Logis­tics, Freight For­ward­ing & Sup­ply Chain Glossary


Acces­so­r­ial Charges: A carrier’s charge for acces­so­r­ial ser­vices such as load­ing, unload­ing, pickup, and delivery.

Also see: Upcharges

Acces­so­r­ial Fee: See Acces­so­r­ial Charges

Accred­i­ta­tion: The process in which cer­ti­fi­ca­tion of com­pe­tency, author­ity, or cred­i­bil­ity is pre­sented. An example

of accred­i­ta­tion is the accred­i­ta­tion of test­ing lab­o­ra­to­ries and cer­ti­fi­ca­tion spe­cial­ists that are per­mit­ted to issue

offi­cial cer­tifi­cates of com­pli­ance with estab­lished standards.

ACH: See Auto­mated Clear­ing­house

Acknowl­edg­ment: Typ­i­cally this is a response, either elec­tronic or as a phys­i­cal doc­u­ment, which con­firms the

receipt of an order from the sup­plier to the buyer.

Active Inven­tory: Mate­ri­als held in a facil­ity which are intended to be con­sumed in manufacturing/​assembly, or

sold in a spec­i­fied period.

Active Stock: Goods in active pick loca­tions and ready for order filling.

Actual Costs: The actual labor, mate­r­ial, and allo­cated over­head costs incurred in the acqui­si­tion or pro­duc­tion of a


Advanced Ship­ping Notice (ASN): Detailed ship­ment infor­ma­tion trans­mit­ted to a cus­tomer or con­signee in

advance of deliv­ery, des­ig­nat­ing the con­tents (indi­vid­ual prod­ucts and quan­ti­ties of each) and nature of the

ship­ment. In EDI data stan­dards this is referred to as an 856 trans­ac­tion. May also include car­rier and shipment

specifics includ­ing time of ship­ment and expected time of arrival.

After­mar­ket: A mar­ket for parts and acces­sories used in the repair or enhance­ment of a prod­uct. A secondary

mar­ket cre­ated after the orig­i­nal mar­ket sales are finished.

Agency tar­iff: A pub­li­ca­tion of a rate bureau that con­tains rates for many carriers.

Agent: An enter­prise autho­rized to trans­act busi­ness for, or in the name of, another enterprise.

Air Cargo: Freight that is moved by air transportation.

Air Cargo Con­tain­ers: Con­tain­ers designed to con­form to the inside of an air­craft. There are many shapes and

sizes of con­tain­ers. Air cargo con­tain­ers fall into three cat­e­gories: 1) air cargo pal­lets 2) lower deck con­tain­ers 3)

box type containers.

Air Way­bill (AWB): A bill of lad­ing for air trans­port that serves as a receipt for the ship­per, indi­cates that the

car­rier has accepted the goods listed, oblig­ates the car­rier to carry the con­sign­ment to the air­port of destination

accord­ing to spec­i­fied conditions.

Alter­nate Rout­ing: In a pro­duc­tion envi­ron­ment this is an optional process for man­u­fac­tur­ing or assem­bly of a

prod­uct, which may be employed due to unavail­abil­ity of a pri­mary work cen­ter, or choice of non-​standard

com­po­nents. May also refer to a trans­porta­tion route which is dif­fer­ent than what would nor­mally be taken, perhaps

due to weather.

Approved Ven­dor List (AVL): List of the sup­pli­ers approved for doing busi­ness. The AVL is usu­ally cre­ated by

pro­cure­ment or sourc­ing and engi­neer­ing per­son­nel using a vari­ety of cri­te­ria such as tech­nol­ogy, func­tional fit of

the prod­uct, finan­cial sta­bil­ity, and past per­for­mance of the supplier.

Arrival Notice: A notice from the deliv­er­ing car­rier to the Notify Party indi­cat­ing the shipment’s arrival date at a

spe­cific loca­tion (nor­mally the destination).

ASN: See Advanced Ship­ping Notice

Assem­bly: A col­lec­tion of com­po­nents which have been put together into a unit, or the activ­ity involved with putting

com­po­nents together to form a unit.

Auto­mated Clear­ing­house (ACH): A nation­wide elec­tronic pay­ments sys­tem, which more than 15,000 financial

insti­tu­tions use, on behalf of 100,000 cor­po­ra­tions and mil­lions of con­sumer in the U.S. The funds trans­fer sys­tem of

choice among busi­nesses that make elec­tronic pay­ments to ven­dors, it is eco­nom­i­cal and can carry remittance

infor­ma­tion in stan­dard­ized, com­puter process­able data formats.

Avail­able Inven­tory: Also called net inven­tory, this is the quan­tity of stock which is avail­able to use after

con­sid­er­ing allo­ca­tions, reser­va­tions, back­o­rders, and quan­ti­ties set aside to com­pen­sate for qual­ity problems.

Syn­onym: Net Inven­tory

Syn­onym: Available-​to-​Promise

AVL: See Approved Ven­dor List

AWB: See Air Way­bill


B2B: See Busi­ness to Busi­ness

B2C: See Busi­ness to Con­sumer

Bar Code: A sym­bol con­sist­ing of a series of printed bars rep­re­sent­ing val­ues. A sys­tem of opti­cal character

read­ing, scan­ning, and 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.

Bar code scan­ner: A device to read bar codes and com­mu­ni­cate data to com­puter systems.

Barge: The cargo-​carrying vehi­cle used pri­mar­ily by inland water car­ri­ers. The basic barges have open tops, but

there are cov­ered barges for both dry and liq­uid cargoes.

Batch Num­ber: A sequence num­ber asso­ci­ated with a spe­cific batch or pro­duc­tion run of prod­ucts and used for

track­ing purposes.

Syn­onym: Lot Num­ber

Batch Pro­cess­ing: A com­puter term which refers to the pro­cess­ing of com­puter infor­ma­tion after it has been

accu­mu­lated in one group, or batch. This is the oppo­site of “real-​time” pro­cess­ing where trans­ac­tions are processed

in their entirety as they occur.

Batch Release: Orders are released to be ful­filled or picked at spe­cific times dur­ing the course of a day.

Accu­mu­la­tion of the orders before release results in a batch.

See also: Batch Pick­ing

Belly Cargo: Air freight car­ried in the belly of pas­sen­ger aircraft.

Bill of Lad­ing (BOL): A trans­porta­tion doc­u­ment that is the con­tract of car­riage con­tain­ing the terms and

con­di­tions between the ship­per and carrier.

Bill of Lad­ing, Through: A bill of lad­ing that cov­ers goods from point of ori­gin to final des­ti­na­tion, when

inter­change or trans­fer from one car­rier to another is nec­es­sary to com­plete the journey.

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.

Bill of Mate­r­ial Accu­racy: Con­for­mity of a list of spec­i­fied items to admin­is­tra­tive spec­i­fi­ca­tions, with all quantities


Bill of Resources: A list­ing of resources required by an activ­ity. Resource attrib­utes could include cost and


Bin: An inven­tory loca­tion which is typ­i­cally a box or tray used to hold quan­ti­ties of smaller parts.

BOL: See Bill of Lad­ing

BOM: See Bill of Mate­ri­als

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.

Book­ings: The sum of the value of all orders received (but not nec­es­sar­ily shipped), net of all dis­counts, coupons,

allowances, and rebates.

Break-​Bulk: The sep­a­ra­tion of a sin­gle con­sol­i­dated bulk load into smaller indi­vid­ual ship­ments for deliv­ery to the

ulti­mate con­signees. This is pre­ceded by a con­sol­i­da­tion of orders at the time of ship­ment, where many individual

orders which are des­tined for a spe­cific geo­graphic area are grouped into one ship­ment in order to reduce cost.

Bro­ker: An inter­me­di­ary between the ship­per and the car­rier. The bro­ker arranges trans­porta­tion for ship­pers and

rep­re­sents carriers.

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

Bulk stor­age: The process of hous­ing or stor­ing mate­ri­als and pack­ages in larger quan­ti­ties, gen­er­ally using the

orig­i­nal pack­ag­ing or ship­ping con­tain­ers or boxes.

Bun­dle: A group of prod­ucts that are shipped together as an unassem­bled unit.

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

Business-​to-​Business (B2B): As opposed to business-​to-​consumer (B2C). Many com­pa­nies are now focus­ing on

this strat­egy, and their 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.

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 Web­sites that are B2B as the entire busi­ness model,

strat­egy, exe­cu­tion, and ful­fill­ment is different.


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 will above the warehouse


CAGE Code: The Com­mer­cial and Gov­ern­ment Entity code is a 5 char­ac­ter (num­ber and let­ters) code used to

iden­tify con­trac­tors doing busi­ness with the U.S. Government.

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

Cargo: sub­ject of a ship­ment. The mate­ri­als being carried.

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

CBP: See Cus­toms and Bor­der Pro­tec­tion

Cer­tifi­cate of Analy­sis (COA): A doc­u­ment, often required by an importer or gov­ern­men­tal author­i­ties, attesting

to the qual­ity or purity of commodities.

Cer­tifi­cate of Com­pli­ance: A doc­u­ment, often required by an importer or gov­ern­men­tal author­i­ties, attest­ing to

the qual­ity or purity of com­modi­ties. The ori­gin of the cer­ti­fi­ca­tion may be a chemist or any other autho­rized body

such as an inspec­tion firm retained by the exporter or importer.

Cer­tifi­cate of Ori­gin: An inter­na­tional busi­ness doc­u­ment that cer­ti­fies the coun­try of ori­gin of the shipment.

Change Order: A doc­u­ment or dig­i­tal record which autho­rizes and pro­vides noti­fi­ca­tion of a mod­i­fi­ca­tion to a

prod­uct or order.

Chan­nels of Dis­tri­b­u­tion: The down­stream flow of prod­ucts through var­i­ous out­lets or ‘chan­nels’ which may

con­sist of dis­trib­u­tors, retail stores, on-​line ful­fill­ment, etc.

See also: Dis­tri­b­u­tion Chan­nel

Char­ter: The hir­ing or leas­ing of a vehi­cle for tem­po­rary use.

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

Class Rate: A rate con­structed from a clas­si­fi­ca­tion and a uni­form dis­tance sys­tem. A class rate is avail­able for any

prod­uct between any two points.

Clas­si­fi­ca­tion: An alpha­bet­i­cal list­ing of com­modi­ties, the class or rat­ing into which the com­mod­ity is placed, and

the min­i­mum weight nec­es­sary for the rate dis­count; used in the class rate structure.

Clas­si­fi­ca­tion yard: A rail­road ter­mi­nal area where rail cars are grouped together to form train units.

Clear­ing­house: A con­ven­tional or lim­ited pur­pose entity gen­er­ally restricted to pro­vid­ing spe­cial­ized ser­vices, such

as clear­ing funds or set­tling accounts.

Coastal car­ri­ers: Water car­ri­ers that pro­vide ser­vice along coasts serv­ing ports on the Atlantic or Pacific oceans or

on the Gulf of Mexico.

Code: A numeric, or alphanu­meric, rep­re­sen­ta­tion of text for exchang­ing com­monly used infor­ma­tion. For example:

com­mod­ity codes, car­rier codes, etc.

COGS: See Cost of Goods Sold

Com­mer­cial Invoice: A doc­u­ment cre­ated by the seller. It is an offi­cial doc­u­ment which is used to indi­cate, among

other things, the name and address of the buyer and seller, the product(s) being shipped, and their value for

cus­toms, insur­ance, or other purposes.

Com­mod­ity: Any phys­i­cal item that is traded in com­merce. The term usu­ally implies an undif­fer­en­ti­ated product

com­pet­ing pri­mar­ily on price and availability.

Com­mod­ity Code: A code describ­ing a com­mod­ity or a group of com­modi­ties per­tain­ing to goods clas­si­fi­ca­tion. This

code can be car­rier tar­iff or reg­u­lat­ing in nature.

Com­mon Car­rier: Any car­rier engaged in the inter­state trans­porta­tion of persons/​property on a reg­u­lar sched­ule at

pub­lished rates, whose ser­vices are for hire to the gen­eral public.

Com­mon Car­rier Duties: Com­mon car­ri­ers are required to serve, deliver, charge rea­son­able rates, and not


Com­plete & On-​Time Deliv­ery (COTD): A mea­sure of cus­tomer ser­vice. All items on any given order must be

deliv­ered on time for the order to be con­sid­ered as com­plete and on time

Com­pli­ance: Mean­ing that prod­ucts, ser­vices, processes and/​or doc­u­ments com­ply with requirements.

Com­pli­ance Check­ing: The func­tion of EDI pro­cess­ing soft­ware that ensures that all trans­mis­sions con­tain the

manda­tory infor­ma­tion demanded by the EDI stan­dard. Com­pares infor­ma­tion sent by an EDI user against EDI

stan­dards and reports excep­tions. Does not ensure that doc­u­ments are com­plete and fully accu­rate, but does reject

trans­mis­sions with miss­ing data ele­ments or syn­tax errors.

Con­fig­u­ra­tion: The selec­tion and group­ing of com­po­nents and assem­blies into a fin­ished product.

Configure/​Package-​to-​Order: A process where the trig­ger to begin man­u­fac­ture, final assem­bly or pack­ag­ing of a

prod­uct is an actual cus­tomer order or release, rather than a mar­ket fore­cast. In order to be con­sid­ered a Configure

to-​Order envi­ron­ment, less than 20% of the value-​added takes place after the receipt of the order or release, and

vir­tu­ally all nec­es­sary design and process doc­u­men­ta­tion is avail­able at time of order receipt.

Con­fir­ma­tion: With regards to EDI, a for­mal notice (by mes­sage or code) from a elec­tronic mail­box sys­tem or EDI

server indi­cat­ing that a mes­sage sent to a trad­ing part­ner has reached its intended mail­box or been retrieved by the


Con­firm­ing Order: A doc­u­ment sim­i­lar to, or same as a pur­chase order, which is pro­vided to a sup­plier as

con­fir­ma­tion of a pre­vi­ous ver­bal pur­chase request.

Con­for­mance: A term used in qual­ity man­age­ment to con­firm the adher­ence to spec­i­fi­ca­tion of a prod­uct or service.

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

Con­sign­ment: The act of con­sign­ing — plac­ing a per­son or thing in the pos­ses­sion of another, but retaining

own­er­ship until the goods are sold. This may apply to ship­ping or sale in a store (i.e., a con­sign­ment shop).

See also: Con­sign­ment Inven­tory

Con­sign­ment Inven­tory: 1) Goods or prod­uct that are paid for when they are sold by the reseller, not at the time

they are shipped to the reseller. 2) Goods or prod­ucts which are owned by the ven­dor until they are sold to the


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


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.

Con­sol­ida­tor: An enter­prise that pro­vides ser­vices to group ship­ments, orders, and/​or goods to facilitate


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.

Con­tainer­iza­tion: A sys­tem of inter­modal freight trans­port using stan­dard inter­modal con­tain­ers that are

stan­dard­ized by the Inter­na­tional Orga­ni­za­tion for Stan­dard­iza­tion (ISO). These can be loaded and sealed intact onto

con­tainer ships, rail­road cars, planes, and trucks.

Con­tin­u­ous Improve­ment (CI): A struc­tured mea­sure­ment dri­ven process that con­tin­u­ally reviews and improves


Con­tract Car­rier: Car­rier engaged in inter­state trans­porta­tion of persons/​property by motor vehi­cle on a for-​hire

basis, but under con­tin­u­ing con­tract with one or a lim­ited num­ber of cus­tomers to meet spe­cific needs.

Con­trolled Access: Refer­ring to an area within a ware­house or yard that is fenced and gated. These areas are

typ­i­cally used to store high-​value items and may be mon­i­tored by secu­rity cameras

Con­veyor: A mate­ri­als han­dling device that moves freight from one area to another in a ware­house. Roller

con­vey­ors make use of grav­ity, whereas belt con­vey­ors use motors.

COO: See Coun­try of Ori­gin

Cost, Insur­ance, Freight (CIF): A trade term requir­ing the seller to arrange for the car­riage of goods by sea to a

port of des­ti­na­tion, and pro­vide the buyer with the doc­u­ments nec­es­sary to obtain the goods from the carrier.

Cost of Goods Sold (COGS): The amount of direct mate­ri­als, direct labor, and allo­cated over­head asso­ci­ated with

prod­ucts sold dur­ing a given period of time, deter­mined in accor­dance with Gen­er­ally Accepted Account­ing Principles


Cost Recov­ery Rate (CRR): Pro­vides the fund­ing stream for a wide vari­ety of pro­gram logis­tics sup­port functions.

COTD: See Com­plete & On-​Time Deliv­ery

Coun­try of Ori­gin: The coun­try of man­u­fac­ture, pro­duc­tion or growth from where a prod­uct comes.

Cross Dock/​Cross Dock­ing (XDK): A dis­tri­b­u­tion sys­tem in which mer­chan­dise received at the ware­house or

dis­tri­b­u­tion cen­ter is not put away, but instead is read­ied for ship­ment to retail stores. Cross dock­ing requires close

syn­chro­niza­tion of all inbound and out­bound ship­ment move­ments. By elim­i­nat­ing the put-​away, stor­age and

selec­tion oper­a­tions, it can sig­nif­i­cantly reduce dis­tri­b­u­tion costs.

C-​TPAT: See Customs-​Trade Part­ner­ship against Ter­ror­ism

Cube: The vol­ume of the ship­ment or package.

Cal­cu­la­tion: length x width x depth

Cus­tomer: 1) In dis­tri­b­u­tion, the Trad­ing Part­ner or reseller, i.e. Wal-​Mart, Safe­way, or CVS. 2) In Direct-​to–

Con­sumer, the end cus­tomer or user.

Cus­toms Bro­ker­age: Involves the clear­ing of goods through cus­toms bar­ri­ers for importers and exporters.

Cus­toms Clear­ance: The accom­plish­ment of the Cus­toms for­mal­i­ties nec­es­sary to allow goods to enter the country,

to be exported or to be placed under another customer’s procedure.

Customer/​Order Ful­fill­ment Process: The typ­i­cal busi­ness process which includes receipt and pro­cess­ing of a

cus­tomer order through delivery.

Cus­tomiza­tion: Cre­at­ing a prod­uct from exist­ing com­po­nents into an indi­vid­ual order.

Syn­onym: Build to Order

Cus­toms and Bor­der Pro­tec­tion (CBP): Formed dur­ing the cre­ation of the Depart­ment of Home­land Secu­rity in

2003, CBP con­sists pri­mar­ily of the cus­toms inspec­tion func­tion for­merly per­formed by the U.S. Cus­toms Ser­vice as

part of the Depart­ment of Trea­sury, the immi­gra­tion inspec­tion func­tion for­merly per­formed by the Immi­gra­tion and

Nat­u­ral­iza­tion Ser­vice (INS), and the Bor­der Patrol, for­merly part of the Depart­ment of Justice.

Cus­toms House Bro­ker: A busi­ness firm that over­sees the move­ment of inter­na­tional ship­ments through customs

and ensures that the doc­u­men­ta­tion accom­pa­ny­ing a ship­ment is com­plete and accurate.

Customs-​Trade Part­ner­ship against Ter­ror­ism (C-​TPAT): A joint government/​business ini­tia­tive to build

coop­er­a­tive rela­tion­ships that strengthen over­all sup­ply chain and bor­der secu­rity. The vol­un­tary pro­gram is

designed to share infor­ma­tion that will pro­tect against ter­ror­ists’ com­pro­mis­ing the sup­ply chain.


Dan­ger­ous Goods: Arti­cles or sub­stances capa­ble of pos­ing sig­nif­i­cant health, safety, or envi­ron­men­tal risk, and

that ordi­nar­ily require spe­cial atten­tion includ­ing pack­ag­ing and label­ing when stored or transported.

Syn­onym: Haz­ardous Goods

Syn­onym: Haz­ardous Mate­ri­als

Syn­onym: Haz­Mat

DC: See Dis­tri­b­u­tion Cen­ter

Dec­la­ra­tion of Dan­ger­ous Goods: To com­ply with the U.S. reg­u­la­tions, exporters are required to pro­vide special

notices to inland and ocean trans­port com­pa­nies when goods are hazardous.

Declared Value: The value of the goods, declared by the ship­per on a bill of lad­ing, for the pur­pose of determining

a freight rate or the limit of the carrier’s lia­bil­ity. Also used by cus­toms as the basis for cal­cu­la­tion of duties, etc.

Deferred Ship­ping: Deliv­ery of non-​critical shipments.

Delivery-​Duty-​Paid: Supplier/​manufacturer arrange­ment in which sup­pli­ers are respon­si­ble for the trans­port of the

goods they have pro­duced, which is being sent to a man­u­fac­turer. This respon­si­bil­ity includes tasks such as ensuring

prod­ucts get through Customs.

Deliv­ery Receipt: Doc­u­ment a con­signee or its agent dates and signs at deliv­ery, stat­ing the con­di­tion of the goods

at deliv­ery. The dri­ver takes the signed deliv­ery receipt to the ser­vice cen­ter for reten­tion. The cus­tomer retains the

remain­ing copy.

Demur­rage: The car­rier charges and fees applied when rail freight cars and ships are retained beyond a specific

load­ing or unload­ing time.

See also: Deten­tion

Denied Party List (DPL): A list­ing of all the enti­ties with whom a com­pany can­not do busi­ness due to company

pol­icy or gov­ern­ment require­ments. The Export DPL list is based on infor­ma­tion sup­plied by the United States

Gov­ern­ment Fed­eral Reg­is­ter and other sources.

Deten­tion Fee: The car­rier charges and fees applied when rail freight cars, ship and car­ri­ers are retained beyond a

spec­i­fied load­ing or unload­ing time.

See also: Demur­rage

See also: Express

DFZ: See Duty Free Zone

Direct Store Deliv­ery (DSD): Process of ship­ping direct from a manufacturer’s plant or dis­tri­b­u­tion cen­ter to the

customer’s retail store, thus bypass­ing the customer’s dis­tri­b­u­tion center.

Syn­onym: Direct-​to-​Store Deliv­ery

Direct-​to-​Store Deliv­ery: See Direct Store Deliv­ery

Dis­tri­b­u­tion: The activ­i­ties asso­ci­ated with mov­ing mate­ri­als from source to des­ti­na­tion. Can be asso­ci­ated with

move­ment from a man­u­fac­turer or dis­trib­u­tor to cus­tomers, retail­ers or other sec­ondary ware­hous­ing /​dis­tri­b­u­tion


Dis­tri­b­u­tion Cen­ter (DC): The ware­house facil­ity which holds inven­tory from man­u­fac­tur­ing pend­ing dis­tri­b­u­tion to

the appro­pri­ate stores.

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 Plan­ning: The process involved in plan­ning for dis­tri­b­u­tion activ­i­ties. Activ­i­ties may include inbound /

out­bound trans­porta­tion, ware­house man­age­ment, set­ting inven­tory lev­els, put­away and pick­ing, pack­ag­ing and

load­ing, and var­i­ous admin­is­tra­tive functions.

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

Dis­trib­u­tor: A busi­ness and indus­try which acts as a third party local rep­re­sen­ta­tive and dis­tri­b­u­tion point for a

man­u­fac­tur­ing firm. These firms may per­form some light assem­bly or kit­ting of goods, but gen­er­ally pro­vide a buffer

for fin­ished goods. Dis­trib­u­tors typ­i­cally pur­chase the goods in quan­tity from the man­u­fac­turer and ship to

cus­tomers in smaller quantities.

Syn­onym: Whole­saler

Dock: A plat­form, gen­er­ally the same height as the trailer floor, where trucks are loaded and unloaded.

Dock receipt: A receipt that indi­cates an export ship­ment has been deliv­ered to a steamship com­pany by a

domes­tic carrier.

Doc­u­ment: In EDI, a form, such as an invoice or a pur­chase order, that trad­ing part­ners have agreed to exchange

and that the EDI soft­ware han­dles within its compliance-​checking logic.

Doc­u­men­ta­tion: The papers attached or per­tain­ing to goods requir­ing trans­porta­tion and/​or trans­fer of ownership.

These may include the pack­ing list, haz­ardous mate­ri­als dec­la­ra­tions, export /​cus­toms doc­u­ments, etc.

DoD: Depart­ment of Defense (USA)

Double-​pallet jack: A mech­a­nized device for trans­port­ing two stan­dard pal­lets simultaneously.

DPL: See Denied Party List

Draw­back: The abil­ity to be reim­bursed for some or all of the duties paid on imported mer­chan­dise at the time of re–


Drayage: The act of trans­port­ing some­thing a short dis­tance, often as part of a longer over­all move.

Dri­ving time reg­u­la­tions: Rules admin­is­tered by the U.S. Depart­ment of Trans­porta­tion that limit the maximum

time a dri­ver may drive in inter­state com­merce; both daily and weekly max­i­mums are prescribed.

Drop: A sit­u­a­tion in which an equip­ment oper­a­tor deposits a trailer or box­car at a facil­ity at which it is to be loaded

or unloaded.

Drop Yard: Tem­po­rary “park­ing lots” for con­tain­ers or cargo, located off the wharves and some­times next to rail

yards or import warehouses.

Dump­ing: The act of sell­ing goods below costs in selected mar­kets in an effort to gain mar­ket share or eliminate


Dun­nage: The mate­ri­als used in pack­ag­ing, holds and con­tain­ers to pro­tect goods from damage.

DUNS: Data Uni­ver­sal Num­ber­ing System.

DUNS Num­ber: A unique nine-​digit num­ber assigned by Dun and Brad­street to iden­tify a com­pany. DUNS stands

for Data Uni­ver­sal Num­ber­ing System.

Durable Goods: A good which does not quickly wear out, or more specif­i­cally, it yields ser­vices or util­ity over time

(typ­i­cally 3 years or more) rather than being com­pletely used up when used once.

Duty Free Zone (DFZ): An area where goods or cargo can be stored with­out pay­ing import cus­toms duties while

await­ing man­u­fac­tur­ing or future transport.


e-​Commerce: See Elec­tronic Com­merce

EC: See Elec­tronic Com­merce

EDI: See Elec­tronic Data Inter­change

EIN: See Exporter Iden­ti­fi­ca­tion Num­ber

Elec­tronic Com­merce (EC): Also writ­ten as e-​commerce. Con­duct­ing busi­ness elec­tron­i­cally via tra­di­tional EDI

tech­nolo­gies, or online via the Inter­net. In the tra­di­tional sense of sell­ing goods, it is pos­si­ble to do this electronically

because of cer­tain soft­ware pro­grams that run the main func­tions of an e-​commerce web­site, such as product

dis­play, online order­ing, and inven­tory man­age­ment. The def­i­n­i­tion of e-​commerce includes busi­ness activ­ity that is

business-​to-​business (B2B), business-​to-​consumer (B2C).

Elec­tronic Data Inter­change (EDI): Inter­com­pany, computer-​to-​computer trans­mis­sion of busi­ness infor­ma­tion in

a stan­dard for­mat. For EDI purists, “computer-​to-​computer” means direct trans­mis­sion from the originating

appli­ca­tion pro­gram to the receiv­ing, or pro­cess­ing, appli­ca­tion pro­gram. An EDI trans­mis­sion con­sists only of

busi­ness data, not any accom­pa­ny­ing ver­biage or free-​form mes­sages. Purists might also con­tend that a standard

for­mat is one that is approved by a national or inter­na­tional stan­dards orga­ni­za­tion, as opposed to formats

devel­oped by indus­try groups or companies.

Embargo: Per­tain­ing to a state­ment or for­mula based upon expe­ri­ence or obser­va­tion rather than on deduc­tion or


End-​of-​Life: Plan­ning and exe­cu­tion at the end of the life of a prod­uct. The chal­lenge is mak­ing just the right

amount to avoid: 1) end­ing up with excess, which has to be sold at great dis­counts or scrapped, or 2) end­ing up with

short­ages before the next gen­er­a­tion is available.

End-​of-​Life Inven­tory: Inven­tory on hand that will sat­isfy future demand for prod­ucts that are no longer in

pro­duc­tion at your entity. This dif­fers from obso­lete inven­tory because there is an expected future require­ment for

these prod­ucts.

End Item: The top level item in a bill of mate­ri­als. Typ­i­cally a fin­ished prod­uct which can be sold as a completed

item or repair part.

Syn­onym: Fin­ished Goods Inven­tory

ETA: The Esti­mated Time of Arrival.

ETD: The Esti­mated Time of Departure.

Exception-​Based Pro­cess­ing: A com­puter term for appli­ca­tions that auto­mat­i­cally high­light par­tic­u­lar events or

results which fall out­side pre-​determined para­me­ters. This saves con­sid­er­able effort by auto­mat­i­cally finding

prob­lems and alert­ing the right per­sons. An exam­ple would be where a shorted item on a pur­chase order receipt

would auto­mat­i­cally notify a pur­chas­ing agent for follow-​up.

Ex Works (EXW): An inter­na­tional trade term (Incoterms, Inter­na­tional Cham­ber of Com­merce) requir­ing the seller

to deliver goods at his or her own place of busi­ness. All other trans­porta­tion costs and risks are assumed by the


Excep­tion Mes­sage: See Action Mes­sage

Excep­tion Rate: A devi­a­tion from the class rate; changes (excep­tions) made to the classification.

Exempt Car­rier: A for-​hire car­rier that is free from eco­nomic reg­u­la­tion. Trucks haul­ing cer­tain com­modi­ties are

exempt from Inter­state Com­merce Com­mis­sion eco­nomic reg­u­la­tion. By far the largest por­tion of exempt carrier

trans­ports agri­cul­tural com­modi­ties or seafood.

Expe­dit­ing: 1) Mov­ing ship­ments through reg­u­lar chan­nels at an accel­er­ated rate. 2) To take extra­or­di­nary action

because of an increase in rel­a­tive pri­or­ity, per­haps due to a sud­den increase in demand.

Syn­onym: Stockchase

Export: 1) In logis­tics, the move­ment of prod­ucts from one coun­try to another. For exam­ple, sig­nif­i­cant vol­umes of

cut flow­ers are exported from The Nether­lands to other coun­tries of the world. 2) A com­puter term refer­ring to the

trans­fer of infor­ma­tion from a source (sys­tem or data­base) to a target.

Export Bro­ker: An enter­prise that brings together buyer and seller for a fee, then even­tu­ally with­draws from the


Export Com­pli­ance: Com­ply­ing with the rules for export­ing prod­ucts, includ­ing pack­ag­ing, label­ing, and


Export Dec­la­ra­tion: A doc­u­ment required by the Depart­ment of Com­merce that pro­vides infor­ma­tion as to the

nature, value, etc., of export activity.

Export License: A doc­u­ment secured from a gov­ern­ment autho­riz­ing an exporter to export a spe­cific quan­tity of a

con­trolled com­mod­ity to a cer­tain coun­try. An export license is often required if a gov­ern­ment has placed embargoes

or other restric­tions upon exports.

Export Sales Con­tract: The ini­tial doc­u­ment in any inter­na­tional trans­ac­tion; it details the specifics of the sales

agree­ment between the buyer and seller.

Exporter Iden­ti­fi­ca­tion Num­ber (EIN): A num­ber required for the exporter on the Shipper’s Export Declaration.

A cor­po­ra­tion may use their Fed­eral Employer Iden­ti­fi­ca­tion Num­ber as issued by the IRS; indi­vid­u­als can use their

Social Secu­rity Numbers.

Exports: A term used to describe those prod­ucts pro­duced in one geog­ra­phy (typ­i­cally a coun­try) and shipped /​sold

in another.

EXW: See Ex Works


FAST: See Fast and Secure Trade

Fast and Secure Trade (FAST): U.S. Cus­toms pro­gram that allows importers on the U.S./Canada bor­der to obtain

expe­dited release for qual­i­fy­ing com­mer­cial shipments.

FCL: See Full Con­tainer Load

FDA: See Fed­eral Drug Admin­is­tra­tion

FEU: See Forty-​foot equiv­a­lent unit

Finan­cial respon­si­bil­ity: Motor car­ri­ers are required to have body injury and prop­erty dam­age (not cargo)

insur­ance or not less than $500,000 per inci­dent per vehi­cle; higher finan­cial respon­si­bil­ity lim­its apply for motor

car­ri­ers trans­port­ing oil or haz­ardous materials.

First Expired, First Out (FEFO): A stock con­trol rule allow­ing the man­age­ment of prod­ucts hav­ing an eat-​by date

or short shelf life. FEFO can be used for any prod­uct but is most fre­quently used for food or cold storage.

First In, First Out (FIFO): Ware­house term mean­ing first items stored are the first used. In account­ing this term

is asso­ci­ated with the valu­ing of inven­tory such that the lat­est pur­chases are reflected in book inven­tory. While

gen­er­ally con­sid­ered an account­ing notion, FIFO usage is com­mon where prod­ucts may have a shelf life.

Flat: A load­able plat­form hav­ing no super­struc­ture what­ever but hav­ing the same length and width as the base of a

con­tainer and equipped with top and bot­tom cor­ner fit­tings. This is an alter­na­tive term used for cer­tain types of

spe­cific pur­pose con­tain­ers - namely plat­form con­tain­ers and platform-​based con­tain­ers with incom­plete structures.

Flatbed: A flatbed is a type of truck trailer that con­sists of a floor and no enclo­sure. A flatbed may be used with

side­boards” or “tie downs” which keep loose cargo from falling off.

Flow-​Through Dis­tri­b­u­tion: A process in a dis­tri­b­u­tion cen­ter in which prod­ucts from mul­ti­ple loca­tions are

brought in to the D.C. and are re-​sorted by deliv­ery des­ti­na­tion and shipped in the same day. Typ­i­cally involv­ing a

com­bi­na­tion of TL and LTL car­rier resources, this prac­tice elim­i­nates ware­hous­ing, reduces inven­tory lev­els and

speeds order turn­around time.

Syn­onym: Cross Dock process in the trans­porta­tion business

See also: Cross Dock

FOB: See Free on Board

FOB Des­ti­na­tion: Title passes at des­ti­na­tion, and seller has total respon­si­bil­ity until ship­ment is delivered.

FOB Ori­gin: Title passes at ori­gin, and buyer has total respon­si­bil­ity over the goods while in shipment.

For-​hire Car­rier: A car­rier that pro­vides trans­porta­tion ser­vice to the pub­lic on a fee basis.

For­eign Trade Zone (FTZ): An area or zone set aside at or near a port or air­port, under the con­trol of the U.S.

Cus­toms Ser­vice, for hold­ing goods duty-​free pend­ing cus­toms clearance.

Fork­lift truck: A machine-​powered device that is used to raise and lower freight and to move freight to different

ware­house locations.

Fourth-​Party Logis­tics (4PL): Dif­fers from third party logis­tics in the fol­low­ing ways; 1)4PL orga­ni­za­tion is often a

sep­a­rate entity estab­lished as a joint ven­ture or long-​term con­tract between a pri­mary client and one or more

part­ners; 2)4PL orga­ni­za­tion acts as a sin­gle inter­face between the client and mul­ti­ple logis­tics ser­vice providers; 3)

All aspects (ide­ally) of the client’s sup­ply chain are man­aged by the 4PL orga­ni­za­tion; and, 4) It is pos­si­ble for a

major third-​party logis­tics provider to form a 4PL orga­ni­za­tion within its exist­ing struc­ture. The term was registered

by Accen­ture as a trade­mark in 1996 and defined as “A sup­ply chain inte­gra­tor that assem­bles and man­ages the

resources, capa­bil­i­ties, and tech­nol­ogy of its own orga­ni­za­tion with those of com­ple­men­tary ser­vice providers to

deliver a com­pre­hen­sive sup­ply chain solu­tion.”, but is no longer registered.

Forty-​foot Equiv­a­lent Unit (FEU): A stan­dard size inter­modal container.

Free Along­side Ship (FAS): A ship­ping con­tract term indi­cat­ing that the seller must place the goods along­side the

ship at the named port and be liable for all charges and risks prior to place­ment. The seller must clear the goods for

export; this changed in the 2000 ver­sion of the Incoterms. Suit­able for mar­itime trans­port only.

Free on Board (FOB): Con­trac­tual terms between a buyer and a seller, that define where title trans­fer takes place.

Free Time: The period of time allowed for the removal or accu­mu­la­tion of cargo before charges become applicable.

Free Trade Zone or For­eign Trade Zone (FTZ): Also known as an export pro­cess­ing zone (EPZ), one or more

spe­cial areas of a coun­try where some nor­mal trade bar­ri­ers such as tar­iffs and quo­tas are elim­i­nated and

bureau­cratic require­ments are low­ered in hopes of attract­ing new busi­ness and for­eign invest­ments. Free trade

zones can be defined as labor inten­sive man­u­fac­tur­ing cen­ters that involve the import of raw mate­ri­als or

com­po­nents and the export of fac­tory products.

Freight: Goods being trans­ported from one place to another.

Freight Bill: The carrier’s invoice for trans­porta­tion charges applic­a­ble to a freight shipment.

Freight Car­ri­ers: Com­pa­nies that haul freight, also called “for-​hire” car­ri­ers. Meth­ods of trans­porta­tion include

truck­ing, rail­roads, air­lines, and sea borne shipping.

Freight Charge: The rate estab­lished for trans­port­ing freight.

Freight Col­lect: The freight and charges to be paid by the consignee.

Freight Con­sol­i­da­tion: The act of com­bin­ing indi­vid­ual ship­ments into a sin­gle lot in order to reduce costs or

improve trans­port equip­ment uti­liza­tion. Con­sol­i­da­tion can take a vari­ety forms by cus­tomer, geog­ra­phy, shipping

land or sched­ule. Con­sol­i­da­tion may occur at the ship­ping facil­ity or may be a ser­vice of a third party.

Freight For­warder: An orga­ni­za­tion which pro­vides logis­tics ser­vices as an inter­me­di­ary between the ship­per and

the car­rier, typ­i­cally on inter­na­tional ship­ments. Freight for­warders pro­vide the abil­ity to respond quickly and

effi­ciently to chang­ing cus­tomer and con­sumer demands and inter­na­tional ship­ping (import/​export) requirements.

Freight Pre­paid: The freight and charges to be paid by the consignor.

FTL: See Full Truck Load

FTZ: See Free Trade Zone

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


Ful­fill­ment Agent: May be des­ig­nated as an agent to plan, sched­ule, or con­trol the process of exe­cut­ing the

logis­tics chain.

Full Con­tainer Load (FCL): A term used when goods occupy a whole container.

Full Truck Load (FTL): A term which defines a ship­ment which occu­pies at least one com­plete truck trailer, or

allows for no other ship­pers goods to be car­ried at the same time.


Gap analy­sis: The process of deter­min­ing and doc­u­ment­ing the vari­ance (gap) between goals and current


Gen­eral Com­modi­ties Car­rier: A com­mon motor car­rier that has oper­at­ing author­ity to trans­port general

com­modi­ties, or all com­modi­ties not listed as spe­cial commodities.

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.

Gen­eral Aver­age: A prin­ci­ple of mar­itime law where in the event of emer­gency, if cargo is jet­ti­soned or expensed

incurred, the loss is shared pro­por­tion­ately by all par­ties with a finan­cial inter­est in the voyage.

GO: See Gen­eral Order

Goods: A term asso­ci­ated with more than one def­i­n­i­tion: 1) Com­mon term indi­cat­ing mov­able property,

mer­chan­dise, or wares. 2) All mate­ri­als which are used to sat­isfy demands. 3) Whole or part of the cargo received

from the ship­per, includ­ing any equip­ment sup­plied by the shipper.

Goods Received Note (GRN): Doc­u­men­ta­tion raised by the recip­i­ent of mate­ri­als or products.

Gross Inven­tory: Value of inven­tory at stan­dard cost before any reserves for excess and obso­lete items are taken.


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

Har­mo­nized Code: An inter­na­tional clas­si­fi­ca­tion sys­tem that assigns iden­ti­fi­ca­tion num­bers to spe­cific products.

The cod­ing sys­tem ensures that all par­ties in int’l trade use a con­sis­tent clas­si­fi­ca­tion for the pur­poses of

doc­u­men­ta­tion, sta­tis­ti­cal con­trol, and duty assessment.

Haulage: The inland trans­port ser­vice which is offered by the car­rier under the terms and con­di­tions of the tar­iff and

of the rel­a­tive trans­port document.

Haz­ardous Goods: See Haz­ardous Mate­r­ial

Haz­ardous Mate­r­ial: A sub­stance or mate­r­ial, which the Depart­ment of Trans­porta­tion has deter­mined to be

capa­ble of pos­ing a risk to health, safety, and prop­erty when stored or trans­ported in commerce.

See also: Mate­r­ial Data Safety Sheet

Haz­Mat: See Haz­ardous Mate­r­ial

Hot Shot: Direct deliv­ery of time-​sensitive freight.

Hub: 1) A large retailer or man­u­fac­turer hav­ing many trad­ing part­ners. 2) A ref­er­ence for a trans­porta­tion network

as in “hub and spoke” which is com­mon in the air­line and truck­ing indus­try. For exam­ple, a hub air­port serves as the

focal point for the ori­gin and ter­mi­na­tion of long-​distance flights where flights from out­ly­ing areas are fed into the

hub air­port for con­nect­ing flights. 3) A com­mon con­nec­tion point for devices in a net­work. 4) A Web “hub” is one of

the ini­tial names for what is now known as a “por­tal”. It came from the cre­ative idea of pro­duc­ing a web­site, which

would con­tain many dif­fer­ent “por­tal spots” (small boxes that looked like ads, with links to dif­fer­ent yet related

con­tent). This con­tent, com­bined with Inter­net tech­nol­ogy, made this idea a mile­stone in the devel­op­ment and

appear­ance of web­sites, pri­mar­ily due to the abil­ity to dis­play a lot of use­ful con­tent and store one’s preferred

infor­ma­tion on a secured server. The web term “hub” was replaced with portal.

Hub Air­port: An air­port that serves as the focal point for the ori­gin and ter­mi­na­tion of long-​distance flights; flights

from out­ly­ing areas are fed into the hub air­port for con­nect­ing flights.


IATA: See Inter­na­tional Air Trans­port Asso­ci­a­tion

Import: Move­ment of prod­ucts from one coun­try into another. The import of auto­mo­biles from Ger­many to the U.S.

is an example.

Impor­ta­tion Point: The loca­tion (port, air­port or bor­der cross­ing) where goods will be cleared for impor­ta­tion into

a coun­try.

Import/​Export License: Offi­cial autho­riza­tion issued by a gov­ern­ment agency which allows for the trans­port of

goods across their national bound­aries. Licenses may be required for all, or only spe­cific classes of commodities.

Importer Secu­rity Fil­ing (ISF): Rule that requires importers, or their agents, to trans­mit an Importer Security

Fil­ing to CBP, for cargo des­tined to the United States no later than 24 hours before cargo is laden aboard a vessel

des­tined to a United States port. An ISF is required for all USA des­tined cargo and all IE and T&E ship­ments that

enter a US Port.

In Bond: Goods are held or trans­ported In-​Bond under cus­toms con­trol either until import duties or other charges

are paid, or to avoid pay­ing the duties or charges until a later date.

Inbound Logis­tics: The move­ment of mate­ri­als from sup­pli­ers and ven­dors into pro­duc­tion processes or storage


INCOTERMS: Inter­na­tional terms of sale devel­oped by the Inter­na­tional Cham­ber of Com­merce to define sellers’

and buy­ers’ responsibilities.

Inspec­tion Cer­tifi­cate: A doc­u­ment cer­ti­fy­ing that mer­chan­dise (such as per­ish­able goods) was in good condition

imme­di­ately prior to shipment.

Inter­modal Trans­porta­tion: Trans­port­ing freight by using two or more trans­porta­tion modes such as by truck and

rail or truck and ocean­go­ing vessel.

Inter­modal Con­tainer Trans­fer Facil­ity: A facil­ity where cargo is trans­ferred from one mode of trans­porta­tion to

another, usu­ally from ship or truck to rail.

Inter­na­tional Air Trans­port Asso­ci­a­tion (IATA): An inter­na­tional air car­rier rate bureau for pas­sen­ger and

freight move­ments.

Inter­na­tional Stan­dards Orga­ni­za­tion (ISO): An orga­ni­za­tion within the United Nations to which all national and

other stan­dard set­ting bod­ies (should) defer. Devel­ops and mon­i­tors inter­na­tional stan­dards, includ­ing OSI,

EDI­FACT, and X.400

Inter­na­tional Traf­fic in Arms Reg­u­la­tions (ITAR): U.S. State Depart­ment reg­u­la­tions that gov­ern the export of

restricted prod­uct, ser­vice or tech­nol­ogy to for­eign states.

Inven­tory: Com­po­nents, raw mate­ri­als, work in process, fin­ished goods and sup­plies required for the cre­ation of

goods and ser­vices; it can also refer to the num­ber of units and/​or value of the stock of goods held by a company.

Inven­tory Accu­racy: This is when the on-​hand quan­tity is equiv­a­lent to the per­pet­ual bal­ance (plus or minus the

des­ig­nated count tol­er­ances). It can often be referred to as a per­cent­age show­ing the vari­ance between book

inven­tory and actual count. This is a major per­for­mance met­ric for any orga­ni­za­tion which man­ages large


Note: Typ­i­cal min­i­mum and best prac­tice aver­ages would be 95% and 99%.

Inven­tory Man­age­ment: The process of ensur­ing the avail­abil­ity of prod­ucts through inven­tory administration.

ISO: See Inter­na­tional Stan­dards Orga­ni­za­tion

Item: A uniquely iden­ti­fi­able piece of inven­tory. Also known as a part num­ber or SKU, an item can be raw materials,

flu­ids, com­po­nent parts, sub­assem­blies, fin­ished assem­blies, pack­ag­ing, etc. Usu­ally dif­fer­en­ti­ated by form, fit or

func­tion. Items which are painted dif­fer­ent col­ors are gen­er­ally viewed as dif­fer­ent items.


Just-​in-​Time (JIT): An inven­tory con­trol sys­tem that con­trols mate­r­ial flow into assem­bly and manufacturing

plants by coor­di­nat­ing demand and sup­ply to the point where desired mate­ri­als arrive just in time for use. An

inven­tory reduc­tion strat­egy that feeds pro­duc­tion lines with prod­ucts deliv­ered “just in time”. Devel­oped by the

auto indus­try, it refers to ship­ping goods in smaller, more fre­quent lots.


Key Per­for­mance Indi­ca­tor (KPI): A mea­sure which is of strate­gic impor­tance to a com­pany or depart­ment. For

exam­ple, a sup­ply chain flex­i­bil­ity met­ric is Sup­plier On-​time Deliv­ery Per­for­mance which indi­cates the per­cent­age of

orders that are ful­filled on or before the orig­i­nal requested date.

See also: Score­card

Kit­ting: Light assem­bly of com­po­nents or parts into defined units ahead of pro­duc­tion issue or cus­tomer shipment.

Kit­ting reduces the need to main­tain an inven­tory of pre-​built com­pleted prod­ucts, but increases the time and labor

con­sumed at shipment.

KPI: See Key Per­for­mance



Lad­ing: The cargo car­ried in a trans­porta­tion vehicle.

Lane: A major origin-​destination pair, i.e., traf­fic lane, an origin-​destination pair­ing. A man­u­fac­turer in Chicago

ships to a des­ti­na­tion in New York, pro­duc­ing the Chicago to New York traf­fic lane.

Leg: A por­tion of a com­plete trip which has an ori­gin, des­ti­na­tion, and car­rier and is com­posed of all consecutive

seg­ments of a route booked through the same carrier.

Less-​Than-​Truckload (LTL): Goods weigh­ing less than 10,000 pounds from sev­eral ship­pers loaded onto one trailer.

Lessee: A per­son or firm to whom a lease is granted.

Lessor: A per­son or firm that grants a lease.

Let­ter of credit: An inter­na­tional busi­ness doc­u­ment that assures the seller that pay­ment will be made by the bank

issu­ing the let­ter of credit upon ful­fill­ment of the sales agreement.

Lift Truck: Vehi­cles used to lift, move, stack, rack, or oth­er­wise manip­u­late loads. Mate­r­ial han­dling peo­ple use a

lot of terms to describe lift trucks, some terms describe spe­cific types of vehi­cles, oth­ers are slang terms or trade

names that peo­ple often mis­tak­enly use to describe trucks. Terms include indus­trial truck, fork­lift, reach truck,

motor­ized pal­let trucks, tur­ret trucks, coun­ter­bal­anced fork­lift, walkie, rider, walkie rider, walkie stacker, straddle

lift, side loader, order pick­ers, high lift, cherry picker, Jeep, Tow motor, Yale, Crown, Hys­ter, Ray­mond, Clark,


Line-​haul Ship­ment: A ship­ment that moves between cities and dis­tances over 100 to 150 miles.

Line: 1) An area within a pro­duc­tion or assem­bly facil­ity where man­u­fac­tur­ing occurs in a lin­ear fash­ion, passing

prod­ucts through one level of com­ple­tion on to the next process. 2) A unique item order line on a cus­tomer or

pur­chase order.

Link: The trans­porta­tion method used to con­nect the nodes (plants, ware­houses) in a logis­tics system.

Load­ing Port: The port where the cargo is loaded onto the export­ing ves­sel. This port must be reported on the

Shipper’s Export Dec­la­ra­tion, Sched­ule D and is used by U.S. com­pa­nies to deter­mine which tar­iff is used to freight

rate the cargo for car­ri­ers with more than one tariff.

LOC: See Line of Credit

Local Rate: A rate pub­lished between two points served by one carrier.

Local Ser­vice Car­ri­ers: An air car­rier clas­si­fi­ca­tion of car­ri­ers that oper­ate between areas of lesser and major

pop­u­la­tion cen­ters. These car­ri­ers feed pas­sen­gers into the major cities to major hubs.

Logis­tics: The process of plan­ning, imple­ment­ing, and con­trol­ling pro­ce­dures for the effi­cient and effective

trans­porta­tion and stor­age of goods includ­ing ser­vices, and related infor­ma­tion from the point of ori­gin to the point

of con­sump­tion for the pur­pose of con­form­ing to cus­tomer require­ments. This def­i­n­i­tion includes inbound, outbound,

inter­nal, and exter­nal movements.

Logis­tics Chan­nel: The net­work of sup­ply chain par­tic­i­pants engaged in stor­age, han­dling, trans­fer, transportation,

and com­mu­ni­ca­tions func­tions that con­tribute to the effi­cient flow of goods.

Logis­tics Ser­vice Provider (LSP): Any busi­ness which pro­vides logis­tics ser­vices. Includes those businesses

typ­i­cally referred to as 3PL, 4PL, LLP, etc. Ser­vices may include pro­vi­sion­ing, trans­port, ware­hous­ing, pack­ag­ing, etc.


Major car­rier: A for-​hire cer­tifi­cated air car­rier that has annual oper­at­ing rev­enues of $1 bil­lion or more: the carrier

usu­ally oper­ates between major pop­u­la­tion centers.

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

Merge in Tran­sit: The process of com­bin­ing or “merg­ing” ship­ments from mul­ti­ple sup­pli­ers which are going

directly to the buyer or to the store, bypass­ing the seller. Effec­tively this is a “drop ship­ment” from sev­eral vendors

to one buyer, which is being com­bined at an inter­me­di­ary point prior to delivery.

Mile­stone: The set of spe­cific dead­lines or mea­sure­ment /​deci­sions points which are used to progress in completing

an Ini­tia­tive. Mile­stones include spe­cific com­ple­tion dates or rates.

Mode: See Trans­porta­tion Mode


NAFTA: See North Amer­i­can Free Trade Agree­ment

National Car­rier: A for-​hire cer­tifi­cated air car­rier that has annual oper­at­ing rev­enues of $75 mil­lion to $1 billion;

the car­rier usu­ally oper­ates between major pop­u­la­tion cen­ters and areas of lesser population.

Net­work Opti­miza­tion: A process or method­ol­ogy to make a net­work as fully per­fect, func­tional, effec­tive or

effi­cient as pos­si­ble. The use of math­e­mat­ics may be involved to find the best solution.

Net­work Plan­ning: An inven­tory dis­tri­b­u­tion or trans­porta­tion plan­ning strat­egy which attempts to opti­mize the

time/​cost of travel or cost of hold­ing inven­tory across mul­ti­ple sites.

Next Flight Out: An expe­dited method for trans­port­ing time-​critical ship­ments by air. Ship­ments sent by NFO will be

on the next flight leav­ing your city.

Node: A fixed point in a firm’s logis­tics sys­tem where goods come to rest; includes plants, ware­houses, supply

sources, and markets.

Non-​Compliance: Fail­ure or refusal to do as requested by higher author­ity or as pre­scribed by a set of rules that

describe cor­rect pro­ce­dure to fol­low (i.e., rules on haz­ardous waste disposal).

Non-​Durable goods: Goods whose ser­vice life is con­sid­ered to be less than three years.

See also: Durable Goods

Non-​Vessel-​Owning Com­mon Car­rier (NVOCC): A firm that offers the same ser­vices as an ocean car­rier, but

which does not own or oper­ate a ves­sel. NVOCCs usu­ally act as con­sol­ida­tors, accept­ing small ship­ments (LCL) and

con­sol­i­dat­ing them into full con­tainer loads. They also con­sol­i­date and dis­perse inter­na­tional con­tain­ers that

orig­i­nate at or are bound for inland ports. They then act as a ship­per, ten­der­ing the con­tain­ers to ocean common

car­ri­ers. They are required to file tar­iffs with the Fed­eral Mar­itime Com­mis­sion and are sub­ject to the same laws and

statutes that apply to pri­mary com­mon carriers.

Non­con­for­mity: A qual­ity man­age­ment event that cap­tures the fail­ure to meet spec­i­fied inspec­tion or testing


North Amer­i­can Free Trade Agree­ment (NAFTA): A free trade agree­ment, imple­mented Jan­u­ary 1, 1994,

between Canada, the United States and Mex­ico. It includes mea­sures for the elim­i­na­tion of tar­iffs and non-​tariff

bar­ri­ers to trade, as well as many more spe­cific pro­vi­sions con­cern­ing the con­duct of trade and invest­ment that

reduce the scope for gov­ern­ment inter­ven­tion in man­ag­ing trade.


Ocean Bill of Lad­ing: The bill of lad­ing issued by the ocean car­rier to its customer.

Off­shoring: The prac­tice of mov­ing domes­tic oper­a­tions such as man­u­fac­tur­ing to another country.

On Time Deliv­ery: A met­rics which is defined as % of receipts that were received by the cus­tomers on time.

Opti­miza­tion: The process of mak­ing some­thing as good or as effec­tive as pos­si­ble with given resources and


Order: A type of request for goods or ser­vices such as a pur­chase order, sales order, work order, etc.

Order Batch­ing: Prac­tice of com­pil­ing and col­lect­ing orders before they are sent in to the manufacturer.

Order Man­age­ment: The process of man­ag­ing activ­i­ties involved in cus­tomer orders, man­u­fac­tur­ing orders, and

pur­chase orders. For cus­tomer orders this includes order entry, pick­ing, pack­ing, ship­ping, and billing. For

man­u­fac­tur­ing it includes order release, rout­ing, pro­duc­tion mon­i­tor­ing, and receipt to inven­tory. For POs the

activ­i­ties are order place­ment, mon­i­tor­ing, receiv­ing, and acceptance.

Ori­gin: The place where a ship­ment begins its movement.

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.

See also: Break-​Bulk

Out­bound Logis­tics: The process related to the move­ment and stor­age of prod­ucts from the end of the production

line to the end user.

Over-​the-​road: A motor car­rier oper­a­tion that reflects long-​distance, inter­city moves; the oppo­site of local



Pack Out: In a ful­fill­ment envi­ron­ment this refers to the oper­a­tions involved in pack­ag­ing and pal­letiz­ing individual

units of prod­uct for intro­duc­tion into the ware­house dis­tri­b­u­tion envi­ron­ment. For exam­ple, a con­tract 3PL may

received or assem­ble units of prod­uct which need to be placed into retail pack­ag­ing, then over­packed with a carton

and then palletized.

Pack­age to Order: A post­pone­ment strat­egy where prod­ucts are received in bulk or man­u­fac­tured with­out final

pack­ag­ing to allow for a vari­ety of pack­ag­ing options for a sin­gle prod­uct. An exam­ple is where a prod­uct is shipped

to retail­ers with pack­ag­ing designed specif­i­cally for the indi­vid­ual retailer.

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. Some pal­lets have elec­tronic track­ing tags (RFID) and most are recy­cled in

some man­ner.

Pal­let Jack: Mate­r­ial han­dling equip­ment con­sist­ing of two broad par­al­lel pal­let forks on small wheels used in the

ware­house to move pal­lets of prod­uct, but not hav­ing the lift­ing capa­bil­ity of a fork­lift. It may be a motor­ized unit

guided by an oper­a­tor who stands on a plat­form; or it may be a motor­ized or man­ual unit guided by an oper­a­tor who

is walk­ing behind or beside it. Comes as a “sin­gle” (one pal­let) or “dou­ble” (two pallets).

Pal­let Rack: A sin­gle or multi-​level struc­tural stor­age sys­tem that is uti­lized to sup­port high stack­ing of sin­gle items

or pal­letized loads.

Per­fect Order: The def­i­n­i­tion of a per­fect order is one which meets all of the following

cri­te­ria: Deliv­ered com­plete, with all items on the order in the quan­tity requested.

Deliv­ered on time to customer’s request date, using the customer’s def­i­n­i­tion of on-​time delivery.

Deliv­ered with com­plete and accu­rate doc­u­men­ta­tion sup­port­ing the order, includ­ing pack­ing slips, bills of lading,

and invoices.

Deliv­ered in per­fect con­di­tion with the cor­rect con­fig­u­ra­tion, cus­tomer ready, with­out dam­age, and fault­lessly in–

stalled (as applicable).

Pick/​Pack: Pick­ing of prod­uct from inven­tory and pack­ing into ship­ment containers.

Pick-​Up Order: doc­u­ment indi­cat­ing the author­ity to pick up cargo or equip­ment from a spe­cific location.

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

Pickup and Deliv­ery (P&D): A type of trans­porta­tion, usu­ally local, where the car­rier fol­lows a reg­u­lar route

mak­ing deliv­er­ies and pick­ing up shipment.

PLU: See Price Look-​Up

PO: See Pur­chase Order

POD: See Proof of Deliv­ery

Pool­ing: A ship­ping term for the prac­tice of com­bin­ing ship­ment from mul­ti­ple ship­pers into a truck­load in order to

reduce ship­ping charges.

Port: A har­bor, air­port or other facil­ity where ships will anchor, planes will land or trucks and trains will enter.

Port Author­ity: A state or local gov­ern­ment that owns, oper­ates, or oth­er­wise pro­vides wharf, dock, and other

ter­mi­nal invest­ments at ports.

Port of Dis­charge: Port where ves­sel is off loaded.

Port of Entry: A port at which for­eign goods are admit­ted into the receiv­ing country.

Port of Load­ing: Port where cargo is loaded aboard the vessel.

Post­pone­ment: The delay of final activ­i­ties (i.e., assem­bly, pro­duc­tion, pack­ag­ing, etc.) until the lat­est possible

time. A strat­egy used to elim­i­nate excess inven­tory in the form of fin­ished goods which may be pack­aged in a

vari­ety of con­fig­u­ra­tions and to max­i­mize the oppor­tu­nity to pro­vide a cus­tomized end prod­uct to the customer.

Pre­paid: A freight term, which indi­cates that charges are to be paid by the ship­per. Pre­paid ship­ping charges may

be added to the cus­tomer invoice, or the cost may be bun­dled into the pric­ing for the product.

Price Look-​Up (PLU): Used for retail prod­ucts sold loose, bunched or in bulk (to iden­tify the dif­fer­ent types of fruit,

say). As opposed to UPC (Uni­ver­sal Prod­uct Codes) for pack­aged, fixed weight retail items. A PLU code con­tains 45

dig­its in total. The PLU is entered before an item is weighed to deter­mine a price.

Pri­vate Car­rier: A car­rier that pro­vides trans­porta­tion ser­vice to the firm and that owns or leases the vehi­cles and

does not charge a fee. Pri­vate motor car­ri­ers may haul at a fee for wholly-​owned subsidiaries.

Pri­vate Label: Prod­ucts that are designed, pro­duced, con­trolled by, and which carry the name of the store or a

name owned by the store; also known as a store brand or dealer brand. An exam­ple would be Wal-Mart’s “Sam’s

Choice” prod­ucts.

Pri­vate Ware­house: A ware­house that is owned by the com­pany using it.

Pro Num­ber: Any pro­gres­sive or seri­al­ized num­ber applied for iden­ti­fi­ca­tion of freight bills, bills of lad­ing, etc.

Pro­cure­ment: The activ­i­ties asso­ci­ated with acquir­ing prod­ucts or ser­vices. The range of activ­i­ties can vary widely

between orga­ni­za­tions to include all of parts of the func­tions of pro­cure­ment plan­ning, pur­chas­ing, inven­tory control,

traf­fic, receiv­ing, incom­ing inspec­tion, and sal­vage operations.

Syn­onym: Pur­chas­ing

Prod­uct: Some­thing that has been or is being produced.

Prod­uct Char­ac­ter­is­tics: All of the ele­ments that define a product’s char­ac­ter, such as size, shape, weight, etc.

Prod­uct Con­fig­u­ra­tion: The arrange­ment of parts or com­po­nents to sat­isfy a customer’s demand by cre­at­ing a


Prod­uct ID: A method of iden­ti­fy­ing a prod­uct with­out using a full descrip­tion. These can be dif­fer­ent for each

doc­u­ment type and must, there­fore, be cap­tured and related to the doc­u­ment in which they were used. They must

then be related to each other in context.

Prod­uct Life Cycle: The life of a prod­uct in a mar­ket with respect to busi­ness sales and prof­its over time. There are

five stages to the prod­uct life cycle: prod­uct devel­op­ment, intro­duc­tion, growth, matu­rity and decline.

Prod­uct Life Cycle Man­age­ment (PLM): The process of man­ag­ing the entire life­cy­cle of a prod­uct from its

con­cep­tion, design, devel­op­ment and man­u­fac­ture, to man­age­ment of its intro­duc­tion, growth and decline.

Project Cargo: Arrang­ing move­ment of goods and mate­ri­als in non-​standard pack­ages by non-​standard meth­ods to

or from non-​standard des­ti­na­tions. It is often time sensitive.

Proof of Deliv­ery (POD): Infor­ma­tion sup­plied by the car­rier con­tain­ing the name of the per­son who signed for the

ship­ment, the time and date of deliv­ery, and other ship­ment deliv­ery related infor­ma­tion. POD is also sometimes

used to refer to the process of print­ing mate­ri­als just prior to ship­ment (Print on Demand).

Pur­chase Order (PO): The purchaser’s autho­riza­tion used to for­mal­ize a pur­chase trans­ac­tion with a sup­plier. The

phys­i­cal form or elec­tronic trans­ac­tion a buyer uses when plac­ing order for merchandise.

Pur­chase Order Man­age­ment: The man­age­ment of pur­chase orders.


Qual­ity Con­trol (QC): The man­age­ment func­tion that attempts to ensure that the foods or ser­vices manufactured

or pur­chased meet the prod­uct or ser­vice specifications.


Radio Fre­quency (RF): A form of wire­less com­mu­ni­ca­tions that lets users relay infor­ma­tion via electromagnetic

energy waves from a ter­mi­nal to a base sta­tion, which is linked in turn to a host com­puter. The ter­mi­nals can be

place at a fixed sta­tion, mounted on a fork­lift truck, or car­ried in the worker’s hand. The base sta­tion con­tains a

trans­mit­ter and receiver for com­mu­ni­ca­tion with the ter­mi­nals. RF sys­tems use either narrow-​band or spread–

spec­trum trans­mis­sions. Narrow-​band data trans­mis­sions move along a sin­gle lim­ited radio fre­quency, while spread–

spec­trum trans­mis­sions move across sev­eral dif­fer­ent fre­quen­cies. When com­bined with a bar-​code sys­tem for

iden­ti­fy­ing inven­tory items, a radio-​frequency sys­tem can relay data instantly, thus updat­ing inven­tory records in so–

called “real time.”

Radio Fre­quency Iden­ti­fi­ca­tion (RFID): The use of radio fre­quency tech­nol­ogy includ­ing RFID tags and tag

read­ers to iden­tify objects. Objects may include vir­tu­ally any­thing phys­i­cal, such as equip­ment, pal­lets of stock, or

even indi­vid­ual units of prod­uct. RFID tags can be active or pas­sive. Active tags con­tain a power source and emit a

sig­nal con­stantly. Pas­sive tags receive power from the radio waves sent by the scan­ner /​reader. The inherent

advan­tages of RFID over bar code tech­nol­ogy are: 1) the abil­ity to be read over longer dis­tances, 2) the elimination

of require­ment for “line of sight” read­abil­ity, 3) added capac­ity to con­tain infor­ma­tion, and 4) RFID tag data can be

updated /​changed.

Receiv­ing: The func­tion of tak­ing phys­i­cal receipt of mate­r­ial and per­form­ing ini­tial inspec­tion of the incoming

ship­ment for dam­age and val­i­da­tion with respect to pur­chase order quan­tity. Typ­i­cally includes some ini­tial data

record­ing, but not qual­ity assur­ance or stocking.

Receiv­ing Dock: Dis­tri­b­u­tion cen­ter loca­tion where the actual phys­i­cal receipt of the pur­chased mate­r­ial from the

car­rier occurs.

Recon­sign­ment: A car­rier ser­vice that per­mits chang­ing the des­ti­na­tion and/​or con­signee after the ship­ment has

reached its orig­i­nally billed des­ti­na­tion and pay­ing the through rate from ori­gin to final destination.

Redis­tri­b­u­tion: A trend in the food­ser­vice dis­tri­b­u­tion busi­ness where a large “redis­trib­u­tor” such as SYSCO or Dot

Foods will pur­chase in truck­load quan­ti­ties from the food man­u­fac­tur­ers and ware­house the prod­ucts. Individual

smaller dis­trib­u­tors can then pur­chase mul­ti­ple man­u­fac­tur­ers’ prod­ucts from the redis­trib­u­tor and fill up an entire

truck to save on ship­ping costs.

Reefer: A term used for refrig­er­ated vehicles.

Refrig­er­ated Car­ri­ers: Truck­load car­ri­ers designed to keep per­ish­ables good refrig­er­ated. The food industry

typ­i­cally uses this type of carrier.

Reman­u­fac­tur­ing /​ Refur­bish­ing: Refers to the re-​work per­formed on returned items to make the items saleable.

Note that prod­ucts made avail­able for sale in this man­ner must be appro­pri­ately labeled as such.

Replen­ish­ment: The process of mov­ing or re-​supplying inven­tory from a reserve (or upstream) stor­age loca­tion to

a pri­mary (or down­stream) storage/​picking loca­tion, or to another mode of stor­age in which pick­ing is performed.

Request for Infor­ma­tion (RFI): A doc­u­ment used to solicit infor­ma­tion about ven­dors, prod­ucts, and services

prior to a for­mal RFQ/​RFP process.

Request for Pro­posal (RFP): A doc­u­ment, which pro­vides infor­ma­tion con­cern­ing needs and require­ments for a

man­u­fac­turer. This doc­u­ment is cre­ated in order to solicit pro­pos­als from poten­tial sup­pli­ers. For, exam­ple, a

com­puter man­u­fac­turer may use a RFP to solicit pro­pos­als from sup­pli­ers of third party logis­tics services.

Request for Quote (RFQ): A for­mal doc­u­ment request­ing ven­dor responses with pric­ing and avail­abil­ity of

prod­ucts. RQFs are typ­i­cally solicited from a broad group of sup­pli­ers from which a nar­rower group will be selected

and asked to pro­vide a more detailed Request for Proposal.

Return Goods Han­dling: Processes involved with return­ing goods from the cus­tomer to the man­u­fac­turer. Products

may be returned because of per­for­mance prob­lems or sim­ply because the cus­tomer doesn’t like the product.

Reverse Logis­tics: A spe­cial­ized seg­ment of logis­tics focus­ing on the move­ment and man­age­ment of prod­ucts and

resources after the sale and after deliv­ery to the cus­tomer. Includes prod­uct returns for repair and/​or credit.

RF: See Radio Fre­quency

RFI: See Request for Infor­ma­tion

RFP: See Request for Pro­posal

RFQ: See Request for Quote

Roll-​On, Roll-​Off (RO-​RO): A type of ship designed to per­mit cargo to be dri­ven on at ori­gin and off at destination;

used exten­sively for the move­ment of automobiles.

RO-​RO: See Roll-​On, Roll-​Off

Rout­ing or Rout­ing Guide: 1) Process of deter­min­ing how ship­ment will move between ori­gin and destination.

Rout­ing infor­ma­tion includes des­ig­na­tion of carrier(s) involved, actual route of car­rier, and esti­mated time enroute.

2) Right of ship­per to deter­mine car­ri­ers, routes and points for trans­fer ship­ments. 3) In man­u­fac­tur­ing this is the

doc­u­ment which defines a process of steps used to man­u­fac­ture and/​or assem­ble a product.


SCAC: See Stan­dard Car­rier Alpha Code

SCAC Code: See Stan­dard Car­rier Alpha Code

Scan: A com­puter term refer­ring to the action of scan­ning bar codes or RF tags.

Sched­ule B: The Sched­ule B com­mod­ity code is the U.S. government’s numeric sys­tem of iden­ti­fy­ing all goods and

ser­vices for export.

Ser­ial Num­ber: A ser­ial num­ber is a unique num­ber assigned for iden­ti­fi­ca­tion which varies from its suc­ces­sor or

pre­de­ces­sor by a fixed dis­crete inte­ger value. Com­mon usage has expanded the term to refer to any unique

alphanu­meric iden­ti­fier for one of a large set of objects, how­ever in data pro­cess­ing and allied fields in computer

sci­ence. Not every numer­i­cal iden­ti­fier is a ser­ial num­ber; iden­ti­fy­ing num­bers which are not ser­ial num­bers are

some­times called nom­i­nal numbers.

Ser­ial Ship­ping Con­tainer Code: An 18-​character iden­ti­fi­ca­tion num­ber used to iden­tify con­tain­ers including

pal­lets and boxes pri­mar­ily for con­tain­ers which are a part of a ship­ment cov­ered by an Auto­mated Ship­ment Notice


Ser­vice Level: A met­ric, shown as a per­cent­age, which cap­tures the abil­ity to sat­isfy demand or responsiveness.

Order fill rates and machine or process up-​time are exam­ples of ser­vice level measures.

Ser­vice Level Agree­ment (SLA): May be used in lieu of a con­tract to rep­re­sent and doc­u­ment the terms of the

per­for­mance based agree­ment for organic support.

Ship Agent: A liner com­pany or tramp ship oper­a­tor rep­re­sen­ta­tive who facil­i­tates ship arrival, clear­ance, loading

and unload­ing, and fee pay­ment while at a spe­cific port.

Ship Bro­ker: A firm that serves as a go-​between for the tramp ship owner and the char­ter­ing con­signor or


Ship­per: The party that ten­ders goods for transportation.

Shipper-​Carrier: Shipper-​carriers (also called pri­vate car­ri­ers) are com­pa­nies with goods to be shipped that own or

man­age their own vehi­cle fleets. Many large retail­ers, par­tic­u­larly gro­ceries and “big box” stores, are shipper–


Shipper’s Agent: A firm that acts pri­mar­ily to match up small ship­ments, espe­cially single-​traffic pig­gy­back loads to

per­mit use of twin-​trailer pig­gy­back rates.

Shipper’s Asso­ci­a­tion: A non­profit, coop­er­a­tive con­sol­ida­tor and dis­trib­u­tor of ship­ments owned or shipped by

mem­ber firms; acts in much the same was as for-​profit freight forwarders.

Shipper’s Let­ter of Instruc­tions (SLI): The doc­u­ment con­tain­ing instruc­tions by the ship­per or shipper’s agent for

prepar­ing doc­u­ments and forwarding.

Ship­ping: 1) The act of con­vey­ing mate­ri­als from one point to another. 2) The func­tional area which pre­par­ers the

out­go­ing ship­ment for transport.

Ship­ping Lane: A pre­de­ter­mined, mapped route on the ocean that com­mer­cial ves­sels tend to fol­low between

ports. This helps ships avoid haz­ardous areas. In gen­eral trans­porta­tion, the log­i­cal route between the point of

ship­ment and the point of deliv­ery used to ana­lyze the vol­ume of ship­ment between two points.

Ship­ping Man­i­fest: A doc­u­ment which is typ­i­cally pre­sented to the car­rier out­lin­ing the indi­vid­ual ship­ping orders

included in a ship­ment. The man­i­fest will show the ref­er­ence num­ber of each ship­ping order in the load, the weight

and count of boxes or con­tain­ers, and the destination.

Shrink­age: Refers to the loss of inven­tory count due to pil­fer­age, dam­age, spoilage, etc. Shrink­age can occur while

mate­r­ial is in stock and while it is in transit.

Silo: Relates to a man­age­ment /​orga­ni­za­tion style where each func­tional unit oper­ates inde­pen­dently, and with

lit­tle or no col­lab­o­ra­tion between them and other units regard­ing major busi­ness processes and issues.

Syn­onym: Fox­hole

Syn­onym: Stovepipe

SKU: See Stock Keep­ing Unit

SLA: See Ser­vice Level Agree­ment

Small Par­cel Ground (SPG): Mode of trans­porta­tion where the unit being trans­ported meets all of the following

descrip­tions: under 150 lbs, inside of 130 inches in length and girth com­bined, indi­vid­u­ally labeled, and can be

indi­vid­u­ally han­dled and trans­ported absent of a pal­let. Typ­i­cally bro­ken down for rat­ing pur­poses into separate

cat­e­gories for com­mer­cial and residential.

Special-​Commodities Car­rier: A com­mon car­rier truck­ing com­pany that has author­ity to haul a special

com­mod­ity; there are 16 spe­cial com­modi­ties, such as house­hold goods, petro­leum prod­ucts, and hazardous


Special-​Commodity Ware­houses: A ware­house that is used to store prod­ucts that require unique types of

facil­i­ties, such as grain (ele­va­tor), liq­uid (tank) and tobacco (barn).

SPG: See Small Par­cel Ground

Spot: To move a trailer or box­car into place for load­ing or unloading.

Stack Car: An inter­modal flat car designed to place one con­tainer on top of another for bet­ter uti­liza­tion and

eco­nom­ics. Also referred to as a well car because the cars are low­ered in the cen­ter to allow clear­ance when moving

under low-​lying structures.

Stan­dard Car­rier Alpha Code (SCAC or SCAC Code): A unique 2 to 4-​letter code assigned to transportation

com­pa­nies for iden­ti­fi­ca­tion pur­poses. SCAC codes are required for EDI, and are printed on bills of lad­ing and other

trans­porta­tion documents.

Steve­dores: Labor man­age­ment com­pa­nies that pro­vide equip­ment and hire work­ers to trans­fer con­tain­ers and

cargo between ships and docks.

Stock Keep­ing Unit (SKU): A cat­e­gory of unit with unique com­bi­na­tion of form, fit, and func­tion (i.e. unique

com­po­nents held in stock). To illus­trate: If two items are indis­tin­guish­able to the cus­tomer, or if any distinguishing

char­ac­ter­is­tics vis­i­ble to the cus­tomer are not impor­tant to the cus­tomer, so that the cus­tomer believes the two

items to be the same, these two items are part of the same SKU. As a fur­ther illus­tra­tion con­sider a computer

com­pany that allows cus­tomers to con­fig­ure a prod­uct from a stan­dard cat­a­logue com­po­nents, choos­ing from three

key­boards, three mon­i­tors, and three CPUs. Cus­tomers may also indi­vid­u­ally buy key­boards, mon­i­tors, and CPUs. If

the stock were held at the con­fig­u­ra­tion com­po­nent level, the com­pany would have nine SKUs. If the company

stocks at the com­po­nent level, as well as at the con­fig­ured prod­uct level, the com­pany would have 36 SKUs. (9

com­po­nent SKUs + 3×3×3 con­fig­ured prod­uct SKUs. If as part of a pro­mo­tional cam­paign the com­pany also

spe­cially pack­aged the prod­ucts, the com­pany would have a total of 72 SKUs.

Sup­plier: An indi­vid­ual or an orga­ni­za­tion who sup­plies goods or ser­vices to the com­pany. This is also sometimes

referred to as a ”ven­dor.” In some set­tings — where a com­pany pro­vides goods through a dis­tri­b­u­tion network—

net­work mem­bers may be referred to as sup­pli­ers, even though they are the imme­di­ate cus­tomers of the company.

Sup­ply Chain: 1) start­ing with unprocessed raw mate­ri­als and end­ing with the final cus­tomer using the finished

goods, the sup­ply chain links many com­pa­nies together. 2) the mate­r­ial and infor­ma­tional inter­changes in the

logis­ti­cal process stretch­ing from acqui­si­tion of raw mate­ri­als to deliv­ery of fin­ished prod­ucts to the end user. All

ven­dors, ser­vice providers and cus­tomers are links in the sup­ply chain.

Sup­ply Chain Exe­cu­tion (SCE): The abil­ity to move the prod­uct out the ware­house door. This is a crit­i­cal capacity

and one that only brick-​and-​mortar firms bring to the B2B table. Dot-​coms have the tech­nol­ogy, but that’s only part

of the equa­tion. The need for SCE is what is dri­ving the Dot-​coms to offer equity part­ner­ships to the wholesale


Sup­ply Chain Inven­tory Vis­i­bil­ity: The abil­ity to visu­al­ize the sta­tus of inven­tory in the sup­ply chain from some

point upstream — begin­ning with the var­i­ous tiers of sup­pli­ers — on to down­stream — through dis­tri­b­u­tion and retail

chan­nels. In most cases, this will only be one level in each direc­tion; how­ever, it may include the abil­ity to access

sup­ply and demand infor­ma­tion at those points as well.

Sup­ply Chain Net­work Design Sys­tems: The sys­tems employed in opti­miz­ing the rela­tion­ships among the various

ele­ments of the sup­ply chain man­u­fac­tur­ing plants, dis­tri­b­u­tion cen­ters, points-​of-​sale, as well as raw materials,

rela­tion­ships among prod­uct fam­i­lies, and other factors-​to syn­chro­nize sup­ply chains at a strate­gic level.


Tare Weight: The weight of an empty vehi­cle or con­tainer. By sub­tract­ing it from the gross weight (laden weight),

the weight of the goods car­ried (the net weight) may be determined.

Tar­iff: A tax assessed by a gov­ern­ment on goods enter­ing or leav­ing a coun­try. The term is also used in

trans­porta­tion in ref­er­ence to the fees and rules applied by a car­rier for its services.

Tasks: The break­down of the work in an activ­ity into smaller elements.

Ten­der: The doc­u­ment which describes a busi­ness trans­ac­tion to be performed.

Terms and Con­di­tions (T’s & C’s): All the pro­vi­sions and agree­ments of a contract.

TEU: See Twenty-​foot Equiv­a­lent Unit

Third-​Party Logis­tics (3PL): Out­sourc­ing all or much of a company’s logis­tics oper­a­tions to a specialized

com­pany. The term “3PL” was first used in the early 1970s to iden­tify inter­modal mar­ket­ing com­pa­nies (IMCs) in

trans­porta­tion con­tracts. Up to that point, con­tracts for trans­porta­tion had fea­tured only two par­ties, the ship­per and

the car­rier. When IMCs entered the pic­ture — as inter­me­di­aries that accepted ship­ments from the ship­pers and

ten­dered them to the rail car­ri­ers — they became the third party to the con­tract, the 3PL. Def­i­n­i­tion has broad­ened to

the point where these days, every com­pany that offers some kind of logis­tics ser­vice for hire calls itself a 3PL.

Prefer­ably, these ser­vices are inte­grated, or “bun­dled,” together by the provider. Ser­vices they pro­vide are

trans­porta­tion, ware­hous­ing, cross-​docking, inven­tory man­age­ment, pack­ag­ing, and freight for­ward­ing. In 2008

leg­is­la­tion passed declar­ing that the legal def­i­n­i­tion of a 3PL is “A per­son who solely receives, holds, or otherwise

trans­ports a con­sumer prod­uct in the ordi­nary course of busi­ness but who does not take title to the product.”

Third-​Party Logis­tics Provider: A firm which pro­vides mul­ti­ple logis­tics ser­vices for use by cus­tomers. Preferably,

these ser­vices are inte­grated, or “bun­dled” together by the provider. These firms facil­i­tate the move­ment of parts

and mate­ri­als from sup­pli­ers to man­u­fac­tur­ers, and fin­ished prod­ucts from man­u­fac­tur­ers to dis­trib­u­tors and

retail­ers. Among the ser­vices which they pro­vide are trans­porta­tion, ware­hous­ing, cross-​docking, inventory

man­age­ment, pack­ag­ing, and freight forwarding.

Third-​Party Ser­vice Provider (3PSP): See Third-​Party Logis­tics (3PL)

Third-​Party Ware­hous­ing: The act of using a con­trac­tor to pro­vide ware­hous­ing ser­vices, and the name of the

indus­try which is involved in pro­vid­ing con­tract ware­hous­ing oper­a­tions for hire.

Through­put: A mea­sure of ware­hous­ing out­put vol­ume (weight, num­ber of units). Also, the total amount of units

received plus the total amount of units shipped, divided by two.

Time-​Definite Ser­vices: Deliv­ery is guar­an­teed on a spe­cific day or at a cer­tain time of the day.

Trac­ing: Deter­min­ing where a ship­ment is dur­ing the course of a move.

Trace­abil­ity: 1) The abil­ity to track the loca­tion of a ship­ment as it moves through the ship­ping process to the

cus­tomer. 2) The abil­ity to deter­mine the source of indi­vid­ual lot num­bered or ser­ial num­bered products.

Trac­ing: 1) Deter­min­ing where a ship­ment is dur­ing the course of a move. 2) The prac­tice of relat­ing resources,

activ­i­ties and cost objects using the dri­vers under­ly­ing their cost causal rela­tion­ships. The pur­pose of trac­ing is to

observe and under­stand how costs are aris­ing in the nor­mal course of busi­ness operations.

Syn­onym: Assign­ment

Track­ing and Trac­ing: Mon­i­tor­ing and record­ing ship­ment move­ments from ori­gin to destination.

Trac­tor: The trac­tor is the dri­ver com­part­ment and engine of the truck. It has two or three axles.

Trad­ing Part­ner: Com­pa­nies that do busi­ness with each other via EDI (e.g., send and receive busi­ness documents,

such as pur­chase orders).

Trad­ing Part­ner Agree­ment: The writ­ten con­tract that spells out agreed upon terms between EDI trading


Traf­fic: A depart­ment respon­si­ble for the process of deter­min­ing timely and eco­nomic deliv­ery meth­ods, arranging

inter­nal or exter­nal trans­porta­tion, and track­ing ship­ment sta­tus and logis­tics net­work issues.

Traf­fic Man­age­ment: The man­age­ment and con­trol­ling of trans­porta­tion modes, car­ri­ers and services.

Trailer: The part of the truck that car­ries the goods.

Trailer Drops: When a dri­ver drops off a full truck at a ware­house and picks up an empty one.

Trailer on a Flat­car (TOFC): Trans­port of truck trail­ers with their loads on spe­cially designed rail cars.

Syn­onym: Pig­gy­back

Trans­ac­tion: A sin­gle com­pleted trans­mis­sion, e.g., trans­mis­sion of an invoice over an EDI net­work. Anal­o­gous to

usage of the term in data pro­cess­ing, in which a trans­ac­tion can be an inquiry or a range of updates and trading

trans­ac­tions. The def­i­n­i­tion is impor­tant for EDI ser­vice oper­a­tors, who must inter­pret invoices and other documents.

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

Trans­porta­tion Mode: The method of trans­porta­tion: land, sea, or air shipment.

Trans­porta­tion Secu­rity Admin­is­tra­tion (TSA): TSA was cre­ated in response to the attacks of Sep­tem­ber 11th

and signed into law in Novem­ber 2001. TSA was orig­i­nally in the Depart­ment of Trans­porta­tion but was moved to

the Depart­ment of Home­land Secu­rity in March 2003. TSA’s mis­sion is to pro­tect the nation’s trans­porta­tion systems

by ensur­ing the free­dom of move­ment for peo­ple and commerce.

TSA: See Trans­porta­tion Secu­rity Admin­is­tra­tion

Turnover: 1) A cal­cu­la­tion of the num­ber of times the inven­tory of an item would be con­sumed dur­ing a period

given aver­age inven­tory lev­els and consumption.

Twenty-​foot Equiv­a­lent Unit (TEU): Stan­dard unit for count­ing con­tain­ers of var­i­ous capac­i­ties and for

describ­ing the capac­i­ties of con­tainer ships or ter­mi­nals. One 20 Foot ISO con­tainer equals 1 TEU. One 40 Foot ISO

con­tainer equals two TEU. A 20 foot con­tainer is typ­i­cally 8.5 feet tall and 8 feet wide out­side and has an internal

capac­ity of 1170 square feet.


Uni­form Prod­uct Code (UPC): A stan­dard prod­uct num­ber­ing and bar cod­ing sys­tem used by the retail industry.

UPC codes are admin­is­tered by the Uni­form Code Coun­cil; they iden­tify the man­u­fac­turer as well as the item, and

are included on vir­tu­ally all retail packaging.

See also: GS1

Unit Cost: The cost asso­ci­ated with a sin­gle unit of prod­uct. The total cost of pro­duc­ing a prod­uct or ser­vice divided

by the total num­ber of units. The cost asso­ci­ated with a sin­gle unit of mea­sure under­ly­ing a resource, activity,

prod­uct or ser­vice. It is cal­cu­lated by divid­ing the total cost by the mea­sured vol­ume. Unit cost mea­sure­ment must

be used with cau­tion as it may not always be prac­ti­cal or rel­e­vant in all aspects of cost management.

UPC: See Uni­form Prod­uct Code


Val­i­da­tion: To check whether a doc­u­ment is the cor­rect type for a par­tic­u­lar EDI sys­tem, as agreed upon by the

trad­ing part­ners, in order to deter­mine whether the doc­u­ment is going to or com­ing from an autho­rized EDI user.

Value Added: Increased or improved value, worth, func­tion­al­ity or usefulness.

Value-​Adding/​Nonvalue-​Adding: Assess­ing the rel­a­tive value of activ­i­ties accord­ing to how they con­tribute to

cus­tomer value or to meet­ing an organization’s needs. The degree of con­tri­bu­tion reflects the influ­ence of an

activity’s cost driver(s).

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

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

See also: Sup­plier

Ven­dor Code: A unique iden­ti­fier, usu­ally a num­ber and some­times the company’s DUNS num­ber, assigned by a

Cus­tomer for the Ven­dor it buys from. Exam­ple; a Gro­cery Store Chain buys Oreo’s from Nabisco. The Grocery

Store Chain, for account­ing pur­poses, iden­ti­fies Nabisco as Ven­dor #76091. One com­pany can have mul­ti­ple vendor

codes. Exam­ple; Welch’s Foods sells many dif­fer­ent prod­ucts. Frozen grape juice con­cen­trate, chilled grape juice,

bot­tled grape juice, and grape jelly. Because each of these items is a dif­fer­ent type of prod­uct, frozen food, chilled

food, bev­er­ages, dry food, they may have a dif­fer­ent buyer at the Gro­cery Store Chain, requir­ing a dif­fer­ent vendor

code for each prod­uct line.

Ves­sel: A float­ing struc­ture designed for transport.

Vis­i­bil­ity: The abil­ity to access or view per­ti­nent data or infor­ma­tion as it relates to logis­tics and the sup­ply chain,

regard­less of the point in the chain where the data exists.


Ware­house: Stor­age place for prod­ucts. Prin­ci­pal ware­house activ­i­ties include receipt of prod­uct, storage,

ship­ment, and order picking.

Ware­hous­ing: The stor­ing (hold­ing) of goods.

Ware­house Man­age­ment Sys­tem (WMS): The sys­tems used in effec­tively man­ag­ing ware­house business

processes and direct ware­house activ­i­ties, includ­ing receiv­ing, put­away, pick­ing, ship­ping, and inven­tory cycle

counts. Also includes sup­port of radio-​frequency com­mu­ni­ca­tions, allow­ing real-​time data trans­fer between the

sys­tem and ware­house per­son­nel. They also max­i­mize space and min­i­mize mate­r­ial han­dling by automating

put­away processes.

Way­bill: Doc­u­ment con­tain­ing descrip­tion of goods that are part of com­mon car­rier freight ship­ment. Show origin,

des­ti­na­tion, consignee/​consignor, and amount charged. Copies travel with goods and are retained by

originating/​delivering agents. Used by car­rier for inter­nal record and con­trol, espe­cially dur­ing tran­sit. Not a

trans­porta­tion contract.

Whole­saler: See Dis­trib­u­tor

WIP: See Work in Process

WMS: See Ware­house Man­age­ment Sys­tem

Work-​in-​Process (WIP): Parts and sub­assem­blies in the process of becom­ing com­pleted fin­ished goods. Work in

process gen­er­ally includes all of the mate­r­ial, labor and over­head charged against a pro­duc­tion order which has not

been absorbed back into inven­tory through receipt of com­pleted products.





10 + 2 Rule: A new rule insti­tuted by the United States Cus­toms and Bor­der Pro­tec­tions (US CBP). 10+2 requires

cargo infor­ma­tion, for secu­rity pur­poses, to be trans­mit­ted to the US CBP at least 24 hours before goods are loaded

onto an ocean ves­sel for ship­ment into the U.S. 10+2 is pur­suant to sec­tion 203 of the SAFE Port Act, and requires

importers to pro­vide 10 data ele­ments to the US CBP, as well as 2 more data ele­ments from the carrier.

· The fol­low­ing 10 data ele­ments are required from the


· Man­u­fac­turer (or sup­plier) name and address

· Seller (or owner) name and address

Buyer (or owner) name and

address Ship-​to name and address

· Con­tainer stuffing


· Con­sol­ida­tor (stuffer) name and


· Importer of record number/​foreign trade zone appli­cant iden­ti­fi­ca­tion number

· Con­signee

number(s) Coun­try

of ori­gin

· Com­mod­ity Har­mo­nized Tar­iff Sched­ule number

· From the car­rier, 2 data ele­ments are

required: Ves­sel stow plan

· Con­tainer status


3PL: See Third Party Logis­tics

4PL: See Fourth Party Logis­tics