Understanding the different elements of the supply chain can seem difficult. This glossary of common terms used in our industry will help you get started.

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3PL: Third-Party Logistics. A 3PL is an outsourced logistics provider, which handles aspects of shipping ranging from warehousing and fulfillment to freight bills and transportation.



Active Stock: Active stocks refer to stocks that have been traded the most on an exchange by actively buying and selling in large numbers.

ATA: Actual Time of Arrival. The time when vessel/ship/plane is determined to arrive at its destination.

ATD: Actual time of departure. The exact time a shipment is dispatched from a point of origin.

Advanced Shipping Notice (ASN): A pending Delivery document that include shipment information about the products, quantities, and nature the of shipment.

Application Programming Interface (API): A software intermediary that enables two applications or more to interact with each other.


Bale: A large Compressed bound which often used to warp goods such as hay, paper, wool, or cotton.

Bar Code: An identifier consisting of a series of printed parallel bars representing values.

Break-Bulk: When the goods are transported by container ship, it is called break bulk shipping.

Bundling: An occurrence where two or more products are combined into one transaction for a single price.

Base Currency: A.k.a the transaction currency which is assigned the value of 1 when calculating exchange rates.

Bill of Lading (BOL): A document that provides all the details needed to process the freight shipment.

Back Order: A request to a supplier or wholesaler for an additional stock of a sold-out item to satisfy an outstanding customer order.


Customer Returns: Items that were once sold from the store (or website) and are then returned by the customer in varying conditions.

Customs: The authorities or the official department that collects duties levied by a country on imports and exports of goods.

Customs Clearance: The act of getting permission for taking or importing goods/merchandise from another country into the importing nation.

Customer integration: The component of customer relationship management which puts technology in place that allows customers to process their own transactions and to have direct contact with the organization.

Cross Docking: Involves supplying products from a manufacturing plant straight to customers with little or no material handling in between. A facility that operates without storage in supply chains.

Cargo: Merchandise being carried by a means of transportation.

Channel: A method that a business distributes its products, such as a retail or distribution channel, call center, or a web-based electronic storefront.

Claim: A legal demand for financial reimbursement or for a charge made against a carrier for loss, damage, delay, or overcharge.

Commercial zone: Any part of a city or town which contains land that is used for commercial activities( building central business, shopping centers, etc..)

Consolidation: Combines two or more shipments to have lower transportation rates.

Carrier: A company or a person who legally transports goods by land, water or air, and they usually work with shippers to ship goods from one place to another.

Carrier Liability: A carrier that is responsible for all shipment loss, damage, and delay that comes with exceptions ( e.g: Act of Public Authority, Act of Shipper, and the Goods’ Inherent Nature)

Commodity Code: A code that describes a commodity (product/raw material) or a group of commodities that deals with standard classifications of goods. It could be carrier tariff or regulating in nature. 

Chargeable Weight: Used by airlines to determine the cost of shipment. It may be either volumetric weight or grass weight.

Countertrade: International trade by exchange of goods rather than by currency purchase.

Consignee: A party or person to whom goods or merchandises are being shipped and delivered.

Cubage: Cubic volume or capacity of scape that is being used or available for shipping or storage.

Cumulative Lead Time: The total time required to source components, build, and ship a product.

Currency Adjustment Factor (CAF): A surcharge imposed by a carrier on ocean freight charges to offset foreign currency fluctuations.

CWT: An abbreviation for Hundredweight, which is equivalent to 100 pounds.


Dashboard: A tool board to capture a summary of key performance, could also be a monitoring system for eCommerce fulfillment business.

Data synchronization: A data transfer process between a handled device and a desktop computer.

DDP: Delivered Duty Paid are fees/taxes/duties that are paid by The shipper of the order.

DDU: Delivered Duty Unpaid are taxes or duty charges that have to be paid for by the recipient of the shipment on delivery. 

Destination: The designated location as a receipt point for goods/shipment.

Delivery Order: A Delivery Order is a document from a shipper or an owner of a freight carrier that orders the release of the transportation of cargo to another party.

Demand Chain Management: The same as supply chain management, but with an emphasis on consumer pull versus supplier push. 

Demurrage: Charges are applied when rail freight cars and ships are retained beyond a specified loading or unloading time.

Deregulation: Revisions or complete elimination of economic regulations controlling transportation.

Dispatch: To send off a shipment to a certain destination.

Destock: Reduce the quantity of stock held.

Differential: A discount offered by a carrier that faces a service time disadvantage over a route.

Direct Cost: A price directly associated with the production of services or goods.

Distributed Inventory: The splitting of goods across different fulfillment centers that is geographically dispersed. 

Dock receipt: A document used to accept materials or equipment. It is also a proof of delivery that ocean carrier carries.

Dunnage: A packing material used to protect a product from damage during transport.

Duty Free zone: An area where goods or cargo can be stored without paying import customs duties while awaiting future transport.

Drop shipping: To sell brand name on your website (e.g: is to have one supplier ship directly to the buyer’s customer.)


Emergency Stock: A particular quantity of product to be stocked and used in an emergency. For example: an unplanned catastrophic event.

End Item: A completed item or product sold.

Expediting: Moving shipments through regular channels at an accelerated rate.

Expiration Date: The last date that a product, as food, medicine, or beauty products that should be used before it is considered spoiled or ineffective, usually specified on the label or package.

Export: To send goods and services to another country.

Export Borker: An agent who acts as an intermediary between buyer and seller for a fee.


Fulfillment: Refers to the process of preparing and delivering a customer’s order.

First in First out (FIFO): A method of inventory accounting in which the cost of the first units to enter are the first units sold.

Finished Goods Inventory ( FG or FGI): Products completely manufactured, packaged, stored, and ready for distribution.

Facilities: The physical plant, distribution centers, service centers, and related equipment.

FEU: Forty-foot equivalent unit, a standard size intermodal container.

Fixed costs: A fixed cost that does not change with an increase or decrease in the number of goods or services produced or sold.

Fixed order quantity: The inventory control system, wherein the maximum and minimum inventory levels are fixed(1). Or inventory management that cause planned or a actual orders to be generated for pre-determined fixed quantity. (2)

Freight: Goods being transported from one place to another.

Fulfillment Services Provider: Third-party company that provides order fulfillment services on behalf of another party ( e.g: online sellers).

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

Forecast: An estimation of future demand for products using quantitative or qualitative methods.

Foreign Trade Zone (FTZ): An area that is close to a port airport under control of a local customs service, for holding goods duty-free pending customs clearance.

Forward picking: A storage area designed for picking where inventory replenished from reserve storage.

Fourth Party Logistics (4PL): Differs from 3PL from organization is more about long-term partnerships where quality of the service will play a primary role, and which involves shared risks and benefits.

Full Truckload (FTL): Full truckload or Full Container Load is a type of shipping mode whereby a truck carries one dedicated shipment.


General Agreement on Tariffs and Trade (GATT):A legal agreement between many countries, aimed at expanding international trade and eliminating trade barriers.

General-Merchandise Warehouse: A warehouse that is used to store goods that are readily handled, are packaged, and do not require a controlled environment.

General Order (GO): A customs term referring to a warehouse where merchandise not entered within five working days after the carrier’s arrival is stored at the risk and expense of the importer. 

GTIN: Global Trade Item Number: All-numeric system for assigning globally unique codes to trade items (products and services).

Goods: A merchandise or materials which are used to satisfy demands.

Gross Margin: The difference between total revenue and the cost-of-goods sold.

Gross Weight: The total weight of the vehicle and the payload of freight or passengers.


Hazardous Material: Substance or material could be capable of posing a risk to health, safety, and property when stored or transported in commerce.

Holding cost: Cost of holding a unit of an item in stock for a unit time.

Handling Costs:The cost involved in moving, transferring, preparing, and otherwise handling inventory.

Hundredweight: A pricing unit used in transportation (equal to 100 pounds).

Hub: A large retailer or manufacturer having many trading partners.


Import: The movement of products from one country into another.

In bound: Goods are held or transported in-bound under customs control, import duties or charges are paid.

Inbound logistics: The material management that starts from suppliers and vendors into production process to storage facilities.

Incentive rate: A rate that convinces the shipper to ship heavier volumes per shipment.

Insurance certificate: A document issued to the consignee to certify that insurance is provided to cover loss of or damage to the cargo while in transit.

Integrated logistics: A comprehensive view of the entire supply chain as a single process from raw material to finished goods distribution.

Inventory: A place where you store your products.

Item coding: An arrangement for giving every package of material moved an identifying tag, that contains bar code. 


Joint Cost: A common cost in cases where a company produces products in fixed proportions.

Joint rate: A rate over a route that requires two or more carries to transport the shipment.

Just-in-Time Logistics: The process of minimizing the times required to source, handle, produce, transport, and deliver products in order to meet customer requirements.


Kitting: A Light assembly of components or parts to defined units.


Logistics: Where implementing and controlling procedures for efficient and effective storage of goods and services. It includes inbound, outbound, internal and external movement.

Logistic Channel: The network of supply chain participants engaged in storage, handling transfer, transportation and communications functions.

Lot: A production run or batch that can be isolated from other runs and identified with specific set of material, production facility and process characteristics.

Logistics Data Interchange (LDI) : An automatic system that electronically transmits logistics information.

Locator system: Inventory tracking system enables you to assign locations to your inventory, facilitating the ability to store your goods. Everything is stored in number sequence, by vendor, by product …

Last Mile: The description of the last process delivery, where carrier, courier (delivery agent) is responsible for the final handover to the customer.

Landed Cost: Cost of a product that includes the logistics costs ( transportation, warehousing, handling costs, etc..)


Management information system (MIS) : A system that controls the flow of information throughout an organization to make sure everyone has to work properly.

Multi-sales channel: The practice of selling merchandise on more than one sales channel.

Minimum Weight: The shipment weight the carrier’s tariff mentions is the minimum weight required to use.

Multi-Currency: The ability to process an order using a variety of currencies for pricing and billing.

Manifest: A document that describes individual orders contained within a shipment.

Marks and Numbers: Marks and numbers are placed on goods used to identify a shipment or parts of a shipment.

Maximum Order Quantity: An order quantity modifier applied after the lot size has been calculated that limits the order quantity.

Merge in Transit: The process of ” merging” shipments from suppliers and going to the buyer or the store, bypassing the seller.


Net Weight: The weight of the merchandise, unpacked, exclusive of any containers.

Non-stock inventory : Inventory that is not tracked within your inventory system. It does not have an item-master record or internal SKU number (stock keeping unit number).

Node: A fixed point in a firm’s logistics system where goods come to rest ( includes plants, warehouses, supply sources, and markets.)


Order: A request to ship, receive or transport material as indicated in a customer order, purchase order, or shop order.

Order Tracking: An online tool that gives the buyer information about the product and the status of the purchased item. this system aims to show transparency of the distribution process.

Order Fulfillment: Defined as the steps or process of receiving goods, then processing and delivering orders to customers.

Order Management : The process of taking orders and making sure that your customer receives them on time and in good order.

Optimization: The process of making the best or most effective use of something or situation. It would be a value that you would like to optimize the aim is to look for the best practical solution.

Outsourcing: Utilize a third-party provider to perform services performed in house. (manufacturing of products and call center/ customer support included)

Outbound Logistics: A process that is associated with the movement and storage of products from end-line production to end-user.

On-Demand: Work performed when demand is present. It is used to describe products that are manufactured or assembled parts through a process in batches of one.

Omni-Channel: The way a customer interacts with a retailer across multiple channels (such as stores or web)


Product catalog: A type of marketing collateral that lists essential product details to help the buyers make a purchase decision.

Parcel insurance :A third party shipping insurance provider covering packages in the event that they lost or damaged while in transit.

Parcel Shipment: Parcel include small packages like those handled by providers such as UPS and FedEx.

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

Pick/Pack: Picking and packing immediately into shipment containers. 

Product ID:A method of identifying a product without using full description. it contains item Code or number, the SKU.

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

Port: A harbor where ships will anchor.

Purchase order: A document that is created by a buyer indicating the items they wish to purchase from a seller.

Prepaid Freight: Freight paid by the shipper to the carrier when merchandise is tendered for shipment that is not refundable if the merchandise does not arrive at the intended destination.


Quality Control: A process through which a company strives to ensure that product quality is maintained or improved.

Queue time: The amount of time inventory is staged before processing.


Re-stocking: An act of replenishing stock. The act of restocking the shelves once all the products are sold.

Receiving dock: Distribution area where the physical receipt of the purchased material from the carrier occurs.

Returns: A customer returning goods to the manufacturer. Goods may have performance problems or simply because the customer did not like the product.

Reserve Storage: An area intended for storage of material full pallet load sizes from which both forward picking.

Re-Order Point ( ROP): The minimum unit quantity that a business should have in available inventory before they need to reorder more product.

Reverse Logistics: A specialized segment of logistics focusing on the movement and management of products and resources after the sale and delivery to the customer.

Return Merchandise Authorization (RMA): A numbered authorizations provided to allow your receive a refund, replacement, or repair during the product’s warranty period.


Sales Support: A system was developed to assist the sales force in improving productivity through continuous communication.

Supply Chain: A network between a company and its suppliers to produce and distribute a specific product to the final buyer.

Shipping: The transport of goods by sea, air or some other means from one location to another location.

Safety Stock: Also called “emergency stock”. A level of additional stock that is preserved to prevent risk of stock outs.

SCOR: A Supply chain reference model built around six major processes. SCOR aims to provide a standardized method of measuring supply chain performance.

Serial Number: A unique number for identification to a single piece that will never be repeated for similar pieces. It is used too to support traceability and warranty programs.

SSCC (Serial Shipping Container Code): A global serial number for identifying a movable unit (e.g: pallet)

Split-case picking: Variation of case picking where the inner pack of items from cartons is retrieved.

Stock: All the goods or merchandise are stored in a warehouse and available for sale.

Stock-Keeping Unit (SKU): A scannable bar code, most often seen printed on product labels. It is used to identify and track the inventory or stock.

Slotting: The categorization and organization of different products within a warehouse facility.

Stock out (out of stock): A situation in which an item is out of stock.

Shortage: The inability of fulfilling customer needs due to material shortages, stop production, or delivery delays from suppliers.


Tracking shipment :The process of localizing shipping containers or parcel post at anytime during production, storing, and delivering to ascertain their provenance and to foreknow and aid delivery.

Tariff: A tax assessed by a government on goods entering or leaving a country.

Transit time: The total time that elapses between a shipment’s pickup and delivery.

Tariff code: A product-specific code as a document in a Harmonized System maintained by the (World Customs Organization). The more digits in a tariff code string, the more specific the product it identifies.

Third Party Logistics: The outsourcing of all company’s logistics operations to a specialized agency.

Transaction: A single completed transmission ( e.g: transmission of an invoice over an EDI network where a range of updates, documents are interpreted)

Total Cost analysis: A decision-making approach that considers minimization of total costs of variables system as transportation, warehousing, inventory, and customer service.

Throughput: The amount of products a company can produce and deliver to a client within a set of a frame time.


Unit Cost: The total cost of producing an item or a service divided by the total number of units.

Unit load: A single unit of an item or multiple units being moved at a time, instead of moving each item separately.

Upsell: The practice of attempting to sell a higher-value product to the customer.

Uniform Product Code (UPC): Also known as the Universal Product Code. Usually, the code is displayed on a Package to help identify the product. The code includes a barcode with a 12 digit-number right under it.


Value Added: The increased or improved value/ worth of the products or services.

Value Added: The increased or improved value/ worth of the products or services.

Vendor: The manufacturer or distributor of an item or product line.

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

Visibility: The ability to access data or information related to logistics and supply chain.

Vertical integration: When a firm decides to produce multiple value-adding stages, from raw material to the sale product to the ultimate consumer.


Warehouse: Place where you store products which include receipt of the product, storage, shipment, and order picking.

Warehouse Management System (WMS): Used system for managing warehouse business processes (including receiving, put away, picking, shipping, and inventory cycle counts..)

Warranty Costs: Includes materials, labor, and problem diagnosis for products returned for repair or refurbishment.

Web Portal: It serves as the single point of access for information. it helps in search navigation, personalization, notification. but it requires one to register into a network to have access to information.

Weight Confirmation: The practice of confirming or validating receipts or shipments based on the weight.

Waybill: A document containing goods description that shows the origin, destination, consignee/consignor, and the amount charged. it’s used by the carrier for internal record and control during transit.


Zone-batch picking: A combination of zone and batch picking, where multiple pickers pick portions of multiple orders.

Zone Price: The price of a product at all geographic locations within a zone.

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