Warehouse and Distribution Terms

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.

Delivery Instructions

A document issued to a carrier to pick up goods at a location and deliver them to another location.

Bin Center

A drop off facility that is smaller than a public warehouse.

Call Center

A facility housing personnel who respond to customer phone queries. These personnel may provide customer service and technical support. Call center services may be in house or outsourced.

Business Unit

A division or segment of an organization generally treated as a separate profit-and-loss center.

Container

(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.

Buffer

(1) A quantity of materials awaiting further processing. It can refer to raw materials, semi-finished stores, or hold points, or a work backlog that is purposely maintained behind a work center. (2) In the theory of constraints, buggers can be time or material, and support throughput and/or due date performance. Buffers can be maintained at the constraint, convergent points (with a constraint part), divergent points, and shipping points.

Cage

(1) A secure enclosed area for storing highly valuable items (2) A pallet-sized platform with sides that can be secured to the tines of a forklift and in which a person may ride to inventory items stored well above the warehouse floor.

Consignment

(1) A shipment that is handled by a common carrier. (2) The process of a supplier placing goods at a customer location without receiving payment until after the goods are used or sold.

Business Plan

(1) A statement of long-range strategy and revenue, cost, and profit objectives usually accompanied by budgets, a projected balance sheet, and a cash flow (source and application of funds) statement. A business plan is usually stated in terms of dollars and grouped by product family. The business plan is then translated into synchronized tactical functional plans through the production planning process (or the sales and operations planning processes). Although frequently stated in different terms (dollars versus units), these tactical plans should agree with each other and with the business plan. (2) A document consisting of the business details (organization, strategy, and financing tactics) prepared by an entrepreneur to plan for a new business.

Cartage

(1) Charge for pick-up and delivery of goods or (2) movement of goods locally (short distances).

Consignment Inventory

(1) Goods or products 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 customer.

Backorder

(1) The act of retaining a quantity to ship against an order when other order lines have already been shipped. Backorders are usually caused by stock shortages. (2) The quantity remaining to be shipped if an initial shipment(s) has been processed. Note: In some cases, backorders are not allowed. This results in a lost sale when sufficient quantities are not available to completely ship an order or order line.

Build to Inventory

A "push" system of production and inventory management. Product is manufactured or acquired in response to sales forecasts.

Consolidator's Bill of Lading

A bill of lading issued by a consolidator as a receipt for merchandise that will be grouped with cargo obtained from other shippers.

Bill of Lading, Through

A bill of lading to cover goods from point of origin to final destination when interchange or transfer from one carrier to another is necessary to complete the journey.

Claim

A charge made against a carrier for loss, damage, delay, or overcharge.

ABC Analysis

A classification of items in an inventory according to importance defined in terms of criteria such as sales volume and purchase volume.

Carrier Liability

A common carrier is liable for all shipment loss, damage, and delay with the exception of that caused by act of God, act of a public enemy, act of a public authority, act of the shipper, and the goods' inherent nature.

Co-Packer

A contract co-packer produces goods and/or services for other companies, usually under the other company's label or name. Co-packers are more frequently seen in s consumer packaged goods and foods.

Bar Code Scanner

A device to read bar codes and communicate data to computer systems.

Cross Docking

A distribution system in which merchandise received at the warehouse or distribution center is not put away, but instead is readied for shipment to retail stores. Cross docking requires close synchronization of all inbound and outbound shipment movements. By eliminating the put-away, storage, and selection operations, it can significantly reduce distribution costs.

Carrier

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

Co-Managed Investory (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.

Cartel

A group of companies that agree to cooperate rather than compete, in producing a product or service. Thus limiting or regulating competition.

Bundle

A group of products that are shipped together as an I assembled unit.

Date Code

A label on products with the date of production. In food industries, it's often an integral part of the lot number.

Bill of Activities

A listing of activities required by a product, service, process output, or other cost object. Bill of activity attributes could include volume and/or cost of each activity in the listing.

Bill of Resources

A listing of resources required by an activity. Resource attributes could include cost and volumes.

Blanket Purchase Order

A long-term commitment to a supplier for material against which short-term releases will be generated to satisfy requirements. Oftentimes, blanket orders cover only one item with predetermined delivery dates.

Bar Coding

A method of encoding data for fast and accurate readability. Bar codes are a series of alternating bars and spaces printed or stamped on products, labels, or other media, representing encoded information which can be read by electronic readers called bar.

Batch Picking

A method of picking orders in which order requirements are aggregated by product across orders to reduce movement to and from product locations. The aggregated quantities of each product are then transported to a common area where the individual orders are constructed. See Zone Picking.

Build to Order

A method of reducing inventory by not manufacturing product until there is an actual order from the customer.

Wave Picking

A method of selecting and sequencing picking lists to minimize the waiting time of the delivered material. 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.

Zone Picking

A method of subdividing a picking list by arrears within a storeroom for more efficient and rapid order picking. A zone-picked order must be grouped to a single location and the separate pieces combined before delivery, or must be delivered to a different locations such a s a work center.

Bill of Lading (BOL)

A transportation document that is the contract of carriage containing the terms and conditions between the shipper and carrier.

Buffer Stock

A quantity of goods or articles kept in storage to safeguard against unforeseen shortages or demands.

Blanket Rate

A rate that does not increase according to the distance a commodity is shipped.

Data Warehouse

A repository of data that has been specially prepared to support decision-making applications.

Carousel

A rotating system of layers of bins and/or drawers that can store many small items using relatively little floor space.

Blanket Wrap

A service pioneered by the moving companies to eliminate packaging material by wrapping product in padded "blankets" to protect it during transit, usually on "air ride" vans.

Bulk Area

A storage area for large items which at a minimum are most efficiently handled by the pallet load.

Carton Flow Rack

A storage rack consisting of multiple lines of gravity flow conveyors.

Bill of Material (BOM)

A structured list of all the materials or parts and quantities needed to produce a particular finished product, assembly, subassembly, or manufactured part, whether purchased or not.

Bar Code

A symbol consisting of a series of printed bars representing values. A system of optical character reading, scanning, tracking of units by reading a series of printed bars for translation into a numeric or alphanumeric identification code. A popular example is the UPC code used on retail packaging.

Business Performance Measurement (BPM)

A technique that uses a system of goals and metrics to monitor performance. Analysis of these measurements can help businesses periodically set business goals, then provide feedback to managers on progress towards those goals. A specific measure can be compared to itself over time, compared with a present target, or evaluated alone with other measures.

Advanced Shipment Notice (ASN)

An EDI term referring to a transaction set (ANSI 856) where the supplier sends out a notification to interested parties that a shipment is now outbound in the supply chain. This notification is list transmitted to a customer or consign or designating items shipped. The ASN may also include the expected time of arrival.

Contract

An agreement between two or mote competent persons or companies to perform or not to perform specific acts or services or to deliver merchandise. A contract maybe oral or written. A purchase order, when accepted by a supplier, becomes a contract. Acceptance may be in writing or by performance, unless the purchase order requires acceptance in writing.

Buyer

An enterprise that arranges for the acquisition of goods or services and agrees to payment terms for such goods or services.

Consolidator

An enterprise that provides services to group shipments, orders, and/or goods to facilitate movement.

Bullwhip Effect

An extreme change in the supply position upstream in a supply chain generated by a. Small change in demand downstream in the supply chain. Inventory can quickly move from being back ordered to being in excess. This is caused by the serial nature of communicating orders up the chain with the inherent transportation delays of moving product down the chain. The bullwhip effect can be eliminated by synchronizing the supply chain.

ABC Inventory Control

An inventory control approach based on the ABC volume or sales revenue classification of products (A items are highest volume or revenue, C- or perhaps D- are lowest volume SKUs.)

Wall-to-Wall Inventory

An inventory management technique in which material enters a plant an dis processed through the plant into finished goods without ever having entered a formal stock area.

Bundling

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

Can-Order Point

An ordering system used when multiple items are ordered from one vendor. The can-order pint is a point higher than the original order point. When any one of the items triggers an order by reaching the must-order point, all items below their can-order point are also ordered. The can-order point is set by considering the additional holding cost that would be incurred if the item were ordered early.

Business-to-Business (B2B)

As opposed to business-to-consumer (B2C). Many companies are now focusing on this strategy, and their web sites are aimed at businesses (think wholesale) and only other businesses can access or buy products on the site. Internet analysts predict this will be the biggest sector on the web.

Capacity Planning

Assuring that needed resources (e.g., manufacturing capacity, distribution center capacity, transportation vehicles, etc.) will be available at the right time and place to meet logistics and supply chain needs.

ABC Classification

Classification of a group of items in decreasing order of annual dollar volume or other criteria. This array is then split into three classes called A, B, and C. The A group represents 10 to 20% by number of items, and 50 to 70% by projected dollar volume. The next grouping, B, represents about 20% of the items and 20% of the dollar volume. The C-class contains 60 to 70% of the items, and represents about 10 to 30% of the dollar volume.

Consolidation

Combining two or more shipments in order to realize lower transportation rates. Inbound consolidation from vendors is called make-bulk consolidation; outbound consolidation to customers is called break-bulk consolidation.

Bill of Material Accuracy

Conformity of a list of specified items to administrative specifications, with all quantities correct.

Crossdock

Crossdock operations in a warehouse involve moving goods between different trucks to consolidate loads without intermediate storage.

Cubage

Cubic volume of space being used or available for shipping or storage.

Advanced Shipping Notice (ASN)

Detailed shipment information transmitted to a customer or consigned in advance of delivery, designating the contents (individual products and quantities of each) and nature of the shipment. May also include carrier and shipment specifics, including time of shipment and expected time of arrival. Also see: Assumed Receipt.

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 operating data on an organization's resources, activities, drivers, objects and measures. ABC Models are created and maintained within this system.

Buffer Management

In the theory of constraints, a process in which all expediting in a shop is driven by what is scheduled to be in the buggers (constraint, shipping, and assembly buffers). By expediting this material into the buffers, the system helps avoid idleness at the constraint and missed customer due dates. In addition, the causes of items missing from the buffer are identified, and the frequency of occurrence is used to prioritize improvement activities.

Cubic Space

In warehousing, a measurement of space available, or required, in transportation and warehousing.

Cube Utilization

In warehousing, a measurement of the utilization of the total storage capacity of a vehicle or warehouse.

Carrier Assets

Items that a carrier owns (technically or outright) to facilitate the services they provide.

Advanced Planning and Scheduling (APS)

Techniques that deal with analysis and planning of logistics and manufacturing over the short, immediate, and long-term time periods. APS describes any computer program that uses advanced mathematical algorithms or logic to perform optimization or simulation on finite capacity scheduling, sourcing, capital planning, resource planning, forecasting, demand management, and others. These techniques simultaneously consider a range of constraints and business rules to provide real-time planning and scheduling, decision support, available-to-promise, and capable-to-promise capabilities. APS often generates and evaluates multiple scenarios. Management then selects one scenario to use as the official plan. The five main components of an APS system are demand plannings, production planning, production scheduling, distribution planning, and transportation planning.

Advance Material Request

Ordering materials before the release of the formal product design. This early release is required because of long lead times.

Capacity Management

The concept that capacity should be understood, defined, and measured for each level in the organization to include market segments, products, processes, activities, and resources. In each of these applications, capacity is defined in a hierarchy of idle, non-product, and productive views.

Zone Price

The constant price of a product at all geographic locations within a zone.

Changeover

Process of making necessary adjustments to change or switchover the type of products produced on a manufacturing line. Changeovers usually lead to downtime and for the most part, companies try to minimize changeover time to help reduce costs.

Back Order

Product ordered but out of stock and promised to ship when the product becomes available.

Caged

Referring to the practice of placing high-value or sensitive products in a fenced off area within a warehouse.

Buyer Behavior

The way individuals or organizations behave in a purchasing situation. The customer-oriented concept finds out the wants, needs, and desires of customers and adapts resources of the organization to deliver need-satisfying goods and services.

Warehouse

Storage place for products. Principal warehouse activities include receipt of product, storage, shipment, and order picking.

Booking

The act of requesting space and equipment aboard a vessel for cargo which is to be transported

Blanket Release

The authorization to ship and/or produce against a blanket agreement or contract.

Cubic Capacity

The carrying capacity of a piece of equipment according to measurement in cubic feet.

Calendar Days

The conversion of working days to calendar days is based on the number of regularly scheduled workdays per week in your manufacturing calendar. Calculation: To convert from working days to calendar days: if work week = 4 days, multiply by 1.75, = 5 days, multiply by 1.4, - 6 days, multiply by 1.17.

Co-Destiny

The evolution of a supply chain from intra-organizational management to inter-organizational management.

Business Process Reengingeering (BPR)

The fundamental rethinking and radical redesign of business processes to achieve dramatic organizational improvements.

Business-to-Consumer (B2C)

The hundreds of e-commerce web sites that sell goods directly to consumers are considered B2C. This distinction is important when comparing web sites that are B2B as the entire business model, strategy, execution, and fulfillment is different.

Consolidation Point

The location where consolidation takes place.

Bill of Lading Number

The number assigned by the carrier to identify the bill of lading.

Booking Number

The number assigned to a certain space reservation by the carrier or the carrier's agent.

Consignee

The party to whom goods are shipped and delivered. The receiver of a freight shipment.

Consignor

The party who originates a shipment of goods (shipper). The sender of a freight shipment, usually the seller.

Capacity

The physical facilities, personnel, and processes available to meet the product or service needs of customers. Capacity generally refers to the maximum output or producing ability of a machine, a person, a process, a factory, a product, or a service.

Business Process Outsourcing (BPO)

The practice of outsourcing non-core internal functions to third parties. Functions typically outsourced include logistics, accounts payable, accounts receive able, payroll, and Human Resources. Other areas can include IT development or complete management of the IT functions of the enterprise.

Burn Rate

The rate of consumption of cash in a business. Used to determine cash requirements on an on-going basis. A burn rate of $50,000 would mean the company spends $50,000 a month above any incoming cash flow to sustain its business. Entrepreneurial companies will calculate their burn rate in order to understand how much time they have before they need to raise more money, or show a positive cash flow.

Capital

The resources, or money, available for investing in assets that produce output.

Cube Out

The situation when a piece of equipment has reached its volumetric capacity before reaching the permitted weight limit.

Warehousing

The storage (holding) of goods.

Warehouse Management System (WMS)

The systems used in effectively managing warehouse business processes and direct warehouse activities, including receiving, putaway, picking, shipping, and inventory cycle counters. 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.

Delivery Appointment

The time agreed upon between two enterprises for goods or transportation equipment to arrive at a selected location.

Carrier Certificate and Release Order

Used to advise customs of the shipment's details. By means of this document, the carrier certifies that the firm or individual named in the certificate is the owner or consignee of the cargo.

Bonded Warehouse

Warehouse approved by the Treasury Department and under bond/guarantee for observance of revenue laws. Used for storing goods until duty is paid or goods are released in some other proper manner.