A is for Acronym. L is for Lingo.
Language – like technology – never stops evolving.
We’ve been working in warehouses and the supply chain business for over thirty-years and yet we still come across tech-lingo that is so new or niche that it’s downright confounding.
Don’t be surprised if you catch yourself scratching your head over a mysterious acronym or some quirky tech slang. Supply chain and logistics are a discipline so vast and full of innovation that there will always be new language trying to capture the landscape.
To help you navigate some of the ever-changing terms, we have compiled a list of the some of the most common supply-chain lingo. Feel free to bookmark this page for quick reference the next time you are trying to decode some cryptic tech-talk.
2D BarCode- Two Dimensional Bar Code: Codes read from side-to-side, and up and down by scanner.
2PL: Second party logistics provider
3PL: Third party logistics provider
AI: Artificial Intelligence is the simulation of human intelligence by machines especially computers. This includes natural language processing (NLP), speech recognition and machine vision
AIDC: Automatic identification & data collection
ASN – Advanced Shipping Notice: Detailed shipment information transmitted by the shipper to a customer or consignee in advance of delivery.
Allocated Stock: A part or product that has been reserved, but not yet withdrawn or issued from stock, and is thus not available for other purposes.
Anticipation Stock: Inventory held in order to be able to satisfy a demand with seasonal fluctuations with a production level that does not fluctuate at all or that varies to a lesser extent than the demand.
Backflushing: The deduction from inventory, after manufacture, of the component parts used in a parent by exploding the bill of materials by the production total of parents produced.
Backhaul: Generally a back haul is any return load taken after the delivery has been made.
Backorder: Customer demand for which no stock is available and where the customer is prepared to wait for the item to arrive in stock.
Batch Number: A code used to identify the specific production point, for a product or an assembly, in a manufacturing or assembly process.
BOM – Bill of Material: A list materials required to produce an item
B2B – Business-to-Business: Companies that sell goods and services to other companies. An HR payroll tool, for example, would be a B2B product.
B2C – Business-to-Consumer: Businesses that sell their products straight to the consumer. A toy manufacturer, for example, would be a B2C company.
Back Ordering: A practice of placing a purchase order to a supplier for a product that’s temporarily out of stock in your warehouse and has already been ordered by your customers.
Blanket Order: A method in which the buyer will agree to buy a certain quantity of one or more items over an agreed-upon period of time (from days to several months) without specifying their exact shipment dates at the time of purchase.
COGS: Cost of Goods Sold
Central Distribution Center: A warehouse that is the sole stocking point for the distribution system that it serves.
Cold Supply Chain: A distribution system moving perishable goods that must be kept cold or frozen.
CDC – Composite Distribution Center: A multi-temperature distribution center. The receipt, storage and handling of products would typically take place in a variety of on-site chambers each operating at a specific temperature.
Consolidation Centers: Depots that store and/or process stock (see cross docking) into full loads for delivery to retailer RDCs.
Cost to Serve: Is a Supply Chain analytical approach, utilizing activity based cost techniques that identifies the costs of servicing specific customers, with specific products, by allocating costs to customers, products and channels.
Cross Docking: A system where products for store orders are not put away into the warehouse racking for later picking but are processed into store orders on arrival at the RDC.
CX: Customer experience. All the interactions a customer has with your business. This could involve usage of your product, engaging with your website, communicating with your sales team, etc.
DC: Distribution Center
DSD – Direct Store Delivery: Delivery by suppliers directly to their customers retail outlet, rather than via the retailers DC.
Drop Shipment: When your vendors ships goods directly to your customers, on your behalf. You will pay this vendor, but your customer will not know the vendor.
EDI – Electronic Data Interface: A method of transferring transactions from one computer system to another, by converting the data into a standard that can be easily read by all systems.
EPC: Electronic product code. The RFID version of the UPC barcode. EPC is intended to be used for specific product identification
FIFO – First In – First Out: A method of cost lot tracking where items are valued and sold in the order they were purchased.
First Pick Ratio: During order picking, the percentage of orders or lines for which 100% completion was achieved from the primary location or picking face.
Groupage: This is a method of grouping multiple shipments from different sellers (each with its own bill of lading) inside a single container.
Hitchment: This refers to the process of combining two or more shipments into a single shipment that is recognized by a single bill of lading, even if they did not originate from the same point.
In Process Goods: Partially completed final products that are still in the production process either as an accumulation of partially completed work or the queue of material awaiting further processing.
Inventory Process: Any business process that involves inventory. Includes the receiving of parts, putting them away, and their storage, withdrawal, issue, and movement through work-in process, while simultaneously tracking their movement and maintaining records of events.
Issue Tickets: An authorization to withdraw allocated stock items from the stockroom. When presented to the stockroom, they can be exchanged for the parts designated.
JIT – Just-in-time: An inventory optimization method where every batch of items arrives “just in time” to fulfill the needs of the next stage, which could be either a shipment or a production cycle.
Knocked Down: An item that is dismantled into two or more parts in order to facilitate easier transportation. These parts will then be put together before delivery.
Logistics: The time-related positioning of resources to meet user requirements.
Lot Number: The allocation of a unique number, to one or more of a product during manufacture or assembly, to provide traceability.
Lost Sales: A customer demand for which no stock is available and where the customer is not prepared to wait for the item to arrive in stock but goes to another supplier.
LIFO – Last in, first out: is a method of cost lot tracking where your most recent purchases are sold first. It works exactly opposite to FIFO.
Make to Order. A manufacturing process strategy where the trigger to begin manufacture of a product is an actual customer order or release rather than a market forecast.
Make to Stock: A manufacturing process strategy where finished product is continually held in plant or warehouse inventory to fulfill expected incoming orders or releases based on a forecast
Maximum Stock: The upper limit, expressed in quantitative, financial or time-based terms, to which the stock of an item should normally be allowed to rise.
Maximum Order: Quantity An order quantity which, in principle, must not be exceeded.
Minimum Order: The smallest order quantity which, in principle, is allowed.
Minimum Stock: A control limit within a stock control system which could indicate the point at which an order should be placed, or indicate if stocks are too low, for a specific item.
NIFO: Next In First Out
Obsolete Stock: Stock held within an organization where there is no longer any organizational reason for holding the stock.
Obsolescent Stock: Parts which have been replaced by an alternative but which may still be used until stock is exhausted.
Off Shoring: This generally refers to the outsourcing (off shore) of manufacturing and production.
Order Picking: Collecting items from a storage location to satisfy a shop or customer order.
Outsourcing: An arrangement whereby an external party or ‘contractor’ undertakes certain business processes on behalf of their client. In Supply Chain this would typically be warehousing and transport.
Parent Part: Any finished goods, end item, or part that is mixed, fabricated, assembled, stirred, or blended from one or more other components.
Part Number: A unique identification number allocated to a specific part either by the manufacturer or user of the part.
Pick Face: The primary location in a warehouse at which order picking, of less than pallet loads, is undertaken.
Pick Path: the route used to pick items off the shelves in the warehouse before they are packaged and shipped out.
Production Lead Time: The time taken to manufacture or produce an item after an external order has been received until the item is available for packing.
POD – Proof of Delivery: 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.
PLT – Purchasing Lead Time: The length of time between the decision to purchase an item and its actual addition to stock.
Put Away Rules: The internal rules and procedures for positioning stock in a warehouse or store after goods inward processing.
Quarantine Stock: On-hand stock which has been segregated and is not available to meet customer requirements.
RFID – Radio Frequency Identification: The attachment of transponders (read only or read/write) to products, as an alternative to linear bar codes, to enable product identification some distance from the scanner or when out of line of sight.
RDC – Regional Distribution Center: A warehouse operated by or on behalf of a retailer that serves a number of stores in a specific area with a range of product types and temperature bands.
ROL – Re-Order Level: The calculated level of stock within an inventory control system to which the quantity of a specific item is allowed to fall before replenishment order action is generated.
Reverse Logistics: The requirement to plan the flow of surplus or unwanted material or equipment back through the supply chain after meeting customer demand.
Rotable: A repairable inventory item that can be repeatedly restored to a fully serviceable condition and re-used over the normal life cycle of the parent equipment to which it is related.
Service Differentiation: Is a Supply Chain management approach that aims to reduce costs by identifying customer service needs and ensuring that customers are not over or under serviced.
Slotting: A method of optimizing the ‘pick path’ in a warehouse, by ensuring that frequently selected items are closer to the despatch area, or lower down in high rise facilities. Significant time and cost saving results if this is done well.
Stock Site: A location at which stock is held.
Stock Turn: The number of times that an inventory turns over during the year and normally obtained by dividing the average inventory value into the annual cost of sales. i.e. Annual sales at cost / average inventory value.
Supply-Chain: The total sequence of business processes, within a single or multiple enterprise environments, that enable customer demand for a product or service to be satisfied.
SKU: Stock keeping unit
SSCC: Serial Shipping Container Code
TAQ: Total Acquisition Cost: The sum of all the costs to an organization of carrying an item in stock including reorder, carrying and shortage costs.
Total Lead-time: The total time between the decision to place a replenishment order until its availability for use. That is, the sum of Order Lead-time, Purchasing Lead-time, Transit Time and any Goods Inward Lead-time for that replenishment order.
Transaction: Recording of a material movement or an adjustment event that impacts on a stock position.
Transit Time: The time taken to move goods physically between different locations in a supply chain or laterally to another facility.
TAT – Turn Around Time: The total time taken to repair a component at the repair location, including waiting time but excluding transit time.
Unit: The standard size or quantity of a stock item.
Unit Cost: The cost to an organization of acquiring one unit, including any freight costs, unit production cost, including direct labour, direct material and factory overheads.
Unit of Measure: The standard unit of an item used in the stock account and to construct order quantities.
Vendor Hub: Third party operation of a warehouse, funded by suppliers, containing Vendor-Owned stock for delivery to a customer.
VMI: Vendor Managed Inventory. An element of inventory stocked by one organization but where the forecast demand, and required stock levels to meet that demand, are calculated by the manufacturer or distributor of the stock items concerned.
WIP- Work in Progress. The total amount of work in processing, between production stages or subject to a waiting time.
WD: Warehouse Distribution
WMS: Warehouse Management Solution
YMS: Yard Management System. A system designed to facilitate and organize truck and trailer traffic that serves a warehouse, distribution or manufacturing facility.
Zero Inventories: Part of the principles of just-in-time which relates the elimination of waste by having only required materials when needed.