used by some large shippers to ensure lower shipping rates and guaranteed capacity. The shipper works with a few core carriers to groups a series of one-way hauls between suppliers, manufacturing plants, distribution centers and sometimes customers into a round trip. The carriers benefit from fewer empty miles, less idle time, better asset utilization and more regular routes.
A system of intermodal freight transport using standard intermodal containers that are standardized by the International Organization for Standardization (ISO). These can be loaded and sealed intact onto container ships, railroad cars, planes, and trucks.
1) A "box," typically 10 to 40 feet long, which is primarily used for ocean freight shipments. For travel to and from ports, containers are loaded onto truck chassis or on railroad flatcars. 2) The packaging, such as a carton, case, box, bucket, drum, bin, bottle, bundle, or bag, that an item is packed and shipped in.
Consumer Packaged Goods (CPG):
Consumable goods such as food and beverages, footwear and apparel, tobacco, and cleaning products. In general, CPGs are things that get used up and have to be replaced frequently, in contrast to items that people usually keep for a long time, such as cars and furniture.
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.
Consignment Inventory:
1) Goods or product that are paid for when they are sold by the reseller, not at the time they are shipped to the reseller. 2) Goods or products which are owned by the vendor until they are sold to the consumer.
The party to whom goods are shipped and delivered. The receiver of a freight shipment.
Computer-aided design (CAD):
Computer-based systems for product design that may incorporate analytical and "what if" capabilities to optimize product designs. Many CAD systems capture geometric and other product characteristics for engineering-data-management systems, producibility and cost analysis, and performance analysis.
Material that will contribute to a finished product but is not the finished product itself. Examples would include tires for an automobile, power supply for a personal computer, or a zipper for a ski parka. Note that what is a component to the manufacturer may be considered the finished product of their supplier.
Commodity Code:
A code describing a commodity or a group of commodities pertaining to goods classification. This code can be carrier tariff or regulating in nature.
Any physical item that is traded in commerce. The term usually implies an undifferentiated product competing primarily on price and availability.
An alphabetical listing of commodities, the class or rating into which the commodity is placed, and the minimum weight necessary for the rate discount; used in the class rate structure.
Category Management:
The management of product categories as strategic business units. The practice empowers a category manager with full responsibility for the assortment decisions, inventory levels, shelf-space allocation, promotions and buying. With this authority and responsibility, the category manager is able to judge more accurately the consumer buying patterns, product sales and market trends of that category.
Cantilever Rack:
Racking system that support columns at the rear and arms which attach to the support columns to hold shelving or stock. Cantilevers racks allows for storage of very long items.
Call Center:
A call center is a centralized office used for the purpose of receiving and transmitting a large volume of requests by telephone. A call centre is operated by a company to administer incoming product support or information inquiries from consumers. Outgoing calls for telemarketing, clientele, product services, and debt collection are also made. In addition to a call centre, collective handling of letters, faxes, live chat, and e-mails at one location is known as a contact center.
Dangerous Goods:
Articles or substances capable of posing significant health, safety, or environmental risk, and that ordinarily require special attention including packaging and labeling when stored or transported.
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 such as suppliers to ensure that supplier's objectives and practices align.
Days of Supply:
Measure of quantity of inventory-on-hand, in relation to number of days for which usage which will be covered. For example, if a component is consumed in sale or manufacturing at the rate of 100 per day, and there are 1,585 units available on-hand, this represents 15.85 days supply. The goal, in most cases, is to demonstrate efficiency through having a high turnover rate and therefore a low days’ inventory. However, realize that this ratio can be unfavorable if either too high or too low. A company must balance the cost of carrying inventory with its unit and acquisition costs, with the potential of lost business and ultimately lost customers if shortages are pervasive.
The return of an empty transportation container back to a transportation facility. Commonly used description of an empty backhaul.
Decision Support System (DSS):
Software that speeds access and simplifies data analysis, queries, etc. within a database management system.
Declaration of Dangerous Goods:
To comply with the U.S. regulations, exporters are required to provide special notices to inland and ocean transport companies when goods are hazardous.
Declared Value:
The value of the goods, declared by the shipper on a bill of lading, for the purpose of determining a freight rate or the limit of the carrier's liability. Also used by customs as the basis for calculation of duties, etc.
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. Typically used to help plan warehouse and receiving / inspection operations and to manage backup of carriers at loading docks.
Supplier/manufacturer arrangement in which suppliers are responsible for the transport of the goods they have produced, which is being sent to a manufacturer. This responsibility includes tasks such as ensuring products get through Customs.
What customers or users actually want. Typically associated with the consumption of products or services as opposed to a prediction or forecast.
Demand Management:
The proactive compilation of requirements information regarding demand (i.e., customers, sales, marketing, finance) and the firm's capabilities from the supply side (i.e., supply, operations and logistics management); the development of a consensus regarding the ability to match the requirements and capabilities; and the agreement upon a synthesized plan that can most effectively meet the customer requirements within the constraints imposed by supply chain capabilities.
Demand Planning:
The process of identifying, aggregating, and prioritizing, all sources of demand for the integrated supply chain of a product or service at the appropriate level, horizon and interval. The sales forecast is comprised of the following concepts:
Demand Planning Systems:
The systems that assist in the process of identifying, aggregating, and prioritizing, all sources of demand for the integrated supply chain of a product or service at the appropriate level, horizon and interval.
Demand Signal:
A signal from a consumer, customer or using operation that triggers the issue of product or raw material. The demand signal is most efficiently an electronic data transmission, but could be a physical document, kanban or telephone call.
Deming Circle:
An iterative four-step problem-solving process typically used in business process improvement. It is also known as the Shewhart cycle, Deming Wheel, or Plan-Do-Study-Act.
The carrier charges and fees applied when rail freight cars and ships are retained beyond a specific loading or unloading time. also: Detention
A physical characteristic of a commodity measuring its mass per unit volume or pounds per cubic foot; an important factor in rate making, since density affects the utilization of a carrier's vehicle.
A location where a substance is stored usually for later utilization. A Repair Depot is a location/facility where assets are rebuilt or repaired.
Detention Fee:
The carrier charges and fees applied when rail freight cars, ship and carriers are retained beyond a specified loading or unloading time. also: Demurrage
Direct Channel:
Your own sales force sells to the customer. Your entity may ship to the customer, or a third party may handle shipment, but in either case your entity owns the sales contract and retains rights to the receivable from the customer. Your end customer may be a retail outlet. The movement to the customer may be direct from the factory, or the product may move through a distribution network owned by your company. Order information in this channel may be transmitted by electronic means.
Direct Cost:
A cost that can be directly traced to a cost object since a direct or repeatable cause-and-effect relationship exists. A direct cost uses a direct assignment or cost causal relationship to transfer costs. Direct costs can consist of materials used and labor directly involved in production.
Discrete Order Picking:
An order picking method where each individual order is picked, line by line, prior to beginning picking of another order.
Discrete Order Quantity:
A production planning technique that generates planned orders in quantities equal to the net customer order requirements in each period. also: Lot-for-Lot
The carrier activities involved with controlling equipment; involves arranging for fuel, drivers, crews, equipment, and terminal space.
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 Center (DC):
The warehouse facility which holds inventory from manufacturing pending distribution to the appropriate stores.
A business and industry which acts as a third party local representative and distribution point for a manufacturing firm. These firms may perform some light assembly or kitting of goods, but generally provide a buffer for finished goods. Distributors typically purchase the goods in quantity from the manufacturer and ship to customers in smaller quantities.
The practice of selling goods to a competitor that the vendor assumes would be used to service that Customer's store. Example; Grocery Store Chain A buys orange juice from Minute Maid. Grocery Store Chain A, because of their sales volume or because of promotion, can buy product for $12.50 per case. Grocery Store Chain B, because of a lower sales volume, buys the same orange juice for $14.50 per case. Grocery Store Chain A and Grocery Store Chain B get together and make a deal. Grocery Store Chain A resells that product to Grocery Store Chain B for $13.50 per case. Grocery Store Chain A makes $1.00 per case and Grocery Store Chain B gets product for $1.00 less per case than it can buy from Minute Maid.
An acronym used by Six Sigma practitioners to remind them of the steps in a Six Sigma improvement project - Define, Measure, Analyze, Improve, Control.
A practice where pre-qualified product is received into inventory, eliminating the normal receiving and inspection handling involved. Also, a warehouse metric used to benchmark the amount of time required to perform the processes associated with getting received items into storage.
Double Bottoms:
A motor carrier operation involving two trailers being pulled by one tractor.
Double Stack:
Two containers, one on top of the other, loaded on a railroad flatcar; an intermodal service.
Referring to the demand side of the supply chain. One or more companies or individuals who participate in the flow of goods and services moving from the manufacturer to the final user or consumer. Antonym: Upstream
Transportation of materials and freight on a local basis, but intermodal freight carriage may also be referred to as drayage.
Driving time regulations:
Rules administered by the U.S. Department of Transportation that limit the maximum time a driver may drive in interstate commerce; both daily and weekly maximums are prescribed.
A situation in which an equipment operator deposits a trailer or boxcar at a facility at which it is to be loaded or unloaded.
Drop and Hook:
An arrangement among shipper, carrier and consignee whereby the carrier leaves a trailer filled with freight at a destination and hooks up and hauls away an empty trailer.
Drop Ship:
A customer fulfillment strategy where products are shipped directly from the manufacturer or distributor to a customer bypassing the retail or secondary distribution location. Intended to expedite delivery and reduce handling costs. Billing transactions occur in the normal manner, only the material flow is altered.
Drop Trailers:
Trailers that are unhooked from a tractor when the truck reaches its destinations.
Drop Yard:
Temporary “parking lots” for containers or cargo, located off the wharves and sometimes next to rail yards or import warehouses.
The act of selling goods below costs in selected markets in an effort to gain market share or eliminate competition.
The materials used in packaging, holds and containers to protect goods from damage.
DUNS System:
DUNS: Data Universal Numbering System. DUNS Number: A unique nine-digit number assigned by Dun and Bradstreet to identify a company. DUNS stands for Data Universal Numbering System.
Durable Goods:
A good which does not quickly wear out, or more specifically, it yields services or utility over time (typically 3 years or more) rather than being completely used up when used once.
Duty Free Zone (DFZ):
An area where goods or cargo can be stored without paying import customs duties while awaiting manufacturing or future transport.
Dwell Time:
The period of time during which a dynamic process is halted in order for another process to occur.
Dynamic Lot Sizing:
A lot-sizing technique where the order quantity subject to continuous re-computation to take into account that demand for the product varies over time.
Dynamic Rescheduling:
A functional capability of resource planning and operations management systems which provides the ability to reschedule activities “on the fly” in the event of a change in one of the factors affecting the schedule—such as a late shipment or equipment failure.
EAN.UCC Information Network (EIN):
EAN International and the Uniform Code Council network for the exchange of Global Data Synchronization Network (GDSN), master data between partners of the global supply and demand chain now a part of GS1.
Economic Order Quantity (EOQ):
An inventory model that determines how much to order by determining the amount that will meet customer service levels while minimizing total ordering and holding costs.
Economic Value Added (EVA):
A measurement of shareholder value as a company's operating profits after tax, less an appropriate charge for the capital used in creating the profits.
Efficient Consumer Response (ECR):
A demand driven replenishment system designed to link all parties in the logistics channel to create a massive flow-through distribution network. Replenishment is based upon consumer demand and point of sale information.
Electronic Commerce (EC):
Also written as e-commerce. Conducting business electronically via traditional EDI technologies, or online via the Internet. In the traditional sense of selling goods, it is possible to do this electronically because of certain software programs that run the main functions of an e-commerce website, such as product display, online ordering, and inventory management. The definition of e-commerce includes business activity that is business-to-business (B2B), business-to-consumer (B2C).
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.
Electronic Funds Transfer (EFT):
Refers to the transactions and related computer-based systems used to perform financial (typically banking) transactions between organizations and accounts electronically.
Electronic Product Code (EPC or ePC):
An identification scheme for universally identifying physical objects via RFID tags and other means. Standardized EPC data consists of among other partitions of data, an EPC Manager Number, an object class identification, a filter value, and a serial number used to uniquely identify the instance of the object. Information on the tag may include asset numbers, container code numbers, locations, Global Trade Item Numbers (GTIN), etc. The EPC is a 96-bit tag which unlike a UPC number which only provides information specific to a group of products, gives each product its own specific identifying number, providing greater accuracy in tracking. EPC standards are managed by the global standards organization known as GS1.
Pertaining to a statement or formula based upon experience or observation rather than on deduction or theory.
Planning and execution at the end of the life of a product. The challenge is making just the right amount to avoid: 1) ending up with excess, which has to be sold at great discounts or scrapped, or 2) ending up with shortages before the next generation is available.
Engineering Change Order (ECO)
: A documented and approved revision to a product or process specification.
Enterprise Resource Planning (ERP) System:
A class of software for planning and managing "enterprise-wide" the resources needed to take customer orders, ship them, account for them and replenish all needed goods according to customer orders and forecasts. Often includes electronic commerce with suppliers. Examples of ERP systems are the application suites from SAP, Oracle, PeopleSoft and others.
An EDI management software function that groups all documents of the same type, or functional group, and bound for the same destination into an electronic envelope. Enveloping is useful where there are multiple documents such as orders or invoices issued to a single trading partner that need to be sent as a packet.
Exception-Based Processing:
A computer term for applications that automatically highlight particular events or results which fall outside pre-determined parameters. This saves considerable effort by automatically finding problems and alerting the right persons. An example would be where a shorted item on a purchase order receipt would automatically notify a purchasing agent for follow-up.
Ex Works (EXW):
An international trade term (Incoterms, International Chamber of Commerce) requiring the seller to deliver goods at his or her own place of business. All other transportation costs and risks are assumed by the buyer.
Exception Rate:
A deviation from the class rate; changes (exceptions) made to the classification.
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 carrier transports agricultural commodities or seafood.
1) Moving shipments through regular channels at an accelerated rate. 2) To take extraordinary action because of an increase in relative priority, perhaps due to a sudden increase in demand.
Exporting Definitions:
Export: 1) In logistics, the movement of products from one country to another. For example, significant volumes of cut flowers are exported from The Netherlands to other countries of the world. 2) A computer term referring to the transfer of information from a source (system or database) to a target. Export Broker: An enterprise that brings together buyer and seller for a fee, then eventually withdraws from the transaction. Export Compliance: Complying with the rules for exporting products, including packaging, labeling, and documentation. Export Declaration: A document required by the Department of Commerce that provides information as to the nature, value, etc., of export activity. Export License: A document secured from a government authorizing an exporter to export a specific quantity of a controlled commodity to a certain country. An export license is often required if a government has placed embargoes or other restrictions upon exports. Export Processing Zone (EPZ): A term used in various countries similar to a Free Trade Zone. also: Free Trade Zone Export Sales Contract: The initial document in any international transaction; it details the specifics of the sales agreement between the buyer and seller. Exporter Identification Number (EIN): A number required for the exporter on the Shipper's Export Declaration. A corporation may use their Federal Employer Identification Number as issued by the IRS; individuals can use their Social Security Numbers. Exports: A term used to describe those products produced in one geography (typically a country) and shipped / sold in another. also: Export
Extended Enterprise:
Refers to the concept where an organization’s internal capabilities are extended by virtue of their supply chain partners to form a larger logical entity.
An industrial term, applies to firms that build machines, structures components and other equipment, by cutting, shaping otherwise creating components from raw materials, and assembling components made from raw materials.
An installation, contrivance, or other thing which facilitates something; a place for doing something: Commercial or institutional buildings, including offices, plants and warehouses.
Fair Value:
The value of the carrier's property; the basis of calculation has included original cost minus depreciation, replacement cost, and market value.
Fast and Secure Trade (FAST):
U.S. Customs program that allows importers on the U.S./Canada border to obtain expedited release for qualifying commercial shipments.
Federal Maritime Commission:
A regulatory agency that controls services, practices, and agreements of international water common carriers and noncontiguous domestic water carriers.
Fill Rates by Order:
Whether orders are received and released consistently, or released from a blanket purchase order, this metric measures the percentage of ship-from-stock orders shipped within 24 hours of order "release". Make-to-Stock schedules attempt to time the availability of finished goods to match forecasted customer orders or releases. Orders that were not shipped within 24 hours due to consolidation but were available for shipment within 24 hours are reported separately. In calculating elapsed time for order fill rates, the interval begins at ship release and ends when material is consigned for shipment.
Final Assembly:
The highest level assembled product, as it is shipped to customers. This terminology is typically used when products consist of many possible features and options that may only be combined when an actual order is received.
Finance lease:
An equipment-leasing arrangement that provides the les with a means of financing for the leased equipment; a common method for leasing motor carrier trailers.
Finished Goods Inventory (FG or FGI):
Products completely manufactured, packaged, stored, and ready for distribution.
First In, First Out (FIFO):
Warehouse term meaning first items stored are the first used. In accounting this tem is associated with the valuing of inventory such that the latest purchases are reflected in book inventory. While generally considered an accounting notion, FIFO usage is common where products may have a shelf life
Fixed-Location Storage:
A stocking strategy which uses set warehouse locations assigned to each SKU. If additional storage is required the excess stock will be placed in an “overflow” area with appropriate cross references in systems or on bin labels. Locations are typically reviewed periodically as a part of a slotting strategy.
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.
Fixed Order Quantity:
Fixed Order Quantity: An inventory reorder method which causes all replenishment orders to be a pre-determined size or a multiple thereof. This is typically introduced to accommodate price breaks, packaging or shipping requirements.
Fixed Price (FP):
A type of contract where a specified price is paid for a specific product, service, or goal.
A flatbed is a type of truck trailer that consists of a floor and no enclosure. A flatbed may be used with “sideboards” or “tie downs” which keep loose cargo from falling off.
A rail car without sides; used for hauling machinery.
Floor Loading:
Containerized freight is usually not palletized. Instead, the bottom layer of boxes is loaded onto the floor of the container. As a result, more boxes can be loaded into a container, but the containers take much longer to unload.
Floor-Ready Merchandise (FRM):
Goods shipped by suppliers to retailers with all necessary tags, prices, security devices, etc. already attached, so goods can be cross docked rapidly through retail DCs, or received directly at stores.
Flow-Through Distribution:
A process in a distribution center in which products from multiple locations are brought in to the D.C. and are re-sorted by delivery destination and shipped in the same day. Typically involving a combination of TL and LTL carrier resources, this practice eliminates warehousing, reduces inventory levels and speeds order turnaround time.
Flow Rack:
Storage rack that utilizes shelves (metal) that are equipped with rollers or wheels. Such an arrangement allows product and materials to "flow" from the back of the rack to the front and therein making the product more accessible for small-quantity order-picking.
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.
For-hire Carrier:
A carrier that provides transportation service to the public on a fee basis.
An estimate of future customer demand. Forecasts are typically made using scientific techniques based on historical usage and adjusted to accommodate various factors such as life cycle, cyclical usage patterns, promotions and pricing actions.
Forecast Accuracy:
A measurement of the level of accuracy inherent in your forecast as a percent of actual units or dollars shipped. Forecast accuracy in the supply chain is typically measured using the Mean Absolute Percent Error (MAPE). However, there are confusions between the statistical definition of MAPE and its application among supply chain planners. Statistically MAPE is defined as the average of percentage errors. Most practitioners however define and use the MAPE as the Mean Absolute Deviation divided by Average Sales. You can think of this as a volume-weighted MAPE. In some references, this is also referred to as the mean absolute difference (MAD)/mean ratio.
Predictions of how much of a product will be purchased by customers. Relies upon both quantitative and qualitative methods.
Foreign Trade Zone (FTZ):
An area or zone set aside at or near a port or airport, under the control of the U.S. Customs Service, for holding goods duty-free pending customs clearance.
Forklift truck:
A machine-powered device that is used to raise and lower freight and to move freight to different warehouse locations.
Fourth-Party Logistics (4PL):
Differs from third party logistics in the following ways; 1)4PL organization is often a separate entity established as a joint venture or long-term contract between a primary client and one or more partners; 2)4PL organization acts as a single interface between the client and multiple logistics service providers; 3) All aspects (ideally) of the client’s supply chain are managed by the 4PL organization; and, 4) It is possible for a major third-party logistics provider to form a 4PL organization within its existing structure. The term was registered by Accenture as a trademark in 1996 and defined as "A supply chain integrator that assembles and manages the resources, capabilities, and technology of its own organization with those of complementary service providers to deliver a comprehensive supply chain solution.", but is no longer registered.
Forty-foot Equivalent Unit (FEU):
A standard size intermodal container.
Free Alongside Ship (FAS):
A shipping contract term indicating that the seller must place the goods alongside the ship at the named port and be liable for all charges and risks prior to placement. The seller must clear the goods for export; this changed in the 2000 version of the Incoterms. Suitable for maritime transport only.
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.
Free Trade Zone (FTZ):
Also known as an export processing zone (EPZ), one or more special areas of a country where some normal trade barriers such as tariffs and quotas are eliminated and bureaucratic requirements are lowered in hopes of attracting new business and foreign investments. Free trade zones can be defined as labor intensive manufacturing centers that involve the import of raw materials or components and the export of factory products.
Freight-all-kinds (FAK):
An approach to rate making whereby the ante is based only upon the shipment weight and distance; widely used in TOFC service.
Freight Collect:
The freight and charges to be paid by the consignee.
Freight Consolidation:
The act of combining individual shipments into a single lot in order to reduce costs or improve transport equipment utilization. Consolidation can take a variety forms by customer, geography, shipping land or schedule. Consolidation may occur at the shipping facility or may be a service of a third party.
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.
The act of fulfilling a customer order. Fulfillment includes order management, picking, packaging, and shipping.
Full-Service Leasing:
An equipment-leasing arrangement that includes a variety of services to support leased equipment (i.e., motor carrier tractors).
Full-time Equivalents (FTE):
Frequently organizations make use of contract and temporary employees; please convert contract, part-time, and temporary employees to full-time equivalents. For example, two contract employees who worked for six months full-time and a half-time regular employee would constitute 1.5 full-time equivalents. 1 FTE = 2000 hours per year.
Full Container Load (FCL):
A term used when goods occupy a whole container.
Full Truck Load (FTL):
A term which defines a shipment which occupies at least one complete truck trailer, or allows for no other shippers goods to be carried at the same time. Fully Allocated Cost: The variable cost associated with a particular unit of output plus an allocation of common cost.
Future order:
A purchase or customer order which is placed for delivery at a time beyond the normal order cycle. The purpose may be to queue orders against future availability of new products, or as a means to advise suppliers of future requirements.
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 re-evaluating, re-energizing, 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.
Gap analysis:
The process of determining and documenting the variance (gap) between goals and current performance.
Gemba Kanri:
A Lean management term which refers to the control and improvement of the value creating processes.
Genchi Genbutsu:
A Japanese phrase used in Lean management which means "Go and for yourself" Rather than simply hear or read about a problem and make a suggestion for improvement, one should actually go to its direct location and experience the situation first hand.
General Agreement on Tariffs and Trade (GATT):
The General Agreement on Tariffs and Trade started as an international trade organization in 1947, and has been superseded by the World Trade Organization (WTO). GATT (the agreement) covers international trade in goods. An updated General Agreement is now the WTO agreement governing trade in goods. The 1986-1994 “Uruguay Round” of GATT member discussions gave birth to the WTO and also created new rules for dealing with trade in services, relevant aspects of intellectual property, dispute settlement, and trade policy reviews. GATT 1947: The official legal term for the old (pre-1994) version of the GATT. GATT 1994: The official legal term for new version of the General Agreement, incorporated into the WTO, and including GATT 1947.
Global Strategy:
An organization's strategic guide to globalization. A global strategy may be appropriate in industries where firms are faced with strong pressures for cost reduction but with weak pressures for local responsiveness. Therefore, the strategy allows these firms to sell a standardized product worldwide. However, fixed costs (capital equipment) are substantial. Nevertheless, these firms are able to take advantage of scale economies and experience curve effects, because of the ability to mass-produce a standard product which can be exported—providing that demand is greater than the costs involved.
Global Trade Item Number (GTIN):
A unique number that comprises up to 14 digits and is used to identify an item (product or service) upon which there is a need to retrieve pre-defined information that may be priced, ordered or invoiced at any point in the supply chain. The definition covers raw materials through end user products and includes services, all of which have pre-defined characteristics. GTIN is the globally-unique EAN.UCC System identification number, or key, used for trade items (products and services). It's used for uniquely identifying trade items (products and services) sold, delivered, warehoused, and billed throughout the retail and commercial distribution channels. Unlike a UPC number, which only provides information specific to a group of products, the GTIN gives each product its own specific identifying number, giving greater accuracy in tracking.
The process of making something worldwide in scope or application.
A rail car with a flat platform and sides three to five feet high; used for top loading of items that are long and heavy.
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.
Green Strategy:
A comprehensive management plans that have the final goal of achieving environmental and economic sustainability. They are integrated, all-inclusive strategies that replace traditional single-issue policies.
Greenhouse Gas Emissions:
The release of greenhouse gases into the atmosphere by human activities. Greenhouse Gases are identified as water vapor, carbon dioxide, methane, nitrous oxide, and ozone.
Handling Costs:
The cost involved in moving, transferring, preparing, and otherwise handling inventory.
Harmonized Code:
An international classification system that assigns identification numbers to specific products. The coding system ensures that all parties in int'l trade use a consistent classification for the purposes of documentation, statistical control, and duty assessment.
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 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.
An element of the Toyota Production System that averages volume and sequence of scheduled items to provide level production and help enable just in time (JIT).
Highway Use Taxes:
Taxes assessed by federal and state governments against users of the highway (the fuel tax is an example). The use tax money is used to pay for the construction, maintenance, and policing of highways.
Usually refers to a forklift truck on which the operator must stand rather than sit.
Honeycomb Loss:
When storing multiple SKUs in a single region, full utilization of all of the available space is not desirable because it could result in some items not being accessible. Honeycomb loss, the price paid for accessibility, is the unusable empty storage space in a lane or stack due to the storage of only a single SKU in each lane or stack since storing items from different SKUs would block access.
Hopper cars:
Rail cars that permit top loading and bottom unloading of bulk commodities; some hopper cars have permanent tops with hatches to provide protection against the elements.
Hoshin Planning:
Breakthrough planning. a step-by-step strategic planning process that assesses breakthrough strategic objectives against daily management tasks and activities. It provides a visual map at all levels of the organization provides clear strategic direction. a company develops up to four vision statements that indicate where the company should be in the next five years. Company goals and work plans are developed based on the vision statements. Periodic audits are then conducted to monitor progress.
An individual employed to move trucks and trailers within a terminal or warehouse yard area.
1) A large retailer or manufacturer having many trading partners. 2) A reference for a transportation network as in "hub and spoke" which is common in the airline and trucking industry. For example, a hub airport serves as the focal point for the origin and termination of long-distance flights where flights from outlying areas are fed into the hub airport for connecting flights. 3) A common connection point for devices in a network. 4) A Web "hub" is one of the initial names for what is now known as a "portal". It came from the creative idea of producing a website, which would contain many different "portal spots" (small boxes that looked like ads, with links to different yet related content). This content, combined with Internet technology, made this idea a milestone in the development and appearance of websites, primarily due to the ability to display a lot of useful content and store one's preferred information on a secured server. The web term "hub" was replaced with portal.
Hundredweight (cwt):
A pricing unit used in transportation (equal to 100 pounds).
Hurdle Rate:
The required rate of return in a discounted cash flow analysis, above which an investment makes sense and below which it does not.
Inventory Deployment:
A technique for strategically positioning inventory to meet customer service levels while minimizing inventory and storage levels. Excess inventory is replaced with information derived through monitoring supply, demand and inventory at rest as well as in motion.
Inventory Management:
The process of ensuring the availability of products through inventory administration.
Inventory Planning Systems:
The systems that help in strategically balancing the inventory policy and customer service levels throughout the supply chain. These systems calculate time-phased order quantities and safety stock, using selected inventory strategies. Some inventory planning systems conduct what-if analysis and that compares the current inventory policy with simulated inventory scenarios and improves the inventory ROI.
Inventory Turns:
This ratio measures how many times a company's inventory has been sold (turned over) during a period of time. The cost of goods sold divided by the average level of inventory on hand. 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.
Inventory Turnover:
Inventory Turns Inventory Velocity: The speed which inventory moves through a defined cycle (i.e., from receiving to shipping).
ISO 9000: A series of quality assurance standards compiled by the Geneva, Switzerland-based International Standardization Organization. In the United States, ISO is represented by the American National Standards Institute based in Washington, D.C. ISO 14000 Series Standards: A series of generic environmental management standards under development by the International Organization of Standardization, which provide structure and systems for managing environmental compliance with legislative and regulatory requirements and affect every aspect of a company's environmental operations.
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.
Pallets and containers used in air transportation; the igloo shape is designed to fit the internal wall contours of a narrow-body airplane.
Movement of products from one country into another. The import of automobiles from Germany to the U.S. is an example.
Import/Export License:
Official authorization issued by a government agency which allows for the transport of goods across their national boundaries. Licenses may be required for all, or only specific classes of commodities.
In Bond:
Goods are held or transported In-Bond under customs control either until import duties or other charges are paid, or to avoid paying the duties or charges until a later date.
Inbound Logistics:
The movement of materials from suppliers and vendors into production processes or storage facilities.
International terms of sale developed by the International Chamber of Commerce to define sellers' and buyers' responsibilities.
Independent Trading Exchange (ITE):
Often used synonymously with B2B, e-marketplace or Virtual Commerce Network (VCN). ITE is a more precise term, connoting many-to-many transactions, whereas the others do not specify the transactions.
Indirect Cost:
A resource or activity cost such as operation costs and overhead that cannot be directly traced to a final cost object since no direct or repeatable cause-and-effect relationship exists. An indirect cost uses an assignment or allocation to transfer cost.
Indirect/Distributor Channel:
Your company sells and ships to the distributor. The distributor sells and ships to the end user. This may occur in multiple stages. Ultimately your products may pass through the Indirect/Distributor Channel and arrive at a retail outlet. Order information in this channel may be transmitted by electronic means. These means may include EDI, brokered systems, or linked electronic systems.
Inland Bill of Lading:
The carriage contract used in transport from a shipping point overland to the exporter's international carrier location.
Inland Carrier:
An enterprise that offers overland service to or from a point of import or export.
Inland Port:
An inland port is a site located away from traditional land, air and coastal borders. It facilitates and processes international trade through strategic investments in multimodal transportation assets and by promoting value-added services as goods move through the supply chain.
The opposite of outsourcing, that is, a service performed in-house.
Inspection Certificate:
A document certifying that merchandise (such as perishable goods) was in good condition immediately prior to shipment.
Integrated Carrier:
A company that offers a blend of transportation services such as land, sea and air carriage, freight forwarding, and ground handling.
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.
Intellectual Property (IP):
Property of an enterprise or individual which is typically maintained in a digital form. This may include software program code or digital documents, music, videos, etc.
In EDI, the exchange of electronic information between companies. Also, the group of transaction sets transmitted from one sender to one receiver at one time. Delineated by interchange control segments.
Intercorporate hauling:
A private carrier hauling the goods of a subsidiary and charging the subsidiary a fee: this is legal if the subsidiary is wholly owned (100%) or if the private carrier has common carrier authority.
Two or more motor carriers working together to haul the shipment to a destination. Carrier equipment may be interchanged from one carrier to the next, but usually the shipment is rehandled without the equipment.
Intermodal Transportation:
Transporting freight by using two or more transportation modes such as by truck and rail or truck and oceangoing vessel.
Internal Water Carriers:
Water carriers that operate over internal, navigable rivers such as the Mississippi, Ohio, and Missouri.
International Air Transport Association (IATA):
An international air carrier rate bureau for passenger and freight movements.
Interstate Commerce:
The transportation of persons or property between states; in the course of the movement, the shipment cresses a state boundary line
Interstate Commerce Commission (ICC):
An independent regulatory agency that implements federal economic regulations controlling railroads, motor carriers, pipelines, domestic water carriers, domestic surface freight forwarders, and brokers.
Interstate System:
The United States National System of Interstate and Defense Highways, 42,000 miles of four-lane, limited-access roads connecting major population centers.
Intrastate Commerce:
The transportation of persons or property between points within a state. A shipment between two points within a state may be interstate if the shipment had a prior or subsequent move outside of the state and the intent of the shipper was an interstate shipment at the time of shipment.
In-transit Inventory:
Material moving between two or more locations, usually separated geographically; for example, finished goods being shipped from a plant to a distribution center. In-transit inventory is an easily overlooked component of total supply chain availability.
Components, raw materials, work in process, finished goods and supplies required for the creation of goods and services; It can also refer to the number of units and/or value of the stock of goods held by a company.
Inventory Accuracy:
This is when the on-hand quantity is equivalent to the perpetual balance (plus or minus the designated count tolerances). It can often be referred to as a percentage showing the variance between book inventory and actual count. This is a major performance metric for any organization which manages large inventories. Note: Typical minimum and best practice averages would be 95% and 99%.
Inventory Carrying Cost:
One of the elements comprising a company's total supply-chain management costs. These costs consist of the following: Opportunity Cost : The opportunity cost of holding inventory. This should be based on your company's own cost of capital standards using the following formula. Calculation: Cost of Capital x Average Net Value of Inventory Shrinkage : The costs associated with breakage, pilferage, and deterioration of inventories. Usually pertains to the loss of material through handling damage, theft, or neglect. Insurance and Taxes : The cost of insuring inventories and taxes associated with the holding of inventory. Total Obsolescence for Raw Material, WIP, and Finished Goods Inventory : Inventory reserves taken due to obsolescence and scrap and includes products exceeding the shelf life, i.e. spoils and is no good for use in its original purpose (do not include reserves taken for Field Service Parts). Channel Obsolescence : Aging allowances paid to channel partners, provisions for buy-back agreements, etc. Includes all material that goes obsolete while in a distribution channel. Usually, a distributor will demand a refund on material that goes bad (shelf life) or is no longer needed because of changing needs. Field Service Parts Obsolescence : Reserves taken due to obsolescence and scrap. Field Service Parts are those inventory kept at locations outside the four walls of the manufacturing plant i.e., distribution center or warehouse.
International Security Filing (ISF-10+2)
10 + 2 Rule: A new rule instituted by the United States Customs and Border Protections (US CBP). 10+2 requires cargo information, for security purposes, to be transmitted to the US CBP at least 24 hours before goods are loaded onto an ocean vessel for shipment into the U.S. 10+2 is pursuant to section 203 of the SAFE Port Act, and requires importers to provide 10 data elements to the US CBP, as well as 2 more data elements from the carrier. The following 10 data elements are required from the importer: Manufacturer (or supplier) name and address Seller (or owner) name and address Buyer (or owner) name and address Ship-to name and address Container stuffing location Consolidator (stuffer) name and address Importer of record number/foreign trade zone applicant identification number Consignee number(s) Country of origin Commodity Harmonized Tariff Schedule number From the carrier, 2 data elements are required: Vessel stow plan Container status messages
Joint Rate:
A rate over a route that involves two or more carriers to transport the shipment.
Joint Supplier Agreement (JSA):
Indicative of Stage 3 Sourcing Practices, the JSA includes terms & conditions, objectives, process flows, performance targets, flexibility, balancing and incentives.
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.
Just-in-Time II (JIT II):
Vendor-managed operations taking place within a customer's facility. JIT II was popularized by the Bose Corporation. The supplier reps, called "inplants," place orders to their own companies, relieving the customer's buyers from this task. Many also become involved at a deeper level, such as participating in new product development projects, manufacturing planning (concurrent planning).
Taken from the Japanese words “kai” (change) and “zen” (good). The popular meaning is continual improvement of all areas of a company and not just quality. A business philosophy of continuous cost, quality problems, and delivery time reductions through rapid, team-based improvement activities.
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 assembly line "just in time" for use. Empty containers are then returned to the source as a signal to resupply the associated parts in the specified quantity.
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 are fulfilled on or before the original requested date.
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.
Knock Down:
A flat, unformed cardboard box or tray. Knock-downs, also known as KDs, are constructed and glued in the recoup or packaging areas and used for repacked product. Many KDs are provided by the customer for their recouped products.
Labor Management System (LMS):
A software solution which provides a means of defining / documenting the most appropriate means of performing a process or task, provides an engineered methodology for calculating standard which show how long a task should take to complete and includes tools which can be used for planning activities and reporting performance against standards.
The cargo carried in a transportation vehicle.
Land Bridge:
The movement of containers by ship-rail-sip on Japan-to-Europe moves; ships move containers to the U.S. Pacific Coast, rails move containers to an East Coast port, and ships deliver containers to Europe.
Landed Cost:
Cost of product plus relevant logistics costs such as transportation, warehousing, handling, etc.
A major origin-destination pair, i.e., traffic lane , an origin-destination pairing. A manufacturer in Chicago ships to a destination in New York, producing the Chicago to New York traffic lane.
Last In, First Out (LIFO):
Accounting method of valuing inventory that assumes that the latest goods purchased during a given accounting period are also the first goods used.
Lead Logistics Partner (LLP):
An organization that organizes other 3rd party logistics partners for outsourcing of logistics functions. An LLP serves as the client's primary supply chain management provider, defining processes and managing the provision and integration of logistics services through its own organization and those of its subcontractors.
Lead Time:
The total time that elapses between an order's placement and its receipt. It includes the time required for order transmittal, order processing, order preparation, and transit.
Leadership in Energy and Environmental Design (LEED):
A building rating system, developed by the U.S. Green Building Council (USGBC), to provide a set of standards for environmentally sustainable construction.
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.
A portion of a complete trip which has an origin, destination, and carrier and is composed of all consecutive segments of a route booked through the same carrier.
Less-Than Descriptors
Less-Than-Carload (LCL): Shipment that is less than a complete rail car load (lot shipment). Less-Than-Truckload (LTL) Carriers: Trucking companies that consolidate and transport smaller (less than truckload) shipments of freight by utilizing a network of terminals and relay points.
Letter of credit:
An international business document that assures the seller that payment will be made by the bank issuing the letter of credit upon fulfillment of the sales agreement.
License Plate:
A pallet tag. Refers to a uniquely numbered bar code sticker placed on a pallet of product. Typically contains information about product on the pallet.
Life Cycle Cost (LCC):
In cost accounting, a product's life cycle is the period that starts with the initial product conceptualization and ends with the withdrawal of the product from the marketplace and final disposition. A product life cycle is characterized by certain defined stages, including research, development, introduction, maturity, decline, and abandonment. Life cycle cost is the accumulated costs incurred by a product during these stages.
Lift Truck:
Vehicles used to lift, move, stack, rack,or otherwise manipulate loads. Material handling people use a lot of terms to describe lift trucks, some terms describe specific types of vehicles, others are slang terms or trade names that people often mistakenly use to describe trucks. Terms include industrial truck, forklift, reach truck, motorized pallet trucks, turret trucks, counterbalanced forklift, walkie, rider, walkie rider, walkie stacker, straddle lift, side loader, order pickers, high lift, cherry picker, Jeep, Tow motor, Yale, Crown, Hyster, Raymond, Clark, Drexel.
A flat-bottomed boat designed for cross-harbor or inland waterway freight transfer. While the terms barge and lighter are used interchangeably, a barge usually refers to a vessel used for a long haul, while a lighter is used for a short haul.
Line-haul Shipment:
A shipment that moves between cities and distances over 100 to 150 miles.
1) An area within a production or assembly facility where manufacturing occurs in a linear fashion, passing products through one level of completion on to the next process. 2) a unique item order line on a customer or purchase order.
The transportation method used to connect the nodes (plants, warehouses) in a logistics system.
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).
Loading Allowance:
A reduced rate offered to shippers and/or consignees who load and/or unload LTL or AQ shipments.
Loading Port:
The port where the cargo is loaded onto the exporting vessel. This port must be reported on the Shipper's Export Declaration, Schedule D and is used by U.S. companies to determine which tariff is used to freight rate the cargo for carriers with more than one tariff.
Local Service Carriers:
An air carrier classification of carriers that operate between areas of lesser and major population centers. These carriers feed passengers into the major cities to major hubs.
Location Grid:
A layout of the warehouse or storage yard used to enhance the management of efficient put away, pick, and inventory cycle counting. A high level view of warehouse locations or a general template used to map out a storage yard.
Locator System:
Locator systems are inventory-tracking systems that allow you to assign specific physical locations to your inventory to facilitate greater tracking and the ability to store product randomly. Location functionality in software can range from a simple text field attached to an item that notes a single location, to systems that allow multiple locations per item and track inventory quantities by location. Warehouse management systems (WMS) take locator systems to the next level by adding functionality to direct the movement between locations.
Location Tag:
A bar coded sign that hangs above or on a warehouse location. The location number can be read from the tag or scanned with an RF gun.
A daily record of the hours an interstate driver spends driving, off, duty, sleeping in the berth, or on duty but not driving.
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.
Logistics Channel:
The network of supply chain participants engaged in storage, handling, transfer, transportation, and communications functions that contribute to the efficient flow of goods.
Logistics Management:
As defined by the Council of Supply Chain Management Professionals (CSCMP): "Logistics management is that part of supply chain management that plans, implements, and controls the efficient, effective forward and reverse flow and storage of goods, services, and related information between the point of origin and the point of consumption in order to meet customers' requirements. Logistics management activities typically include inbound and outbound transportation management, fleet management, warehousing, materials handling, order fulfillment, logistics network design, inventory management, supply/demand planning, and management of third party logistics services providers. To varying degrees, the logistics function also includes sourcing and procurement, production planning and scheduling, packaging and assembly, and customer service. It is involved in all levels of planning and execution-strategic, operational, and tactical. Logistics management is an integrating function which coordinates and optimizes all logistics activities, as well as integrates logistics activities with other functions, including marketing, sales, manufacturing, finance, and information technology."
Logistics Service Provider (LSP):
Any business which provides logistics services. Includes those businesses typically referred to as 3PL, 4PL, LLP, etc. Services may include provisioning, transport, warehousing, packaging, etc.
Long Ton:
Equals 2,240 pounds.
Lot Control:
A method of tracking production lots used primarily to manage potential recalls. Typically unique lot or batch numbers are assigned to each group of products manufactured and tracking systems are established to monitor the destination of the products when sold.
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.
Machine Downtimes:
Time during which a machine cannot be utilized. Machine downtimes may occur during breakdowns, maintenance, changeovers, etc.
Maintenance, Repair, and Operating supplies (MRO):
1) Any activity – such as tests, measurements, replacements, adjustments and repairs — intended to retain or restore a functional unit in or to a specified state in which the unit can perform its required functions. 2) A category of software designed to support asset maintenance and management, also sometimes referred to as Computerized Maintenance Management Systems (CMMS)
Major carrier:
A for-hire certificated air carrier that has annual operating revenues of $1 billion or more: the carrier usually operates between major population centers.
Make-or-buy decision: Business decision that compares the costs and benefits of manufacturing a product or product component against purchasing it. If the purchase price is higher than what it would cost the manufacturer to make it, or if the manufacturer has excess capacity that could be used for that product, or the manufacturer's suppliers are unreliable, then the manufacturer may choose to make the product. This assumes the manufacturer has the necessary skills and equipment necessary, access to raw materials, and the ability to meet its own product standards. A company who chooses to make rather than buy is at risk of losing alternative sources, design flexibility, and access to technological innovations. Make-to-Order (Manufacture-to-order): A manufacturing process strategy where the trigger to begin manufacture of a product is an actual customer order or release, rather than a market forecast. For Make-to-Order products, more than 20% of the value-added takes place after the receipt of the order or release, and all necessary design and process documentation is available at time of order receipt. Make-to-Stock (Manufacture-to-stock): A manufacturing process strategy where finished product is continually held in plant or warehouse inventory to fulfill expected incoming orders or releases based on a forecast.
A document which describes individual orders contained within a shipment.
Manufacturing Critical-Path Time (MCT):
The typical amount of calendar time from when a manufacturing order is created through the critical-path until the first, single piece of that order is delivered to the customer.
Manufacturing Execution Systems (MES):
A system designed to manage and monitor work-in-process on the factory floor including manual or automatic labor and production reporting, as well as on-line inquiries and links to tasks that take place on the production floor. Manufacturing Execution Systems may include one or more links to work orders, receipt of goods, shipping, quality control, maintenance, scheduling or other related tasks.
Manufacturing Lead Time:
The total length of time used to process raw materials and components through all upper levels in the bill of material to an end item. It specifies the total of all individual elements of lead time—such as order preparation, queue, setup, run, inspection, etc.—used for and indicative of a projected availability date for an end item if all lowest level raw material is on hand.
Manufacturing Resource Planning (MRP II):
The extension of closed-loop MRP that includes and integrates financial and simulation systems. It includes all organizational functions related to long-term strategic and business planning, demand planning, materials planning, resource planning, and production and vendor scheduling and execution. It assumes the use of a base, integrated system and the sharing of a common database and operating parameters by all functions and departments.
Maritime Transportation Security Act (MTSA):
Law passed in 2002 to create a comprehensive national system of transportation security enhancements. The MTSA designated the U.S. Coast Guard as the lead federal agency for maritime homeland security and requires federal agencies, ports, and vessel owners to take numerous steps to upgrade security. The MTSA requires the Coast Guard to develop national and regional area maritime transportation security plans and requires seaports, waterfront terminals, and vessels to submit security and incident response plans to the Coast Guard for approval. The MTSA also requires the Coast Guard to conduct antiterrorism assessments of certain foreign ports.
Mass Customization:
A phrase used in marketing, manufacturing, call centers and management referring to the use of flexible computer-aided manufacturing systems to produce custom output. Those systems combine the low unit costs of mass production processes with the flexibility of individual customization. At its core is a tremendous increase in variety and customization without a corresponding increase in costs.
Master Pack:
A large box that is used to pack a number of smaller boxes or containers. Aids in protecting the smaller cartons or packages and reduces the number of cartons to be handled during the material handling process.
Master Production Schedule (MPS):
The master level or top level schedule used to set the production plan in a manufacturing facility.
Material Safety Data Sheet (MSDS):
A form containing data regarding the properties of a particular substance. An important component of product stewardship and workplace safety, it is intended to provide workers and emergency personnel with procedures for handling or working with that substance in a safe manner, and includes information such as physical data (melting point, boiling point, flash point, etc.), toxicity, health effects, first aid, reactivity, storage, disposal, protective equipment, and spill handling procedures. The exact format of an MSDS can vary from source to source within a country depending on how specific is the national requirement.
Materials Handling:
The physical handling of products and materials between procurement and shipping.
Materials Management:
Inbound logistics from suppliers through the production process. The movement and management of materials and products from procurement through production.
Materials Planning:
The materials management function that attempts to coordinate the supply of materials with the demand for materials.
Maximum Order Quantity:
The maximum quantity allowed when ordering a specific item. Typically a value which is calculated and set into the system for a period of time.
Merge in Transit:
The process of combining or "merging" shipments from multiple suppliers which are going directly to the buyer or to the store, bypassing the seller. Effectively this is a "drop shipment" from several vendors to one buyer, which is being combined at an intermediary point prior to delivery.
Specific areas of measurement. A metric must be quantitative, must support benchmarking, and must be based on broad, statistically valid data. Therefore, it must exist in a format for which published data exists within the enterprise or industry.
Micro-land Bridge:
An intermodal movement in which the shipment is moved from a foreign country to the U.S. by water and then moved across the U.S. by railroad to an interior, nonport city, or vice versa for exports from a nonport city.
Milk run:
Delivery method for mixed loads from different suppliers. Instead of each of several (say 5) suppliers sending a vehicle every week to meet the weekly needs of a customer, one vehicle visits each supplier on a daily basis and picks up deliveries for that customer. This way, while still five vehicle loads are shipped every week, each vehicle load delivers the full daily requirements of the customer from each supplier. This method gets its name from the dairy industry practice where one tanker collects milk every day from several dairy farmers for delivery to a milk processing firm. also: Consolidation
Min -Max System:
A replenishment and inventory management system that sets a minimum inventory level, used to trigger a reorder when the available plus incoming receipt total is less than the min. The amount of the order is the difference between the calculated (less than min) inventory and a predefined max. Min-max systems are typically not time-phased.
Mini-land Bridge:
An intermodal movement in which the shipment is moved from a foreign country to the U.S. by water and then moved across the U.S. by railroad to a destination that is a port city, or vice versa for exports from a U.S. port city.
Minimum Weight:
The shipment weight specified by the carrier's tariff as the minimum weight required to use the TL or CL rate; the rate discount volume.
Mixed Loads:
The movement of both regulated and exempt commodities in the same vehicle at the same time.
Modal Split:
The relative use made of the modes of transportation; the statistics used include ton-miles, passenger-miles, and revenue.
Motor Carrier:
An enterprise that offers service via land motor carriage.
National Carrier:
A for-hire certificated air carrier that has annual operating revenues of $75 million to $1 billion; the carrier usually operates between major population centers and areas of lesser population.
National Industrial Traffic League (NITL):
An association representing the interests of shippers and receivers in matters of transportation policy and regulation.
National Motor Freight Classification (NMFC):
A tariff, which contains descriptions and classifications of commodities and rules for domestic movement by motor carriers in the U.S.
Network Model:
A database model created to represent objects and their relationships in a flexible way.
Network Optimization:
A process or methodology to make a network as fully perfect, functional, effective or efficient as possible. The use of mathematics may be involved to find the best solution.
Network Planning:
An inventory distribution or transportation planning strategy which attempts to optimize the time/cost of travel or cost of holding inventory across multiple sites.
A fixed point in a firm's logistics system where goods come to rest; includes plants, warehouses, supply sources, and markets.
Non-Vessel-Owning Common Carrier (NVOCC):
A firm that offers the same services as an ocean carrier, but which does not own or operate a vessel. NVOCCs usually act as consolidators, accepting small shipments (LCL) and consolidating them into full container loads. They also consolidate and disperse international containers that originate at or are bound for inland ports. They then act as a shipper, tendering the containers to ocean common carriers. They are required to file tariffs with the Federal Maritime Commission and are subject to the same laws and statutes that apply to primary common carriers.
North American Free Trade Agreement (NAFTA):
A free trade agreement, implemented January 1, 1994, between Canada, the United States and Mexico. It includes measures for the elimination of tariffs and non-tariff barriers to trade, as well as many more specific provisions concerning the conduct of trade and investment that reduce the scope for government intervention in managing trade.
Not Otherwise Specified / Not Elsewhere Specified:
This term often appears in ocean or airfreight tariffs respectively. If no rate for the specific commodity shipped appears in the tariff, then a general class rate (for example: printed matter NES) will apply. Such rates usually are higher than rates for specific commodities.
A loss in the utility or value of property that results over time from intrinsic limitations (as outmoded facilities) or external circumstances.
Obsolete Inventory:
Inventory for which there is no forecast demand expected. A condition of being out of date. A loss of value occasioned by new developments that place the older property at a competitive disadvantage.
Ocean Bill of Lading:
The bill of lading issued by the ocean carrier to its customer.
Occupational Safety and Health Administration (OSHA):
A United States Department of Labor Agency whose mission is the prevention of work-related injuries, illnesses, and death.
The practice of moving domestic operations such as manufacturing to another country.
Pertaining to work performed when demand is present. Typically used to describe products which are manufactured or assembled only when a customer order is placed. May also refer to computer applications which are accessed remotely via a subscription service where charges for use are incurred as opposed to paying a set period fee.
On-Hand Balance:
1) The ‘book’ quantity recorded in the inventory records. 2) The ‘physical’ quantity as can be actually counted in the storage location(s).
On Time Delivery:
A metrics which is defined as % of receipts that were received by the customers on time.
On Time In Full (OTIF):
Sales order delivery performance measure which can be expressed as a target, say, of achieving 98% of orders delivered in full, no part shipments, on the requested date.
One Piece Flow:
Moving parts through a process in batches of one.
Open-to-Buy (OTB):
A retail category management technique which identifies merchandise budgeted for purchase during a certain time period that has not yet been ordered. It is also the process of planning merchandise sales and purchases. OTB budgets are typically set by commodity group rather than supplier.
Operational Performance Measurements:
The set of performance measures (metrics) used to monitory activity in the operational area of the business. These include those related employee and machine productivity in the areas of receiving, warehouse management, manufacturing and assembly, inventory management, fulfillment.
Operating Ratio:
A measure of operation efficiency.
The process of making something as good or as effective as possible with given resources and constraints.
Order Batching:
Practice of compiling and collecting orders before they are sent in to the manufacturer.
Order Cycle:
The time and process involved from the placement of an order to the receipt of the shipment.
Order Fulfillment Lead Times:
Average, consistently achieved lead-time from customer order origination to customer order receipt, for a particular manufacturing process strategy (Make-to-Stock, Make-to-Order, Configure/Package-to-Order, Engineer-to-Order). Excess lead-time created by orders placed in advance of typical lead times (Blanket Orders, Annual Contracts, Volume Purchase Agreements, etc.), is excluded. (An element of Total Supply Chain Response Time)
Order Management:
The process of managing activities involved in customer orders, manufacturing orders, and purchase orders. For customer orders this includes order entry, picking, packing, shipping, and billing. For manufacturing it includes order release, routing, production monitoring, and receipt to inventory. For POs the activities are order placement, monitoring, receiving, and acceptance.
Order Picking:
The function of gathering the items associated with an order from their storage locations in order to make them available to be included in production processes or to customers. also: Batch Picking also: Discrete Order Picking also: Zone Picking
The place where a shipment begins its movement.
Original Equipment Manufacturer (OEM):
The rebranding of equipment and selling it under another name, or as a component of another product. OEM refers to the company that made the products (the "original" manufacturer), but with the growth of outsourcing, eventually became widely used to refer to the organization that buys the products and resells them. This term has two generally acceptable definitions which are actually opposites of each other and may vary by industry: 1) The OEM reseller is often the designer of the equipment (which is made to order). An example would be a computer manufacturer OEM which includes components built by other manufacturers, and 2) Companies that make products for others to repackage and sell, or to incorporate into a final assembly. An example would be an OEM manufacturing tires for use on automobiles.
Out Of Stock:
The state of not having inventory at a location and available for distribution or for sell to the consumer (zero inventory).
Outbound Consolidation:
Consolidation of a number of small shipments for various customers into a larger load. The large load is then shipped to a location near the customers where it is broken down and then the small shipments are distributed to the customers. This can reduce overall shipping charges where many small packet or parcel shipments are handled each day.
Outbound Logistics:
The process related to the movement and storage of products from the end of the production line to the end user.
To utilize a third-party provider to perform services previously performed in-house. Examples include manufacturing of products and call center/customer support.
Over, short and damaged (OS&D):
This is typically a report issued at warehouse when goods received are more or less than indicated by the packing slip, or are damaged. Used to file claim with carrier.
A motor carrier operation that reflects long-distance, intercity moves; the opposite of local operations.
The practice of using a large box or carton to contain multiple smaller packages which are all going to the same destination in order to achieve a reduced overall shipping cost vs. the individual packages.
Owner-operator (OO):
A trucking operation in which the opener of the truck is also the driver.
Pack Out:
In a fulfillment environment this refers to the operations involved in packaging and palletizing individual units of product for introduction into the warehouse distribution environment. For example, a contract 3PL may received or assemble units of product which need to be placed into retail packaging, then overpacked with a carton and then palletized.
Package to Order:
A postponement strategy where products are received in bulk or manufactured without final packaging to allow for a variety of packaging options for a single product. An example is where a product is shipped to retailers with packaging designed specifically for the individual retailer.
Packing List:
List showing merchandise packed and all particulars. Normally prepared by shipper but not required by carriers. Copy is sent to consignee to help verify shipment received, it may be inside of the box or attached to the outside in a clear envelope. The physical equivalent of the electronic Advanced Ship Notice (ASN).
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.
Pallet Jack:
Material handling equipment consisting of two broad parallel pallet forks on small wheels used in the warehouse to move pallets of product, but not having the lifting capability of a forklift. It may be a motorized unit guided by an operator who stands on a platform; or it may be a motorized or manual unit guided by an operator who is walking behind or beside it. Comes as a "single" (one pallet) or "double" (two pallets).
Pallet Rack:
A single or multi-level structural storage system that is utilized to support high stacking of single items or palletized loads.
Pallet Tag:
The bar coded sticker that is placed on a unit load or partial load, typically at receiving. The pallet tag can be scanned with an RF gun.
Parcel Shipment:
Parcels include small packages like those typically handled by providers such as UPS and FedEx.
Part Standardization:
A strategy designed to eliminate excessive SKU counts (part numbers) from inventory control systems though the use of common parts and components. Also knows as ‘rationalizing’.
Per Diem:
1) The rate of payment for use by one railroad of the cars of another. 2) A daily rate of reimbursement for expenses.
Perfect Order:
The definition of a perfect order is one which meets all of the following criteria: Delivered complete, with all items on the order in the quantity requested. Delivered on time to customer’s re-quest date, using the customer’s definition of on-time delivery. Delivered with complete and accurate documentation supporting the order, including packing slips, bills of lading, and invoices. Delivered in perfect condition with the correct configuration, customer ready, without damage, and faultlessly in-stalled (as applicable).
Performance Measurement Program:
A performance measurement program goes beyond just having performance metrics in place. Many companies do not realize the full benefit of their performance metrics because they often do not have all of the necessary elements in place that support their metrics. Typical characteristics of a good performance measurement program include the following: Metrics that are aligned to strategy and linked to the “shop floor” or line level workers A process and culture that drives performance and accountability to delivery performance against key performance indicators. An incentive plan that is tied to performance goals, objectives and metrics Tools/technology in place to support easy data collection and use. This often includes the use of a “dashboard” or “scorecard” to allow for ease of understanding and reporting against key performance
Performance Measures:
Indicators of the work performed and the results achieved in an activity, process, or organizational unit. Performance measures should be both non-financial and financial. Performance measures enable periodic comparisons and benchmarking. For example, a common performance measure for a distribution center is % of order fill rate.
Permanent Storage:
Permanent storage is an area of the warehouse used for (or the goods themselves) a class of goods intended to be in storage for longer than 90 days.
Perpetual Inventory:
The system of record-keeping where book inventory is tracking by recording all receipts issues and adjustments as they occur. Records may be kept manually on logs or stock cards, or in a computer database.
Physical Distribution:
The movement and storage functions associated with finished goods from manufacturing plants to warehouses and to customers; also, used synonymously with business logistics.
Physical Supply:
The movement and storage functions associated with raw materials from supply sources to the manufacturing facility.
Picking Techniques:
Pick-by-Light: A laser identifies the bin for the next item in the rack; when the picker completes the pick, the bar code is scanned and the system then points the laser at the next bin. Pick/Pack: Picking of product from inventory and packing into shipment containers. Pick-to-Clear: A method often used in warehouse management systems that directs picking to the locations with the smallest quantities on hand. Pick-to-Carton: Pick-to-carton logic uses item dimensions/weights to select the shipping carton prior to the order picking process. Items are then picked directly into the shipping carton. 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-to-Trailer: Order-picking method where the order picker transports the materials directly from the pick location to the trailer without any interim checking or staging steps.
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.
Terminology used to describe a truck trailer being transported on a railroad flatcar.
Pin Lock:
A hard piece of iron, formed to fit on a trailer's pin, that locks in place with a key to prevent an unauthorized person from moving the trailer.
Plan-Do-Check-Action (PDCA):
A four step quality improvement cycle, based on a process described by Walter Shewhart, that involves continuous improvement based on analysis, design, execution and evaluation. Sometimes referred to as plan/do/study/act, it emphasizes the constant attention and reaction to factors that affect quality.
Planned Order:
An order proposed by an MRP system to cover forecast demand in a future period. Planned orders will changes dynamically over time to accommodate changes in forecasts and actual usage until they become ‘firm planned orders’ either through manual intervention or by virtue of the associated period moving within a planning horizon. The next step in the process would be to create an actual purchase or production order.
Planning Horizon:
In an MRP system this is the length of time into the future (number of periods or days) for which the planning system will generate requirements. The horizon should be set long enough out to accommodate the longest cumulative lead time for any item in the population.
Point Of Sale (POS):
1) The time and place at which a sale occurs, such as a cash register in a retail operation, or the order confirmation screen in an on-line session. Supply chain partners are interested in capturing data at the POS, because it is a true record of the sale rather than being derived from other information such as inventory movement. 2) Also a national network of merchant terminals, at which customers can use client cards and personal security codes to make purchases. Transactions are directed against client deposit accounts. POS terminals are sophisticated cryptographic devices, with complex key management processes. POS standards draw on ABM network experiences and possess extremely stringent security requirements.
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.
Pro Number:
Any progressive or serialized number applied for identification of freight bills, bills of lading, etc.
A shipping term for the practice of combining shipment from multiple shippers into a truckload in order to reduce shipping charges.
A harbor, airport or other facility where ships will anchor, planes will land or trucks and trains will enter.
Port Authority:
A state or local government that owns, operates, or otherwise provides wharf, dock, and other terminal investments at ports.
The delay of final activities (i.e., assembly, production, packaging, etc.) until the latest possible time. A strategy used to eliminate excess inventory in the form of finished goods which may be packaged in a variety of configurations and to maximize the opportunity to provide a customized end product to the customer.
Predictive Maintenance:
Regularly scheduled maintenance activities and practices that k to prevent unscheduled machinery downtime by collecting and analyzing data on equipment conditions. The analysis is then used to predict time-to-failure, plan maintenance, and restore machinery to good operating condition. Predictive maintenance systems typically measure parameters on machine operations, such as vibration, heat, pressure, noise, and lubricant condition. In conjunction with computerized maintenance management systems (CMMS), predictive maintenance enables repair-work orders to be released automatically, repair-parts inventories checked, or routine maintenance scheduled.
A freight term, which indicates that charges are to be paid by the shipper. Prepaid shipping charges may be added to the customer invoice, or the cost may be bundled into the pricing for the product.
Preventative Maintenance (PM):
Regularly scheduled maintenance activities performed in order to reduce or eliminate unscheduled equipment failures and downtime.
A series of time-based activities that are linked to complete a specific output.
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.
The activities associated with acquiring products or services. The range of activities can vary widely between organizations to include all of parts of the functions of procurement planning, purchasing, inventory control, traffic, receiving, incoming inspection, and salvage operations.
Product Life Cycle:
The life of a product in a market with respect to business sales and profits over time. There are five stages to the product life cycle: product development, introduction, growth, maturity and decline.
Product Life Cycle Management (PLM):
The process of managing the entire lifecycle of a product from its conception, design, development and manufacture, to management of its introduction, growth and decline.
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 Private Partnering (PPP):
An agreement between a government entity and one or more private industry, or other, entities to perform work or utilize facilities and equipment. The Public-Private Partnerships initiative is directed toward improving the output and performance of DoD organic activities through increased participation by the private sector via industrial partnering.
Public Warehouse:
A business that provides short or long-term storage to a variety of businesses usually on a month-to-month basis. A public warehouse will generally use their own equipment and staff however agreements may be made where the client either buys or subsidizes equipment. Public warehouse fees are usually a combination of storage fees (per pallet or actual square footage) and transaction fees (inbound and outbound). Public warehouses are most often used to supplement space requirements of a private warehouse.
Pull or Pull-Through Distribution:
Supply-chain action initiated by the customer. Traditionally, the supply chain was pushed; manufacturers produced goods and "pushed" them through the supply chain, and the customer had no control. In a pull environment, a customer's purchase sends replenishment information back through the supply chain from retailer to distributor to manufacturer, so goods are "pulled" through the supply chain.
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. This is a replenishment system where inventory is "pulled" into the supply chain (or "demand chain" by POS systems, or ECR programs), and is associated with "build to order" systems.
A 28-foot trailer, used mostly in less than truckload business.
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 order for merchandise.
Push Back Rack:
Utilizing wheels in the rack structure, this rack system allows palletized goods and materials to be stored by being pushed up a gently graded ramp. Stored materials are allowed to flow down the ramp to the aisle. This rack configuration allows for deep storage on each rack level.
Push Distribution:
The process of building product and pushing it into the distribution channel without receiving any information regarding requirements. also: Pull or Pull-Through Distribution
Put Away:
The activities involved in moving materials from a receiving area or the end of a production process into inventory stock locations.
QS 9000:
A quality certification program used in the automotive industry which is based on the ISO 9000 standards.
Qualitative Forecasting Techniques:
A forecasting method where intuition or judgment is typically required due to the lack of hard quantitative facts. An example is where a new product is being introduced.
The degree to which a set of defined characteristics of a product or service fulfills known requirements. The common element of the business definitions 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 a perceptual, conditional and somewhat subjective attribute.
Quality Circle:
A group composed of individuals trained to identify, analyze and solve work-related problems. They present their solutions to management in order to improve the performance of the organization, and motivate and enrich the work of employees. When matured, true quality circles become self-managing, having gained the confidence of management. Typical topics are improving occupational safety and health, improving product design, and improvement in the workplace and manufacturing processes.
Quantitative Forecasting Techniques:
A forecasting method that relies on expert human judgment combined with a rating scale, instead of being purely based on hard (measurable and verifiable) data.
The act of setting aside materials which do not appear to meet known quality standards. Typically items in quarantine are placed into a secured area to prevent their use while an investigation is conducted and disposition is determined.
Quick Response (QR):
A strategy widely adopted by general merchandise and soft lines retailers and manufacturers to reduce retail out-of-stocks, forced markdowns and operating expenses. These goals are accomplished through shipping accuracy and reduced response time. QR is a partnership strategy in which suppliers and retailers work together to respond more rapidly to the consumer by sharing point-of-sale scan data, enabling both to forecast replenishment needs.
A piece of equipment which is used to store materials off of the floor. Racks will typically have shelves, but may be designed to hold materials vertically such as lengths of pipe of metal bar stock.
The activity of placing materials onto a rack. May also refer to hardware which is used to build racks.
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 terminals can be place at a fixed station, mounted on a forklift truck, or carried in the worker's hand. The base station contains a transmitter and receiver for communication with the terminals. 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 combined with a bar-code system for 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 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.
Random-Location Storage:
An inventory management technique where items are allowed to occupy multiple locations which are assigned dynamically based on size and weight at the time put away is scheduled. also: Fixed-Location Storage
Rate Bureau:
A group of carriers that get together to establish joint rates, to divide joint revenues and claim liabilities, and the publish tariffs. Rate bureaus have published single line rates, which were prohibited in 1984.
A technique of allocating available stocks of product among requesting customers typically used when demand exceeds anticipated availability. Various formulas or strategies may be employed based on customer relationships, urgency and price.
Raw Materials (RM):
Crude or processed material that can be converted by manufacturing, processing, or combination into a new and useful product.
The processing of data in a business application as it happens -as contrasted with storing data for input at a later time (batch processing).
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.
Receiving Dock:
Distribution center location where the actual physical receipt of the purchased material from the carrier occurs.
A carrier service that permits changing the destination and/or consignee after the shipment has reached its originally billed destination and paying the through rate from origin to final destination.
A trend in the foodservice distribution business where a large “redistributor” such as SYSCO or Dot Foods will purchase in truckload quantities from the food manufacturers and warehouse the products. Individual smaller distributors can then purchase multiple manufacturers' products from the redistributor and fill up an entire truck to save on shipping costs.
A term used for refrigerated vehicles.
1) A fundamental rethinking and radical redesign of business processes to achieve dramatic improvements in performance. 2) A term used to describe the process of making (usually) significant and major revisions or modifications to business processes. 3) Also called Business Process Reengineering.
Refrigerated Carriers:
Truckload carriers designed to keep perishables good refrigerated. The food industry typically uses this type of carrier.
Regional Carrier:
A for-hire air carrier, usually certificated, that has annual operating revenues of less than $74 million; the carrier usually operates within a particular region of the country.
Remanufacturing / Refurbishing:
Refers to the re-work performed on returned items to make the items saleable. Note that products made available for sale in this manner must be appropriately labeled as such.
Reorder point:
A predetermined inventory level that triggers the need to place an order. This minimum level provides inventory to meet anticipated demand during the time it takes to receive the order.
The process of moving or re-supplying inventory from a reserve (or upstream) storage location to a primary (or downstream) storage/picking location, or to another mode of storage in which picking is performed.
An individual or organization which purchasers products from a manufacturer or distributor and resells them to the ultimate consumer. This group includes a wide range of businesses from door to door and corner stores to global companies like Walmart, as well as on-line stores like Amazon.
Return Material Authorization or Return Merchandise Authorization (RMA):
A reference number produced to recognize and give authority for a faulty product to be returned to a distribution center or manufacturer. This form typically needs to be accompanied by 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 for the work required in repair situations, or as a reference for credit approval.
Reverse Auction:
A type of auction where a select group of suppliers bids competitively for an order posted by the buyer (opposite of a regular auction, where buyers are bidding to buy products). The buyer may choose the lowest bid or may split the purchase among several of the suppliers. As bidding continues, the prices decline.
Reverse Engineering:
A process whereby competitors' products are disassembled & analyzed for evidence of the use of better processes, components & technologies.
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.
Risk Management:
The identification, evaluation, and ranking the priority of risks followed by synchronized and cost-effective application of resources to lessen, monitor, and control the probability and/or impact of unfortunate events.
Roll-On, Roll-Off (RO-RO):
A type of ship designed to permit cargo to be driven on at origin and off at destination; used extensively for the movement of automobiles.
Root Cause Analysis:
A class of problem solving methods aimed at identifying the root causes of problems or events. The practice of RCA is predicated on the belief that problems are best solved by attempting to correct or eliminate root causes, as opposed to merely addressing the immediately obvious symptoms.
Consortium of major Information Technology, Electronic Components, Semiconductor Manufacturing, Telecommunications and Logistics companies working to create and implement industry-wide, open e-business process standards. These standards form a common e-business language, aligning processes between supply chain partners on a global basis. RosettaNet is a subsidiary of the GS1 group.
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 enroute. 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.
Rule of Eight:
Before the Motor Carrier Act of 1980, contract carriers requesting authority were restricted to eight shippers under contract. The number of shippers has been deleted as a consideration for granting a contract carrier permit.
Rules-Based Returns:
A returns management methodology which is based on preset rules governing the “if” and “how” returns are handled, based on the nature of the return request and the age or condition of the product.
Safety Stock:
The inventory a company holds above normal needs as a buffer against delays in receipt of supply or changes in customer demand.
Salable Goods:
Products which are available for sale to customers as differentiated from items which are parts or assemblies that are not generally sold independently. In the retail environment salable is differentiated from ‘unsalable’ which denotes goods which are damaged, spoiled or past pull date.
Sales and Operations Planning (S&OP):
A strategic planning process that reconciles conflicting business objectives and plans future supply chain actions. S&OP Planning usually involves various business functions such as sales, operations and finance to agree on a single plan/forecast that can be used to drive the entire business. Some organizations include suppliers and customers in their S&OP processes.
Sales Cycle Time:
Measures the time required for a product to sell out completely from the store/shelf i.e., beginning from the day it enters the floor.
Sales Planning:
The process of determining the level of sales necessary to meet general business objectives of profitability, productivity, competitive customer lead times, and so on, as expressed in the overall business plan.
Sarbanes-Oxley Public Accounting and Investor Protection Act (SOX):
A United States federal law enacted on July 30, 2002 to protect investors by improving the accuracy and reliability of corporate disclosures made pursuant to the securities laws, and for other purposes. The law is divided into 11 sections ranging from additional corporate board responsibilities to criminal penalties.
Saw-Tooth Diagram:
An X/Y diagram showing quantity on one axis and time depicting the inventory level for a typical item in stock with inventory level declining as it is consumed and rising as incoming orders are received.
1) How quickly and efficiently a company can ramp up to meet demand. also uptime production flexibility. 2) How well a solution to some problem will work when the size of the problem increases. The economies to scale don't really kick in until you reach the critical mass, then revenues start to increase exponentially.
Scan-Based Trading (SBT):
A practice that uses point-of-sale scanner data to manage payment, promotion and replenishment of products in a retail store. It is similar in nature to and an enhanced version of Vendor Managed / Owned Inventory where the retailers POS data is used as the basis for transactions between the supplier and the retailer. Supplements the consumption / replenishment component of CPFR and ECR strategies.
Scanlon Plan:
A form of gainsharing that returns cost savings to the employees, usually as a lump-sum bonus. It is a productivity measure, as opposed to profit-sharing which is a profitability measure This program dates back to the 1930s and relies on committees to create cost-sharing ideas labor costs, productivity has increased while unit cost has decreased.
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. Synonym: Dashboard
In marketing, it is the identification and classification of groups of buyers within a market who share similar needs and who demonstrate similar buyer behavior.
A Japanese term for Standardize. Refers to standardized work practices. It is more than standardized cleanliness. This means operating in a consistent and standardized fashion. Everyone knows exactly what his or her responsibilities are.
A Japanese term for sort -a Lean 5 S term which refers to the practice of sorting through all the tools, materials, etc., in the work area and keeping only essential items. Everything else is stored or discarded. This leads to increased safety and less clutter to interfere with productive work.
A Japanese term for Shine . Indicates the need to keep the workplace clean as well as neat by making cleaning a daily activity. At the end of each shift, the work area is cleaned up and everything is restored to its place. The key point is that maintaining cleanliness should be part of the daily work -not on occasional activity initiated when things get too messy.
A Japanese term for straighten . Focuses on the need for an orderly workplace. "Orderly" in this sense means arranging the tools and equipment in an order that promotes work flow. Tools and equipment should be kept where they will be used, and the process should be ordered in a manner that eliminates extra motion.
Selling, General and Administrative (SG&A) Expenses:
Includes marketing, communication, customer service, sales salaries and commissions, occupancy expenses, unallocated overhead, etc. Excludes interest on debt, domestic or foreign income taxes, depreciation and amortization, extraordinary items, equity gains or losses, gain or loss from discontinued operations and extraordinary items.
Sensitivity Analysis (SA):
The study of how the variation (uncertainty) in the output of a mathematical model can be apportioned, qualitatively or quantitatively, to different sources of variation in the input of a model.
Serial Number:
A serial number is a unique number assigned for identification which varies from its successor or predecessor by a fixed discrete integer value. Common usage has expanded the term to refer to any unique alphanumeric identifier for one of a large set of objects, however in data processing and allied fields in computer science. Not every numerical identifier is a serial number; identifying numbers which are not serial numbers are sometimes called nominal numbers.
Serial Shipping Container Code:
An 18-character identification number used to identify containers including pallets and boxes primarily for containers which are a part of a shipment covered by an Automated Shipment Notice (ASN).
Serpentine Picking:
A method used for picking warehouse orders wherein the pickers are directed to pick from racks on both sides of an aisle as they move from one end to the other. A different method would be to pick from one side (front to back) then from the opposite side (back to front). Where used, serpentine picking can halve travel time and improve traffic flow down the aisles.
Service Level:
A metric, shown as a percentage, which captures the ability to satisfy demand or responsiveness. Order fill rates and machine or process up-time are examples of service level measures.
Service Level Agreement (SLA):
May be used in lieu of a contract to represent and document the terms of the performance based agreement for organic support.
Service Oriented Architecture (SOA):
A computer system term which describes an software architectural concept that defines the use of services to support business requirements. In an SOA, resources are made available to other participants in the network as independent services that are accessed in a standardized way. Most definitions of SOA identify the use of web services (using SOAP and WSDL) in its implementation, however it is possible to implement SOA using any service-based technology.
Service Parts Revenue:
The sum of the value of sales made to external customers and the transfer price valuation of sales within the company of repair or replacement parts and supplies, net of all discounts, coupons, allowances, and rebates.
Seven Wastes:
Developed by Taiichi Ohno, Toyota’s Chief Engineer for many years who was the innovator at the heart of the Toyota quality system, this refers to identified seven barriers to improving quality. They are the: 1) waste of overproduction 2) waste of waiting 3) waste of transportation 4) the waste of inappropriate processing 5) the waste of unnecessary Inventory 6) waste of unnecessary motions 7) waste of the defects.
Shelf life:
The recommended time that products can be stored, during before they are considered unsuitable for sale or consumption.
Ship Agent:
A liner company or tramp ship operator representative who facilitates ship arrival, clearance, loading and unloading, and fee payment while at a specific port.
Ship Broker:
A firm that serves as a go-between for the tramp ship owner and the chartering consignor or consignee.
The party that tenders goods for transportation.
Shipper's Agent:
A firm that acts primarily to match up small shipments, especially single-traffic piggyback loads to permit use of twin-trailer piggyback rates
Shipping Lane:
A predetermined, mapped route on the ocean that commercial vessels tend to follow between ports. This helps ships avoid hazardous areas. In general transportation, the logical route between the point of shipment and the point of delivery used to analyze the volume of shipment between two points.
Shipping Manifest:
A document which is typically presented to the carrier outlining the individual shipping orders included in a shipment. The manifest will show the reference number of each shipping order in the load, the weight and count of boxes or containers, and the destination.
Shop Floor Production Control Systems:
The systems that assign priority to each shop order, maintaining work-in-process quantity information, providing actual output data for capacity control purposes and providing quantity by location by shop order for work-in-process inventory and accounting purposes.
A short move that is usually under 1,000 miles.
Short Sea Shipping:
Refers to the use of coastal waters for transport of cargo between coastal port areas as an alternative to the use of the highway system between the same two areas. An example would be using roll-on, roll-off vessels and truck trailers to transport cargo from the northeast US to the southeast or gulf coast.
Short Shipment:
Piece of freight missing from shipment as stipulated by documents on hand.
Refers to the loss of inventory count due to pilferage, damage, spoilage, etc. Shrinkage can occur while material is in stock and while it is in transit.
A Greek letter ( ∑ ) commonly used to designate the standard deviation of a population. Sigma is a statistical term that measures how much a process varies from perfection, based on the number of defects per million units produced. In a process audit measurement would be of the number of times the process failed for each million time the process was run. In either case the subject is generally referred to as and “opportunity”.
Relates to a management / organization style where each functional unit operates independently, and with little or no collaboration between them and other units regarding major business processes and issues.
A mathematical technique for testing the performance of a system due to uncertain inputs and/or uncertain system configuration options. Simulation produces probability distributions for the behavior (outputs) of a system. A company may build a simulation model of its build plan process to evaluate the performance of the build plan under multiple product demand scenarios.
Single-Period Inventory Models:
An inventory model, sometimes called the ‘newsboy’ model, which is used to define economical or profitable lot-size quantities when an item is ordered or produced only once ( newspapers, perishables, etc.) it balances the cost of a potential shortage with the cost of excess stock.
Single Minute Exchange of Dies (SMED):
A manufacturing procedure which provides for a rapid and efficient way of converting a manufacturing process from running the current product to running the next product.
Single Source Leasing:
Leasing both the truck and driver from one source.
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.
Sleeper Team:
The use or two drivers to operate a truck equipped with a sleeper berth; while one driver sleeps in the berth to accumulate the mandatory off-duty time, the other driver operates the vehicle.
Slip Seat Operation:
A term used to describe a motor carrier relay terminal operation where one driver is substituted for another who has accumulated the maximum driving time hours.
Slip Sheet:
Similar to a pallet, the slip sheet, which is made of cardboard or plastic, is used to facilitate movement of unitized loads.
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.
Dry commodities that are made into a liquid form by the addition of water or other fluids to permit movement by pipeline.
Small Parcel Ground (SPG):
Mode of transportation where the unit being transported meets all of the following descriptions: under 150 lbs, inside of 130 inches in length and girth combined, individually labeled, and can be individually handled and transported absent of a pallet. Typically broken down for rating purposes into separate categories for commercial and residential.
Smart and Secure Trade Lanes (SST):
Private initiative of the Strategic Council on Security Technology, an assembly of executives from port operators, major logistics technology providers, transportation consultancies, and former generals and public officials. Aims to enhance the safety, security and efficiency of cargo containers and their contents moving through the global supply chain into U.S. ports.
Smart Label:
A label that has an RFID tag integrated into it.
SmartWay Certification:
A voluntary certification program that partners the freight industry sector with the EPA, focused on recognition and incentives for fuel efficiency improvements and greenhouse gas emissions reductions. Eligibility for the truck certification is based on a comprehensive set of fuel-saving, low-emission equipment specifications for new Class 8 long-haul tractors.
In statistics, a data set is smoothed by creating an approximating function that attempts to capture important patterns in the data, while leaving out noise.
Sole sourcing:
When there is only one supplier for a product or service, and no alternate suppliers are available.
Separating items (parcels, boxes, cartons, parts, etc.) according to their intended destination within a plant or for transit.
Special-Commodities Carrier:
A common carrier trucking company that has authority to haul a special commodity; there are 16 special commodities, such as household goods, petroleum products, and hazardous materials.
Special-Commodity Warehouses:
A warehouse that is used to store products that require unique types of facilities, such as grain (elevator), liquid (tank), and tobacco (barn).
Special Economic Zone (SEZ):
A geographical region that has economic laws that are more liberal than a country's typical economic laws. The category 'SEZ' covers a broad range of more specific zone types, including Free Trade Zones (FTZ), Export Processing Zones (EPZ), Free Zones (FZ), Industrial Estates (IE), Free Ports, Urban Enterprise Zones and others. Usually the goal of an SEZ structure is to increase foreign investment.
Split Case Order Picking:
A process used to fill orders for quantities less than a full case thereby requiring ordered items to be picked from a case or some similar container.
Split Delivery:
The act of creating a purchase order for a large volume of product in order to get a reduced price (price break), and then designating a spread of delivery dates to eliminate the need to pay for and stock the full quantity initially.
Stack Car:
An intermodal flat car designed to place one container on top of another for better utilization and economics. Also referred to as a well car because the cars are lowered in the center to allow clearance when moving under low-lying structures.
Spur Track:
A railroad track that connects a company's plant or warehouse with the railroad's track; the cost of the spur track and its maintenance is borne by the user.
The practice of picking material for a production or sales order and moving to a separate area for purposes of consolidation or identifying shortages. Staging may also refer to the placement of equipment in preparation of being used.
Stand Up Fork Lift:
A forklift where the operator stands rather than sits. Most commonly used in case picking operations where the operator must get on and off the lift frequently.
Standard Carrier Alpha Code (SCAC or SCAC Code):
A unique 2 to 4-letter code assigned to transportation companies for identification purposes. SCAC codes are required for EDI, and are printed on bills of lading and other transportation documents.
Standard Deviation/Variance:
Measures of dispersion for a probability distribution. The variance is the average squared difference of a distribution from the distribution's mean (average) value. The standard deviation is defined mathematically as the square root of the variance, and is thereby expressed in the same units as the random variable that's described by the probability distribution. A distribution that varies widely about its mean value will have a larger standard deviation/variance than a distribution with less variation about its mean value.
Start Manufacture to Order Complete Manufacture:
Average lead-time from the time manufacturing begins to the time end products are ready for shipment, including the following sub-elements: order configuration verification, production scheduling, time to release order to manufacturing or distribution, and build or configure time. (An element of Order Fulfillment Lead Time)
Statement of Work (SOW):
A document that captures and acknowledges mutual agreement on the work activities, deliverables and timeline that a vendor will execute against in performance of work for a customer. Detailed requirements and pricing are usually specified in a Statement Of Work, along with various other terms and conditions.
Statistical Process Control (SPC):
A method for achieving quality control in processes. The technique hinges on the observation that any process is subject to mingly random variations, which are said to have common causes, and non-random variations, which are said to have special causes. SPC relies on measuring variation in output and setting control limits based on observations of variations arising solely from common causes. A process that is "in control" is expected to generate output that is within the control limits.
Labor management companies that provide equipment and hire workers to transfer containers and cargo between ships and docks.
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.
Stock Keeping Unit (SKU):
A category of unit with 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 product from a standard catalogue components, choosing 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, as well as at the configured product 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.
Stock Out:
A term referring to a situation where no stock was available to fill a customer or production order during a pick operation. Stock outs can be costly, including the profit lost for not having the item available for sale, lost goodwill, substitutions, or lost customer .
Straight Truck:
A truck which has the driver’s cab and the trailer combined onto a single frame. Straight trucks do not have a separate tractor and trailer. The driving compartment, engine and trailer are one unit.
Strategic Sourcing:
The process of determining long-term supply requirements, finding sources to fulfill those needs, selecting suppliers to provide the services, negotiating the purchase agreements and managing the suppliers' performance. Focuses on developing the most effective relationships with the right suppliers, to ensure that the right price is paid and that lifetime product costs are minimized. It also assesses whether services or processes would provide better value if they were outsourced to specialist organizations.
Stretch Wrap:
Clear plastic film that is wrapped around a unit load or partial load of product to secure it. The wrap is elastic.
Sunk Cost:
In economics and business decision-making, sunk costs are costs that cannot be recovered once they have been incurred. Sunk costs are sometimes contrasted with variable costs, which are the costs that will change due to the proposed course of action, and prospective costs which are costs that will be incurred if an action is taken.
Supermarket Approach:
An inventory management and picking technique used in lean enterprises. This concept was conceived by Taiichi Ohno of Toyota after a visit to the US in 1956 where he was impressed by how consumers could pick whatever they need from the shelf, and the store would simply replenish what was taken. This became the basis for the “pull system”.
An individual or an organization who supplies goods or services to the company. This is also sometimes referred to as a ”vendor.” In some settings—where a company provides goods through a distribution network—network members may be referred to as suppliers, even though they are the immediate customers of the company.
Supplier Scorecards:
Assessment of suppliers based on performance benchmarks in several key areas. Some examples are manufacturing Critical path time (MCT), on time delivery, quality parts per million, cost of poor quality, inventory turns, and productivity gains. A supplier’s rank can then be established and the data used to measure the relative performance of a supplier within the supply base, and track improvement in supplier’s quality over time.
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 Execution (SCE):
The ability to move the product out the warehouse door. This is a critical capacity and one that only brick-and-mortar firms bring to the B2B table. Dot-coms have the technology, but that's only part of the equation. The need for SCE is what is driving the Dot-coms to offer equity partnerships to the wholesale distributors.
Supply Chain Inventory Visibility:
The ability to visualize the status of inventory in the supply chain from some point upstream—beginning with the various tiers of suppliers—on to downstream—through distribution and retail channels. In most cases, this will only be one level in each direction; however, it may include the ability to access supply and demand information at those points as well.
Supply Chain Management (SCM) as defined by the Council of Supply Chain Management Professionals (CSCMP):
"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."
Supply Chain Network Design Systems:
The systems employed in optimizing the relationships among the various elements of the supply chain manufacturing plants, distribution centers, points-of-sale, as well as raw materials, relationships among product families, and other factors-to synchronize supply chains at a strategic level.
Supply Chain Operations Reference Model (SCOR):
This is the model developed by the Supply-Chain Council SCC and is built around six major processes: plan, source, make, deliver, return and enable. The aim of the SCOR is to provide a standardized method of measuring supply chain performance and to use a common set of metrics to benchmark against other organizations.
Corporate sustainability refers to efforts a company makes related to conducting business in a socially and environmentally responsible manner. It includes elements including sustainable development, corporate social responsibility (CSR), stakeholder concerns, and corporate accountability.
The concept that all supply chain functions are integrated and interact in real time; when changes are made to one area, the effect is automatically reflected throughout the supply chain.
Tactical Planning:
The process of systematic determination and scheduling of immediate or short-term activities required to achieve the objectives of the organizations strategic plan.
Takt Time:
It can be defined as the maximum time per unit to produce a product in order to meet demand. It is derived from the German word “Taktzeit” (cycle time). Takt time sets the pace for industrial manufacturing lines. For example, in automobile manufacturing, cars are assembled on a line and are moved on to the next station after a certain time—the takt time. Therefore, the time needed to complete work on each station has to be less than the takt time in order for the product to be completed within the allotted time.
Tally sheet:
A printed form on which companies record, by making an appropriate mark, the number of items they receive or ship. In many operations, tally sheets become a part of the permanent inventory records.
A truck that has two drive axles or a trailer that has two axles.
Tank cars:
Rail cars that are designed to haul bulk liquids or gas commodities.
Tapering rate:
A rate that increases with distance but not in direct proportion to the distance the commodity is shipped.
Tare Weight:
The weight of an empty vehicle or container. By subtracting it from the gross weight (laden weight), the weight of the goods carried (the net weight) may be determined.
Target Costing:
A target cost is calculated by subtracting a desired profit margin from an estimated or a market-based price to arrive at a desired production, engineering, or marketing cost. This may not be the initial production cost, but one expected to be achieved during the mature production stage. Target costing is a method used in the analysis of product design that involves estimating a target cost and then designing the product/service to meet that cost.
A tax assessed by a government on goods entering or leaving a country. The term is also used in transportation in reference to the fees and rules applied by a carrier for its services.
Task interleaving:
A method of combining warehouse picking and putaway. Warehouse Management Systems (WMS) use logic to direct (typically with an RF terminal) a lift truck operator to put away a pallet en route to the next pick. The idea is to reduce “deadheading” or driving empty material handling equipment around the warehouse.
A principle is a general rule, fundamental, or other statement of an observed truth. Over time certain fundamental truths of material handling have been found to exist. The "principles" of material handling are often useful in analyzing, planning and managing material handling activities and systems. At the very least they form a basic foundation upon which one can begin building expertise in material handling. These principles, serve as a starting point to identifying potential problems and assessing need, are: - Planning - Standardization - Work - Ergonomic - Unit Load - Space Utilization - System - Automation - Environment - Life Cycle Cost
The document which describes a business transaction to be performed.
Terminal Delivery Allowance:
A reduced rate offered in return for the shipper of consignee tendering or picking up the freight at the carrier’s terminal.
Terms and Conditions
(T’s & C’s): All the provisions and agreements of a contract.
Theoretical Cycle Time:
The back-to-back process time required for a single unit to complete all stages of a process without waiting, stoppage, or time lost due to error.
Theory of Constraints (TOC):
A production management theory which dictates that volume is controlled by a series of constraints related to work center capacity, component availability, finance, etc. Total throughput cannot exceed the capacity of the smallest constraint, and any inventory buffers or excess capacity at non-related work centers is waste.
Twenty-foot Equivalent Unit
Third-Party Logistics (3PL):
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 Logistics Provider:
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 to distributors and retailers. Among the services which they provide are transportation, warehousing, cross-docking, inventory management, packaging, and freight forwarding.
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.
Three-layer Framework:
A basic structure and operational activity of a company; the three layers include operational systems, control and administrative management, and master planning.
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.
Time-Definite Services:
Delivery is guaranteed on a specific day or at a certain time of the day.
The time interval between product concept development and introduction to the marketplace. It includes specification development, product development and release to production.
Time Bucket:
A defined period, typically 7 days, wherein data is summarized for presentation in an MRP system. Data in the bucket is usually divided into groups showing inventory beginning balance, anticipated supply and demand, and available ending balance.
Time Fence:
Specific date used as a boundary for policy changes in a planning or other system. A policy that ks to stabilize the master production schedule may prohibit changes to the existing schedule inside the time fence (which is based on lead time) and allow changes under certain circumstances after that date. Another example is the reaction to demand based on customer orders only inside the lead time fence, and based on forecast thereafter.
Time Utility:
A value created in a product by having the product available at the time desired. Transportation and warehousing create time utility.
A measure of output for freight transportation; it reflects the weight of the shipment and the distance it is hauled; a multiplication of tons hauled and distance traveled.
Total Annual Material Receipts:
The dollar amount associated with all direct materials received from January 1 to December 31.
Total Cost Analysis:
A decision-making approach that considers minimization of total costs and recognizes the interrelationship among system variables such as transportation, warehousing, inventory, and customer service.
Total Cost Curve:
A curve that graphically represents the relation between the total cost incurred by a firm in the short-run production of a good or service and the quantity produced. The total cost curve is a cornerstone upon which the analysis of short-run production is built. It combines all opportunity cost of production into a single curve, which can then be used with the total revenue curve to determine profit.
Total Cost of Ownership (TCO):
Total cost of a computer asset throughout its lifecycle, from acquisition to disposal. TCO is the combined hard and soft costs of owning networked information assets. 'Hard' costs include items such as the purchase price of the asset, implementation fees, upgrades, maintenance contracts, support contracts, and disposal costs, license fees that may or may not be upfront or charged annually. These costs are considered 'hard costs' because they are tangible and easily accounted for.
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 Inventory Days of Supply:
Total gross value of inventory at standard cost before reserves for excess and obsolescence. Includes only inventory that is on the books and currently owned by the business entity. Future liabilities such as consignments from suppliers are not included.
Total Landed Costs:
Usually referred to as the total cost of a landed shipment, it includes purchase price, freight, insurance, and other costs up to the port of destination. In some instances, it may also include the customs duties and other taxes levied on the shipment.
Total Make Cycle Time:
The average total processing time between commencement of upstream processing and completion of all manufacturing process steps up to, but NOT including, packaging and labeling operations (i.e. from start of manufacturing to final formulated product ready for primary packaging). Do not include hold or test and release times.
Total Quality Management (TQM):
A management approach in which managers constantly communicate with organizational stakeholders to emphasize the importance of continuous quality improvement.
Total Sourcing Lead Time (95% of Raw Material Dollar Value):
Cumulative lead time (total average combined inside-plant planning, supplier lead time [external or internal], receiving, handling, etc., from demand identification at the factory until the materials are available in the production facility) required to source 95% of the dollar value (per unit) of raw materials from internal and external suppliers.
Total Supply-Chain Management Cost (5 elements):
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. Accurate assignment of IT-related cost is challenging. It can be done using Activity-Based-Costing methods, or based on more traditional approaches. Allocation based on user counts, transaction counts, or departmental headcounts are reasonable approaches. The emphasis should be on capturing all costs, whether incurred in the entity completing the survey or incurred in a supporting organization on behalf of the entity. Reasonable estimates founded in data were accepted as a means to assess overall performance. All estimates reflected fully burdened actuals inclusive of salary, benefits, space and facilities, and general and administrative allocations.
Total Supply Chain Response Time:
The time it takes to rebalance the entire supply chain after determining a change in market demand. Also, a measure of a supply chain’s ability to change rapidly in response to marketplace changes.
Touch Labor:
The labor that adds value to the product -assemblers, welders etc. This does not include indirect resources such as material handlers (mover and stage product, mechanical and electrical technicians responsible for maintaining equipment.
The number of times a labor action is taken during a manufacturing or assembly process. Touches are typically used to measure efficiency or for costing and pricing purposes.
Tracking Signal:
A statistic that reveals when parameter estimates in a forecasting model are not optimal. For example, a tracking signal might be based on a graph of the ratio of the cumulative sum of the differences between the actual and forecast values to the mean absolute deviation. If the tracking signal exceeds a certain value, the series can then be flagged for examination. This concept has been used successfully in quality control. It ms sensible also for forecasting, although little research supports its use. An alternative is to use successive re-estimation.
Trading Partner:
Companies that do business with each other via EDI (e.g., send and receive business documents, such as purchase orders).
Trading Partner Agreement:
The written contract that spells out agreed upon terms between EDI trading partners.
A department responsible for the process of determining timely and economic delivery methods, arranging internal or external transportation, and tracking shipment status and logistics network issues.
Traffic Management:
The management and controlling of transportation modes, carriers and services.
The part of the truck that carries the goods.
Trailer Drops:
When a driver drops off a full truck at a warehouse and picks up an empty one.
Trailer on a Flatcar (TOFC):
Transport of truck trailers with their loads on specially designed rail cars. Synonym: Piggyback
An international water carrier that has no fixed route or published schedule; a tramp ship is chartered for a particular voyage or a given time period.
A single completed transmission, e.g., transmission of an invoice over an EDI network. Analogous to usage of the term in data processing, in which a transaction can be an inquiry or a range of updates and trading transactions. The definition is important for EDI service operators, who must interpret invoices and other documents.
Transaction Set:
Commonly used business transactions (e.g. purchase order, invoice, etc.) organized in a formal, structured manner, consisting of a Transaction Set header control segment, one or more Data Segments, and a Transaction Set trailer Control Data Segment.
Transactional Acknowledgement:
Specific Transaction Sets, such as the Purchase Order Acknowledgement (855), that both acknowledges receipt of an order and provides special status information such as reschedules, price changes, back order situation, etc.
Transfer Pricing:
The pricing of goods or services transferred from one segment of a business to another. Transfer pricing generally includes the costs associated with performing the transfer and therefore item costs will be incrementally higher than when received through normal channels.
Transit privilege:
A carrier service that permits the shipper to stop the shipment in transit to perform a function that changes the commodity’s physical characteristics but to pay the through rate.
Transload Facility:
A Facility used for transferring shipments from truck to rail and vice versa. Operations where inbound ocean containers (or other cargo) are unloaded, palletized and then reloaded (typically into 53-foot over-the¬road trailers), for railway or road transport to a final destination.
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.
Transportation Mode:
The method of transportation: land, sea, or air shipment.
Transportation Planning:
The process of defining an integrated supply chain transportation plan and maintaining the information which characterizes total supply chain transportation requirements, and the management of transporters both inter and intra company.
Transportation Planning Systems:
The systems used in optimizing of assignments from plants to distribution centers, and from distribution centers to stores. The systems combine "moves" to ensure the most economical means are employed.
Transportation Security Administration (TSA):
TSA was created in response to the attacks of September 11th and signed into law in November 2001. TSA was originally in the Department of Transportation but was moved to the Department of Homeland Security in March 2003. TSA's mission is to protect the nation’s transportation systems by ensuring the freedom of movement for people and commerce.
Truckload Carriers (TL):
Trucking companies, which move full truckloads of freight directly from the point of origin to destination.
Truckload Lot:
A quantity of freight which, although it does not fully fill a truck, qualifies as large enough to be rated for a truckload rate.
1) A calculation of the number of times the inventory of an item would be consumed during a period given average inventory levels and consumption. 2) A calculation of the rate that the employee base of a company or department would change during a period due to hiring and termination.
Twenty-foot Equivalent Unit (TEU):
Standard unit for counting containers of various capacities and for describing the capacities of container ships or terminals. One 20 Foot ISO container equals 1 TEU. One 40 Foot ISO container equals two TEU. A 20 foot container is typically 8.5 feet tall and 8 feet wide outside and has an internal capacity of 1170 square feet.
Two-Level Master Schedule:
An approach to master scheduling in an environment that uses product family plans with a variety of options at the end item level. The first level creates a master schedule at the family level for general planning purposes. The second level uses customer specific option choices to provide improved master schedules at the option level.
Two-Bin system:
An inventory ordering system in which the time to place an order for an item is indicated when the first bin is empty. The second bin contains sufficient supply until the order is received.
Two-Way Scorecards:
A scorecard that allows a supplier to provide feedback on how well a buyer is providing it with information, paying on time, and managing other key elements of bilateral performance.
Umbrella rate:
An ICC rate-making practice that held rates to a particular level to protect the traffic of another mode.
Unbundled Payment/Remittance:
Process where payment is delivered separately from its associated detail.
Under Utilization:
To use too little or inefficiently.
Uniform Communication Standard (UCS):
A set of standard transaction sets for the grocery industry that allows computer-to-computer, paperless exchange of documents between trading partners. Using Electronic Data Interchange, UCS is a rapid, accurate and economical method of business communication; it can be used by companies of all sizes and with varying levels of technical sophistication.
Uniform Product Code (UPC):
A standard product numbering and bar coding system used by the retail industry. UPC codes are administered by the Uniform Code Council; they identify the manufacturer as well as the item, and are included on virtually all retail packaging.
Uniform Resource Locator (URL):
A string that supplies the Internet address of a website or resource on the World Wide Web, along with the protocol by which the site or resource is accessed. The most common URL type is http;//, which gives the Internet address of a web page. Some other URL types are gopher://, which gives the Internet address of a Gopher directory, and ftp:;//, which gives the network location of an FTP resource.
Uniform Warehouse Receipts Act:
The act that sets forth the regulations governing public warehousing. The regulations define the legal responsibility of a warehouse manager and define the types of receipts issued.
Unit Cost:
The cost associated with a single unit of product. The total cost of producing a product or service divided by the total number of units. The cost associated with a single unit of measure underlying a resource, activity, product or service. It is calculated by dividing the total cost by the measured volume. Unit cost measurement must be used with caution as it may not always be practical or relevant in all aspects of cost management.
Unit Load Device (ULD):
Refers to airfreight containers and pallets.
Unit of Driver Measure:
The common denominator between groupings of similar activities. Example: 20 hours of process time is performed in an activity center. This time equates to a number of common activities varying in process time duration. The unit of measure is a standard measure of time such as a minute or an hour.
Unit of Measure (UOM):
The unit in which the quantity of an item is managed, e.g., pounds, each, box of 12, package of 20, or case of 144. Various UOMs may exist for a single item. For example, a product may be purchased in cases, stocked in boxes and issued in single units.
Unit-of-Measure Conversion:
A conversion ratio used whenever multiple units-of-measure are used with the same item. For example, if you purchased an item in cases (meaning that your purchase order stated a number of cases rather than a number of pieces) and then stocked the item in eaches, you would require a conversion to allow your system to calculate how many eaches are represented by a quantity of cases. This way, when you received the cases, your system would automatically convert the case quantity into an each quantity.
Unit Train:
An entire, uninterrupted locomotive, care, and caboose movement routed between an single origin and destination.
United Nations Standard Product and Service Code (UN/SPSC):
Developed jointly between the UN and Dun & Bradstreet (D&B). Has a five level coding structure (segment, family, class, commodity, business function) for nearly 9000 products.
United States Railway Association:
The planning and funding agency for Conrail; created by the 3-R Act of 1973.
To consolidate a number of packages into one unit; the several packages are strapped, banded, or otherwise attached together.
In warehousing, the consolidation of several units (cartons or cases) into larger units to improve efficiency in handling and to reduce shipping costs.
Units Moved per Man Hour:
Measures the number of units moved in per man hour.
Unplanned Order:
Orders which are received that do not fit into the volumes prescribed by the plans developed from forecasts.
Charges added to a bill, particularly a freight bill, to cover additional costs that were not envisioned when a contract was written. These might include costs related to rapidly increasing fuel charges or costs related to government mandates.
Upside Flex Agreement:
This is a flexibility agreement with a supplier where the upside and down side are negotiated in advance for lead-time, cost, etc.
Upside Production Flexibility:
The number of days required to complete manufacture and delivery of an unplanned sustainable 20% increase in end product supply of the predominant product line. The one constraint that is estimated to be the principal obstacle to a 20% increase in end product supply, as represented in days, is Upside Flexibility: Principal Constraint. Upside Flexibility could affect three possible areas: direct labor availability, internal manufacturing capacity, and key components or material availability.
Refers to the supply side of the supply chain. Upstream partners are the suppliers who provide goods and services to the organization needed to satisfy demands which originate at point of demand or use, as well as other flows such as return product movements, payments for purchases, etc.
Urban Mass Transportation Administration:
Agency of the U.S. Department of Transportation responsible for developing comprehensive mass transport systems for urban areas and for providing financial aid to transit systems.
Usage Rate:
Measure of demand for product per unit of time (e.g., units per month, etc.).
To check whether a document is the correct type for a particular EDI system, as agreed upon by the trading partners, in order to determine whether the document is going to or coming from an authorized EDI user.
Value Added:
Increased or improved value, worth, functionality or usefulness.
Value-Added Network (VAN):
A company that acts as a clearing-house for electronic transactions between trading partners. A third-party supplier that receives EDI transmissions from sending trading partners and holds them in a “mailbox” until retrieved by the receiving partners.
Value-Added Productivity Per Employee:
Contribution made by employees to total product revenue minus the material purchases divided by total employment. Total employment is total employment for the entity being surveyed. This is the average full-time equivalent employee in all functions, including sales and marketing, distribution, manufacturing, engineering, customer service, finance, general and administrative, and other. Total employment should include contract and temporary employees on a full-time equivalent (FTE) basis.
Assessing the relative value of activities according to how they contribute to customer value or to meeting an organization’s needs. The degree of contribution reflects the influence of an activity’s cost driver(s).
Value Analysis:
A method to determine how features of a product or service relate to cost, functionality, appeal and utility to a customer (i.e., engineering value analysis).
Value Based Return (VBR):
A measure of the creation of value. It is the difference between economic profit and capital charge.
Value Chain:
A series of activities, which 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 to identify all the elements in the linkage of activities a firm relies on to secure the necessary materials and services, starting from their point of origin, to manufacture, and to distribute their products and services to an end user.
Value Engineering Change Proposal (VECP):
A change proposal resulting from an organized effort directed at analyzing the function of Department of Defense systems, equipment, facilities, procedures, and supplies for the purpose of achieving the required function at the lowest total cost of effective ownership, consistent with requirements for performance, reliability, quality, and maintainability.
Value-of-service pricing:
Pricing according to the value of the product being transported; third-degree price discrimination; demand-oriented pricing; charging what the traffic will bear.
Value of Transfers:
The total dollar value (for the calendar year) associated with movement of inventory from one “bucket” into another, such as raw material to work-in-process, work-in-process to finished goods, plant finished goods to field finished goods or customers, and field finished goods to customers. Value of Transfers is based on the value of inventory withdrawn from a certain category and is often approached from a costing perspective, using cost accounts. For example, Raw Materials Value of Transfers is the value of transfers out of the raw material cost accounts (you may have cost centers associated with inventory locations, but all "raw ingredients" usually share common cost accounts or can be rolled up into one financial view). The same goes for WIP. Take the manufacturing cost centers and look at the total value of withdrawals from those cost centers. While Average Gross Inventory represents the value of the inventory in the cost center at any given time, the Value of Transfers is the total value of inventory leaving the cost center during the year.
Value Proposition:
What the supply chain member offers to other members. To be truly effective, the value proposition has to be two-sided; a benefit to both buyers and sellers.
Value Stream:
All activities, both value added and nonvalue added, required to bring a product from raw material state into the hands of the customer, bring a customer requirement from order to delivery and bring a design from concept to launch.
Value Stream Mapping:
A pencil and paper tool used in two stages: 1. Follow a product's production path from beginning to end and draw a visual representation of every process in the material and information flows. 2. Then draw a future state map of how value should flow. The most important map is the future state map.
Rate of product movement through a warehouse
The manufacturer or distributor of an item or product line.
Vendor Code:
A unique identifier, usually a number and sometimes the company's DUNS number, assigned by a Customer for the Vendor it buys from. Example; a Grocery Store Chain buys Oreo's from Nabisco. The Grocery Store Chain, for accounting purposes, identifies Nabisco as Vendor #76091. One company can have multiple vendor codes. Example; Welch's Foods sells many different products. Frozen grape juice concentrate, chilled grape juice, bottled grape juice, and grape jelly. Because each of these items is a different type of product, frozen food, chilled food, beverages, dry food, they may have a different buyer at the Grocery Store Chain, requiring a different vendor code for each product line.
Vendor-Managed Inventory (VMI):
The practice of retailers making suppliers responsible for determining order size and timing, usually based on receipt of retail POS and inventory data. Its goal is to increase retail inventory turns and reduce stock outs. Its goal is to increase retail inventory turns and reduce stock outs. It may or may not involve consignment of inventory (supplier ownership of the inventory located at the customer).
Vendor Owned Inventory (VOI):
Consignment Inventory
Vertical Hub/Vertical Portal:
Serving one specific industry. Vertical portal websites that cater to consumers within a particular industry. Similar to the term "vertical industry", these websites are industry specific, and like a portal, they make use of Internet technology by using the same kind of personalization technology. In addition to industry specific vertical portals that cater to consumers, another definition of a vertical portal is one that caters solely to other businesses.
Vertical Integration:
A style of management control. Vertically integrated companies are united through a hierarchy with a common owner. Usually each member of the hierarchy produces a different product or (market-specific) service, and the products combine to satisfy a common need. Vertical integration defines the degree to which a firm owns its upstream suppliers and its downstream buyers it is typified by one firm engaged in different parts of production (e.g. growing raw materials, manufacturing, transporting, marketing, and/or retailing).
VICS: Voluntary Interindustry Commerce Standards.
The retail industry standards body responsible for the CPFR standard, among other things. VICS is a not-for-profit association whose mission is to take a global leadership role in the development of business guidelines & specifications; facilitating implementation through education and measurement, resulting in the improvement of the retail supply chain efficiency and effectiveness, which meet or exceed customer and consumer expectations.
Virtual Corporation:
1) A business that has few employees and outsources nearly all its work. 2) .A consortium of businesses that pursue a common goal. For example, several companies work together to produce a technologically advanced product.
The ability to access or view pertinent data or information as it relates to logistics and the supply chain, regardless of the point in the chain where the data exists.
The vision of the business is a statement which reflects the aspirations of its management and specifies its intended direction or future destination .
Voice Activated or Voice Directed:
Systems which guide users such as warehouse personnel via voice commands.
Voice of the Customer:
A business term to describe the process of capturing a customer's requirements using market research to determine a customer’s wants and needs. This is then organized into a hierarchical structure and prioritized by importance and satisfaction with current alternatives.
World Trade Organization (WTO):
An organization established on January 1, 1995 replacing the previous General Agreement on Tariffs and Trade GATT that forms the cornerstone of the world trading system.
Work Sequence:
Defined steps and activities that must be performed in order for the work to be accomplished.
Work-in-Process (WIP):
Parts and subassemblies in the process of becoming completed finished goods. Work in process generally includes all of the material, labor and overhead charged against a production order which has not been absorbed back into inventory through receipt of completed products.
Work Breakdown Structure (WBS):
A complete line by line breakdown of the products, services, and activities that will be required to fulfill a contractual obligation.
Windows Meta File (WMF):
A vector graphics format for Windows-compatible computers used mostly or word processing clip art.
Will Call:
The practice of taking orders that will be picked up at the selling facility by the buyer. An area where buyers can pick up an order at the selling facility. This practice is widely used in the service parts business.
Wide Area Network (WAN):
A computer network that covers a broad area (i.e., any network whose communications links cross metropolitan, regional, or national boundaries. The largest and most well-known example of a WAN is the Internet.
What If Scenarios:
A method to determine the effect different costs or investments have on profit and other financial indicators. Examples of cost or investments that would be evaluated are financial effects of different pricing models, warehousing options, number of employees or raw materials options.
Weighted-Point Plan:
A method of analyzing a group of candidates (employees, suppliers, etc.) using a rating approach that gathers data and assigns weights to each evaluation category. A weighted sum for each candidate is obtained and a comparison made. The weights used should sum to 100% for all.
Wagner-Whitin Algorithm:
A dynamic programming lot sizing model that evaluates multiple alternatives that consider period demand and production, holding, and setup costs to produce an optimal lot size that varies for each period as required.
Wall-to-Wall Inventory:
An inventory control technique where all inventory locations within the warehouse are counted at one time as opposed to doing a cycle count of smaller groups.
Storage place for products. Principal warehouse activities include receipt of product, storage, shipment, and order picking.
The storing (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.
An obligation or guarantee that a product or service sold is as factually stated or legally implied by the seller. Oftentimes, warranties provide a specific remedy, such as repair or replacement, in the event the product or service fails to meet the warranty.
Warranty Costs:
Includes materials, labor, and problem diagnosis for products returned for repair/refurbishment.
Any activity or process that does not add value to the goods or services required by the customer. Examples of waste include move time, counting inventory, inspection, the production of defective material, rework, etc. Waste is considered to cause increased cost, lead time and quality problems while not adding value, and may be created by vendors, personnel, equipment, incorrect process parameters and many other factors.
Waterway Use Tax:
A per-gallon tax assessed barge carriers for use of the waterways.
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. also batch picking, zone picking 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.
Document containing description of goods that are part of common carrier freight shipment. Show origin, destination, consignee/consignor, and amount charged. Copies travel with goods and are retained by originating/delivering agents. Used by carrier for internal record and control, especially during transit. Not a transportation contract.
Weight Break:
The shipment volume at which the LTL charges equal the TL charges at the minimum weight.
Weight Confirmation:
The practice of confirming or validating receipts or shipments based on the weight.
Raw Material: A raw material that loses weight in processing
The ANSI standard for interindustry electronic interchange of business transactions. XDK: Cross Dock / Cross Docking XML: Extensible Markup Language
A term Toyota adopted to capture the idea of horizontal transfer of information and knowledge across an organization. Yokoten is a two-way street, requiring proactive effort from both those acquiring and developing the knowledge and those who could benefit from greater understanding of the requirements for success.
The ratio of usable output from a process to its input.
Yard Management System (YMS):
A system which is designed to facilitate and organize the coming, going and staging of trucks and trucks with trailers in the parking "yard" that serves a warehouse, distribution or manufacturing facility.
Zone Skipping:
For shipments via the US Postal Service, depositing mail at a facility one or more zones closer to the destination. This option would benefit customers operating in close proximity to a zone border or shipping sufficient volumes to offset additional transportation costs. Can also be used with UPS/FedEx but these companies tend to work with carried to do a truckload shipment into a zone and use UPS to do the last mile delivery, reduced lead time and cost.
Zone price:
The constant price of a product at all geographic locations within the zone.
Zone Picking:
A method of picking orders where a warehouse is divided into several pick zones with order pickers assigned to a specific zone and only picking the items in that zone, orders are moved from one zone to the next (usually on conveyor systems) as they are picked (also known as "pick-and-pass"). also batch picking, wave picking.
Zone of Reasonableness:
A zone or limit within which air carriers are permitted to change rates without regulatory scrutiny; if the rate change is within the zone, the new rate is presumed to be reasonable.
Zone of Rate Freedom:
Motor carriers are permitted to raise or lower rates by 10% in one year without ICC interference; if the rate change is within the zone of freedom, the rate is presumed to be reasonable.
Zero Inventory:
A Just-In-Time Inventory Control term where emphasis is placed on reducing inventory to minimal levels to reduce costs and promote organizational effectiveness.

Glossary terms provided by Kate Vitasek