Glossary - A

ABC Analysis

It is a method of classifying items, events, or activities according to their relative importance. It is frequently used in inventory management. Considering for example shipments quantities, A class generally represents 80 % of the shipments (representing generally 20 % of the references), B class consists of 15 % of the shipments (representing generally 30 % of the references), C class consists of 5 % of the shipments (representing generally 50 % of the references). This method allows prioritisation and can be applied to others fields as storage, supply, suppliers.

Access Point

A hardware device or a computer's software that acts as a communication hub for users of a wireless device to connect to a wired LAN. APs are important for providing heightened wireless security and for extending the physical range of service a wireless user has access to.

Aisle

Any passageway within a storage area.

Algorithm

A computable set of steps to achieve a desired result.

Allocation

In order management, allocation of available inventory to customer and production orders.

ASN - Advanced Shipping Notification

A message, usually sent through EDI, from a vendor to a customer at the time of the vendor shipment that notifies the customer of the order, item and quantity information.

ASP - Application Service Provider

It is a third-party entity that manages and distributes software-based services and solutions to customers across a wide area network from a central data center. In essence, ASPs are a way for companies to outsource some or almost all aspects of their information technology needs. They may be commercial ventures that cater to customers, or not-for-profit or government organizations, providing service and support to end users.

ASRS - Automatic Storage and Retrieval System

An inventory management system consisting of machines that move up and down one or multiple parallel storage aisles for automatically placing and retrieving loads from specific storage locations.

Assortment range

The number of different product types stored in a warehouse.

Auto ID

Automatic identification and tracking of material movement and inventory by data collection devices, using bar codes or other methods.

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Glossary - B

Backorder

An order that cannot be filled or shipped on the requested date due to lack of inventory availability.

Bar Code

A code consisting of a group of printed and variously patterned bars and spaces and sometimes numerals that is designed to be scanned and read into computer memory and that contains information (as identification) about the object it labels.

Batch

In production, a lot or given quantity processed at the same time with the same process parameters. A batch may consist of more than one item number but all items are considered to have the same characteristics for purposes of traceability. More generally, a set of objects gathered and processed together instead of one at a time.

Batch picking

Order picking method where goods for several summarized orders are picked at the same time. The goods are later sorted by order or delivery address, typically at some central location.

Best practices

Standard, published operating methods found to produce the best performance and results in a given industry or organization.

Bin

A standard container for components OR an inventory shelf or rack location with a specific identifier.

Blind count

A physical inventory or cycle count in which the count tag or sheet contains item and location information but does not include the book (calculated) inventory as of the time of count.

BOM - Bill Of Materials

A structured list of the items used in making a parent assembly that reflects the actual production process in terms of timing and quantities consumed.

Bonded warehouse

A warehouse facility or a dedicated portion of a facility in which imported goods may be stored or processed without payment of customs duties until the merchandise is removed.

Buffer stock

Inventory held to protect (buffer) against uncertainty in supply or demand.

Bulk storage

The process of housing or storing materials and packages in larger quantities, generally using the original packaging or shipping containers or boxes.

Browser

Short for Web browser, a software application used to locate and display Web pages. The most popular browsers are today graphical browsers, which means that they can display graphics as well as text. In addition, most modern browsers can present multimedia information, including sound and video, though they require plug-ins for some formats.

Business to Business - B2B

Short for business-to-business, the exchange of services, information and/or products from one business to another, as opposed to between a business and a consumer (see B2C).

Business to Consumer - B2C

It is the exchange of services, information and/or products from a business to a consumer, as opposed to between one business and another (see B2B).

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Glossary - C

Carrier

A firm which transports goods or people via land, sea or air.

Carrying cost

Also called holding cost, carrying cost includes the recurring costs and extraordinary charges associated with maintaining inventory, such as financing, storage, insurance and obsolescence.

Class Based Storage

The class-based storage policy distributes the products, among a number of classes, and for each class it reserves a zone within the storage area.

Client

The client part of a client-server architecture. Typically, a client is an application that runs on a personal computer or workstation and relies on a server to perform some operations. For example, an e-mail client is an application that enables you to send and receive e-mail.

Cloud computing

It is as a style of computing where massively scalable IT-enabled capabilities are delivered as a service to external customers using Internet technologies.

Consignee

The party such as mentioned in the transport document by whom the goods, cargo or containers are to be received.

Consignment Note

A document prepared by the shipper and comprising a transport contract. It contains details of the consignment to be carried to the port of loading and it is signed by the inland carrier as proof of receipt.

Consigned inventory (or Consignment stock)

Inventory physically at a customer site that remains the financial possession of the vendor. The inventory is considered transferred when agreements specify it is physically recounted by the vendor, when it is used in production by the customer, by a customer self-billing process, or other method.

Consumer To Consumer - C2C

C2C is the abbreviation for consumer-to-consumer electronic commerce. C2C is an electronic Internet-facilitated medium that involves transactions between consumers utilizing a third-party. The most common example of C2C is the online auction. In this form of C2C, consumers post items for sale and other consumers bid to purchase them.

Container

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 OR the packaging, such as a carton, case, box, bucket, drum, bin, bottle, bundle, or bag, that an item is packed and shipped in.

Co-packing

Packaging operation, often performed by the Logistics Service Provider in a dedicated zone of the warehouse, consisting of wrapping different products together (for example to bundle a sample of new product with an old product), or identical products (in the case of promotional offers, for example).

Cross docking

A practice of unloading materials from an incoming semi-trailer truck or railroad car and loading these materials directly into outbound trucks, trailers, or rail cars, thus eliminating the need to place inventory in storage. Cross docking requires close synchronization of all inbound and outbound shipment movements.

CSV - Comma Separated Variables

A type of data format in which each piece of data is separated by a comma. This is a popular format for transferring data from one application to another, because most database systems are able to import and export comma-delimited data.

Cycle counting

Any process that verifies the correctness of inventory quantity data by counting portions of the inventory on an ongoing basis. In other words, any process that uses regularly scheduled counts but does not count the entire facility's inventory in a single event.

Cycle Time

The complete time an activity or process takes from initiation to completion. An example would be order cycle time, which would span from initial order capture to final customer delivery.

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Glossary - D

Database

Often abbreviated DB. A collection of information organized in such a way that a computer program can quickly select desired pieces of data. You can think of a database as an electronic filing system. Traditional databases are organized by fields, records, and files. A field is a single piece of information; a record is one complete set of fields; and a file is a collection of records. For example, a telephone book is analogous to a file. It contains a list of records, each of which consists of three fields: name, address, and telephone number.

Date-managed inventory

Replenishment policy based on fixed quantities at fixed dates: the quantities delivered can be close to the Economic Order Quantity or correspond to a partial delivery of an annual contract.

DBMS - Database Management System

A collection of programs that enables you to store, modify, and extract information from a database. There are many different types of DBMSs, ranging from small systems that run on personal computers to huge systems that run on mainframes.

Direct Delivery (or Direct Shipment)

The conveyance of goods directly from the vendor to the buyer. Frequently used if a third party acts as intermediary agent between vendor and buyer.

Distribution center

A facility that stores inventory and ships finished goods orders to customers for a specific geographic area. Its stock is replenished on a periodic basis by manufacturing plants or other distribution centers, and it may process customer returns but does not have production capabilities.

Distribution channel

One or more companies or individuals who participate in the flow of goods and services from the manufacturer to the final user or consumer.

Distribution Warehouse

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

Distribution Logistics

Set of activities with the goal of making available the desired items and quantities of finished goods to the customer and/or end consumer at the desired time at the best pricing terms. This process involves the definition of a distribution policy (inventory management method for finished goods, delivery cycle time, management of inbound transport, subcontracting to Logistics Service Providers, etc.).

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Glossary - E

EAI - Enterprise Application Integration

It is the unrestricted sharing of data and business processes throughout the networked applications or data sources in an organization.

European Article Number - EAN.UCC

European Article Numbering/Uniform Code Council. The EAN.UCC System provides identification standards to uniquely identify trade items, logistics units, locations, assets, and service relations worldwide. The identification standards define the construction of globally-unique and unambiguous numbers.

E-business

Electronic Business, is the administration of conducting business via the Internet. This would include the buying and selling of goods and services, along with providing technical or customer support through the Internet. e-Business is a term often used in conjunction with e-commerce, but includes services in addition to the sale of goods.

E-commerce

A general term for conducting business and consumer marketing, product information, ordering and payment functions over the Internet instead of using traditional methods. Product delivery still requires physical capabilities unless the product or service can be fulfilled using strictly electronic means (as in the download of software code).

Economic Order Quantity - EOQ

The most economical one-time purchase quantity of a product that should be purchased based on all associated costs for ordering and maintaining the product. Calculating this quantity is considered by many to be a rudimentary form of replenishment planning.

Economies of scale

Cost savings in production, purchasing or support functions realized by combining organizations and achieving higher volumes.

EDI - Electronic Data Interchange

The electronic transfer of order and transfer information between trading partners on the same system, that uses a predefined, standard message format for order receipt, order release, advanced shipping notifications, invoices and other transactions.

EDIFACT - Electronic Data Interchange For Administration Commerce and Transportation

An international standard, ISO 9735, giving the application-level syntax rules for messages between companies concerning orders and services. It superseded EDIF (electronic data interchange format), the interim standard format for messages about company orders and purchases. It allows information to be successfully transferred between trading partners.

EDP - Electronic Data Processing

The processing of data by an electronic device such as a computer.

Effectiveness

The level to which an activity or product is able to satisfy perceived requirements, which compares benefits derived to costs incurred.

Efficiency

A performance measurement that tracks actual vs. expected resource usage for a given volume or output.

Emergency Stock

The quantity of a commodity that must be maintained on hand at all times to provide for initial response to an unplanned catastrophic event.

E-procurement

Use of Internet technologies to manage purchasing and procurement. This approach was initially developed by a single company (“proprietary solution”) but can evolve towards a shared model as represented by Marketplaces.

ERP - Enterprise resource planning

A management information system that integrates all the business processes relevant to an enterprise (sales, purchasing, inventory management, accounting, etc.). Its purpose is to facilitate the flow of information between all business functions inside the boundaries of the organization and manage the connections to outside stakeholders.

Expiration date

The calendar date a lot or batch is no longer considered usable due to safety or processing considerations.

Extranet

It refers to an intranet that is partially accessible to authorized outsiders. Whereas an intranet resides behind a firewall and is accessible only to people who are members of the same company or organization, an extranet provides various levels of accessibility to outsiders. You can access an extranet only if you have a valid username and password, and your identity determines which parts of the extranet you can view.

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Glossary - F

FEFO - First Expired, First Out

In inventory control, this refers to the practice of using stock from inventory on the basis of what was has the shortest expiration date is consumed first, i.e. first-in-first-out.

FIFO - First In, First Out

In inventory control and financial accounting, this refers to the practice of using stock from inventory on the basis of what was received first and is consumed first, i.e. first-in-first-out.

Firewall

A system designed to prevent unauthorized access to or from a private network. Firewalls can be implemented in both hardware and software, or a combination of both. Firewalls are frequently used to prevent unauthorized Internet users from accessing private networks connected to the Internet, especially intranets. All messages entering or leaving the intranet pass through the firewall, which examines each message and blocks those that do not meet the specified security criteria.

Fixed cost

Costs that do not change in the short term as a function of changes in production volumes, distribution volumes, labor or machine hours.

Fixed-Location Storage

A method of storage in which a relatively permanent location is assigned for the storage of each item in a storeroom or warehouse. Although more space is needed to store parts than in a random-location storage system, fixed locations become familiar, and therefore a locator file may not be needed (see also Random-Location Storage).

Fixed lot size

A lot size that always uses the same quantity (or a multiple) for a reorder; the timing of the order varies while the size of the order is constant.

Fixed Order Quantity

A lot-sizing technique in MRP or inventory management that will always cause planned or actual orders to be generated for a predetermined fixed quantity, or multiples thereof if net requirements for the period exceed the fixed order quantity.

Fixed Reorder Cycle Inventory Model

A form of independent demand management model in which an order is placed every “n” time units. The order quantity is variable and essentially replaces the items consumed during the current time period. This reorder system are sometimes called fixed interval order systems, order level systems, or periodic review systems.

Floating Slot

Random storage locations. A storage location which can, when emptied, be restocked with a variety of different SKU's.

FMCG - Fast Moving Consumer Goods

Common high volume products that are sold quickly and at relatively low cost, such as soft drinks, hygiene products or grocery items.

Fourth Part Logistics Provider - 4PL

In practice, this is a 3PL comprised primarily of computer applications and knowledge workers that manages other 3PLs and logistics service providers that supply logistics services to customers. A 4PL is often viewed as the same as a non-asset-based 3PL or lead logistics provider.

FTP - File Transfer Protocol

It is the protocol for exchanging files over the Internet. FTP works in the same way as HTTP for transferring Web pages from a server to a user's browser and SMTP for transferring electronic mail across the Internet in that, like these technologies, FTP uses the Internet's TCP/IP protocols to enable data transfer.
FTP is most commonly used to download a file from a server using the Internet or to upload a file to a server (e.g., uploading a Web page file to a server).

Fulfillment

The act of fulfilling a customer order. Fulfillment includes order management, picking, packaging, and shipping.

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Glossary - G

GIS - Geographic Information System

Tools used to gather, transform, manipulate, analyze, and produce information related to the surface of the Earth. This data may exist as maps, 3D virtual models, tables, and/or lists. GISs can be as complex as whole systems that use dedicated databases and workstations hooked up to a network, or as simple as "off-the-shelf" desktop software.
GISs play an important role in many organizations. For instance, police and fire departments may use GISs to locate landmarks and hazards, plot destinations, and design emergency routes. GISs may also be used by governments, research institutes or any other body that can't possibly handle the task of manually processing large amounts of geographical data.

GPS - Global Positioning System

A worldwide satellite navigational system formed by 24 satellites orbiting the earth and their corresponding receivers on the earth. The GPS satellites continuously transmit digital radio signals that contain data on the satellites location and the exact time to the earth-bound receivers.
Based on these information the GPS receivers can calculate the longitude and latitude. GPS has applications beyond navigation and location determination. GPS can be used for cartography, forestry, mineral exploration, wildlife habitation management, monitoring the movement of people and things and bringing precise timing to the world.

Glossary - H

Handling Costs

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

Handling Unit

Goods or an aggregation of goods bundled together for distribution and logistics purposes. May include an individual item in a carton, combined items on pallets and skids, or items transferred in independently identified containers, such as ocean containers, rail cars or trucking trailers.

HTML - Hyper Text Markup Language

It is the authoring language used to create documents on the World Wide Web. HTML defines the structure and layout of a Web document by using a variety of tags and attributes. There are hundreds of other tags used to format and layout the information in a Web page. Tags are also used to specify hypertext links. These allow Web developers to direct users to other Web pages with only a click of the mouse on either an image or word(s).

HTTP - Hyper Text Transfer Protocol

It is the underlying protocol used by the World Wide Web. HTTP defines how messages are formatted and transmitted, and what actions Web servers and browsers should take in response to various commands. For example, when you enter a URL in your browser, this actually sends an HTTP command to the Web server directing it to fetch and transmit the requested Web page.

HTTPS - Hypertext Transfer Protocol over Secure Socket Layer

A protocol for transmitting private documents via the Internet. It uses a cryptographic system that uses two keys to encrypt data − a public key known to everyone and a private or secret key known only to the recipient of the message. Most web browser support SSL, and many Web sites use the protocol to obtain confidential user information, such as credit card numbers. By convention, URLs that require an SSL connection start with https: instead of http:.

Hub

The central transshipment point in a transport structure, serving a number of consignees and/or consignors by means of spokes. The stretches between hubs mutually are referred to as trunks.

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Glossary - I

Inbound logistics

The systems and tracking methods used for incoming materials in the process of being shipped from customers or vendors to a manufacturing facility or distribution center or warehouse.

Inner pack

A smaller container within a container used to separate smaller quantities of an item. Inner packs are usually smaller chipboard boxes or poly bags used within a case to break down the larger case quantity into smaller, easier to handle and count quantities. Also known as unit packs.

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.

Internet

A global network connecting millions of computers. Unlike online services, which are centrally controlled, the Internet is decentralized by design. Each Internet computer, called a host, is independent. Its operators can choose which Internet services to use and which local services to make available to the global Internet community. Remarkably, this anarchy by design works exceedingly well. There are a variety of ways to access the Internet. Most online services offer access to some Internet services. It is also possible to gain access through a commercial Internet Service Provider (ISP).

Intranet

A network based on TCP/IP protocols (an internet) belonging to an organization, usually a corporation, accessible only by the organization's members, employees, or others with authorization. An intranet's Web sites look and act just like any other Web sites, but the firewall surrounding an intranet fends off unauthorized access.
Like the Internet itself, intranets are used to share information. Secure intranets are now the fastest-growing segment of the Internet because they are much less expensive to build and manage than private networks based on proprietary protocols.

Inventory

Raw, intermediate or finished items that are physically stocked by an organization, or for which they are financially liable. Classification methods specify the usage, valuation method, degree of control, timing (to order or to stock) and other factors associated with investing company assets in inventoried items. The sole purpose of carrying inventory is to fill an expected future internal or external demand; the ability to accurately predict that demand determines the level of investment required.

Inventory accuracy

When the on-hand quantity is equivalent to the perpetual balance (plus or minus the designated count tolerances). Often 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. Typical minimum and best practice averages would be 95% and 99%.

Inventory adjustment

Any transaction that increases or decreases on-hand balances.

Inventory control

Tactical and operational activities undertaken within the management, ordering and control of inventory in order to increase inventory efficiency. Tactical and operational activities dealing with material control (stock and other material flow resources, transportation etc).

Inventory turns

The cost of goods sold divided by the average level of inventory on hand. This ratio measures how many times a company's inventory has been sold during a period of time.
Operationally, inventory turns are measured as total throughput divided by average level of inventory for a given period; how many times a year the average inventory for a firm changes over, or is sold.

Inventory value

Financial value to on-hand inventory, based on standard cost, First In First Out (FIFO), Last In First Out (LIFO), average list price or other method. The method used is determined by a requirement to meet legal or other standards specified by a third party, or by an operational measure found to be useful in analyzing inventory positions.

Item

See: SKU

Item Profile

All data describing an item’s physical and transactional characteristics. An item activity profile provides support the choice of storage and slotting options.

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Glossary - J

Just in time (JIT)

The concept of reducing inventories by working closely with suppliers to coordinate delivery of materials just before their use in the manufacturing process. JIT is a production or SCM approach that strives to eliminate sources of waste by synchronizing production demand with material supply so that parts arrive at the right place, at the right time.

Glossary - K

Kaizen

A Japanese term for continuous improvement, with the intention to improve standardized activities and processes to eliminate waste.

Kanban

Kanban means “card” or “ticket” in Japanese. It is a signaling system used to trigger action wherein consumption from one level of production directly drives action (for example, replenishment) one level back. It is actually a scheduling system that tells you what to produce, when to produce it, and how much to produce.

Kitting

A "kit" represents a preset group of items, of varying quantities, that is represented as a unique item in your supply chain. Kitting can involve light assembly, or the picking and packing of order components and collateral materials into a "kit," or complete set of items ready to ship.

KPI - Key Performance Indicator

Key Performance Indicators (KPI) are financial and non-financial metrics (measurements) used to quantify objectives to reflect the strategic performance of a process or entity. A KPI is used to assess the present state of business and to prescribe the course of action. They help an organization measure progress towards their organizational goals.

Glossary - L

Labor Management

A capability, typically associated with warehouse management, used to track worker activities, compare them to established engineered standards and to eventually use this information to plan activities based on the characteristics of tasks, projected tack demand and the expected labor component of projected work.

Laser scanner

A fixed or hand-held device that uses a moving laser to read bar codes.

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.

Legacy system

An old and out-dated computer system or application program that continues to be used because it still functions for the users' needs, even though newer technology or more efficient methods of performing a task are now available.

License Plate

A license plate is a unique identifier that is affixed to a handling unit (usually a pallet or a case) of a product, identifying the lot and other data related to the content of the container and following it as it moves through the warehouse. All the product information can be immediately discerned by simply scanning the bar code on the license plate label.

LIFO - Last In, First Out

In inventory control and financial accounting, this refers to the practice of using stock from inventory on the basis of what was received last and is consumed first, i.e. last-in-first-out.

Lineside warehouse

A supplier warehouse positioned as close as possible to the production location to facilitate Just In Time manufacture.

LLP - Lead Logistics Partner

A lead logistics provider co-ordinates and integrates its own logistics services with those of others with complementary or supporting capabilities. See also 4PL.

Load Consolidation

The process of combining smaller LTL or parcel shipments into larger shipments to gain transportation efficiencies.

Logistics

The process of planning, implementing, and controlling the efficient, cost effective flow and storage of raw materials, in-process inventory, finished goods and related information from point of origin to point of consumption for the purpose of meeting customer requirements.

Lot

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

Lot ID (or Lot number)

The identifier assigned for a specific production lot or batch and used in subsequent material transactions and tracing activities.

LSP - Logistics Service Provider

An organisation that offers 3PL, 4PL or lead logistics provider services.

Less-than-truckload - LTL

A term that indicates the transportation of relatively small freight, shipments that are less than a trailer load in size. Freight are collected by carriers from different shippers and then consolidated for additional line hauls.

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Glossary - M

Main aisle

A passageway wide enough to permit the easy flow of equipment, supplies, and personnel; it generally runs the length of the building.

Maintenance costs

The costs incurred to support and ensure continued availability of an asset, such as scheduled and unscheduled repairs and support staff OR, in software agreements the annual fees paid to the vendor that allows ongoing use of the system.

Make to order (MTO)

A manufacturing method in which commonly-used raw materials and components may be stocked based on previous demand history, but further processing into higher-level items is not done until receipt of a customer order.

Make to stock (MTS)

A manufacturing method in which finished goods are produced and stocked prior to receipt of a customer order. It uses a forecast based on past demand history to initiate production of end items when inventory has fallen below desired levels, instead of waiting until a final quantity and configuration is described on a customer order.

Manifest

Document that lists in detail all the bills of lading issued by a carrier or its agent or master for a specific voyage. A detailed summary of the total cargo of a vessel. Used principally for Customs purposes.

Manufacturing resource planning (MRPII)

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.

Master production schedule (MPS)

The schedule of manufactured items usually created to fill 'outside' demand from forecasts, customer orders and interplant orders that specifies the exact item numbers, dates and quantities for production but is not in itself a production order to be released to the floor. It considers the high-level production plan and rough cut capacity availability, and aligns with management targets for linearity and permissible level of changes.

Material handling

Material Handling is the movement, storage, control and protection of materials, goods and products throughout the process of manufacturing, distribution, consumption and disposal. The focus is on the methods, mechanical equipment, systems and related controls used to achieve these functions.

Material requirement planning (MRP)

The process that uses the Master production schedule as demand, explodes the bill of material for specified MPS items, nets those requirements against on-hand inventory and existing open orders, and recommends placing new production and purchase orders and changes to existing orders based on parameters that consider safety stock levels, lot sizes and lead times.

Minimum inventory level

The lowest desired amount of inventory, used by planning systems to generate replenishments that will keep projected on-hand at that level or higher.

Minimum order quantity

The order quantity used as the minimum for a planned order, even if the lot size rule calculated a smaller amount.

Min-max ordering

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.

Modular bill of material

A bill of material used for products configured from many possible combinations of modules, or options. It normally contains a group of common components always used that do not have to be chosen, feature categories (such as monitor size) that represent a part of the product to be configured, and options within the feature (such as 15", 17", 19") that are the actual subassemblies or components to be used.

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Glossary - N

New economy

The economy that has developed as a result of Internet business activity. It is a term used in the late 1990s and 2000s to describe the e-commerce sector and the digital economy, in which firms mostly trade online rather than in the bricks and mortar of physical premises.

Glossary - O

Obsolescence or Obsolete

Goods that are no longer usable for their intended purpose through expiration, contamination, or change of need.

On-Hand Balance

The quantity shown in the inventory records as being physically in stock.

On-time delivery

The receipt of scheduled shipments on the expected date, or defined as being within an allowable early/late tolerance. Some measurements include adherence to a specified delivery time of day due to unloading or space constraints.

Optimization

Achieving the best possible solution to a problem in terms of a specified objective function.

Order

A single entry and/or document that specifies items, services, prices, dates and quantities and has a specific identifier for referencing or tracing.

Order picking

Inventory order picking method where a warehouse is picked for the completion of a single order at a time. Each warehouse operator is assigned an inventory order and that operator fulfills that order, picking each order line item in the most-intelligent way possible without back-tracking.

Order point

A specified inventory level used to trigger a reorder when the total of current on-hand inventory and open scheduled receipts falls below that level. The order point is set to cover demand expected until the order is received, and often includes a buffer based on past variability in the demand or the lead time.

Order point method

Replenishment policy with variable date and set quantity, based on defining the stock level (Order Point) that triggers the order signal.

Outbound logistics

The processes and network used to pick, ship, track and store if necessary items ordered by customers, distribution centers and other supply chain partners.

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.

Outsourcing

The ongoing use of an external third party instead of an internal resource which may include production of a single operation, a product or an entire line, shipping and order fulfillment, product design, network infrastructure support or many other functions. Outsourced functions are normally outside an organization's core competencies and are done to reduce cost, reduce lead time, improve quality or achieve some other stated goal.

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Glossary - P

Packaging

The wrapping or container in which something is packed for storage or shipment; the type or style of the wrapping or container used to protect goods during shipping and handling; materials used to prepare something for shipping or storage; or the process of packing an item for shipment or storage.

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.

Pallet

A low, portable platform, usually double-faced and made of rough (undressed) wood, on which goods and materials are stacked for storage or transportation. Job specific pallets come in different designs, dimensions, and materials; such as a two-way entry pallet, four-way entry pallet, box pallet, post pallet, steel pallet, while the most common standard dimensions are Europallet (120 x 80 cm) and ISO pallet (100 x 120 cm).

Pallet Rack

A single or multi-level structural storage system that is utilized to support high stacking of single items or palletized loads.

Paperless

When referring to processing in the warehouse (paperless picking, paperless receiving) or on the shop floor, paperless generally suggests that the direction of tasks and execution of transactions are conducted electronically without the use of paper documents. This is usually accomplished through the use of fixed or portable computers, bar code scanners, RFID readers, light-signalling technology (pick-to-light), or voice technology.

Parcel

Any physical piece of cargo in relation to transport consisting of the contents and its packing for the purpose of ease of handling by manual or mechanical means. The final product of the packing operation consisting of the packing and its contents to facilitate manual or mechanical handling.

Parent part

Any finished goods, end item, or part that is mixed, fabricated, assembled, stirred, or blended from one or more other components.

Part number

The set of characters, normally alphanumeric, that identifies a specific manufactured or purchased item and is used in all database, order, inventory and other functions.

Physical inventory

The verification of on-hand inventory quantities by taking an actual count. Often refers to the annual or quarterly process of counting all items, rather than the physical verification of selected groups of parts on a continuing basis (a cycle count).

Pick and pack

Taking goods out of a stock and packing them according to customer conditions.

Pick list

A list of all components and materials required to fill a specific production, sales or interplant order. It often specifies the warehouse locations to pick from, and sometimes consolidates requirements from more than one order.

Pick to clean - Pick to clear

Method often used in warehouse management systems that directs picking to the locations with the smallest quantities on hand.

Picking

The operations involved in pulling products from storage areas to complete a customer order.

Picking list

A list used to collect items from stores needed to fulfil an order.

Portal

A Web portal or public portal refers to a Web site or service that offers a broad array of resources and services, such as e-mail, forums, search engines, and online shopping malls. The first Web portals were online services, such as AOL, that provided access to the Web, but by now most of the traditional search engines have transformed themselves into Web portals to attract and keep a larger audience.

Procurement

The activities which ensure the availability of the material and or services in the desired quantity, quality, place and time from the supplier.

Productivity

An overall measure based on a quantity of output generated by a given quantity of input. Increased output as a result of the same amount of input (such as labour hours) indicates more efficient use of a given set of resources due to process improvements or other achievements.

Proxy

A server that sits between a client application, such as a Web browser, and a real server. It intercepts all requests to the real server to see if it can fulfil the requests itself. If not, it forwards the request to the real server.
Proxy servers have two main purposes: improve performance or filter requests (for example, a company might use a proxy server to prevent its employees from accessing a specific set of Web sites).

Pull system

Flow management model in which quantities are produced or assembled in order to immediately satisfy demand (firm orders). The main objective of a pull system is to eliminate carrying costs at all points of the Logistics Chain and can be more or less direct according to the margin of safety set by the company.

Push system

Flow management model that establishes a production plan to respond to forecast demand for a company’s products. Based on this production plan, the Master Production Schedule and Material Requirements Plan are defined to require the least inventory possible (minimum stocks) and to avoid stock-outs.

Put away

The activities related to the receipt of material, determination of its storage or other destination, movement to that location and the stocking and physical arrangement as required.

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Glossary - Q

Quarantine

State of the goods which may not be manipulated before obtaining favourable results to one or several controls.

Glossary - R

Rack

A storage device for handling material in pallets. A rack usually provides storage for pallets arranged in vertical sections with one or more pallets to a tier. Some racks accommodate more than one-pallet-deep storage.

Random-Location Storage

A storage technique in which parts are placed in any space that is empty when they arrive at the storeroom. Although this random method requires the use of a locator file to identify part locations, it often requires less storage space than a fixed-location storage method (see also Fixed-Location Storage).

Raw material

Purchased items, such as bar stock or food ingredients, transformed by manufacturing operations into an intermediate or finished item. Often used in reference to bulk or commodity items but may include individual components (piece parts) such as nuts, bolts and screws.

Real-time

The processing and visibility of transactions and information as they occur, and not on a periodic or batch basis.

Reason code

A code that classifies scrap, inventory write-offs, order changes or other transactions into categories for analysis and corrective action.

Receiving

The functions and department that process incoming material against purchase orders, interplant orders and customer returns, verify proper item, quantity and physical condition, move to stocking locations and perform receipt update and documentation duties.

Receiving Area

Area in the warehouse where goods are received.

Record

In database management systems, a complete set of information. Records are composed of fields, each of which contains one item of information. A set of records constitutes a file. For example, a personnel file might contain records that have three fields: a name field, an address field, and a phone number field.

Reverse logistics

Reverse logistics covers activities related to returned product, returned pallets and containers, and returned materials for disposal or recycling.

RF - Radio Frequency

Refers to the portable data collection / printing devices that use radio frequency (RF) to transmit data to the local host system.

RFID - Radio frequency automatic identification

A location and identification system using radio frequency signals that employs a transceiver, antenna and tag associated with a product and location to transmit data. The systems do not require a direct line of sight or contact and can transmit at high speed, but are more costly than other data collection technologies such as bar coding. RFID systems are often used for inventory tracking in large warehouse and distribution center facilities.

Replenishment

Operation consisting in taking out quantities from reserved stock reserves to feed picking stocks OR approach to determining the order quantity and order date of stocks.

Replenishment level

Replenishment policy using fixed dates and variable quantities. In each period a quantity is ordered to reach the previously defined optimal stock level. Date-Managed Inventory, Replenishment method, Order Point method, and replenishment of variable quantities at variable dates.

ROI - Return on investment

The ratio of income produced by an asset divided by its investment cost.

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Glossary - S

SaaS – Software as a Service

SaaS is a software distribution model in which an application is managed by a provider and made available, via a network, as a service to meet the common needs of different customers: these operate on a single “environment”, (one-to-many distribution model), and pay fees commensurate with their use of the service.
SaaS allows organizations to access business functionality at a cost typically less than paying for licensed applications since SaaS pricing is based on a monthly fee. Also, because the software is hosted remotely, users don't need to invest in additional hardware. SaaS removes the need for organizations to handle the installation, set-up and often daily upkeep and maintenance.

Safety stock

An inventory quantity planned to be on-hand at all times to provide a hedge against future uncertainty. Planning systems generate planned orders based on the quantity and timing needed to maintain the specified safety stock.

Scalability

It refers to how well a hardware or software system can adapt to increased demands. For example, a scalable network system would be one that can start with just a few nodes but can easily expand to thousands of nodes. Scalability can be a very important feature because it means that you can invest in a system with confidence you won't outgrow it.

Seasonality

Large variations in product demand that reoccur during the same approximate timeframe on a yearly basis and are not due to a trend or promotion (as in the yearly demand for Halloween candy or snow shovels). Products that exhibit a high degree of seasonality normally require an inventory build based on forecast prior to the high demand period, or the flexibility to greatly vary production and supply.

Serial number

A set of characters that uniquely identifies a single unit and can be used for traceability and warranty purposes. It does not normally refer to the use of a single identifier for a batch or lot composed of multiple units.

Server

A computer or device on a network that manages network resources. For example, a file server is a computer and storage device dedicated to storing files. Any user on the network can store files on the server. A print server is a computer that manages one or more printers, and a network server is a computer that manages network traffic. A database server is a computer system that processes database queries.
Servers are often dedicated, meaning that they perform no other tasks besides their server tasks. On multiprocessing operating systems, however, a single computer can execute several programs at once. A server in this case could refer to the program that is managing resources rather than the entire computer.

Service level

The extent to which a supplying resource satisfies customer requirements, often expressed in terms of error rate, resource availability or accuracy in meeting requested dates.

Shelf life

The standard amount of days a given item can be stored after a receipt before it must be tested, or is declared unusable for shipments or production purposes.

Shelves

Board fixed horizontally and supported by a frame or uprights. May be of metal or wood. Shelves may be fixed or adjustable. Used for small stores.

Shipping

The function that performs tasks for the outgoing shipment of parts, components, and products. It includes packaging, marking, weighing, and loading for shipment.

Shipping Documents

Documents required for the carriage of goods. Synonym: Transport Documents.

Shipping Manifest

A document that lists the pieces in a shipment. A manifest usually covers an entire load regardless of whether the load is to be delivered to a single destination or many destinations. Manifests usually list the items, piece count, total weight, and the destination name and address for each destination in the load.

Shrinkage

The loss generated by comparing an actual quantity to the expected or book amount; commonly refers to a physical count that reduces the perpetual inventory.

SKU - Stock Keeping Unit

An identification of a specific item that allows it to be tracked for inventory purposes. Every SKU is assigned a unique identification number. Used interchangeably with the terms item and item number.

Slotting

Slotting addresses the definition of the best placement of each product item in a warehouse or distribution center for the purpose of optimizing material handling efficiency. It depends on a variety of factors such as picking, receiving and put-away volume and frequency, package dimensions and weight, picked and storage package size, material handling equipment used, layout of the facility, labor rates.

SMB - Small to Medium Business

Generally accepted term referring to businesses larger than the Small Office Home Office (SOHO) and the larger corporations. SMB is not a universally defined, some company classifies an SMB as having between 500-2000 employees. A better definition of SMB might leverage the European Union's Small to Medium Enterprise (SME) entity to more uniformly describe SMB. SME is defined as a legally independent company with no more than 500 employees.

Spare part

An extra or backup part or component of equivalent form and function.

SSCC - Serial Shipping Container Code

The Serial Shipping Container Code is used to identify individual logistic unit. A logistic unit can be any combination of units put together in a case or on a pallet or truck where the specific unit load needs to be managed through the supply chain. The SSCC enables this unit to be tracked individually which brings benefits for order and delivery tracking and automated goods-receiving. As the SSCC provides a unique number for the delivery it can be utilized as a look-up number to provide not only detailed information regarding the contents of the load but also as part of an Advanced Shipping Notice (ASN) or Despatch Advice process.

Stocktaking

A physical count of products actually held in stock as a basis for verification of the stock records and accounts.

Stock Out

The condition when required material is not available for a production, sales or interplant order.

Stockout Cost

The opportunity cost associated with not having sufficient supply to meet demand.

Supply chain

The linked set of resources and processes that begins with the sourcing of raw material and extends through the delivery of end items to the final customer. It includes vendors, manufacturing facilities, logistics providers, internal distribution centers, distributors, wholesalers and all other entities that lead up to final customer acceptance. The extended supply chain for a given company may also include secondary vendors to their immediate vendors, and the customers of their immediate customers.

Supply Chain Execution - SCE

A subset of SCM, focused on execution-oriented applications, including warehouse management systems (WMS), TMS, GTM systems and other execution applications, such as real-time decision support systems (for example, dynamic routing and dynamic sourcing systems) and supply chain visibility systems within the enterprise, as well as throughout the extended supply chain.

Supply Chain Management - SCM

A business strategy to improve shareholder and customer value by optimizing the flow of products, services and related information from source to customer. SCM encompasses the processes of creating and fulfilling the market's demand for goods and services. It is a set of business processes that encompasses a trading partner community engaged in a common goal of satisfying the end customer. Thus, a supply chain process can stretch from a supplier's supplier to a customer's customer. Functionally, SCM encompasses transactional execution systems (for example, enterprise resource planning, WMS, manufacturing execution systems, TMS and ITS), planning, optimization systems (for example, SCP) and supply chain analytics (for example, data warehousing).

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Glossary - T

Task interleaving

A warehouse management process of creating round-trip opportunities for warehouse users, where the warehouse system identifies and synchronizes put-away and pick movements to minimize user travel.

TCP/IP - Trasmission Control Protocol/Internet Protocol

Short for Transmission Control Protocol/Internet Protocol, the suite of communications protocols used to connect hosts on the Internet. TCP/IP uses several protocols, the two main ones being TCP and IP.
Whereas the IP protocol deals only with packets, specifying the format of packets, also called datagrams, and the addressing scheme, TCP enables two hosts to establish a connection and exchange streams of data. TCP guarantees delivery of data and also guarantees that packets will be delivered in the same order in which they were sent.

Third party logistics provider - 3PL

Organizations that provide outsourced logistics services, typically specializing in integrated warehousing and transportation services, although the portfolio of services offered continues to expand and can include additional services, such as freight forwarding and customs brokerage.

Throughput Time

Is the time which is needed to manufacture a detail or a product from the first to the last job operation in the overall time-frame. The throughput time for an order is the time period which is needed to produce the products included in the order, i.e. the time from receiving the order until delivery has been effected.

Time-to-market

The cycle time between product conception and fulfilment. Reduction in time-to-market is a significant competitive advantage in industries with short product life cycles.

Total cost of ownership - TCO

The life cycle cost view of an asset, which includes acquisition, setup, support, ongoing maintenance, service and all operating expenses. It focuses attention on the sum of all costs of owning an asset, as opposed to the initial or vendor cost, and is useful in outsourcing decisions.

Total quality control - TQC

The comprehensive set of principles that focuses company-wide attention on the aspects of design, production and logistics that lead to quality conformance and customer acceptance. It maintains a cross-functional view of the processes involved, and stresses that quality is not the responsibility of a separate quality control department.

TMS - Transportation Management System

System used to plan freight movements, do freight rating and shopping across all modes, select the appropriate route and carrier, and manage freight bills and payments.

Track and Trace

A transportation management process where shipments are tracked and monitored across the entire life cycle of the shipment such that the status of a shipment can be determined and problems more readily identified.

Transport Documents

See: Shipping Document

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Glossary - U

Unit load

Assembly of individual items or items in shipping containers that are bonded, palletized or strapped together to form a single unit for more efficient handling, moving, storing and stacking by a pallet jack or forklift truck.

URL - Uniform Resource Locator

It is the global address of documents and other resources on the World Wide Web. The first part of the address is called a protocol identifier and it indicates what protocol to use, and the second part is called a resource name and it specifies the IP address or the domain name where the resource is located. The protocol identifier and the resource name are separated by a colon and two forward slashes.

Glossary - V

Value chain

The linked set of activities within a supply chain that actively add value to the end product, as opposed to support or reporting activities.

Variable cost

A cost for material, labour or overhead that changes in a traceable and measurable way due to changes in the volume of production units or operating hours in a given period.

VMI - Vendor Managed Inventory

An inventory planning and fulfilment technique in which a supplier is responsible for monitoring and restocking customer inventory at the appropriate time to maintain predefined levels. The vendor is given access to current customer inventory, forecast and sales order information and initiates replenishment as required.

VPN - Virtual Private Network

It is a network that is constructed by using public wires to connect nodes. For example, there are a number of systems that enable you to create networks using the Internet as the medium for transporting data. These systems use encryption and other security mechanisms to ensure that only authorized users can access the network and that the data cannot be intercepted.

Glossary - W

Wall-to-wall inventory

A physical inventory of all items within a given warehouse or facility.

Warehousing

The storing (holding) of goods.

Wave picking

A method of picking goods in a series of waves, generally used to minimize the waiting time of the delivered material, or reduce the warehouse traffic. Shipping orders may be picked in waves combined by a common product, common carrier or destination, and manufacturing orders in waves related to work centers.

White Paper

This term has historically been used to describe a report that states the social or political position of an organization. In recent years, however, the IT industry has adopted the term to describe articles that explain a certain technology or product. For example, a company may release a white paper to the public in order to educate consumers about one of their products. The terminology used may be somewhat technical, but the goal of a white paper is usually to describe the technology or product in terms most people can understand.

Wide Area Network (WAN)

A public or private data communications system for linking computers distributed over a large geographic area.

Wi-Fi

Short for "wireless fidelity", is a term for certain types of wireless local area network (WLAN) that use specifications in the 802.11 family. The term Wi-Fi was created by an organization called the Wi-Fi Alliance, which oversees tests that certify product interoperability.

WMS - Warehouse management system

A software application that manages the operations of a warehouse or distribution center. Application functionality includes receiving, put-away, inventory management, cycle counting, task interleaving, wave planning, order allocation, order picking, replenishment, packing, shipping, labour management and automated material-handling equipment interfaces. The use of radio frequency technology in conjunction with bar codes provides the foundation of a WMS, delivering accurate information in real time.

World Wide Web (WWW)

The World Wide Web, or just "the Web," is a subset of the Internet. It is a system of Internet servers that support specially formatted documents. The documents are formatted in a mark-up language called HTML (HyperText Markup Language) that supports links to other documents, as well as graphics, audio, and video files. This means you can jump from one document to another simply by clicking on hot spots.
All Web pages are written in the hyper-text mark-up language (HTML), which works in conjunction with HTTP, and can be accessed using a Web browser.

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Glossary - X

XML - Extensible mark-up Language

The Extensible Markup Language (XML) is a W3C (World Wide Web Consortium) recommendation for creating special-purpose mark-up languages. It is a simplified subset of SGML, designed especially for Web documents. It allows designers to create their own customized tags, enabling the definition, transmission, validation, and interpretation of data between applications and between organizations.

Glossary - Y

Yard management system

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.

Glossary - Z

Zone

Location designation that represents a storage area.

Zone Picking

A method of subdividing a picking list by areas (zones) of the warehouse. Pickers select materials within their own area and the separate pieces of an order are combined before delivery.