Supply Chain Glossary: Demystifying Industry Terms

Outsourced logistics services that include anything from warehousing to delivery, allowing businesses to streamline their supply chain operations.

A technique used to categorize items based on their importance, typically into categories A, B, and C, to prioritize inventory management efforts.

The quantity of a product that is available and can be promised to the customer based on current inventory minus current commitments.

The process of allowing customers to order goods that are not currently in stock — with a promise to deliver when the item is back in stock.

Represents the return leg of a transportation journey that typically occurs after delivering goods to their destination - similar to a homeward journey for a carrier or a vessel after completing its primary delivery route.

The bill of lading, is a legal document that serves as a formal contract between the shipper and the carrier. It outlines key details of the transported cargo, such as its nature, quantity, and destination.

The phenomenon where small fluctuations in demand at the consumer level can result in progressively larger fluctuations in demand further up the supply chain.

An ongoing effort to improve products, services, or processes by making small, incremental improvements over time.

A supply chain agreement where goods are sent to a consignee to be sold, with the consignor retaining ownership until the goods are sold.

A logistics practice where incoming goods are directly transferred from inbound to outbound transportation without being stored in a warehouse.

Returns initiated by the customer, often due to reasons like wrong product shipped, product dissatisfaction, or a change of mind.

The duration it takes for a product or service to move from its initial stage to its final stage, encompassing all the processes and activities involved in its production, distribution, and delivery.

The process of estimating future customer product needs and buying preferences with a blend of empirical data analysis, market insights, and a dash of foresight.

A system used to plan inventory and replenishment in distribution centres and warehouses to meet future demand while minimizing excess inventory.

A supply chain method where goods are directly shipped from a supplier to the customer without passing through the retailer's inventory, reducing warehousing costs and streamlining distribution.

A formula that helps determine the optimal order quantity to minimize total inventory holding costs and ordering costs.

Electronic exchange of business documents using a standardized format, such as purchase orders and invoices, between trading partners.

An inventory management method where the oldest inventory (first in) is sold or used first (first out) to keep inventory fresh.

The initial stage of the logistics process, involving the movement of goods from the point of origin to the transportation hub.

A warehousing method where products are received and immediately prepared for shipment without long-term storage, improving order fulfillment speed.

Purchasing inventory in larger quantities than needed to take advantage of lower prices or anticipated price increases, often leading to holding costs.

A document used to record the receipt of goods from a supplier, affirming the quantity and condition of goods received against a purchase order. In essence, the GRN acts as a crucial checkpoint, allowing organizations to verify that the delivered goods align with the specifications outlined in the purchase order.

A set of standardized terms published by the International Chamber of Commerce that define the responsibilities of buyers and sellers globally.

Refers to the systematic planning, control, and optimization of all aspects related to the storage, movement, and tracking of inventory throughout its lifecycle.

A measure of the ability to fulfil individual line items on customer orders, as opposed to entire orders, highlighting the efficiency of inventory allocation.

A production strategy aimed at minimizing inventory levels by receiving goods only as they are needed in the production process.

An extension of the Just-In-Time (JIT) inventory strategy that involves suppliers managing inventory levels directly at the manufacturing or retail outlets.

An inventory valuation method where the most recently produced or acquired items are sold or used first.

The time it takes from placing an order to receiving the goods, including order processing, production, and transportation time.

This represents the final and critical stage wherein goods transition from regional distribution centers to the ultimate destination – the doorstep of the end consumer.

The process of optimizing the arrangement of goods within a transportation vehicle to maximize space utilization and minimize transportation costs.

The intermediate stage of the logistics process, involving the movement of goods between distribution centers or hubs.

The smallest quantity of a product that can be produced or ordered to meet cost or operational requirements.

The percentage of orders that are processed, fulfilled, and delivered accurately, without errors.

A metric that measures the percentage of customer orders fulfilled from stock available, indicating the efficiency of inventory management and customer satisfaction.

The time it takes for an order to be picked, packed, and prepared for shipping after the order is placed.

The amount of inventory in transit between manufacturing and fulfilment locations; it represents goods not yet available for sale or use.

The process of acquiring goods, and services, often involving supplier selection, negotiation, and contract management.

Extra inventory kept on hand to guard against stockouts caused by variations in supply and demand.

A unique code or number that identifies a specific product in a retailer's inventory.

A plan outlining how an organization will procure goods and services, including supplier selection, negotiation, and relationship management.

The costs associated with not having enough inventory leading to lost sales, customer dissatisfaction, and potential damage to brand reputation.

The practice of sourcing goods and services from a variety of suppliers that are owned, operated, or controlled by individuals from diverse backgrounds.

Supplier Relationship Management (SRM) involves managing relationships and interactions with suppliers to ensure that organizations receive maximum value from their partnerships.

Refers to supply chain pros' ability to track and monitor products, processes, and events across the supply chain in real time, providing insights for better decision-making.

The amount of material or items passing through a system or process, measuring the production capability of a facility over a period.

A managerial philosophy that emphasizes the relentless pursuit of excellence across all facets of an organization's operations. It is rooted in the belief that quality should permeate every aspect of the business, from product design to manufacturing processes to customer service.

A comprehensive system that encompasses all the stakeholders involved in producing and delivering a product or service to the end customer, focusing on value creation at each step.

The efficient use of available space within a distribution center or warehouse for storing, staging, and handling goods.